I read an interesting report this morning, which resonated with some other work I had…
Despite the rabble on the Right of politics that marches around driven by conspiracies about government chips in the water supply or Covid vaccines and all the rest of the rot that lot carry on with, the reality is that the well-funded Right that is entrenched in the deepest echelons of capital are extremely well organised and strategic, which is why the dominant ideology reflects their preferences. That group appears to be able to maintain a united front which solidifies their effectiveness. By way of contrast, the Left is poorly funded, but more importantly, divided and on important matters appears incapable of breaking free from the fictions and framing that the Right have introduced to further their own agenda. So, the Left is often pursuing causes that appear to be ‘progressive’ and which warm their hearts, but which in reality are just reinforcing the framing that advance the interests of the Right. We saw that again this week with the emergence of the Tax Extreme Wealth movement and with the release of their open letter to the G20 Heads of State – G20 Leaders must tax extreme wealth. This is the work of a group which includes the so-called Patriotic Millionaires, Oxfam, Millionaires for Humanity, Earth4All and the Institute for Policy Studies. It demonstrates perfectly how these progressive movements advance dialogue and framing which actually end up undermining their own ambitions.
The Open Letter doing the work of the Right while thinking they are pursuing progressive causes
The Open Letter is well intended I am sure.
It begins by noting that:
The accumulation of extreme wealth by the world’s richest individuals has become an economic, ecological, and human rights disaster, threatening political stability in countries all over the world. Such steep levels of inequality undermine the strength of virtually every one of our global systems, and must be addressed head-on.
No-one on the progressive side of the debate would disagree with that assessment.
They continue noting the failure of the ‘trickle down’ narrative to deliver on its word.
Who ever believed that ruse anyway?
And they also note the capacity of the top-end-of-town to exploit tax loopholes, tax havens and all those dodges that normal folk like us cannot.
Then it starts to go off the rails:
At the same time, the world has seldom had more need for the richest to pay.
And they talk about “extreme poverty is increasing” and “time running out for countries to make the necessary green investments”.
Those problems are clear and something needs to be done about them.
The solution is clearly within the ambit of government and would require more investment (spending) by the public sector.
The reason I say that the Letter starts to fail here is that the framing and causation is encouraging the reader to conflate the failure of governments to reduce extreme wealth and tax more to the lack of action on poverty or green transition.
In other words, the Letter is suggesting that if the government had more tax revenue then it could spend more on poverty reduction measures, for example.
And in doing that, they are encouraging the reader to construct the government as a financially constrained entity that requires our money in order to spend.
The Letter then urges the G20 leaders to continue to “raise taxes on the richest individuals” and to eliminate cross-border opportunities for rich individuals to shift to lower tax regimes.
And in closing they state:
An international agreement on wealth taxes would shrink dangerous levels of inequality while also allowing leaders to raise vital funds to tackle the multiple challenges facing our world.
And so the narrative of financially-constrained governments needing to raise “vital funds to tackle the multiple challenges” and the money of the rich being the only source of those funds is complete.
The Left doing the work of the Right.
Think about it like this.
In her book – Atlas Shrugged – anti-government Right winger Ayn Rand extolled the virtues of the private corporations who were coerced by governments rules and regulations.
The rest of us are “looters” or “moochers” who have a parasitic relation to these corporations – always desiring to feed off the productivity of the hard work of the corporate leaders.
She conveys the view of how important these ‘men’ of industry are to the well being of the rest of us and without their resources the rest of us would be confined to poverty and hardship.
Her agenda is an extreme liberatarianism.
But think about the framing – the rest of us cannot do without these captains of industry.
That framing appears in the Open Letter from the Tax Extreme Wealth movement.
It elevates the wealthy to a level of importance they do not warrant.
It makes out there is a necessary and sufficient link between the well-being of the rest of us and the fortunes of the extremely wealthy persons.
Without their money, we cannot have things that advance our own well-being.
So, while the progressives don’t want to convey that sort of messaging, the reality is that the framing and language they use reinforces that message.
Why limit the attack on inequality by focusing on taxes
To state the concern in a different way, why do these progressive focus only on ‘taxes’ as a way of reducing inequality.
