Thursday, 20 May 2010

Paying The Ransom - Again

The rich aren't like us - they get bigger tax cuts.

WE’VE BEEN FED the same message for twenty-five years. Over and over again it’s been stuffed down our throats: "The Rich aren't like us. They have different needs. They follow different rules. They require different incentives." And if we’re all feeling just a little bit queasy this morning, it’s because we’ve been forced to swallow that same bilious stew of self-serving lies all over again.

There were moments when I thought John Key was a different kind of National Prime Minister. Times when I actually believed that the combination of a childhood lived under the protection of the Welfare State, and an adulthood spent accumulating enough wealth to snap his fingers at National’s paymasters, had produced something new on the Right: a genuinely compassionate conservative.

But, no. Mr Key has proved himself to be just another shill for selfishness and greed: just another defender of privilege and plutocracy.

Earlier in the week he was urging us not to react jealously, or enviously, to a Budget which has poured millions of dollars into the pockets of the people who deserve it least, while raising the living costs of those families most in need of relief.

"We can be envious about these things", purred the Prime Minister, "but without those people in our economy all the rest of us will either have less people paying tax or fundamentally less services that they provide."

Thus does the Prime Minister pass on to us the contents of the ransom note delivered to him by this country’s wealthiest citizens.

Translated into plain English, it reads: "We’ve got your economic system under our control. Hand over hundreds of millions of dollars – or your helpless little economy will be made to suffer, and you’ll never see Prosperity again."

And last night, Bill English paid up – just as every other Finance Minister has been forced to pay up since the 1980s.

It was a bad move then and it’s still a bad move. Negotiating with economic terrorists is as craven and foolish as negotiating with any other kind. Because once they realise you’re willing to pay for their co-operation, they will hold your economy to ransom again, and again, and again.

Of course Mr Key has attempted to paint the primary beneficiaries of Mr English’s "tax package" as good, hard-working professionals: "Those who pay the top personal rate fit into some of the core critical categories for our economy. They include doctors, entrepreneurs often, scientists, engineers, lawyers, accountants, school principals, nurses".

Well, no, actually. While it’s true to say that a great many professional people are on or slightly above the top rate, they are not the tax package’s primary beneficiaries. At best, most of the people Mr Key cites will benefit from Mr English’s largesse to the tune of about $40 per week. Of that about $20 will be swallowed up by the increase in GST, leaving them just $20 per week better off. Subtract the increases in most people’s ACC levy and these hard-working professionals might end up with an extra $10-$15 per week. Wow.

But even "generosity" on this paltry scale must be paid for by someone. Our public health system is about to suffer the death of a thousand cuts. Our universities will be forced to turn away more and more young New Zealanders. Our prisons will become ever more squalid – and dangerous – repositories for the victims of an economic system which has, for the umpteenth time, been unfairly skewed in favour of the Rich.

Perhaps it would all be bearable if, in return for the extra $300-$500 per week we’re allowing them to keep, our captains of industry, financial wizards and heroic entrepreneurs would guarantee the "step-change" this country so desperately needs.

But if History is any guide, that’s not what we will get. If History’s any guide, we’ll just see more of our industries fall into the hands of foreigners; more "Mum & Dad" investors lose their life’s savings; more holes in the ground; more half-finished palaces; more angry denials of any and all social responsibility.

And why, in God’s name, would we expect anything else? The Rich did not get rich by giving – but by taking. It’s what they do. It’s all they’ve ever done.

And until we stop meeting their demands – they’ll go on doing it.

This essay was originally published in The Timaru Herald, The Taranaki Daily News, The Otago Daily Times and The Greymouth Evening Star of Friday, 21 May 2010.

28 comments:

Anonymous said...

Thanks Chris. I don't always agree with you but you hit the nail on the head this time. I just hope that the public see this for what it is. Kiwis still have a strong sense of fairness in spite of the right's best efforts and they won't like it at all if they understant it properly.

Sanctuary said...

If you are a developer who builds a beach development on an ancestral Maori burial ground in the face of local Iwi outrage and it doesn't matter if you legally own the land. If the occupation doesn't bankrupt you can't guard against the arsonists torch forever, just ask Murray Mexted.

Oh, for our union leaders to have the same bottle.

Steven Cowan said...

Good post, Chris

Gosh, we agree with each other for a change!

I also agree with Sanctuary when he/she says they want the union leadership to show some bottle. Unfortunately I can't see it happening though.

Chris Trotter said...

We may cross swords now and then, Steve, over what we support. But you and I have seldom differed over what we oppose.

