Gillard’s creeping Share-ia Tax and how it will destroy Australia


; Dan Nolan writes about the creeping share(ia) of our income that the Gillard Government is trying to take, and how it will destroy Australia:

One of the main memes that has been popping up over the whole ‘flood levy/tax/contribution/firstborn’ tete a tete, is that those opposing the levy are in some way some ultra-randian selfish pr**ks, who seek to do naught but spit on their fellow man and then ground the spit in with a boot until the victim is crushed underfoot in a pate of sputum and despair. This is disingenuous to say the least.

Surely those to be taxed deserve the right of reply,  as it is their money in the first place. Without the right to say ‘hang on a minute, this is my money we are talking about,’ 

we approach the unacceptable situation where the wealth that private citizens hold is simply an aggregate pool for the government to tap into at their discretion.


 Colouring those who wish to have an input as to how their money is taken from them and used, particularly in the instance where this confiscation is confined in a cynically political fashion to not hurt a party’s voting base, as selfishm or even evil is just playing politics for the sake of playing politics.
Say what you will about the motives of those wishing to oppose the tax, but you have no reason to not accept or even uphold the fact that it is their money in the first place. They will, as a consequence of this ur-lien have less disposable income (up to several thousand a year for higher earners).
Arguing that higher earners as a whole shouldn’t feel the pain is an argument of fiscal homogenisation that is as painful to witness as it is to draw to its logical conclusion. We very rarely can speak to the financial circumstances of others, and rightly so; that is their private information (though the government will take a grand exception to this as you would notice RE: income tax).

I’m loathe to tread the same ground that others have, but I feel that there is a primary point to be made in this situation, namely, in a free society, we have input into how our property is used.

It is all well and good to muckrake that those who oppose this levy are heartless or irascible towards government, but it is entirely unwarranted for those who are not targeted or hit by this tax to make criticisms of those who wish to take a moment to pause and reflect on the economic and sociopolitical implications of this tax.

The primary issue of this article is not to denigrate or attack those who think people who oppose this tax are in some way antithetical to the Australian™ way of life. Again, you’re perfectly entitled to your opinions, but it is reasonable to say that the people who are paying this increase in tax already pay a substantial amount in tax already. This is not a tax request ex nihlio, it is an addendum to the already heavy tax burden middle to high income earners pay in Australia.

The primary issue is that the Government’s response to any fiscal uncertainty is to increase taxes in a politically cynical move, to appear to be on the side of those harmed in the floods. Of course funds need to be appropriated for the rebuilding, but this is the same government that spent a ludicrous amount of money in stimulus programs that the Treasury begrudgingly admitted had a negligible impact on the severity  of the recession.

I will leave the arguments regarding economic impacts and moral hazard to other writers, but the point needs to be made that this tax exists purely so the Government can keep an election promise of maintaining a manner of fiscal reliability.

This is not a point of contention: it is a point of fact. The tax increase is purely in order to maintain an election promise. Of course the government has such powers of taxation within its purview, but it seems to me and others that soaking those who already pay a substantial amount of tax is a far easier method to raise the money than actually taking a long hard look at some of the ridiculous white elephants that continue to be funded by the taxpayer.

Many proposals on how to fund the reconstruction have already been made, but here are a few others: A very simple way to fund the required damages would be to scrap the plans for the internet filter (and the ridiculous source of funds that has been). Scrap the school chaplaincy program for savings of a cool few hundred million dollars. Oh, and substantially cut our military expenditure by removing Australian soldiers from Iraq and Afghanistan saving both lives and money as we try to win a battle that not even the Soviet Empire could win. Not only does reducing the amount of soldiers in battle reduce the overall military expenditure, but it also significantly impacts on the overall expenditures required for future medical and mental health of soldiers exposed to combat.

It would seem that there are countless government programs that, quite rightly, should be up for debate if Ms Gillard's claims of there being nothing else to cut in the budget are true.However, it is our right, as the very citizens that contribute to the coffers of the government through our labour, that we be able to question openly the validity of certain government programs and expenditures.

It would appear that the Gillard Government's lacklustre response to the budget imbalance in managing existing Governmental programs is one of a lack of imagination. It also would appear that those who criticise those who wish to question or protest how their money is spent suffer from a fundamental lack of understanding the concept of property rights.

Dan Nolan is a part-time Software Engineer and developer, student, economics enthusiast and a full-time troll.

The Left: Hoist by their own petard

Dan Nolan Dan Nolan on why the left on the internet is absolutely losing their minds, and why they brought this all upon themselves.

