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Information is dangerous for neo-liberals

On Friday, I reported that a senior psychologist working in the off-shore detention centres was alarmed at the growing mental health problems of children of refugee-seeking parents who are detained with their families in these hell-hole prisons that Federal Government has set up in PNG and elsewhere. I noted the doctor had admitted to a National Inquiry that he was told by the Department of Immigration to take out some of the damaging research evidence covering the incidence of mental illness in the off-shore refugee prisons. Here is a followup of how systematic the government is in using its power to repress the release of information that might alter the public perception of its competence and desirability.

In terms of the previous story, the Government is now denying it suppressed the data – in other words, they are calling the doctor who was giving evidence before a national inquiry, a liar.

It was reported yesterday in the Fairfax press (August 3, 2014) – Morrison questions doctor cover-up claims – that the Minister (Morrison) claimed that:

I mean, in these meetings there is always two sets of versions of what has occurred … What they’re working through is a process to get the best possible reporting of mental health in these facilities.

Which is one of those denials that you give when you don’t actually deny what was said. Of-course, he would not admit to suppressing the evidence.

There was a disturbing story in the relatively new publication on the Australian scene – The Saturday Paper – last week (July 26, 2014) – a href=”http://www.thesaturdaypaper.com.au/news/politics/2014/07/26/brandis-ties-ngo-funding-non-advocacy/1406296800″>Brandis ties NGO funding to non-advocacy – that extends the way the Government is behaving in this regard.

I have written before about how the conservative Federal government that were in power between 1996 and 2007 altered the rules about research commissioned by the Government.

Prior to their tenure, the main policy departments (Employment, Social Security, for example) would issue public tenders for research that they wanted done. Groups such as my own centre, CofFEE would compete for the projects.

If successful, a contract would be signed but the only real constraints I can recall are that the Government reserved the right not to publish any report that might be submitted.

The system was then changed when the conservatives took over. A panel system was devised whereby researchers competed to be on the panel. The Government would then ration research out to its panel once assembled on a discretionary rather than competitive basis.

But the panel tendering process specified that the Government reserved the right to alter findings, substitute its own ‘findings’ for the original research outcomes produced by the panel member, substitute entire reports and release then under the contract (that is, to make it look like the report was from the non-government researcher), not publish at all, among other restrictions.

My group did not tender to be on any panel as a result. I have always refused to participate in processes that will alter my research for political purposes. As a result, my centre received no funding from these sources and we had to find alternative ways to pay our way.

The exercise was clearly one of censorship

The ‘Saturday Paper’ report tells us that the Government are back to their old tricks after being returned to office in September 2013.

We learn that the “Abbott government is using money and law to close down criticism and gag the community’s most trusted voices”.

How?

The previous Labor government, for all their shortcomings, has inserted a clause into the service agreements that cover federal government “funding to community legal centres around Australia” which said:

The Commonwealth is committed to ensuring that its agreements do not contain provisions that could be used to stifle legitimate debate or prevent organisations engaging in advocacy activities.

… [N]o right or obligation arising under this Agreement will be read or understood by the Commonwealth as limiting the Organisation’s right to enter into public debate or criticism of the Commonwealth, its agencies, employees, servants or agents.

It also stipulated that there was no obligation to obtain any advance approval from the government before going public with any criticism.

Guess what? No surprises, the new conservative Government deleted that clause and have since replaced them with new conditions (that came into force on July 1) which:

… specifically state that organisations cannot use Commonwealth money for any activity directed towards law reform or advocacy.

What are they afraid of? Everything! So illegitimate is their policy agenda and so contrary to the evidence base that the last thing they want is for the public to get wind of what is going on.

This is a party that allegedly believes in the ‘market’, which requires excellent flows of information to even approximate the desirable properties that mainstream economists claim for them.

Totalitarian regimes suppress information. We are not there yet but that is the flavour of the Government.

Even the market-oriented federal Productivity Commission:

… found advocacy was actually an efficient use of resources. That’s because it addressed systemic issues rather than just individual cases. Thus “by clarifying the law it can also benefit the community more broadly” … over the years a long list of worthwhile reforms, from tenancy laws to laws relating to domestic violence, have been driven by community legal organisations.

The Government claims that they have to cut spending and as a consequence “frontline services” have to be maintained and advocacy should not use the scarce dollars.

