The rhetoric versus the reality

Is there any more inane yet toxic “fake issue” poisoning policy and economics discussion than the concept of income inequality? Is there an any more useless, deceptive and misleading measure of the strength of an economy and the welfare of a community than income inequality?

And should there be any remnant of doubt in the minds of fair minded citizens about the nefarious motives of the political progressive left, consider that addressing income inequality and climate change are the 2 principle political goals of the Australian Greens.  This despite there being no real income inequality issues in Australia and any Australian effort on climate change is pretty much irrelevant.  But who knew the Australian Greens were running for seats the United Nations.

Aside from Australia’s intellectual elite, consider also the following from Dr Kaushik Basu, Chief Economist of the World Bank from 2012 to 2016. In a recent contribution to Project Syndicate, under the title of The Ethics of Reducing Inequality, Dr Basu wrote:

Around the world, the effects of alarmingly high economic inequality are spilling over into politics and society. Economic insecurity is a driving force behind violent conflicts in the Middle East and the rise of fascist elements in some European countries, not least Hungary and Poland. Even in older democracies such as the United States, economic marginalization has led to a strengthening of chauvinist and supremacist identities and other social problems such as the opioid epidemic.

Did you notice the slight of hand? A slight of hand better than the average Las Vegas magician.

Start with a context-less and evidence-less statement about alarmingly high economic inequality and then seamlessly pivot to economic insecurity. How does one get from income inequality to economic insecurity unless one is pushing a barrow from point 1 to point 2?

One can quite easily have very high income yet feel economically insecure. Consider the cronies and oligarchs that may surround your run of the mill despot. They may be wealthy, but that wealth is at the caprice of the dear leader.  But I somehow doubt that this is the economic insecurity Dr Basu is talking about.

Now if Dr Basu was your standard anti-free-enterprise-pro-big-government member of the Glebe Branch of the Australian Greens, writing policy papers for the Australia Institute, readers would know from what perspective Dr Basu was coming; to Venezuel-ize Australia.  But as the former chief economist of the World Bank, he carries quite a bit of institutional credibility. But then again, it is rather unlikely that the World Bank would ever advocate for policies that would genuinely eliminate world poverty because otherwise where would a bunch of highly paid, no-tax paying development economists get jobs if there was no global poverty.

Income inequality and its evil twin sister (transgender brother) climate change are the policy carbuncles that actually perpetuate world poverty and ever expanding government.  But let us actually consider the foundations of this nonsense.

The work of their high priest, Thomas Piketty has been debunked and disproven several times, but much a parallel area of life, faith trumps evidence.

At a basic level, given the immutable laws of mathematics, there will always be a top 1% of income earners and a bottom 50%.  The thing is though, the people in the top 1% and bottom 50% constantly change.

It may come as a surprise to many Green voters, but a teacher fresh out of university does not earn as much as a teacher with 25 years of experience.  Over time, as workers gain experience, and other workers retire (or die), there is a general cycling of people in the income distribution.

Then there are those one off effects, you know like realizing a capital gain.  You started a small business in 1970 and have since drawn a modest wage.  Then on the cusp of retirement, you sell your business and realise a large capital gain (in lieu of superannuation contributions that you had to make for your staff).  Suddenly, for that 1 accounting period, you are in the 1%.

But don’t confuse people with details like that.  They are inconsistent with the narrative and thus must be ignored.  Is it not ironic that a bunch intellectual elites need to ignore evidence so as to maintain their intellectual elite status.

There is no doubt that the “fake issue” of income inequality is entirely about the envious nature of the progressive left and nothing to do with national welfare.

These people look around and see others they deem as being of lesser ability, intellect and morality having greater income and greater wealth and think it not fair.  In their minds, it is unfair that an uneducated immigrant running a fruit shop earns more than a PhD. in gender studies.  It is unfair that a smart phone app developer earns more than a social worker.  It’s just not fair.  It’s just not fair.