There are many ways in which government policy enhances the wealth of the richest individuals that don’t involve tax considerations at all.
Why not think about the causation that comes before the capacity to pay taxes?
For example, the wealth beneficiaries of capitalism can create massive wealth, in part, because they can create massive income streams.
And think about how capital has created a symbiotic relationship with government via procurement contracts, highly paid consultancies, and the like.
In his closing address as US President, Dwight D. Eisenhower (January 17, 1961) used the term – Military-industrial complex – to describe the powerful capital interests that he said might provide “unwarranted influence” on government but which were fed by government.
In 1966, Paul Baran and Paul Sweezy published – Monopoly Capital – which demonstrated how wealth accumulation relied on government spending via procurement contracts particularly in the military sector.
The next year, 1967, John Kenneth Galbraith published – The New Industrial State – which touched on the themes that large corporations relied on government assistance to achieve stable profits through long-term planning.
We could massively reduce wealth inequality by curbing the opportunities exploited by large corporations to engorge themselves on government contracts.
In Australia, we are currently debating the role of private management consulting firms in government contracts.
The industry is currently scandalised because PwC staff used the confidential information obtained by such a contract to on-sell to their clients to help them minimise tax.
More and more examples of the rorts in the consulting industry are now emerging.
Overly generous contracts, cheating on cost statements and the rest of it.
We now know that PwC was paid nearly $A1 million dollars to investigate a government scheme designed to regain welfare payments that were allegedly rorted by the beneficiaries.
That scheme has now been subjected to a Royal Commission and found to be illegal and heads are rolling (but not enough of them).
But PwC apparently only delivered an eight-page PowerPoint presentation to the government in return for the near million bucks.
And, the presentation has never seen the light of day in the public sphere.
I was in Sydney working yesterday (presenting to a major financial markets workshop) and happened to park in a pay station in the financial district.
In the reserved parking tiers I saw Deloitte, EY etc spaces all marked out and more Porsches, Mazeratis etc parked there than you would ever see anywhere else.
And these consulting firms gain billions each year for doing the work that public servants used to do before neoliberalism started on its purge of public employment.
We could eliminate billions in public expenditure by scrapping the reliance on private consultants and bringing those tasks back into public employment and decent wages.
Why just focus on taxes?
Why aren’t these progressive groups writing open letters about all of that?
Obviously I am not against taxing the rich!
The point is not that I oppose the ambition of the Tax Extreme Wealth efforts.
I have always argued that we should have wealth taxes and much more progression in the income tax structures (where enforceable).
I would also have an expenditure tax along the lines advocated Nicholas Kaldor in his 1957 book “An Expenditure Tax” published by The Macmillan Company.
He argued that we could replace the progressive taxes on personal income with a progressive tax on personal expenditures, which excludes from the tax system the portion of income that is saved.
Kaldor wrote (p.50):
… a changeover to an expenditure tax would undoubtedly have the most severe effect on the wealthy and not on the people who are only moderately well-off.
There are issues with such a tax which I won’t go into here but a carefully designed expenditure tax certainly is harder to escape.
My fundamental objection to the Open Letter narrative is the conflation between taxes and spending capacity.
Modern Monetary Theory (MMT) has demonstrated beyond doubt that such spending capacity for currency-issuing governments is not financially constrained.
Taxes do not fund government spending.
So why would we want to tax the rich more?
It is not because we want the government to have ‘more’ money – when we know unambiguously that it has all the ‘money’ it ever could want (infinity minus a penny)!
It is because we want the rich to have less money.
That is the reason.
And the purpose is to reduce the financial resources the rich have at their disposal so they have less capacity to fund lobbying organisations, buy off politicians, fund political parties, and the rest of it – which means we could reduce their political influence.
That political influence and leverage is one of the major contributing reasons to why the world is in such a mess right now.
Tax the wealth. Sure.
But not to get their money!
By conflating the tax revenue with the capacity of governments to provide services etc, progressives just advance the conservative framing and agenda.
That is enough for today!
(c) Copyright 2023 William Mitchell. All Rights Reserved.