Friday, 16 May 2014

Australia what have you done? The Senate is full of idiots!

I was watching Lateline a couple of days ago and they had two future senators on the program, Bob Day of the Christian Family First Party and David Leyonhjelm from the libertarian Liberal Democratic Party.

Libertarians are all about personal freedom, small government and zero government regulation of the economy. Some of the policies of the liberal democratic party include legalising marijuana to scrapping income tax and introducing a flat tax of 20% on everybody. Now David Leyonhjelm has obviously been talking to Bob Day a lot recently and filled his head with a load of libertarian bullshit. Look at this quote from Lateline:

the optimum level of tax-to-revenue is around about the 20 per cent mark. But they could start slowly, commit to doing one per cent a year and watch the revenues flow in.

Watch the revenues flow in… Wow, if they cut taxes the amount of revenue to the government will go up! Why has nobody thought of this before? It sounds so ridiculous it must be true! I really don’t know what a Christian is doing is doing sprouting this crap. Maybe he believes that the poor are poor simply because they don’t believe in God or don’t believe hard enough - a religious version of the just world fallacy.

The idea behind this 20% flat tax is the belief that our economy is driven by the wealthy. The wealthy by properties, set up businesses and invest. This money is supposed to trickle down the economy and help the poor out as well. A flat tax is supposed to inspire people to be wealthy. A wealthy person may think this sounds good in theory but there are several things wrong with this idea.

There are a lot more poor and middle class people than there are wealthy. All these people have to pay to feed their families, pay rent - spend their money on all manner of things. This money adds up and it is all these people that support the economy not the wealthy. We have what is called a progressive tax system which means there is a tax free threshold up to $18,200 and we have tax brackets all the way up to $180,000. The top tax rate is 45c in every dollar over $180,000.

The reason for a system like this is to not tax the poor so they are able to live on the relatively small amount of money they earn. This in turn helps support the economy. The rich on the other hand are able to look after themselves they still get $18,200 tax-free and all the rest up to $180,000. It is assumed that by the time you have earned $180,000 it won’t hurt you to pay a bit more tax. I believe introducing a flat tax would destroy the economy and, if you take into account that most people are not wealthy, would probably raise more money than our current system does. So it wouldn't be the inspirational effects of a 20% flat tax that would make the revenues flow in, it would be the poor who previously didn't pay tax. There would be far more homeless people and everybody even the rich would probably be worse off.

Completely deregulating the economy would also have potentially catastrophic consequences. In an ideal world where everybody is logical, nice and put the needs of society ahead of their own an economy like this would be fine. Regretfully, the fact is that humans rarely put the needs of others ahead of their own, in that we are just like any other animal.

I used to play a massively multiplayer game called Eve Online. One of the features of this game was the most amazing artificial economy I have ever seen. This economy is completely unregulated and you would not believe how brutal it is. Scammers everywhere, you can literally not trust anybody. Stupid people are sent broke in an incredibly short period of time. Now these poor and maybe stupid people can stop playing Eve. The reason why I have brought this up is you can’t quit real-life as easily. Economic regulations and other laws exist to protect us from our own animal natures. Saying otherwise is self-serving denial. Yeah, I know not a very heart-warming conclusion, but that’s the way it is – deal with it.

Now, I’m not saying there are not many ways we can make the economy work better, be fairer, be more efficient and with less paperwork. The government should reform the economy, but you can’t throw the baby out with the bathwater.

And try not to vote idiots like this into the senate next time – they are there for 6 long years.

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