So they use the neo-liberal funding myth as a smokescreen for their desire to suppress information.

If the progressive side of politics hadn’t fallen hook-line-and-sinker for the neo-liberal macroeconomic myths then they would be better placed to demonstrate how the only motive of these sorts of changes is to stifle debate and inhibit access to what is going on.

The Saturday Paper also reported that the Government is using the “tax authorities” to gag the activities of charities and other groups likely to advocated on behalf of disadvantaged citizens or broader clauses such as environmental issues.

Canada is already seeking to remove tax exemption status from not-for-profit groups if they are troublesome. The Saturday Paper reported that;

Environment groups appear to have been the main target, although a wide range of other organisations, working in the areas of animal welfare, education, health, human rights and even poverty alleviation, have been subject to audit. The process has had a predictably chilling effect on charitable advocacy.

The previous conservative regime in Australia tried to attack “AidWatch, an organisation that researches, monitors and, importantly, campaigns to generate public debate about the effectiveness of foreign aid” in this way and lost in the High Court.

But they are trying that avenue again – their latest target being the – Hunger Project – which is a collection of not-for-profit groups that aims “to break the cycle of poverty”. Once again the Tax Department lost the case – again. But they will keep trying.

At the recent Federal Liberal Council (the Liberals are in Government) a motion was passed unanimously that:

… eco charities be treated as corporations under consumer and competition law … should not be eligible for deductible gift recipient status when advocating political issues.

This will reduce the capacity of a number of green groups to advocate climate change and conservation issues.

The Government is broadening that attack though. The May federal fiscal statement cut funding to a number of areas where high-profile and troublesome not-for-profits operate.

As The Saturday Paper concluded:

Not under this government. No criticism allowed.

Government attacks its own data

The May fiscal statement was deeply iniquitous not to mention ridiculous in the context of the state of the economy. The fiscal deficit should be approximately twice as large at present. But the austerity-bent Government is heading in the opposite direction and has targetted the poorest citizens in their cuts.

They are now deeply unpopular as a consequence and there is now talk of them being a one-term government. The unfortunate thing is that the opposition and its support base is hardly better, more about which later.

Today the Federal Treasurer came out and said that the Treasury Department’s own analysis of the equity impacts of the May fiscal statement were mistaken.

The national broadcaster, the ABC reported today (August 4, 2014) – oe Hockey says Treasury figures that show low-income families will be hit harder by budget are misleading.

The Opposition has got hold of some Treasury analysis under FOI which shows that:

… lower income families will be, on average, $844 worse off. Middle income families will be, on average, $492 worse off, while those on higher incomes will be $517 worse off.

It is what everyone knew anyway. The Government is waging a War on the Poor and doesn’t want anyone to know about the details if they can help it.

The Treasurer was vague but said “there is a lot of misinformation around”.

My reading of the data is that the poor are much worse off in both an absolute and relative sense even taking into account differential tax burdens and pension entitlements.

And we haven’t even asked the question: who bears the burden of the extra unemployment that the Government is deliberately creating?

Answer: the poor.

Neo-liberals masquerading as progressives

A a few weeks ago (July 24, 2014), I – criticised – a so-called left-wing trade union who had put up a motion to the Labor Party Conference in NSW to elevate “government solvency” and “low deficits” as major concerns for any future Labor government.

I received a fair share of abuse – telephone and E-mail. That is par for the course – certain unions don’t like criticism either because their masquerade is disturbed.

The state secretary of the union in question (AMWU) wrote on his Facebook page (I am told) that he dismissed me as one of “our loopier fringe economists”.

He claimed I had criticised him “for advancing the proposal at the ALP Conference that we lift government revenues”.

I like being loopy if his version of macroeconmists is considered sanity.

Moreover, I didn’t criticise him for proposing that the government should lift tax revenues. A government should lift tax revenues if it wants the non-government sector to have less money. It might also want to increase tax rates on certain activities that it wants to discourage (alcohol consumption, carbon etc).

But it should never raise taxes to raise revenue because that would be both unnecessary and possibly contrary to responsible economic management.

It is unnecessary because the Australian government is never revenue constrained because it is the monopoly issuer of the currency. To buy into the myth that tax payers fund government spending is one of the basic neo-liberal myths.