Were you to take at face value the grotesque outpouring of utter vitriol from the left-aligned members of the twitter cognoscenti, you would have thought Tony Abbott had taken up a policy of punching babies, burning down forests and beheading immigrants personally. At least, that’s what most sane people would take from the insane out roar of fury currently flitting around the twittersphere. Catherine Deveny, much reviled or revered for her candor even went as far as to state she would be committing suicide if Tony Abbott became PM. Though this does frivolously deal with the serious issue of suicide, such a statement is as utterly vulgar as it is utterly idiotic. You’d think the fact that Australians obviously thought both sides were pretty equal but wanted to put the boot into Labor for how they treated Kevin Rudd would be something people would be able to have a rational discussion about.

Though it is a trend for the blood to boil in all manners of politics, but these attacks on Mr Abbott seem to stem from the old-fashioned geek term of FUD (Fear, Uncertainty and Doubt). Abbott is portrayed as some manner of religious fundamentalist, and insane free-marketer ‘brutopian’ fantasist, or as a complete idiot who will burn this country to the ground with a gigantic grin from ear to ear. Whilst his religious beliefs differ substantially from mine, I don’t find them disgusting or repugnant as most of the virulently atheist crowd do on twitter, simply because he tends to keep them to himself, or at least not vote entirely informed by them. To put it simply, he’s a fairly moderate Catholic, interested in issues of Social Justice, and as a Catholic, issues of contraception and abortion.

It’s utter idiocy to speculate that we’re going to move back to the 1950’s because he’s now a potential candidate for PM. The ‘insane free-marketeer’, well that’s spoken to by his track record, he seems to be quite economically liberal (small-l) particularly in issues of the maternity leave scheme. Lastly, the cry that he’s in any way an idiot is unfathomable, given his quite impressive intellectual track record, in particular his Rhodes Scholarship. I’ve yet to meet a Rhodes Scholar who wasn’t less than whip-crack smart, and I’d challenge anyone to point to one that is in the slightest bit intellectually deficient.

The reason for this hair-pulling and furious insanity is much the same as the uproar regarding the partnership between the Lib-Dems and the Conservatives in the UK. The Guardian, which had put its cards on the table and supported the Lib-Dems over New Labour in the UK had its blogs beset with furious commenters saying that the Guardian need to apologise to its readers, asking ‘do the editors feel ashamed of what they’ve let happen?’. Whilst those of us grin and bear it when we are led by those on the left, those on the left feel utterly betrayed and show a manner of paranoia and revulsion regarding leadership by anyone even mildly right-leaning.

Much as the Lib-Dem voters in the UK guaranteed New Labour’s defeat, those of whom voted Greens locally as their primary vote guaranteed Labor’s electoral calamity on Saturday. This would normally not be an issue, as we have constantly speculated that those who vote Green vote Labor secondarily, but it was an interesting issue in this election where the Greens decided to not hand out HTV’s that specified particular preferences. Even Bob Brown himself said that preferences (at least in the lower house) were not something he put much credence in. Were the preferences to flow the normal way that Greens/Labor candidates speculate, we would almost certainly be in a different position. However, based on the current statistics (and some speculation on my part, surely baseless) it would appear that the split on Greens preferences was somewhat equally Labor/Liberal.

What this tells us, at least, somewhat, is that the Greens instead of being the normal bolstering vote for Labor, was embraced by the Australian population as somewhat of a protest vote, but the form of which they preferenced around 50/50 to the Liberals as well as Labor. Not only did the Greens come into their own this election ( with a substantial senate tally (9 as of the current estimates) and their first Member of the House of Representatives elected at a general election) but their current vote breakdown showed that the traditional greens supporter is slowly becoming a thing of the past. I’d posit that a great deal of greens voters, though pushing through a protest vote, are environmentally interested (and as Daniel Hannan says, the environment is too important to leave to the left), but the claim that the Left has over the environment, or progressive social policy is utterly fatuous.

Again, this is all speculation until the true figures about the preference flow can be determined, but it is certainly something to reflect on. To the left losing their minds on twitter and facebook and all around the internet, you brought this upon yourselves. Either in the form of the Labor party’s absolute complacency in regards to the will of the Australian population, or in regard to your claim to moral authority and moral governance. Their uproar of repugnance at the concept of Tony Abbott as PM shows how far away the average left-wing individual is from the wills of the Australian electorate. Though many voters may like the Green’s stance on electoral-wildfire issues such as gay marriage, or the treatment of refugees, when it comes to sound economic management and sound governance they know the economy is better in the hands of the right than anyone else.

