I have voted Green more often than I have voted Labor (I’ve never voted for the party I’m a member of, but that’s because there hasn’t been a candidate in my electorate yet). I do so for a number of reasons – environmental issues are not given sufficient consideration by the major parties; the Greens are generally liberal when it comes to social issues; and I want minor parties of all persuasions to have more say in our democracy, which suffers from the 2-party rule we have been afflicted with for so long. However, there is an area where I diverge strongly from Green orthodoxy – economics. Not many people have a solid knowledge of Green economic policies, relying on the watermelon stereotype and the generalised slurs repeatedly made by the mainstream media, so I thought a rundown of some egregious examples would be useful.
With reference to the Australian Greens website:
Implementing all the policies from the Corporate Governance section would represent a substantial increase in the cost of doing business in Australia for dubious gain. It would likely reduce investment by some smallish-but-uncertain amount. That’s not terrible by any means, but something that is preferably avoided if possible. The apparent presumption is that the capitalists are all fat cats who can and will jump through regulatory hoops without changing their behaviour. There would also be a substantial increase in government expenditure if this wishlist was granted. I know lefties don’t see this as a problem, but that’s because they’re either ignorant of, or recklessly indifferent to, deadweight losses.
The Economics section is even more problematic. Item 22 reads, in part, “removing Fringe Benefits Tax concessions which promote increased use of motor vehicles”. Clearly the concern is the increased emissions from more car use, but I recall an outcry from charities at the suggestion that the FBT would be abolished, because having access to it meant they could afford more employees than they otherwise could. Without it, they could not sustain staffing levels, with deleterious knock-on effects for those they seek to help. Another part of 22 says “introducing a tax on extreme wealth applied to the wealthiest 5% of people.” No mention of the rate, so it hardly looks well thought out. Personally, I like the idea of everyone paying tax in proportion to their income – that is, a flat rate – because that seems fair. Apparently the Greens have a different sense of ‘fair’. Fair enough
Item 28 says “return the company tax rate to 33%”. That would be a tax liability increase of 10% (30 going up by 3). It would go against the international trend, which isn’t easily dismissed. Now, company tax rate isn’t the only consideration for firms, but its effect would not be neutral, especially since loopholes and concessions are also targeted (which I applaud on principle, but obviously the libertarian rationale is quite different to the Green one).
Items 33 and 37 are just plain bad. Divesting companies of assets if they are deemed to be “abusing” market power? All “natural” monopolies in public ownership? These are the kinds of things that make people turn away from the Greens in disgust at economic illiteracy. First of all, who decides what is abuse? Governments have often been pressured by interest groups to declare low prices “abuse of market power”, when clearly they are just competition in action, benefiting consumers. Secondly, natural monopolies are rarer than lefties imagine, and who decides that a given situation fits? The government who stands to benefit? Hi there, let me introduce you to my friends Conflict of Interest and Principal-Agent Problem.
Item 38 is trying to take us backward to a mythological golden age of manufacturing, while contradicting itself with regards to developing countries. “[S]trengthening of Australian manufacturing” means an industrial policy – protectionism, in other words, a discredited and outdated concept. As well, it’s backwards in the sense of the march of economic progress. Item 40 is dog-whistling, and doesn’t recognise the benefits of competition. It implies our public life is subject to the (sarcasm alert) dastardly, inhuman, money-grubbing clutches of cutthroat competition. That, if you’ll forgive my French, is bullshit. It also discounts the good things competition can do to the structure of incentives when it comes to the allocation and preservation of environmental resources, something I’ve blogged on several times.
In the Employment and Industrial Relations section, item 40 (banning secret ballots) is undemocratic, 42 biases the system towards employees with the fallacy of “unfair dismissal”, and 44 will increase unemployment because some employers can’t afford high loadings or non-casual workers. Apparently the Greens are taking the union position of advocating for better pay and conditions for those with jobs, forgetting those who don’t have them and are effectively barred from the workforce because they aren’t able to return in profit to the employer what they cost under a high-pay regime.
Items 46 and 47 are useless because don’t recognise the origins of the gender gap in remuneration – men and women are actually different. We already have equal pay for equal work legislation, and the reasons why women are – on average, in aggregate – paid less than men have little to do with sexism, the patriarchy, discrimination, etc. I can’t cover them in this post, but I might return to the subject at a later date.
Item 51 – “use a combination of government job creation and industry policy to achieve full employment and job security for all who seek employment” is out-and-out misguided socialism. Note there is no mention of specific mechanisms for achieving this lofty goal. That’s because THERE ARE NONE. At least, no sustainable ones exist. A country could try, and maybe get some success initially, but the key problem with socialism is – eventually you run out of other people’s money.
In the Global Economics section, items 11 and 12 will impact on the wealth of Australia and developing countries. Reducing trade (the actual outcomes of the proposals) will inevitably reduce the generation of wealth for all participants. Item 16 is a doozy – by encouraging “economic development strategies that encourage self-reliance” it will decrease specialisation, and therefore comparative advantage, and decrease reliance on foreign technology. That will, ironically, increase energy use and carbon emissions, while decreasing economic efficiency in developing countries and therefore worsening their situation. Item 17 goes against recommendations from independent NGOs and charities (assuming ‘exploitation’ is used as lefties typically use it, ie not in its proper sense). If you want to reduce child labour, help poor countries get rich. Not trading with them (see above) is obviously completely counter-productive. Item 24 is a can of macroeconomic worms that I don’t have the expertise to comment on, but is phrased glibly without any consideration of the possibly very large negative effects.
Overall, Greens economic policies show they are not thinking holistically about first- and second-order effects. Also, putting them in place would entail a MASSIVE increase in regulatory oversight and expense, something barely alluded to in the policies. Finally, some innocuously-phrased policies are slipped in as if they nothing very much, but would actually mean radical lurches to the authoritarian left (in economic terms).