Sunday, May 15 (2)

Duncan's question on Q & A on Monday, or rather the heavy-handed responses from some of the panelists, attracted some comment.  Michael Bradley, a corporate lawyer, posted his article on Thursday.  He made some important points.

The 'tax break' on the purchase of a $6000 toaster which theoretically will allow a coffee shop owner to employ more staff is only a timing benefit.  She, in fact, will still write the same amount off her tax, only more quickly.  There is very little net benefit over time. It's a worry that the Assistant Treasurer even thought this was relevant to the particular question.

Second, trickle-down economic theory is a con.  The only reason that business owners employ more staff is if they will produce more profit.  His final comments were:

Wealth is now concentrated at the top to a greater extent than ever. Further, the International Monetary Fund found in a study last year that, as more money is pushed towards high income earners, economic growth actually slows down. The facts unarguably demonstrate that the theory of trickle-down economics is, as Nobel Prize-winning economist Joseph Stiglitz describes it, "absolutely wrong".

It's this simple - if you give money to the rich, it makes them richer. The small part of that wealth which they choose to apply to discretionary spending adds vastly less to the economy than what it loses from the ever-increasing concentration of wealth. To put it another way: how much jobs and growth is created by one rich person paying another rich person $30 million for their harbourside house?

It seems strange that we're being sold the benefits of an entirely discredited theory by a party and Prime Minister who claim to be the experts at this economics stuff.

Duncan asked: "Why don't I get it?" The answer, Duncan, is that you're not supposed to. It's a private joke.