The Economy and that Tax

On and off this week I have had some thoughts rolling around that refuse to subside so it’s time to commit them to ink and get them out.

I will try my best to thread them together and hopefully the end result will resemble some form of coherent statement.

In the modern landscape of Politics more then ever words are the currency of public life, they shape our vision and how we see the world. This is an unfortunate state of affairs as words without action are hollow and lack purpose of meaning. All too often we get caught up in the marketing of the ideal rather then the ideal itself.

This is no more evident with the Greens and the Carbon tax, their words and ideal is to save the environment and yet they champion a policy which has absolutely nothing to do with the environment and everything to do with fiscal wealth creation.

Our political landscape some how has turned on it’s head, the ALP has gone bat shit crazy, the Greens have become intoxicated with their new found relevance and like the drunkard they stumble and slur their words. Tony Abbott and the rest of the Coalition are left dumb struck not quite sure how to respond so spend their time just saying no hoping an original idea will come to them in time to win the next election.

The ALP continue to push the goalposts further to the right in a misguided attempt to try and maintain the middle ground, today we have a Labor party that is more right wing then the likes of Katter’s Australia Party. KAP is trying to hang onto the traditional conservative ideals of the 1970’s which are certainly to the left of where the ALP finds itself today. Given this is the case one must wonder just how damn far to the right today’s tories really are when the ALP is doing their work for them and they still oppose it.

Lets take another look at the Carbon Tax, I’ve said it before it’s fiscal policy not environmental policy and it’s the fiscal policy of the right, it flies in the face of the social economy of the nation. What do I mean by the social economy? We in business often talk about the role of leaders, those that work on the business versus those that work in the business. The economy is no different, there is the social economy that effect us in society on a day to day basis and then there is the fiscal economy that economists talk about and play in.

The Carbon Tax is certainly fiscal policy but why has the message been changed, why is it being marketed as something it’s not? Well this is where the waters muddy, see the ALP are being deceitful and lack the moral clarity and conviction to come clean. They adopted this position in order to get the Greens to step in line so they could hang onto power and as a result they are treating us the punters as imbeciles.

It’s upsetting to me that the ALP and the Greens have a total disregard for the society in general. For them the means justify the end at any cost to integrity and honesty. The ALP just want to survive, and the Greens well they don’t care where the money comes from as long as they get their 15 billion to spend how they see fit.  At least the coalition is being somewhat honest, cause they have never cared about society and only ever been out for their own interests.

The perception in society of the Carbon Tax is based on a lie, and it only serves to strengthen the coalitions position, for them it’s win win. People don’t buy into the environmental message being presented to them as there is an ever receding pocket of ignorance about the environment.

I have always been and remain opposed to the Carbon Tax as an environmental instrument, it will do nothing to curb emissions and I have covered that topic before, but as a fiscal instrument of wealth creation I am undecided.  My gut reaction is I don’t like it but then I am not an economist and I live in the social economy and not the fiscal economy so I am forced to take my lead from history.

When I look at those that support the Carbon Tax as an economic reform I note with interest that one Paul Keating backs it all the way, this in itself affirms to me as a policy the Carbon Tax is about wealth creation and is well and truly planted in the sphere of the economists fiscal economy.  If it was anything else Paul simply wouldn’t have time for it.

Those on the right, that make up a great part of coalition would tell you the greatest treasurer this county has ever seen is Paul Keating and he did more for wealth creation in this country then any other single person. The frameworks Paul created in the 1980’s lead to the explosion of personal wealth in Australia.

Indeed Tony Abbott in September 2009 had this to say about Paul Keating;

“In terms of lasting achievements I think Keating’s greatest triumphs were as treasurer. I think his agenda as treasurer struck a chord not necessarily in the general community which was never especially enamored with economic reform but amongst those that think about public life, economists, academics, fellow politicians, journalists and I think Keating with Hawkes support did build many of the pillars of our present prosperity”

The reason the general community was enamored with it was it was in the realm of the fiscal economy and had nothing to with the social economy in which we find ourselves living, they worked on the economy not in it so when Paul tells us that he considers the Carbon Tax as just as an important economical reform as any of those he introduced you can rest assured this is all about the wealth creation. This is right up there with the national competition policy, the floating of the dollar, the end of centralised rates fixation and the foundation of central bank independence.

While the majority enjoyed some new fruits of these reforms by and large the rich got richer and their personal wealth exploded with the gap between those with and those without accelerating at great pace.

There is however a big difference in terms of what is going on now and what Paul did in the 1980’s. Truth… we have a lack of it.  German philosopher Friedrich Schiller said “only through beauty can man makes his way to freedom”.  The beauty of truth, the ability to step back and watch a sunset, the perfection of an idea, being able to slow down and observe and not just be caught up with survival.

This is what the ALP lacks, the clarity of truth and it is killing them.  The Carbon Tax could well be a great thing for our nation, if you believe the economists it’s the key new growth industry that will correct our two speed economy.  Everyone has heard about the two speed economy, Wayne Swann says it enough but I’m yet to hear it explained and why a Carbon Tax can fix it.

It would seem on one hand we have the traditional resources industries which are doing very well and really always have unfortunately they only encompass 20% of society leaving 80% of us in the services industries which of late are struggling, well melting down if we are honest.  The economists and the rich need a new way of jump starting the services industries, they need to replace the dead branches with new healthy ones and this is where the Carbon Tax comes in.

This adaption of the fiscal economy is set to pave the way for new mechanics of the rich, reforms and terms of trade after all it’s the price that allocates capital in the market that allows these large transitions to the economy to take place and of course history has shown us that the ALP are the best people to bring about economic change as they temper it with social justice.  Keating and Hawke while creating these new frameworks for wealth creation also ensured there were sufficient safe guards in place for all of society.

They delivered policy with truth and clarity of a bigger picture, it wasn’t about survival.  They floated the dollar, they introduced banks but the brakes they applied to those banks mean that today we have the four strongest banks in the world but at the same time they setup a system of enterprise bargaining and  industrial relations that held us in good stead.  We all know what happened when the right decided to mess with it.

The ALP made a error in dumping Kevin Rudd and we are all paying the price for it, but an error doesn’t become a mistake until you refuse to correct it.  Under Kevin Rudd we would have had an Emission Trading Scheme, this is the same as the Carbon Tax essentially but we also would have had social reform where the resources industries who are making billions in profits would have been paying their way.   Kevin Rudd had clarity and truth, sadly Julia and the ALP are now too concerned with mere survival to come up with anything of beauty.

There are some 50 days till the Carbon Tax comes in and I for one believe it won’t be that big a deal at first, the sky won’t fall in and it will be business as usual till it can create some traction for change and then we will see if it was a good or bad punt on the future.  More then anything though I would like to see truth returned to the ALP, to our politics in general.

I may touch this up over the coming week as my own thoughts and feelings become more clear but it’s a start.

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