It might also be contrary to responsible economic management if there was a need for the non-government sector to have more purchasing power. This might or might not be the case. But the claim that the government needs more taxes to fund spending is always wrong.

That was the basis of my criticism. Tim Ayers (the union boss) who dismissed me being a loony fringe economist and his ilk were claiming in the motion that the government should lift taxes so they could spend more and avoid insolvency.

This was the basis of my accusation that their logic is just consistent with mainstream, neo-liberal macroeconomics even if their social vision is acceptable.

They were arguing that the government should not cut spending on socially desirable activities but should address the ‘fiscal crisis’ by raising taxes rather than cutting spending. They didn’t use the term fiscal crisis but said that avoiding Federal government insolvency should be a major aim.

Tim – the Australian government can never become insolvent on financial grounds. It issues the currency! That is the fact. Denying that is puts you in the same room as the neo-liberals even though they despise your types and the activities you wish to support – social equity and trade unions.

The problem is that these so-called progressive groups will never achieve their ‘social vision’ if they continue to pander to mainstream economists about fiscal insolvency and the need to ‘fund’ government spending via taxes or bond sales.

And as for being on the fringe, here is graph of union membership in Australia since 1960.

The Australian Bureau of Statistics – explain:

The ABS has been producing survey estimates of the number of trade union members annually since 1992, and periodically going back to 1976 … Prior to 1976, estimates of trade union members were obtained from various sources, including trade unions themselves, and a series is available back to the early 1900s.

The first graph comes from the spliced series that the – OECD – has put together. Up until 1975, it is derived from so-called ‘administrative data’ (the ‘various sources’ as the ABS denotes it) and after 1976 it is from the ABS survey-based data series.

It shows trade union density (% of employees who are members) for Australia from 1960 to 2013.

The hay-day was in the early 1970s when the first Labor government was elected after 23 years of conservative political rule in Australia. Once the neo-liberals progressively took over in the mid-1970s and the Labor Party, themselves morphed into economic uniformity with that ideology, trade union density declined rapidly.

During the Labor years of 1984-1996 (Hawke-Keating), the unions conspired against their own membership to cut real wages in their roles as partners to the so-called Prices and Incomes Accord. The only problem was that the corporates didn’t play ball and it was just a Real Wages Cutting Accord.

The union leaders also failed categorically to keep pace with the changing demographics in the labour market (increased women, for example).

They also failed to maintain solidarity with the growing number of unemployed and underemployed. Not all unions but most.

The result is seen clearly in the graph.

The following graph shows the trade union density (% of employees) in Manufacturing (the union of which Mr Ayres is a senior official) compared to Australia since 1994. This is ABS data.

The AMWU which serves the Manufacturing sector hasn’t done a very good job of maintaining the diminishing workforce as union members. Even during the threats of WorkChoices (pernicious IR legislation introduced in 2006) and the GFC, there wasn’t a significant deviation from the downward trend.

The sectoral decline in manufacturing employment notwithstanding, it is clear that the organisation of the Manufacturing workers union has done relatively worse than the overall trade union movement in Australia in keeping their employees engaged in membership if the official data is anything to go by.

Perhaps they are too involved in Labor Party politics and devising neo-liberal economic plans for that Party.

At any rate – fringe is fringe.

Conclusion

Australia is entering another dark age with this conservative government. More academics on the progressive side need to speak out and defend the rights of the public to information access and the like.

The problem is, as I have noted before, the funding arrangements with universities have been such that many academics fear for their careers if they come out in public.

I have always disagreed with that view. We have enough legal protection to speak freely. We should use our more privileged positions to find out what the government is doing and report it as widely as we can.

Otherwise, we become as culpable as the rest of the research groups that agree to suppress evidence in return for a few bucks of government money.

That is enough for today!

(c) Copyright 2014 Bill Mitchell. All Rights Reserved.

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    This Post Has 17 Comments
    1. “The problem is that these so-called progressive groups will will never achieve their ‘social vision’ if they continue to pander to mainstream economists about fiscal insolvency and the need to ‘fund’ government spending via taxes or bond sales.”

      I’m no longer convinced that is the reason for their insistence on taxes. Particularly since the Piketty episode it seems clear that the overriding concern of most ‘progressives’ is to extract vengeance from the wealthy – even if that means leaving the poor in poverty.

