Whose liberty matters as Dickensian budget looms?

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Thomas Piketty's book Capital in the 21st CenturyThomas Piketty is the epicentre of a seismic wave in economic discourse prompted by the publication last March of Capital in the 21st Century. In this book, he and his colleagues show that, among other things, wealth accumulation is not benign. They argue that current conditions have set us on track for a return to 19th century-levels of inequality, where inheritance — not labour, earnings or merit — determines quality of life.

Going over the Commission of Audit proposals, I couldn't help but think that the auditors and the Coalition Government seem keen to expedite this neo-Dickensian era.

Mandatory co-payments for GP visits, increased co-payments for subsidised medicines, students paying more for higher education, lowering HECS repayment thresholds to the minimum wage, with the minimum wage itself cut from 56 per cent of average weekly earnings to 46 per cent, pushing back the pension age as if increasing life expectancy matches capacity for work ... the list goes on and on and on. It is death by a thousand cuts, unless you have the wherewithal to pay.

For all the rhetoric about everyone pitching in to 'repair' the budget, it is clear the burden is to be inequitably borne. The audit, for instance, barely nips at generous superannuation concessions for the wealthy, deferring these for a later 'review'. With the Budget due in less than a week, tax breaks won't soon be rationalised.

Meanwhile the 'budget emergency' being used to justify historic changes to welfare — but not taxation — is unconvincing. Australian social expenditure at 19.5 per cent of GDP is lower than in OECD countries such as Germany, the UK and Italy. The deficit itself, as a percentage of GDP, is within the lower range internationally.

None of the chief economists interviewed recently by Fairfax think an urgent return to surplus is warranted, which exposes it as nothing more than a political fetish. Moreover, the structural changes they propose for addressing the deficit have nothing to do with social expenditure: abolishing negative gearing, taxing trusts like companies, broadening or raising the GST, reducing the capital gains tax discount and tightening superannuation tax breaks for high-income earners.

These ideas aren't as dramatic as Piketty's proposals, which include 15 per cent tax on capital and 80 per cent on very high incomes, nor do they directly confront the inequality that concerns him. Yet both sets of ideas highlight taxation as a key approach to self-perpetuating concentrations of wealth during periods of slow growth and permanent demand for universal services and social benefits.

This is where small-government ideologues tend to expose their moral inconsistencies. Government withdrawal is seen as a virtue only when it comes to the welfare system, not the fiscal structures that favour capital-holders. In this scenario, Piketty might say, we end up rewarding people for nothing more than being heirs, while penalising those without a cent of inheritance.

It's all done in the name of 'incentives' toward 'personal responsibility'. This proposition cannot remain coherent in the face of those who will be hit hard by the proposed suite of cuts and co-payments. Subsidy levels over the past decades have enabled most Australians to make a living, complementing their resilience in times of sickness and joblessness. It works. We only need look across the Pacific to understand what might have been.

In this light, the 'social state' is not something that interferes with individual agency, as ideologues might argue. It provides liberating conditions for it. For people born into disadvantage, not having to think twice about visiting the GP for a persistent cough, not having to abandon dreams of attending university due to expense, not having to be anxious about having a roof over your head because your wage covers rent — these constitute a far more meaningful conception of freedom than most libertarians would concede.

Inequality patently limits the choices for those on the margins; social programs that reinstate such choices can only be read as emancipatory.

The thing is that 'classical liberals' are actually on the right track, as far as expressions of individual dignity goes. It is here that liberalism intersects in quite a peculiar fashion with liberation theology. Both emerge from historical periods of state excess and seek to correct it. Yet they arrive at different conclusions: while liberalism thereafter frames government as an instrument of oppression, to be limited as much as possible, liberation theology (or at least a reading of it) reframes it as an instrument for social justice.

Should the Federal Budget next week and the coming years adopt the recommendations of the Commission of Audit, it will demonstrate that limited government can in fact be oppressive but only selectively so. The question that follows is: whose liberty matters here?


