Dialogue: You can't have less tax and 'focus on growth'

By GORDON McLAUCHLAN

Excuse me, but how do you lower the tax base and expand and improve educational services? After all these years, I'm starting to feel sorry for governments.

Corporate interests still don't understand that they do their own cause harm with the public at large by fixating on policies that reflect narrow self-interest and by insisting that their interests must be paramount and at the expense of all others'.

Even the rhetoric wrapped around the pre-Budget campaign for the more education/less tax double-whammy was untidy. Employers and Manufacturers spokesman Alasdair Thompson wanted a "visionary" Government to give priority to education "because wealth-creation requires innovative creativity."

"Visionary" means dreams for the future that match yours. "Wealth-creation" is a cliche to disguise the trickle-down theory that failed, and "innovative creativity" is extreme tautology that means nothing, twice. The background music to all this was the wailing chorus of universities seeking extra funding to avoid increasing charges to students.

The Government, according to this corporate advice, needed to "release the power of research and development in the private sector," "foster a big increase in greenfield NZ enterprises" and "create an environment that develops new technologies and promotes technology transfer from abroad" and "promotes local and foreign investment."

Thompson also wanted to greatly increase the number of maths, science, engineering and creative arts graduates by skewing the fees structure. And then: "The thrust of Government spending must now be focused on growth not redistribution." How do you expand education to ensure that "no child gets left behind" and give incentives to greenfield enterprises without redistribution or social engineering? Or is redistribution just a feel-bad word dropped in for emotional effect.

Any fool can give this sort of advice, and most of them have. The hard part is to say in practical terms HOW?

Please, none of this wonky theory about a lower corporate tax providing a pool of capital that businesspeople can use to thrust us into the forefront of the world's great humming economies and haul up living standards. We have had lower taxes over the past 15 years than we had for decades before that and growth has not happened. Many of the countries doing much better than we are have higher taxes.

Any government with an IQ averaging above 80 would want to do all those things corporate lobbyists nag on about but the weeping in the background is from cabinet members trying to work out HOW?

I'm sure that in all sincerity the last National Government tried to achieve those goals for more than a decade.

What the corporate sector seems to want from the Government is all the results of a centrally directed economy without central direction.

One of the worst, most anarchical actions one can take nowadays is to glance at the past, but anyone who does that will find that New Zealanders have been nagged to take science and maths courses since the 1960s and nothing yet devised has persuaded them to do so. Maybe it's something to do with the left and right sides of the brain, or with personal ambitions and aspirations.

You can imagine the blokes and girls lounging around the common room and someone saying: "Well, I was gonna take law and potentially earn one or two hundred thousand dollars a year but the Government's offering a fees cut for me to take science and earn $40,000. Guess what I'm gonna do, guys?" Laughter all round.

The pressure on governments to reduce taxation is immense, especially now that the Bush Administration in the United States has made that its most urgent legislative move since winning power, despite overwhelming evidence that a small percentage of the wealthy will gain vastly more than the huge majority.

And although lowering the tax base, the US Government will pour money into the defence and technology industries. Now that's redistribution of wealth upwards.

If you know about the past, you understand that phrases and philosophies often gain the momentum of great truths simply because enough people at one particular time believed them.

The other day I was reading what Aldous Huxley, a brilliant man of his generation, wrote immediately before the Second World War in an essay called inequality.

"Even in capitalist countries the principle of the minimum but also the maximum wage was already admitted. Within the last 30 years it has generally been agreed that there are limits beyond which incomes and personal accumulations of capital ought not to go. Now that the principle of the limitation of wealth has been implicitly accepted, even by the wealthy, there should be no great difficulty in imposing an absolute maximum."

People then were no stupider than they are now and Huxley was as clever as they come - but that was the conventional wisdom which, by the time the Second World War ended, had come to be almost unquestioned at all levels of society.

Is our conventional wisdom on economic and social policy more practical and humane? Maybe, but policies lying unexamined beneath jargon and catch-cries would be as dangerous now as they were then.