      It’s the same ‘soak the rich’ line that has been bouncing around unsuccessfully for decades and it comes from their heavy resentment and envy of those who have succeeded in gaming the system in their favour.

      They never seem to realise that making the wealthy poor is not the way to solve inequality. The best way to do that is to make the poor relatively more wealthy while ensuring everybody gains in absolute terms.

      Quite why humans seem to prefer destructive actions over constructive ones is one of those great mysteries in life that I will probably never understand.

      This from the same people that push a ‘citizens income’, which to have any hope of working requires that nobody begrudges what somebody else is receiving.

    2. The view that taxing the very rich is simply a function of envy and vengeance is one that the rich will no doubt find both agreeable and comforting. However, Randy Wray, who also believes that taxation is not the best route to solve inequality, has a slightly different take that is not quite so forgiving:

      “If you want to reduce inequality, you’ve got to incarcerate the top 1%. And give jobs to the rest.”

      http://www.nakedcapitalism.com/2014/05/randy-wray-forget-taxes-redistribution-inequality.html

    3. That is part of the explanation Neil. The other part is that these people have limited intellectual ability, and are incapable of grasping the macroeconomic essentials. This is also related to their inability to recognise the reality behind the facade — that their conceptual understanding of social, political and economic issues is being manipulated and controlled by propaganda and spin machines funded by powerful vested interests.

    4. Dear Neil

      In every Western country today, there is considerable downward redistribution of income by the state. If taxes are proportional or progressive, or even mildly regressive, and if the benefits of the state are more or less equal for all citizens or biased toward the poor, then the combination of the 2 has a significant egalitarian impact. In a country like Canada, the distribution of income before taxes and benefits is much more unequal than after them. We should not only look at cash income but also at non-cash benefit such as health care and schooling.

      It is indeed a fallacy of the left to believe that taxes have to be steeply progressive in order to have an egalitarian impact. As long as the rich pay more taxes than they receive in benefits from the government and as long as the poor pay less taxes than they they receive in benefits, then the combination of taxes and government programs will make the country more egalitarian. To illustrate this, suppose that Peter makes 25,000 per year and pays 5,000 in taxes while Paul makes 100,000 and pays 15,000 in taxes. Peter’s taxes are 20% of his income while Paul’s are 15%. Still, Paul pays 10,000 more in taxes than Peter. If both men receive 10,000 in government benefits, then there has been an income transfer of 5,000 from Paul to Peter despite the fact that taxes are regressive.

      While we are at it, we may as well dispose of the fallacy that a flat-rate income tax can’t have an egalitarian impact. Most flat-rate income taxes have a tax-free base. That means that in fact it is progressive because it has 2 rates, zero and the other. Let’s suppose that in Ruritania, there is a flat rate of 40% on all income over 10,000. That means that a person with an income of 12,500 pays 8% of his income in taxes. Someone with an income of 25,000 pays 24%, one with 50,000 pays 32%, somebody with 100,000 pays 36%, and a rich person with an income of 1,000,000 pays 39.6% of his income in taxes. That looks progressive to me. And of course, the richest person in our example pays total taxes of 396,000 while the poorest pays only 1000.

      Regards. James

    5. Neil,

      I prefer the way Bill argues it, when he writes:

      “The elites use all sorts of divide and conquer strategies to segment the working class. Race and gender are just two of the more obvious ways that we are trained to turn against each other. This helps hide what is really going on – the plundering of national income by the elites.”

      The accumulation of wealth goes hand in hand with the plundering of income. I’ve been reading Picketty’s book, and while much of what he says on deficits would define him as a progressive neo-liberal, I do believe his point about wealth is still valid. We can’t stop the plundering of income if we ignore the disparity in wealth.

    6. you are quit right Neil a national income has nothing to do with taxing the rich
      and everything to do with pre distribution of a portion of a nations spending power

    7. The state does not need tax revenue to spend, but we still need to tax the rich for equal world. Otherwise ordinary people will get short-changed for their efforts, because it is far too easy to use position of power to deal income into ones own pockets. It is about fairness.

    8. Neil,

      “They never seem to realise that making the wealthy poor is not the way to solve inequality.”

      Who is advocating “making the wealthy poor”? “Poorer”, perhaps, but that is not at all the same thing. Less wealthy is how most would put it. Picketty makes the point that if the return on capital is greater than the growth rate, r>g as he terms it, then the rich naturally get richer by doing nothing at all. They can only get richer by “plundering the national income”.