In their minds, righteousness has value and if the market does not reward it, then the government must take from those that don’t have it and give it to those that do.  And because righteousness is hard to count and measure, money will do instead.

It is also important that the economic myth of constant and increasing returns to education investment be proven, even if manipulation is required.  It must be that a holder of a Doctorate in indigenous basket weaving warrants a 6 figure income.  If not, there must be income inequality warranting income redistribution.

Cries about income inequality are seldom about the poor.  Much like other false equality targets, such as gender and race, it is about those in the middle believing it is their birthright to be at the top.

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31 Responses to The rhetoric versus the reality

  1. Spring is coming

    …since the 70s you’ve built your business to be the best little milk bar in the suburb. Then Woolies open their late trading store next door and overnight your ‘super’ is done.
    Anyone who gets out of small business with a nest egg, chappo to you sir/madam!

  2. stackja

    But don’t confuse people with details like that.

    Yes!

  3. egg_

    A slight of hand better than the average Las Vegas magician.

    Or the vanishing investigation into the Vegas shooter?

  4. Roberto

    Much like other false equality targets, such as gender and race, it is about those in the middle believing it is their birthright to be at the top.

    Beautifully put. This truth is the cause of all of progressivism’s angsts.

    And it’s sleight of hand

  5. Chris

    There is no doubt that the “fake issue” of income inequality is entirely about the envious nature of the progressive left and nothing to do with national welfare.

    These people look around and see others they deem as being of lesser ability, intellect and morality having greater income and greater wealth and think it not fair. In their minds, it is unfair that an uneducated immigrant running a fruit shop earns more than a PhD. in gender studies. It is unfair that a smart phone app developer earns more than a social worker. It’s just not fair. It’s just not fair.

    I think to play on the average leftist’s paranoid delusions of significance and of being ‘under attack’ we need to point out that those faceless men manipulate the more credulous leftists by appealing to their envious desire to tear down people who are paid more than they are, or have apparently more social status.
    When you see what kind of leftists are coming in to argue the toss at polling stations and you offer them a How To Vote Card, you would be shocked – monts is a stiched on rtational by comparison to their angry faith in their few talking points.

  6. Tator

    Nearly as fatuous as THIS EFFORT BY PER CAPITA AND PETER MARTIN saying the top 20% of income earners cost workers $37 a week in “tax expenditures”

  7. egg_

    I think to play on the average leftist’s paranoid delusions of significance and of being ‘under attack’ we need to point out that those faceless men manipulate the more credulous leftists by appealing to their envious desire to tear down people who are paid more than they are, or have apparently more social status.

    Bizarre in that the Left are now the establishment, which yoof seem to be waking up to.

  8. Perth Trader

    [Economic insecurity is a driving force behind violent conflicts in the Middle East and the rise of fascist elements in some European countries, not least Hungary and Poland. Even in older democracies such as the United States, economic marginalization has led to a strengthening of chauvinist and supremacist identities and other social problems such as the opioid epidemic.]
    This man knows its a fact that the ME is at war because of income equality ?….that Hungary and Poland are becoming fascist because of income equality?…that the population of the USA are overdosing on opioids because of income equality?…I can write sh*t up too and do it cheaper than this guy. Now that’s income inequality, better known as being paid what your worth.

  9. Dr Fred Lenin

    You get a lot of Batchelors of them yarts jealous because the plumber charges lots to fix their toilet,he hasn’t got a degree peasant, gets more than I do and I struggled through a yartz degree for four years four months of each year , The plumber only worked a full week with four off annually and a few days trade school, up to his knees in shit sometimes ,definately doesn’t deserve what he charges it’s not fair .
    Mind you he lives in a two story house in the outer suburbs worth 800k., I live in an inner suburb in a 150 year old cottage with no garden or backyard ,that costs a fortune to maintain and cost me $1.2 million ,with huge rates to the local green council to fight racism and dirty coal power ,so I’m more socially aware ,gives me a warm feeling being a world citizen .

