It’s the late 50s/early 60s, things are good! Taxes are high, wages are high, inflation is high unemployment is almost non-existant and everyone is happy. We’ve never had it this good.
Oil is cheap, the population is booming, there is disposable income and the war is a distant memory for a young generation who are enjoying a level of prosperity with a wide base – the likes of which we haven’t known before. Take off your clothes, smoke lots of weed, go on a road trip with no money, it’s a revolution you know.
Working class people can own a house and a car, health and education are free, there is a massive expansion of the welfare state. And it’s all affordable because everyone is earning a good wage, the population is still quite diminished (although rapidly growing) so less people are placing demands on the service.
Tax and government are highly centralised thanks to the war effort, the top marginal income tax rate is just below 70% and there is loads of money to throw around. Lets make tertiary education free!
Then the mid-late 70s happen. The brutalised and over simplified version of Keynesian economics
we’d grown so used to fails us. Stagflation! And just when it couldn’t get any worse: Oil Crisis!! God damn it, it’s expensive to drive places now. How am I going to get to work if I am lucky enough to even have a job?
Quick, someone pick up that book written by Hayek, something about surfing, he said this would happen!
Roll on the 80s, a time of excess. Business is booming but everyone I know is still unemployed.
Globalisation! Deindustrialisation! Off shore the shit out of that industry! I’m rich!!
So on through the 80s and 90s: cut spending, lower tax rates and flatten them out while you’re at it. How did we get so bloated, sell everything! Business can run telecommunications infrastructure more efficiently than a government. Business is good, government is bad. Oh look, selling everything has meant that we’ve now got a pile of cash. We can still afford schools and hospitals, especially since we’ve cut all their funding as well.
Come to think of it people should really pay for the services they use, let’s cash in our future and start charging for a tertiary eduction. All these Art’s Degrees are just costing us money. Everyone I know got a free education, why should I care if ‘the kids’ get one or not – particularly kids whose parents didn’t go to university and can’t pay for their kids to attend. How did we get so carried away with upward social mobility in the first place?
Fast forward to the last five years: Debt crisis! The pursuit of growth has left the economy significantly over stretched. There are skills shortages. Our universities are propped up buy foreign students whose parents undergo extraordinary financial hardship to send one child to university in Australia giving Australian Universities enough revenue to function.
Unemployment rates spike, there’s a housing bubble created by baby boomers that decided to cash in on the 1960s boom period they grew up in and spend our inheritance investing in the now bloated property market. And who can blame them?
The population keeps growing at ever increasing rates despite birthrates being below replacement level. As it turns out it is much cheaper to have people in the majority world absorb the cost of training a doctor and then letting them immigrate to Australia. Poor countries pay for their education, we reap their fruitful and taxpaying years!
And we can do this for any trade with a skills shortage! I knew it was a good idea to cut spending on education. Importing the future of other countries is much easier.
So tax rates a low, the population is growing faster and faster – we need it to, how else do we ensure that the economy keeps growing. But how do we pay for the growing demands on public services? We can no longer afford to fund the services that people have become so accustom to.
Austerity measures! Cut public spending, it only benefits those that are still reliant on public services anyway. Pass on the burden of debt to those that struggle to get by while the wealthy hid behind tax loopholes. Come to think of it, the rich wen’t paying much tax in the first place, so why don’t we cut their taxes some more – that’s sure to stimulate growth.
So now the people are getting angry and taking to the streets. They’re occupying Wall Street! Their rioting in Athens!
Where to from here?
Tax the rich.