revolutions happen when rich elites don’t pay tax
The release of the Paradise papers in the week of the centenary of the Russian Revolution, and in a week when the peaceful Catalonian independence leaders were branded criminalsm, should warn us that history did not end with the fall of the Berlin Wall in the 1989. The clash between the forces of capitalism-individualism-rentiers versus the forces of communism-socialism-collectivism-labour is alive and just as destructive as it has ever been.
The Paradise papers reveal what we already suspected: that tax is optional for rich elites. Without a good tax base, of course, governments cannot provide reasonable services or basic living standards to the masses they govern.
French king Louise XVI knew the problem only too well. His rentier aristocracy simply refused to pay reasonable taxes. The masses received no bread. The queen told them to eat cake. They rebelled. They executed the royals.
Romanian dictator Nicolae Ceausescu and his wife were executed, too, in 1989.
I am not suggesting we are heading for violent revolution. Rather that, when you look through history, major upheavals occur time and time again when ruling elites keep taking and not giving, and the masses feel cheated and exploited.
To return to the French Revolution, just before the reign of terror, the Marquis de Condorcet got it right when he referred to “the secret that real power lies not with the oppressors but with the oppressed”.
So many of these upheavals happen when emperors, monarchs or governments (elected or unelected) fail to collect enough tax from the wealthy to distribute it across society. It could be a Roman emperor, a Russian tsar, a communist dictator or any ruling elite. We do not know what form the upheaval will take but, if the good marquis is right and people are feeling oppressed or even just feel a seething resentment, the oppressed will exercise their power and cause an upheaval of some sort.
It should be a warning to governments: make sure the wealthy elites pay a reasonable share of taxes so that the broad mass of society gets decent education, health and housing, or face the consequences.
In , those consequences seem to be a voter exodus to anyone but a major party. It is one of the few powers they can exercise in a world in which: wages stagnate; chief executives are paid 100 times or more than workers; big corporations hide unaccountably behind call-centre waiting times; the price of electricity, water, rates, gas and petty government administrative charges go inexorably up, yet we are told inflation is under control; and people face the daunting choice of waiting endlessly in the public system for “elective” surgery or being dudded by private for-profit health funds and huge gap payments.
In Europe, voters are flocking to parties on the far right. It is not new. When governments do not get control of their financial systems and exercise that control fairly, populists exploit the resulting resentment, as they did in the 1930s.
The lofty idealism of a single European currency has turned into a con. The cartels and elites in northern Europe, particularly Germany, have imposed massive austerity programs on the countries in the south and east in the hope they will repay their euro-denominated debt. But the debt does not get repaid if the debtor is put in the equivalent of debtor’s prison.
Small wonder that separatism abounds in Catalonia, Lombardy, Scotland, Britain with Brexit and elsewhere. People want to control their own destiny democratically, even if it means having their own currency that they can devalue as needed to cope with debt. And if that means the local assets of the elites get devalued, too, then too bad.
If does not do more to rein in evaded tax, it will go the same way as southern Europe.
Don’t get me wrong: capitalism, market economies, democracy and free trade have dragged millions of people out of poverty and given great prosperity to millions more. Whereas socialism and communism invariably end in despotism. But capitalism must be saved from itself. It needs to be better balanced with wealth distribution, provide better government services and better targeted infrastructure.
If it does not, another of the Marquis de Condorcet’s secret powers of the oppressed will be exercised: an increasing withdrawal from the consumer society, because consumers do not have much disposable income to spend.
Austerity and increasing inequality will only make that worse, as this week’s second consecutive quarter of declining retail spending attests.
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Finally, I was berated in the letters column this week for accusing the n Medical Association of being secretive with its schedule of suggested fees. Of course, specialists tell individual patients before operations or other services what fees they can expect to pay, so that they can make an informed decision about whether to go ahead.
But that is not the point. By then, the patient is over a barrel, with treatment pressing.
The point about why the AMA schedule should be made public is so patients can make an informed choice as to whether to continue with private health insurance while they are still well. What is the point of private health insurance if you know that the gap between the Medicare schedule and the AMA schedule for a whole lot of services that you may need will be so big you will not be able to afford them and will instead reluctantly resort to the public system and its waiting times.
People cannot make that informed choice unless they know the likely gap before they get sick. At present, they are blindly cowed into taking out private insurance, which they might not be able to afford to use.
The ACCC should have a good look at the AMA schedule to see if it complies with the letter and spirit of competition law, and either publish it or strike it out.
To say that the schedule should not be made public because it is too complicated and cannot be directly compared with the Medicare schedule is just plain condescending.