A bas Les Aristos!

Victor said...

Spot on

Steve said...

Spot on Chris. This was sold cynically sold to Kiwis. Leak a huge redistribution of wealth to the rich through main stream media prior to the Budget. People then feel grateful when the redistribution isn't quite as bad as they thought it would be. This is like feeling happy after being mugged because they only took your wallet but left your phone.

People are very angry with the injustice they see around banks, finance companies, multinationals, privatisation of assets and inequality. The Left, sad to say, seem unable to articulate, harness and direct that anger effectively.

Olwyn said...

Well said Chris. And given that these tax cuts have to be finance by borrowing, the stage seems set for the next "crisis," the next round of "necessary" cuts to public service and asset sales. John Key looked extremely uneasy on Campbell Live last night, as if terrified of a question for which he had no scripted answer. The big question is, are we able to collectively see that the experiment hasn't worked, and radically change tack?

Anonymous said...

Key is very smug, is he not? He may have been brought up with the help of welfare, but I notice he dodesn't hand his $52 million fortune to the poor or needy. I wonder if he had not made (or swindled?) that fortune, how envious he himself would be of wealthy people, and if he would be PM right now. Now I know what Cullen meant when he coined the term 'rich pricks'. Sickening ones at that! And the poor get poorer...some things never change.

Rose.

Anonymous said...

This government has a duty of care over it's citizens and yet they continue to crap on the most under privileged. What is even more bemusing, is the Maori Party continue to bunker down with them, in spite of the damage it has and is causing in their own communities.
New Zealanders have fallen asleep and need to wake up...

peterquixote said...

this writer's income is so far less than that of Chris, whose polemic and fixed emotional position leaves his words as rhetoric.
Chris fails completely to see what is going on.
To me what the NZ Nat Government is trying to do is stop losing professional and innovative people to the more successful economies, like Australia and Canada, and parts of Europe and the USA.
There is a cost to this.
But to Chris, New Zealand should remain as a socialist state where the few are taxed for the many : and look at the same rhetoric he comes on with, and has done for decades:

" Mr Key has proved himself to be just another shill for selfishness and greed: just another defender of privilege and plutocracy"

With this sort of fundamental anatgonism Chris is increasingly marginalised to a small group of new Zealanders who still believe in Socialism.
And to prove he is slave to his own previous Mana and imagination Chris says further:

"Thus does the Prime Minister pass on to us the contents of the ransom note delivered to him by this country’s wealthiest citizens":

Well dude the note you refer to and which you choose to ignore is that note from OECD countries : that blue note that shows New Zealand is staggering and falling in terms of measured Citizen well being.

And just to absolutely prove how parochial and partisan he is, Chris announces the effect of the new tax structure as :

"We’ll just see more of our industries fall into the hands of foreigners; more "Mum & Dad" investors lose their life’s savings; more holes in the ground; more half-finished palaces; more angry denials of any and all social responsibility"

Those damned foreigners Chris, those damned Chinese and foreigners, its the Governments fault, if only we could go back to the days when we flog from the tax payer workers, they owe us, those horrible successful people, those horrible people, we must go back to socialsim.

peterquixote
.

Anonymous said...

I wish they'd been more pragmatic and restricted the cut in the top tax cut to 2.5% and invested the retained revenue in cutting the business tax rate down further.

Anonymous said...

"New Zealanders have fallen asleep and need to wake up... "

We did in 2008.

"And why, in God’s name, would we expect anything else? The Rich did not get rich by giving – but by taking."

By 'we' I'm assuming you mean the 30% of voters who favoured labour?

Anonymous said...

Top marks Chris. Yes, like yourself I'd succumbed to the wishful thinking that the Shiny Smiley chimera concealed hidden testosterone: that the experience of a state house/solo mum upbringing might somehow elicit the empathy and courage to lead his poor, Neanderthal tory sect to the light. His immediate repudiation of the Brash obscenity on elevation to leadership was encouraging, but we should've known: sadly, this current assault on the poor and the willing obeisance to Money, confirms his impotence.

He's as weak as he looks. He's cut the base benefits and gilded the rich. And as the Smiling Snake is revealed, his fangs grow ever longer: English lets slip that Godzone is now for sale. I'm reminded of Steve Braunias's words:

“As I listened to [Key] and looked at him during our interview… it wasn’t as simple as thinking that the lights were on but no one was home. It was more the case that he was in there, somewhere, but there were no lights on…. The Prime Minister Helen Clark’s scornful assessment of that National Party leader - “Insubstantial” - might actually count as high praise. At least it acknowledged his presence…. The notion that this man could be our next Prime Minister struck me as ludicrous.”

