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April 20, 2021

Fraudulent theory

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The federal budget is based on the trickle-down theory of economics – whereby the rich are stimulated by tax cuts and other concessions in the hope that they will increase spending and thus ultimately advantage those less well off. It is a theory that has probably been around for a long time but was given added impetus during the Thatcher/Reagan era.

That it is a totally self-serving and fraudulent theory can be seen by the fact that the gulf between rich and poor has widened throughout the world, in all societies, since that time and this despite the rise of the middle classes in places like India and China.

Thatcher also came up with the ludicrous theory that national economies should operate like household economies and not spend more than they earn. This is nonsense. Government is a business like any other and all businesses depend on borrowing to exist and advance. This model is no longer even true of household economies that nowadays couldn’t exist without mortgages, credit cards and hire purchase for items like vehicles and businesses, and banks are totally dependent on this form of household debt.

The budget is largely ideologically rather than economically driven. Cutting people under 30 off the dole makes no sense whatsoever in terms of the greater economy. It means much less money circulating. It doesn’t advantage those with rental properties if fewer people can afford to rent them; the same with sellers of basic items like food and clothes.

It also completely ignores the fact that government benefits not only support the poor and unemployed but also underpin the security of middle-class existence.

Desperate people often need to take desperate measures to survive. Expect a rise in violence, robbery, depression, suicide and mental breakdown, more and cheaper drugs circulating in society, more and cheaper prostitution and higher insurance rates – dealing with all of which will cost a lot more than the money supposedly saved by withholding benefits, quite apart from the potential societal disruption.

The cry that the government is trying to prevent future generations from inheriting an enormous burden of debt is also completely untrue. If the world economy continues as it has in the pattern of the last couple of hundred years, inflation will sop up that debt and by the time the current crop of school kids become taxpayers the amounts owing will be negligible.

David Gilet, Byron Bay


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