"Show Me The Money!" Filling The Hole In Labour's Policy Framework.

Killer Line: In the last two elections the "Show me the money!" taunt has fatally derailed Labour's campaign. Releasing fiscal policy should never be the last thing a social-democratic party does in an election cycle - it should be the first. Convince people of the need for a more just distribution of wealth and resources, and all the rest of its programme will fall into place.

 

THERE’S A HOLE in Labour’s emerging policy framework – through which too little light is getting in. The party’s latest big announcement: three years of free post-school education; is a case in point. As a headline, it’s fantastic. But, Labour supporters’ euphoria is unlikely to survive the policy’s fine print. Nearly a decade will pass before the plan is fully implemented – but only if  Labour wins the 2017, 2020 and 2023 elections on the trot. It’s not quite a case of  giving something with one hand, only to snatch it back with the other – but it’s close.

 

And why is Labour unwilling to offer three years of free tertiary level education in its first budget? Because it’s not yet ready to adopt a social-democratic fiscal policy to pay for its social-democratic education policy. That’s the hole – and it’s a bloody dangerous one!

 

Does Labour really believe that it can make it to the next election without anyone noticing that it has failed to come up with a way of paying for its promises? Because if that’s the plan, then its chances of success are pretty slim. The essence of social-democracy is the redistribution of wealth. And the best way to redistribute wealth is through a comprehensive system of progressive taxation. A Labour Party unwilling to acknowledge that it intends to raise the taxes of the wealthy isn’t worthy of the name.

 

Labour’s reluctance to talk about fiscal policy is a strategic error. Little is to be gained, electorally, by offering the voters all manner of generous policies – like three years of free post-school education – if its opponents are left free to insinuate that Labour’s generosity is predicated on massive fiscal delinquency. The electorate will either come to believe that Labour has given no serious thought to how its promises are to be paid for – which makes it fiscally incompetent. Or, that Labour knows very well how its promises will be paid for, but is unwilling to say so before it has been safely elected – which makes it politically dishonest.

 

This is why it is strategically vital for Labour to set out its fiscal policies openly and honestly before releasing its key policies relating to education, health and housing. The party first needs to settle upon a revenue target, and then upon the fiscal instruments it will use to achieve it. These may include Income Tax, Land Tax, Inheritance Tax, Financial Transactions Tax, Carbon Tax, as well as a much stricter regime for extracting an appropriate level of taxation from New Zealand’s largest businesses.

 

Unquestionably, making the case for progressive taxation is the most challenging task faced by any left-wing political party. But unless it is done, everything else that it seeks to achieve becomes moot. “Show me the money!” was the taunt which sank Labour’s chances in the last two election campaigns. Had Labour’s leaders been able to respond, with a wicked grin: “Well, John, as a man with $55 million in the bank, you’ll be among the first to show us the money!” Key’s taunt could have been turned against him.

 

Of course Labour’s enemies will accuse the party of practicing the politics of envy – but this old taunt can also be turned back upon its authors.

 

“If you’re talking about the poor envying the security of the rich: the certainty that bills can be paid; food afforded; a roof put over their children’s heads; then, yes, of course they envy them. And if Labour’s determination to extend that basic security to everyone is what you mean by the politics of envy – then we plead guilty-as-charged. But if you’re accusing Labour voters of envying those who lack any semblance of empathy, solidarity and generosity towards their fellow citizens, and who see in money and material possessions the be-all and end-all of human existence, then you are dead wrong. For Labour voters do not envy such New Zealanders – they pity them.”

 

The power of social-democratic politics lies in its refusal to allow the parties of the Right to escape the question that is so often put to the parties of the Left. “Where’s the money coming from?” The Right wagers everything on the ordinary voter not understanding the causal relationship between his or her own straightened circumstances and the ease and comfort of the rich. That’s why it is Labour’s political duty to point out the gaping hole in the Right’s policy framework. Namely, that the wealth accumulated by the rich comes from the people, whose hard work created it, and to whom it is only right and proper that a fair share be returned.

 

This essay was originally posted on The Daily Blog of Monday, 1 February 2016.

Justifying Progressive Taxation

About time Atlas shrugged? The creator of this 19th Century political cartoon had no difficulty in identifying who carries who in capitalist society. Ayn Rand notwithstanding, it is the countless millions of proletarian Atlases who prevent Capitalism's world from sinking. Progressive taxation is the price the capitalists' pay for keeping their feet dry.