Dan Nolan is a Software/UX Engineer at the UNSW and an avid follower of the political landscape in Australia.

Don’t ban the Burkha, embrace it

Dan-NolanDan Nolan on why we should strengthen relations with the Australian Islamic community.

It’s been a wonderful month of absurdities thus far, we’ve seen Brazil and Argentina knocked out of the world cup, we’ve seen Rudd toppled and replaced basically overnight, but the craziest thing we’ve seen all month is that wonderful whacky NSW politician Fred Nile coming out for female’s rights. No, not for abortion, or contraception, or for better processes in dealing with equal employment opportunities, but their inherent right to not be be-burkhad. Fred Nile, the original captain crazy has taken a moral and principled stand saying we need to ban the Burkha because women are being treated like cattle.

I’m not denying that there are a few cases where this is happening, but they’re almost certainly the edge cases. The other argument made on Menzies House by Senator Bernardi, was that banning the Burkha is necessary because otherwise people will wear them to rob banks. Not only do we set the real police on them when they rob the bank, they’ll have to answer to the fashion police as well. Really intelligent legislative thinking, targeting the edge cases to make people who are uneducated about statistics think that something’s being done. Sure the Burkha is a really, really divisive issue. It’s designed to be, that’s how the whole thing works. Women have covered themselves for centuries at the behest of modesty laws or religious texts, and only recently (the past 50 years or so) have we seen a shift away from this to a more self-determined view of how women interact with the greater world.

Personally I find the Burkha to be dehumanising, not just removing any sense of sexual attraction in the situation, but delving into uncanny valley territory. That and the fact that women in the blue ones look like ghosts from Pac-Man should be enough to give anyone pause over the issue. It’s downright odd interacting with people wearing Burkhas because it feels so awkward, it’s so unnatural, there’s a giant absence of body language and it’s really disturbing. I get that. There are two ways to go about dealing with this cultural divide, a legislative one and a community-oriented one. The primary issue with some Australian Muslims is one we are causing with this legislation and our attitude to them, we’re effectively ghettoising them and allowing the kind of strict religious adherence to come to the fore. Legislating against religious dress is not the way to deal with practices that we don’t find particularly beneficial. We effectively push those who do want to force all women to wear the dress further underground but give them a larger audience of aggrieved Muslims who feel teir right for religious practice has been impeded upon, because it has.

Most of these people came to this country because it offers them a greater deal of social and economic freedoms than their home country. Australia is free from war, widespread disease and famine and free from a roaming religious police, these are all points in its favour. What we need to encourage is a dialogue between the Australian Muslim and Non-Muslim community, to show that we don’t just ‘tolerate’ (which is a nasty word and a nasty concept) but embrace their ideas and beliefs, because we want to westernize these individuals. What do you think is more likely to happen, a rapid islamisation of Australia if we embrace and interact with Australian Muslims on a greater level, or a greater Liberalisation of their interactions with the greater Australian community?
 
This new crusade with religious fervour and people strictly adhering to religious rules is effectively a new development over the past 15 years in response to somewhat warranted trepidation in the face of thousands of terrorist attacks performed by people who claim to be doing the acts in the name of Islam. It’d be downright absurd if we weren’t somewhat worried about their motivations. As religion has become a lynch pin and a targeted point of Australian Muslims they have embraced it in response rather than distancing themselves from it because they feel it really characterizes who they are. In short, by continually attacking the Islamic community in Australia, we’re effectively providing a path for a potential radicalization of some elements within the population. 

The real goal for the Liberal party and Australian society in general is to continually interact with the Islamic community and, again, make them feel welcome and that they’re a part of our society. Invite them to party events, register them in your local divisions, organize events at mosques where MPs talk to them and invite their community to come to sports games and fairs. By showing people how open and welcoming Western Civilization is by acting in an open and welcoming way, Australians as a whole will be able to make substantial inroads into reducing the potential paths to radicalization. This embrace of their culture and discussion of their values in an open and honest way will almost certainly promote a Westernising of the Islamic community in Australia, and lead to an overall harmonious society for all of us to enjoy.

Dan Nolan is a part-time Software Engineer and developer, student, economics enthusiast and a full-time troll.

Where are the social groups for the right?

Dan-Nolan

There's no collective group for the young right to identify with, writes Dan Nolan.