Smile and Wave has left the building: time for some heavy mettle.

ak

tony said...

"The Left, sad to say, seem unable to articulate, harness and direct that anger effectively"...well what does one expect when most of the leadership of the labour party (and certainly rogergnome phil goff), actually agree with the ideologically driven economic policies key and the tories are dishing out.

Anonymous said...

@ PeterQuixote - nice try to defend capitalism bud, but you failed. National-Act are transparent in their greed, as are their supporters.

You claim Key is trying to keep well paid professionals in NZ, but most such professionals (many mates of mine) freely admit they work in NZ for lifestyle reasons, as even if Key wiped PAYE totally, nurses, teachers, doctors, etc would still earn under $120,000pa - less than they would earn overseas. So it's not just the PAYE.

Your argument is they will stay if we take little or no tax off them, but this is the same blackmail Boeing tried, when they threatened to offshore their engine rebuilds from Chch airport unless paid a big subsidy. It's blackmail no matter how you spin it.

And Peter, of course "...New Zealand is staggering and falling in terms of measured Citizen well being." As long as we have a liberal capitalist economic system, we will have this lack of well being. Why? Because jobs and pay are undercut by trade liberalisation, which allows sweated labour to undercut domestic manufacturers, and sees 3/4 of our balance of trade deficit being profits sucked offshore to foreign owners. We don't hate the foreign owners for being foreign - we hate them for being owners! (of our industry and land).

Slap a financial transactions tax on 'em; an FTT will not stop speculation, but it will give govt a big chunk of extra income from the vast profits the foreign owners nick off us each year. And jack those PAYE and company tax rates up - the poor will get the cash recycled to them in rebates and benefits but the rich won't! They'll still be rich - just not as filthy rich as they would like to be ;)

Mad Marxist.
Offering short term solutions to the evils of capitalist NZ since 2008.

Anonymous said...

Remember when we went to sleep and woke up, too late in 1984?
All this hand wringing and huffing and puffing doesn't alter the fact that Labour governments are no better - and sometimes worse.

BevanJS said...

Chris,
By ""Mum & Dad" investors lose their life’s savings; more holes in the ground; more half-finished palaces; more angry denials of any and all social responsibility."
... if you are talking of the recent examples in the media of investors losing their life savings I don't see the connection with Government policy. Seems to me those people didn't listen to the grandparents and went ahead and stuck their one egg in one basket.

Anonymous said...

Chris, you wrote:

"Negotiating with economic terrorists is as craven and foolish as negotiating with any other kind. Because once they realise you’re willing to pay for their co-operation, they will hold your economy to ransom again, and again, and again."

You have applied this description to 'the wealthy' but it could equally have been applied to Trade Unions in the not too distant past.

Some of us are old enough to remember the Cook Straight ferry crews going on strike just before the school holidays.

With respect, you need to stop fighting an outdated class war and take a look at what is best for New Zealand as a whole. Having 10% of tax payers funding 70% of State services and welfare benefits, while the bottom 40% effectively paid nothing, if you take WFF into account, was unsustainable.

Key and English have increased State expenditure by 10% in this budget over the previous year, and continue to borrow to fund the gap between Tax revenues and expenditure on services. This is also an exercise in un-sustainability.

It is time for NZ to get real or we will ultimately descend into financial abyss of the modern Greek State.

This means for each of us, a return to personal responsibility, and less emphasis on the politics of redistribution and wealth consumption.

Kind regards
Brendan

Joe Carolan said...

Good post, Chris. Though I do remember us having a disagreement about the slogan "Tax the Rich...
until they bleed!"

You're too concillatory to these bourgeouis scum :)
Off with their heads etc.
Joe

Anonymous said...

Key gets the KFC, party pack and all, most of us out here have been thrown a bone or two, worse than a mere cracker. Rich men and bland mansions are just revolting, Key could have bought a stunning home in Paratai Drive instead, what a dark street he chose to live in, still, wonders never cease. Meanies, meanies, meanies, hope they enjoy their steak dinners, sauces and all!

Gone off National.

Victor said...

I see some merit in providing tax cuts to low and middle income earners. And I don't think that the flow of skilled, middle income professionals to Australia represents 'blackmail', 'terrorism' or any of the same. Nor do I take this to be Chris's meaning. Correct me if I'm wrong, Chris.