IT’S ALREADY BEGUN – the wealthiest New Zealanders and their hired guns are already laying down a curtain of covering fire for what looks like being the most inequitable Budget since 1991. The report of the hand-picked Tax Working Group has already (and very predictably) recommended a reduction in the top marginal tax rate from 38 to 30 percent – to be paid for by an increase in the rate of GST from 12.5 to 15 percent. And to head-off the inevitable protests from the Left, the editors, journalists and columnists of the Right are already casting (here and here) the objections of the nation’s "progressives" as manifestations of "the politics of envy" and plain, old-fashioned class hostility.

And they’re winning.

Most left-wingers simply assume that "progressive taxation" – the more income you receive, the more tax you must pay – requires little or nothing in the way of economic or philosophical justification. It is simply presented as "a good thing" – like Motherhood and Apple Pie. If its defenders feel at all obliged to justify the fact that 44 percent of income tax receipts are extracted from just 10 percent of the tax-paying population, they do so by pointing out that this same group of taxpayers controls more than half the nation’s wealth. If their incomes weren’t redistributed by means of progressive taxation, the say, our society would rapidly become even more unequal than it is at present.

But, once again, the Left is assuming that everybody, like themselves, looks upon inequality as "a bad thing" – something which, if it can’t be entirely eliminated, must be ameliorated to the maximum extent possible.

But is this true? Do the wealthiest layers of our society, and those who aspire to join their ranks, really believe all human-beings are equal? Or that our society should be organised to give every one in it "a fair go"?

In my opinion, the answer to that question is: "No – they don’t." Reading the columns and blogs of the Right’s leading apologists, I get the distinct impression that the doctrines of Social Darwinism command a considerable following in this country. Just consider the reaction elicited by Social Welfare Minister, Paula Bennett, whenever she exposes the worst excesses of the beneficiary class. Think about the widespread support for Anne Tolley’s campaign to impose a test-based "standards" regime on our educational system – a policy which the upper and middle classes instinctively recognise as likely to rebound to their social and economic advantage.

No. I don’t think all New Zealanders view inequality as "a bad thing". Not at all. Not by a long shot.

The Left needs to ask itself how the notion of "the more you earn, the more you pay" ever got established. How were the upper and middle classes of modern capitalist societies ever persuaded to go along with fiscal policies so manifestly designed to limit both their wealth and their power?

The answers might surprise them.

For a start there was the enormous moral and social force of the Judeo-Christian and Islamic religious traditions. The Jewish prophets reserved their most devastating condemnations for those who refused to share their wealth with the poor; who "ground the faces of the widows and orphans". Jesus famously declared that it was "easier for a camel to pass through the eye of the needle, than for a rich man to enter the Kingdom of Heaven". Philanthropy was similarly mandated by the Prophet Mohammed – all Muslims are required to contribute to the maintenance of the poor.

In an irreligious age, and in a nation as secularised as New Zealand, it is easy to forget that, in the past, conformity with these moral precepts was a condition for the salvation of one’s immortal soul. Jewish, Christian and Islamic culture expected people to turn over a significant portion of their wealth to their less fortunate brethren. After all, to see oneself as a child of God more or less mandates a belief in equality and fraternity: if God is our father, then we are all brothers and sisters.

These fundamentally religious precepts flowed naturally into the secular faiths of democracy and socialism.

The French Revolution struck down the notion that inherited privilege had any legitimate role to play in the modern age. The new capitalist wealth, however, was earned. In stark contrast to the wealth of the aristocracy, argued the bourgeois revolutionaries, the capitalist’s profits were the product of individual wit and energy and, therefore, manifestations of democracy.

Classical Marxism dispelled this notion with a vengeance, imbuing wealth with the same moral taint as the teachings of Jesus, Mohammed and the Old Testament prophets. According to Das Kapital, the capitalists appropriated the "surplus value" of their worker’s labour in the form of profit – exploiting the new industrial proletariat no less ruthlessly than their predecessors, the feudal landlords, had exploited their serfs.

The progressive income tax was simply "social democracy’s" means of clawing back the proletariat’s pilfered sweat and talent. Not for nothing was the second of Marx & Engels’ ten demands in The Communist Manifesto: "A heavy progressive or graduated income tax".

The Right, at least, recognises the revolutionary political, social and economic objectives behind the institution of progressive taxation, even as it rejects and denies the religious and/or ethical justifications for its imposition.

In the months ahead, New Zealand’s left-wingers will have to learn once again what their parents and grandparents came to grasp only after long struggle and bitter experience: that equality and social justice are never simply given; they must be fought for – and won.