  10. Bruce of Newcastle

    In a recent contribution to Project Syndicate, under the title of The Ethics of Reducing Inequality, Dr Basu wrote

    Ah excellent. I expect everyone in Australia will now be given the same salary as Dr Basu because equality. Did you say he was Chief Economist of the World Bank? That should be quite a yummy pay packet then. Oh look US$345,000 pa plus US$166,000 in super and other benefits. Wow that is yummy. We’ll all be rich!

  11. Bruce of Newcastle

    Tax free too. Wow the World Bank does pay well.

  12. manalive

    The Greens have a zero-sum model for the economy so how does Richard Di Natale propose his Universal Basic Income (UBI*) be financed, by note printing or wealth confiscation?
    * As with lately discovered medical conditions once they refer to something by its acronym it has ‘arrived’.

  13. Muddy

    egg_
    #2679113, posted on April 5, 2018 at 3:53 pm

    … Bizarre in that the Left are now the establishment, which yoof seem to be waking up to.

    It makes perfect sense. To minimise the risk inherent in attempting to influence change, one operates from a place of protection, in this case ‘the establishment.’ Theoretically, the consequences are absorbed by more than the single individual. Protection takes many forms, such as the rule of law, cultural norms, etc.
    Ask yourself how many of those who seek to influence radical change operate from outside the protections that a western, parliamentary democracy offers? Very, very few. How many feminists, for example, step outside the warm cocoon of our welfare system, our media, our structured and stable tertiary education system, and implement plans that will result in a change of practical outcomes regarding female genital mutilation? Without that establishment armour, they refuse to take any risks, and their fury amounts to little more than a weak, verbal dribble that evaporates in the sun.

    This is one of the reasons I quietly seethe when people still call these cowards Social Justice ‘Warriors.’ Yes, I realise that some claim the ‘warrior’ tag is (not sarcastic – the other word – bugger, I forget it right now), but that doesn’t always come through. True warriors risk everything, including sometimes life itself. Their motivation is irrelevant, the importance lies in the risk taken. One who risks little or nothing, from within the protection of the establishment, using others and institutions as shields, should NEVER be honoured with the title of warrior. We do a grievous disservice to true warriors, risk-takers in our name, both historically and in the present, by misusing the title. Please desist from doing so.

    * Rant Over.

  14. hzhousewife

    …since the 70s you’ve built your business to be the best little milk bar in the suburb. Then Woolies open their late trading store next door and overnight your ‘super’ is done.
    Anyone who gets out of small business with a nest egg, chappo to you sir/madam!

    Interestingly, it is the customers of Woolies who brought this about, and then they wonder where their kids are ever going to get a job, and not only that, this online shopping lark is so cheap, but look how dirty it is in China, all that pollution, and ! The aware ones line up on Saturday for an $11.00 handcrafted loaf of sprouted bread and an $8.00 organic pumpkin with a clean conscience lol ! Oh, and they donate to causes that work to end slavery too.

  15. I think this will not change until we have another couple of generations come through the education system with an understanding of logic rather than believing what feels good is true.
    A return to Euclidian geometry in the syllabus might be a good start but the teachers might have to learn some first.

  16. Shy Ted

    Sleight of hand, Spartacus, sleight, not slight. And while we’re on your spelling, it’s nonothingf**kwits, not Greens, nonothingf**kwits.

  17. Dr Fred Lenin
    #2679130, posted on April 5, 2018 at 4:34 pm

    Hey Doc, those plumbers which you speak of, we collectively call ’em “Bum Crack Bob and his Mrs Feral Cheryl.”

  18. BorisG

    I agree income inequality is a non-issue in Australia, but there are places, particularly in Africa, where this does matter. Of course the real issue is corruption but income inequality is an indicator.

  19. Ƶĩppʯ (ȊꞪꞨV)

    Grey Mao suits for all!

  20. Ƶĩppʯ (ȊꞪꞨV)

    The Greens have a zero-sum model for the economy so how does Richard Di Natale propose his Universal Basic Income (UBI*) be financed, by note printing or wealth confiscation?

    by renaming. Half the budget is already redistributions, how much more can a koala bear.