Before you say the young liberals, just stop. The YL's are basically a recruitment base for the Liberal Party, populated with people trying to get ahead. I've met about 5 people in the YL's that have any degree of political understanding, let alone an ideology. It's where lonely hearts meet, or, more likely, where the despondent and those lacking in affection from anyone close to them retire to.

The point, for the most part, is this, those of us in the 'intellectual right' (in that we can both spell intellectual and feel humble enough to not want it to define ourselves) have no social holes in which to crawl. We've no groupings of intelligent and likeminded individuals to agree with, to share a drink with and above all, to mock those who disagree with us to! Whilst the left plaster the telegraph poles of the streets through which we wander with the posters of tyrrany we are left in silence… alone.

Tim, apparently, once wished to start a society called young and free. Think of it as a shelter for battered women, but for those who loved free markets regardless of how much he told you otherwise. You know, you liked him, he was nice, but damn if you mentioned Rothbard, you'd lose a tooth or three, you callous bitch.

The primary point of my wandering lexical analysis is this: we're… you know, we're bright young things, we know things and we do things and yet, we don't have a cohesive grouping in which to find ourselves. We're not ones known for activism or even, in the case of the vast majority of you, any modicum of inertia. We need something that we can rally behind, if not as an institution that will be at least, publically, liable for the wake of destruction and self-pity we leave behind us.

This is why I call upon you, the erstwhile commenters, to create the most glorious of names for our future collective. Comrades, sharpen your keyboards, examine your vowels and concatenate a series of consonants into the guttural yawn heard around the world. For if those least compelled among us to join a political cause cannot engage in a most self-beneficial one based on the narcissism of the self then the right is truly dead as an intellectual force.

Dan Nolan is an Engineering student at the University of New South Wales, and when he's not busy overindulging in the student life he spends his time explaining economics to anyone who'll listen.

A Podcast for all the fans

Given that Tim's taken the job of weekly linkmaster, I've decided to throw my own personal love into the fray, and that is the EconTalk podcasts containing Mike Munger. Mike's the head of Political Science at Duke University and is absolutely brilliant.

If you've got iTunes this should open straight up and you can get into it. My favourites thus far are on the Division of Labour, Price Gouging, Cultural Norms and Private vs Public risk-taking.

Mike Munger iTunes U Podcasts

If you have a love of or even a fleeting interest in Economics, it's like economics in one lesson for your MP3 player. Commenters, if you know any other good podcasts, please share!

Dan Nolan is an Engineering student at the University of New South Wales, and when he's not busy overindulging in the student life he spends his time explaining economics to anyone who'll listen.

Hoodwinked by Robin Hood

Dan-Nolan Dan Nolan argues why the campaign for a "Robin Hood Tax" is a bad idea.

In the UK there is a campaign that is starting to gain traction internationally. The campaign goes under the banner of the “Robin Hood Tax” and it promises to place a small levy (of less than one tenth of one percent) on all non-retail financial transactions in order to provide a pool of funds for overall social benefit. The idea, in and of itself, is not that new. It is known to economists as a Tobin Tax (named after James Tobin who proposed it in 1972) and it was meant to be a small tax on the great deal of financial transactions that occur between financial bodies every day. In its original instantiation it was meant to be a small tax on currency transactions to guard against speculation in the currency market.

Now this article isn’t for the full on anti-tax brigade that sees every extra tax as an awful evil. It’s not for financial or policy wonks that spend their days cruising mises or glued to bloomberg. It’s not worth my time or yours for me to preach to the converted. This article is for those people who saw the big banks being given a great deal of our money after they speculated and gambled away all of their capital holdings. It’s for those who feel ripped off or who feel that it’d be good to get one back for the little guy. I mean, it seems pretty straightforward, right, a small amount of money per transaction in order to provide a large pool of funds to reinvest into the community. Taking from the big fat-cats who won’t miss it and giving it to those who need it, it just feels right!

Now the standard argument against any of these taxes is that they push up the price of goods and services for consumers and thus never really hit the targets they are loosed upon. The fat cats make you pay for their tax burden and thus you never really see any overall gain for the little guy. I’m not making that argument, regardless of how accurate it may be because there are two very important but distinct elements in play when it comes to this idea of a Robin Hood tax. These come down to moral hazard (if we offer people a bailout they’ll play a bit fast and loose because they have a safety net) and what speculation actually entails. The moral hazard element has entered the game as Germany is considering passing a Tobin Tax on financial transactions, the revenue from which will go into a fund to provide further bailouts. 