Fatima MeashamFatima Measham is a Melbourne-based social commentator who contributes regularly to Eureka Street. She tweets as @foomeister and blogs at This is Complicated.

Topic tags: Fatima Measham, Thomas Piketty, Joe Hockey, liberation theology, Budget 2014

 

 

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Fatima Many thanks for what for me was an insightful opinion piece which compliments what others are saying about the fact that the supposed "trickle down" has become a slow "trickle up"
Brother Richard Dunleavy | 07 May 2014


For the vast majority of people, income = expenditure, with negligible savings. There's no point hammering these people, the government will just succeed in driving them to ill-health and towards penury. The only people with discretionary income are those with high incomes and accumulated wealth - these are the people for whom it is possible that income > expenditure; that is, income = expenditure + additional savings. Now, Mr Hockey, go figure: surely your Catholic background has afforded you an awareness of social justice?
David Arthur | 07 May 2014


An extremely perceptive critique, Fatima. I had always thought that some of the economic policies being touted by the current government, if fully implemented, would result in a much poorer lifestyle for the average voter. It is interesting seeing who is on this Commission of Audit and what their backgrounds are. One member, Peter Boxall, did his PhD in Economics at the University of Chicago, where Milton Friedman was a seminal influence on the department. Whilst I am not particularly into liberation theology, as I think, like most theology it can go terribly wrong (like Economics), you are quite right in naming Dickens as the most effective critic of the economic and social policies of his era. Dickens had a sense of social outrage at the inequities of his time. I think Australia desperately needs a collective sense of social outrage, similar to what Dickens and the more sensible (non-Marxist) liberation theologians had. I can remember when this country was a more just and equitable one. It took a long time and much effort to get it there. It would appear that there is a move afoot to make it less just and equitable. I am flabbergasted.
Edward Fido | 07 May 2014


A pendulum swings one way and then the other. The bible, (2Thessalonians 3:10), says ,"If anyone is unwilling to work ,neither let him eat" This seems to have been taken to heart by the USofA, which the Government strives to follow. The other extreme of the pendulum. enables some young people to say, "I can get just as much money from Centrelink if I don't do any work." Two things seem to be needed. 1.greater distinction between those unwilling to work and those unable to find work; and 2. a method to awaken in people the benefits and satisfaction that come from work. Somewhere between the two extremes needs to be found.
Robert Liddy | 07 May 2014


Thank you so much, Fatima. You have articulated clearly all the suspicions about the commission of audit and Abbott government budget proposals that I had not been able to clarify for myself. And I really do love the term 'neo-Dickensian'. Wonderful!
Paul Collins | 07 May 2014


A beautifully written essay which goes to the heart of the conflict between liberal philosophy and neo-liberal ideology by posing a question the latter ignores: If the best political theory gives priority to the freedom to choose one’s path in life, then fairness argues for all to have this choice. One cannot disentangle these values. The author’s account of the Audit Commission's budget proposals highlights this lack of coherence and reminds us that an ideology is, in the end, an interpretation of ideals set in concrete, usually because group interests have prevailed over community values.
max atkinson | 07 May 2014


Here we go again! We had Bob Brown and his little helper Kevin Rudd doing everything possible to destroy our economy by wasting as much as they could. The managed not only to spend every single cent saved up during the Howard years, the managed to even to get Australia into debt. Compare this to Norway, which like Australia is also benefiting from massive natural resources is investing most of the money in its future. Not our little narrow minded Bob Brown and Kevin Rudd! They believed that pork barrelling would enable them to rule forever. Thankfully, Australians are not as stupid and wanted to stop the massive deadly, expensive and wasteful support to the people smuggling industry. If we want a change in our tax laws, we should have a lot better look at some so called charities and religious institutions and may have to look to have an inheritance tax.
Beat Odermatt | 07 May 2014