      What do you make of that argument?

    9. Neoliberal economics is the current herd direction. Most union leaders are just as much part of the herd as the Labor Party with which they are affiliated.

      This may be one of the reasons for rank and file disaffection to the point of resigning their membership of a union or not joining in the first place.

      But I think the main reason for declining membership is that many proles just don’t see the relevance of a union in today’s society. Many think of themselves as petit bourgeois or mini capitalists and have no need for cooperative action with their peers. They also have little or no historical sense.

      At present Australia is an example of mass cognitive dissonance in many different ways. The only cure for that is widespread pain. The innocent and the guilty will share in that.

    10. I suspect Neil Wilson has seen this wonderful explanation of the folly of “soak the rich” from Randall Wray. He says more in 5 minutes than most do in a week. Wonderful article today, Bill. The drop in union membership is telling. Labor and the unions had us (including me) in 1997 and could have led us anywhere they wanted but chose instead to dump this energy and return to business as usual. Randall Wray: http://www.youtube.com/watch?v=LyJXczg9O3w&t=23m43s

    11. Neil, While I don’t know the answer to the conundrum you pose at the end of your comment, I have often wondered whether part of the reason for our tendency to violent vengeance comes from the way the common chimp and Bonobo genomes were parceled out in our evolutionary descent. If so, it could be the greatest evolutionary fu*k-up of all time.

    12. Warren,

      I’d just make the point that MMT is an economic theory of how the present system functions. Its not a political party. Therefore supporters of MMT don’t have to agree on everything.

      Advocates, on the right, may well use phrases like:
      make the poor relatively more wealthy while ensuring everybody gains in absolute terms

      We’ve all heard the “rising tide lifts all boats” argument from rightish political parties. But there are those of us who reject this and wish to push for greater equality. There is no reason why MMT has to take a position one way or the other.

    13. Bill, ‘Corporate’ functions properly as an adjective, so please don’t use the term ‘corporates’ as a noun when ‘corporation’ is what is meant. I know that this usage is gaining some ground, but that doesn’t render it any the less ugly.

    14. PeterMartin, just a minor point. The line you are attributing to me, “make the poor relatively more wealthy while ensuring everybody gains”, belongs to Neil Wilson. I don’t think I have made that anywhere in this blog.

    15. Never fear Bill!
      What a shame the AMWU secretary could not come to grips with what is essentialy a ‘counting problem’ of sectorial balances.

      I whould have thought he would have at least held the ‘neo-liberal lite’ view that governments run ‘defecits’ during economic downturns when private sector is deleveraging but could ‘cut back’ on spending when times were ‘good’ again.
      (Whatever ‘good’ means over the last 30+ years a measure of good like ‘income to gdp ratio’ certainly looks like an ever increasingly poor outcome for unions/ordinary people).

      Unfortunately the whole inequality issue is so tightly coupled to idea this is simply to ‘take money from the rich and give to the poor’ that people like the AMWU secretary are showing a bit of congitive dissonance in his reaction to Bills prior article. If he’d taken a platry amount of time to understand the problem and simply said “ok i didnt know thats how they system actually works and if anything this solidifies the purpose and stance taken by unions even moreso” would have been a better outcome ;)

    16. “The view that taxing the very rich is simply a function of envy and vengeance is one that the rich will no doubt find both agreeable and comforting. However, Randy Wray, who also believes that taxation is not the best route to solve inequality, has a slightly different take that is not quite so forgiving:

      “If you want to reduce inequality, you’ve got to incarcerate the top 1%. And give jobs to the rest.”

      http://www.nakedcapitalism.com/2014/05/randy-wray-forget-taxes-redistribution-inequality.html

      He would seem to have a point that you need to take a tough line on “market fascism” :-

      http://www.businessinsider.com/the-justice-department-is-subpoenaing-gm-over-subprime-auto-loans-2014-8

    17. You don’t understand. Most progressivism is big government, not left libertarian. That’s why they do divisive othering e.g 1% vs 99%. Even to the point of calling the 1% to be put in prison!
      They want to screw both the poor and rich and help the ‘middle class.’ They are generally middle class.
      They never ask for radical reforms to the system because they work within the initial system.

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