The problem, as far as I am concerned, is the ending of higher rate taxation for our unproductive, selfish, incompetent,parasitic plutocrat class and the price we will be paying for this in terms of dear food and reduced services.

I've met a few wealthy people overseas who, even if they don't in an absolute sense deserve their income differentials, nevertheless contribute more than the average citizen to the wealth and welfare of their societies.

An example of this was the father of an American friend of mine who built up a light engineering company from scratch in a small and increasingly depopulated Midwestern town and provided employment to many in the process, while contributing vastly to local charities and community projects.

But, personally, I've never met anyone in New Zealand who fits that description. Typically, people get rich here either by creaming off or by providing services to others who cream off.
Their expertise lies not in creating wealth but in hanging on to it.

If most of them expatriated their skills, we might actually be better off. And, bear in mind, whether or not they stay here, much of their wealth is already expatriated.

Meanwhile, I'm still looking for something in the budget that will actually lead to the export-directed growth we desperately need to raise the living standards of the average family.

Iain Parker said...

Chris,
about time you stopped pandering to those who pay youre income and showed some support of the ideals of equal opportunity economics you have so long claimed to support.
I am sure you will find interesting the below link written by me including a couple of lines of yours:
http://blog.labour.org.nz/index.php/2010/05/22/english-assets-for-sale-next-term-kiwibank-first-on-block/comment-page-1/#comment-60903

jh said...

My observation is that when people get "rich" it is all relative so they never feel "rich"... hence are sensitive to relative opportunities elsewhere. Also many people running a business feel like a person living by a flood prone river and hence are motivated by survival as much as greed. At the end of the day the system has to operate on how people behave and it is generally perceived that welfare in NZ is a rort where a third are deserving and two thirds aren't.
I think we should look at other ways to bring greater equality, for example a land tax: just look at the wealth scooped up as land is "developed" and housing concentrated.

Anonymous said...

not a comment relating to this post just something i thought you maybe interested in re 'identity politics' etc
http://www.philgraham.net/HH_conf.pdf

Debbie said...

What evidence is there that Key was actually brought up with the help of Welfare? When he was young, as was also the case when I was young, State Houses were not 'welfare' but as middle class as you could possibly want! They were "pepper-potted" then, and we had State Houses in our midst, inhabited by people just like us who 'owned our home', thanks to a long-dead grand-father...

mike said...

Brendan,

If you want to talk about the economic terrorists responsible for the decline of the Greek State, check Goldman Sachs and other purveyors of the "imaginary economy".

These globalised corporates are in their way rather similar in character to Al Qaida, loyal only to their selfish interests and egging on the destruction of 'real economies' so as to collect their latest bets.

While trade unions have on occasion annoyed the public with their tactics, they're not quite in the same league as economic terrorists like GS:

"a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”


Hey, didn't our PM work for one of these firms?

Brewerstroupe said...

No-one should be surprised at the agenda of the former managing director of debt markets at Merrill Lynch, as John Key is designated in this Nov 1999 article.

http://findarticles.com/p/articles/mi_qa3715/is_199911/ai_n8869409/

What is a "Debt Market"?

"The debt market is any market situation where trading debt instruments take place. Examples of debt instruments include mortgages, promissory notes, bonds, and Certificates of Deposit. A debt market establishes a structured environment where these types of debt can be traded with ease between interested parties."
http://www.wisegeek.com/what-is-the-debt-market.htm

This places Key in the very room at Merrill where the pretty bows were being tied on the packages of dodgy mortgages so gleefully sold on to pension funds, leading to the very crisis that New Zealanders felt he was quite the perfect "business brain" to lead us out of.

Perhaps Peterquixote is correct. Maybe the brains had drained before the last election.

Victor said...

Brewerstroupe

You hit on two of the most significant and worrying aspects of our present pass. The first is, obviously, that we've put the lunatics in charge of the asylum and they're going to get paid for burning it down.

The second is that emigration is making us a less intelligent society, as it tends to be our brightest who leave.

I shed few tears for the bean counters and wealth manipulators amongst them (like bad weather or toothache, they'll be back).

But the doctors, engineers and other well-educated people don't just represent an economic loss. They're also a cultural loss.

It's a loss that is making us a more gullible and silly society (viz. the sort of society that regards the egregious Key as some sort of exemplar).

Of course we're bringing in brainy people as immigrants. But it can take years for them to become part of the psychological mainstream and to acquire the local knowledge needed to make sensible political choices. In the meantime that mainstream is getting generally sillier.