What's behind that word co-payment? What does ilt mean? Does 'co' mean 'extra'? Is it intended to disguise the fact that it is actually a payment? After all, if it is something to be paid, that's what a payment is. How about refusing to use that prefix co, people, and just call a payment a payment.
Gavan | 07 May 2014


Great piece, but it is all based on assumptions. Let's wait and see what the Budget actually delivers. So far, it has been a classic political ploy: extremely bad news leaked to the media so we will be relieved when it is not as bad as we thought.
Tony Burnell | 07 May 2014


A well written article highlighting the neo-liberal ideological bent of the razor gang. The recommendations are made by individuals with no compassion and empathy for those who are struggling in 21st century Australia. These are evil people.
terry Stevenson | 07 May 2014


why this obsessive fetish about balancing the budget, yearning for the good old Howard/Costello years? There may never be a return to such an idyllic state, and then what? Sell off all public assets, privatise whatever else is left standing, including the remains of a once proud and professional public service, and then what? More austerity, a la Greece and Portugal, for nothing??
walter p komarnicki | 07 May 2014


"They argue that current conditions have set us on track for a return to 19th century-levels of inequality, where inheritance — not labour, earnings or merit — determines quality of life." I haven't read the book. I suspect I won't need to. But in case it has the irrefutable evidence, please supply: can anyone tell me, which centuries previous to the 19th had higher rates of rags to riches? My reading of economic history is that the 19th century, particularly Dickens’ England, the U.S. and Australia (among others) were distinguished in world history for the unprecedented rise in quality of life of all, including the working classes. Is my data wrong? Does someone have data that the poorest in England or the U.S. or Australia were worse off in 1900 than they were in 1800? Peer reviewed evidence, please.
HH | 07 May 2014


Further to my comments above: thanks to the rise of capitalism, the 19th century was the first century in which inheritance, as long as it had been a custom, actually LOST its position as the chief determinant of the quality of life. This did not pass unnoticed by the losers, the “old money” men. Manifestations of early capitalism such as the factory system were bitterly attacked by the upper classes, represented in parliament by the Tories, with trumped up-data. (For example the Sadler’s Committee report, which even Engels rejected as fraudulent, but which was uncritically embraced as gospel in the twentieth century by leftists such as the Hammonds.) This hostility was not just a matter of snobbery. The landed gentry resented the rise of the “nouveau riche” middle class not least because it was being forced by them under the emerging capitalist order to renegotiate agreements with its farm workers, attracted in droves by the better wages and conditions being offered in the new industrial centres. It would be highly amusing to observe Leftists such as Piketty rehabilitating debunked fabrications of the upper class, were it not for the fact that the poor inevitably suffer from the policy initiatives those myths inspire.
HH | 08 May 2014


Poverty that gradually gets worse within the working class and spreads to the middle class, can lead to a world war. Look at your history, folks. It's all there. We bring war on ourselves, by allowing, even encouraging governments to operate the economy by stupidly focussing on a so-called "deficit", and deserting the lower classes. It just doesn't work.
Louw | 10 May 2014


David Arthur, I too wonder how these "Christian" politicians can simply overlook the teachings of Jesus Christ - the story of Dives and Lazarus is important here - they simply don't see the poor man at the gate! Too intent on their own importance and position (a position they want to keep!!). I am not a Catholic but I am appalled at those who claim to be "Christian" Catholic or other to be making these decisions based on the questionable economic information they are giving us (which I don't believe as I listen to many economists), Lets keep prayer going for a Government who cares for the "little people" -who? LNP? - Labor? or some other? - Who knows! But let us not be silent when it comes to injustice.
Jan Taylor | 10 May 2014


When Mr Abbott was at Davos, with the world's wealthier 1%, he said they had done a good job lifting people from poverty, now all we need to do is lower tax rate. It seems he tries to keep his word to some.
Jude Silber | 11 May 2014


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