On the face of it it sounds fairly reasonable, making the institutions pay for their own bailouts. However, if we listen to Bastiat we know there’s probably something more sinister lurking beneath the surface. Think of it as a sort of guaranteed gamblers insurance. You go out on the town with a few hundred dollars and decide to make a few bets at your local casino, a portion of which is dedicated to a gambling insurance which means if you bet all of your money and lose it all, well, you can pick up some money on the way out so you’re not completely out of pocket. 

So we’re making sure the reckless gamblers aren’t a drain on the rest of society and we’re giving them some cash to buy a kebab of consolation on what we’re going to assume is a walk home. The problem is if you know that at the end of your night you’re guaranteed a kebab and a consititutional as per the insurance in the situation, you’re guaranteed to act more recklessly. You’ll bet down to your last dollar because you know you’re eventually going to be at a situation greater than zero. This is the problem, the actions that you undertake are skewed because the consequences are mitigated, the worst you can get from your night out is a hot meal and some exercise – the best you can get is effectively limitless.

This dovetails nicely with the actual tasks that speculating entails. Speculators make thousands of transactions daily, most of which are essentially gambles. If they want to buy something they are assuming it is currently undervalued, if they’re selling they’re betting that it’s overvalued. Keep in mind they aren’t selling into some kind of Nietzschean abyss, people think that their valuations are wrong and are willing to put their money where their mouth is.

They’re performing an incredibly important market mechanism known as price discovery. Through thousands of these small transactions throughout the day the price shifts slowly from one point to another but trends to a final equilibrium. As people make smaller and smaller gambles the velocity of price change continues. Of course there is a moment to moment equilibrium and a market price based on the quantity and the trade spread, but the point is these people are effectively gambling to find the most accurate market price and are doing us all a favour. 

It might seem a bit weird that people staking and gaining huge fortunes on securities are doing us a favour if they discover something is worth less or more than the current trading price, but they provide the price signals that drive the entire economy. You may think this is all occuring in an abstract situation that will never affect you but you’re wrong. The prices of all the goods and services you consume, the components of products and the rates at which value add are purchased for are all intrinsically dependent on these speculators doing their job properly. 

Through their risks we discover whether financial instruments are overvalued or undervalued and they come to their actual price, meaning that you and I on the street are presented with the real value of the goods and services we consume and not an over or underinflated value. Price signals are paramount to how the ordinary person on the street uses their limited resources. Through finding the most efficient price, we all benefit, we’re all able to make rational decisions about how we spend our money and we’re all able to participate in the market.

This is where the Tobin tax and the whole moral hazard business come to a head. You see if the tax is on a percentage of transactions then it distorts the thinking that individuals in the market have if they’re making a small profit on individual speculations. Sure for securities that are heavily overvalued or heavily undervalued the impetus is there to trade, but for arbitration in fractions of a cent in value, there’s no net benefit. We effectively cripple the accuracy of price determination by placing an artificial limit on the resolution to which it can apply. The speculative force is entirely undermined. 

This coupled with a guaranteed safety net for overly risky speculation means that the impact on the price mechanism increases by an order of magnitude. If you know that there is a degree of taxation on a trade, you’re going to trade far more of a security you feel has a greater margin of profit or loss. Further, if you know that you’re guaranteed a kiss on the cheek and a cup of milo if you scratch your knee open while being stupid, you’re more likely to be even more risky, meaning that you’ll jump at the chance for profit through arbitrage in utterly senseless deals. It also means that you’ll look for situations where you can leverage your guaranteed outcome with a higher profit, meaning people will make riskier and riskier deals, completely shifting the overall values within the entire market.

The perfect example of this is in Dubai (Which has one quarter of the world’s cranes) where individuals thought that the current credit rates (inflated due to over-zealous speculations) meant that building could continue indefinitely. The thousands of half-finished building projects and stagnant cranes are a testament to how efficient this skewed speculative binge was. More importantly, the scope of the bailout benefit is limited to the securities market, meaning that other high-risk investments (Such as in a search engine startup named Google, or in small businesses) are less attractive than the guaranteed safety net of the securities market. 

A Tobin tax isn’t merely a flat tax on the rich to give to the poor – the equivalent of a serf sneaking a sip of wine from the goblet of his master. That’s how it’s being sold, but as Ben Goldacre says “I think it’s a little more complicated than that”. Sure it sounds brave and roguish and downright even a little bit romantic, but that’s only if you ignore the wider impacts. What’s the use in having this extra money if there are no reliable signals through which to spend it.

Dan Nolan is an Engineering student at the University of New South Wales, and when he's not busy overindulging in the student life he spends his time explaining economics to anyone who'll listen.