  21. Elizabeth (Lizzie) Beare

    Yes, I realise that some claim the ‘warrior’ tag is (not sarcastic – the other word – bugger, I forget it right now), but that doesn’t always come through. True warriors risk everything, including sometimes life itself. Their motivation is irrelevant, the importance lies in the risk taken. One who risks little or nothing, from within the protection of the establishment, using others and institutions as shields, should NEVER be honoured with the title of warrior. We do a grievous disservice to true warriors, risk-takers in our name, both historically and in the present, by misusing the title. Please desist from doing so.

    Good rant, Muddy. I think the word you are reaching for may be ‘ironic’ – ie. saying something with an emphasis that suggests you might be sending it up. SJW used in this way is a send up, not just of ‘warrior’ but also of ‘social justice’. The trouble with irony is that it is sometimes quite subtle and thus missed by the reader. Tell me about it. 🙂

    I’ve highlighted your point about risk taking. It is very well made.

  22. Perfidious Albino

    The pretend families in that Per Capita / Anglicare ‘analysis’ Tator linked to above certainly come across as very white bread and Anglo… where are Trevor and Steve with their spaniels, or Kalid and Fatima with their five kids and extended family? Someone should point out to Anglicare how unrepresentative of modern Australia and exclusionary their work is.

    No mention of how much net tax each family pays either apparently…

  23. Awake

    Probably there’s not much income inequality in Australia but I think what the economists generally refer to as income inequality is the “hollowing out of the middle class”, like what they say is happening in the U.S. Like in a graph the middle part is hollow, so in effect only two types of income earners the poor and the rich.

    I sometimes think extreme free market can be oppressive, like in the U.S. where people can become 3 digit billionaires and at the same time rigorously debating wether to increase the minimum wage to $12.

    Probably Australia got the balance right.

  24. Wozzup

    “Is there any more inane yet toxic “fake issue” poisoning policy and economics discussion than the concept of income inequality?”

    I have a motto for the inequality crowd – those who actually believe that inequality is an issue. (Let alone an issue that could actually be solved even assuming it should be).

    Here it is: “Lets Make Australia Poor Again”

    Because making everyone equally poor is the only way to “solve” inequality.

  25. Mundi

    The problem is the leftists don’t realise they are the cause, not the solution.

    The middle class is hollowing out because of industrial relations laws and regulation. Companies won’t dare move away from full time because of absurd burdens. So we see a shift to casual.

    The other reason is housing prices from regulation. With out these absurd prices our middle class would be the richest Middle class people in the world and in all history.

    It’s now common for the majority of the population to be paying over 30% to 50% of there income to land lords simply because regulation has created massive inequality in opportunity to get land near work.

  26. thefrollickingmole

    Next time one of the maaates party says something about “fair they need to be told “A Fair is what parents send their kids to to have fun, its time to stop being childish”

    Or “Affair, you mean what (pick parliamentarian of choice) had with Ms XXX before he abandoned his wife and family”?

    The word “fair” is a childish throwback to the playground and should be treated as such.

  27. Louis

    Apparently you can all shut up now because Waleed hath spoken on the topic. The Green’s policy is good.

    What alarms me about the UBI proposal is that it would only double our welfare bill. WTF! You mean we now spend so much on welfare that we are essentially providing a UBI to half of the population already. That’s a worrying figure.

  28. flyingduk

    I am all for reducing ‘income’; inequality in direct proportion to reducing ‘hard work and productivity’ inequality. If all the leaners became lifters, the ‘problem’ would go away.

  29. Yes, I realise that some claim the ‘warrior’ tag is (not sarcastic – the other word – bugger, I forget it right now), but that doesn’t always come through. True warriors risk everything, including sometimes life itself. Their motivation is irrelevant, the importance lies in the risk taken.

    I call them Social Justice Worriers.
    They worry about everything (so they say).

  30. When I want to be polite I call them sill juvenile wallies, otherwuse silly juvenile w…rs.

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