Two opposed views about how to attain economic security are the foundation of all consequential political battles about the role of government.
One is the claim of the political right that, when people pursue their own self-interest, the greatest welfare will accrue to the largest number of people. The economy, according to this view, is little more than an accumulation of individuals who, inadvertently through their own self-regard, deliver a material benefit for all of society. “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest”, the 18th century Scottish economist Adam Smith wrote. “We address ourselves, not to their humanity but to their self-love.”
For some on the political right, individual greed is progressive – if it respects certain boundaries, usually those of the behaviour accepted in capitalist markets. Others, perhaps in need of a more solid moral foundation for the accumulation of wealth, attempt to avoid the accusation of selfishness by putting their family at the heart of their view. Here at least they can claim that their economic self-interest is a sacrifice for their children. The logic, however, is the same: in the world of economics, don’t love thy neighbour, love thyself.
The other, and correct, view comes from the left. It is that wealth creation is a social act, that the main division in society is not between individuals, but between social classes, and that individuals under capitalism obtain riches only at the expense of the people who perform all the labour – the working class. The left, then, has always been associated with the workers’ movement, or has at least oriented to it and championed the cause of wealth distribution.
Individual self-interest might be good for those in the upper and middle classes. And a few workers might climb out of their class. But economic security for the vast majority can come only through the collective struggle to lift wages and gain decent government services. As anyone who has had to look for work knows, there are more unemployed than there are jobs, and most jobs are menial. Laughable is the idea that there are all these $100,000 a year positions just waiting to be filled by people picking up their bootstraps.
Economic aspiration, then, falls broadly into two types: those who strive only to lift themselves and their family, and those who struggle to improve their lot by fighting for a better deal for all.
The Labor Party, at least rhetorically, has often tried to have two bob each way: sending its leaders to trade union conferences to promise a fair industrial relations system, while reducing the company tax rate and sending hundreds of millions of dollars to elite private schools. Its backing of the Morrison government’s “stage three” tax cuts marks yet another shift to the right and again throws into question why it persists in calling itself a party of labour.
According to the Grattan Institute, a think tank, these cuts, set to come in 2024-25, will cost the budget about $85 billion in the first six years (enough to build about 40 new hospitals around the country) and disproportionately benefit the already wealthy. “The top 15 percent of income earners would pay a lower share of their income in tax, but middle-income earners would pay a higher share”, the institute estimates. “The income tax system in 2024-25 would be less progressive than it has been at any point since the 1950s.”
The ALP, which so many workers continue to look to as a defender of their interests, has voted to gut the redistributive nature of the tax system. That puts it squarely in the camp of the most zealous right wing economists.