Thomas 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 Measham is a Melbourne-based social commentator who contributes regularly to Eureka Street. She tweets as @foomeister .