Why Australia Needs Class Warfare

With the release of the Federal Budget 2011-12 by Prime Minister Gillard, the opposition Liberal party led by Tony Abbott has accused Gillard of class warfare.

It is my opinion that class warfare in a country is a good and healthy thing, but first let me define what I mean by class warfare. Within any country there is a distribution of wealth and as a result there can be classified different classes of people based on wealth. Within most countries there are poor people, middle-class people, and rich or upper-class people.

Under authoritarian regimes, rich people tend to own slaves and oppress the poor, using them to run their businesses. The democratic system gives poor people a voice through the government, allowing the poor to push back at the rich so that they are not fully enslaved. This is class warfare. When the poor push back, they get benefits like public holidays, sick leave, maternity leave, recreation leave, and a host of other benefits that workers in authoritarian countries don't have.

To ensure that poor people get these benefits, they need to be constantly aware of class divisions and to vote for their own class interests in elections.

Unfortunately, in many democracies, while the majority of poor people are class conscious, a significant number of poor people actually vote for parties that implement policies that disadvantage them economically. In American following the 9/11 terrorist attacks, 80 per cent of Americans voted kept George Bush in power, allowing him to implement tax cuts to the rich. Under his presidency, public debt soared and the gap between rich and poor accelerated dramatically. In Australia, refugees tried to hop on a boat and come into Australia. The Prime Minister John Howard turned the boat back. His tough stance saw just about everyone, including the poor, vote for him. When he came in, he implemented policies that diverted public money to the rich e.g. by giving tax breaks through superannuation funds, family tax benefits that even high-income households were eligible for, and of course WorkChoices. In countries like Thailand and Cambodia, the leaders there clash in small-scale wars along the border, both leaders afraid of starting an all-out war but both still very willing to talk tough in an effort to appear nationalistic. This tough stance wins votes and distracts the voting population from the immense wealth held by the elite in both countries. The King of Thailand is the wealthiest royal in the world with a net worth of $30 billion, over sixty times higher than the net worth of the Queen of England (around $450 million).

For many centuries, history shows that the rich often use nationalism to win broad support in democratic systems. Once in power, they implement policies that benefit themselves at the expense of the poor. A poor working-class American will continue to be loyal to the rich as long as he views everyone in the world as being either American or non-American. He feels united to his employer, the one who is exploiting him.

Class warfare allows poor people to suddenly realise that there are indeed divisions within countries. Class warfare allows the poor to demand policies that work in their own interests.

Further reading: Rich and poor divide underestimated

The Federal Budget 2011-12

The Federal Budget 2011-12 was released this week. Everyone else is giving opinions on it, so I may as well. All in all, I think it is a positive budget that would hopefully get Australian back into surplus by 2012-13. The growth in revenue seems optimistic and the spending cuts are probably in my opinion not deep enough, as much deeper cuts are needed in middle-class welfare. But all in all, it is a step in the right direction, that is, keeping taxes high and cutting spending. It follows the fundamental rule of personal finance, which is to spend less than you earn.

In the world of FBT, the budget gets rid of the loophole that allows tax benefits to be accrued if you drive your work car more than 25,000 kilometres per year. This horrendous loophool meant that many small businesses actually deliberately drove their company cars more than they needed to in order to get tax concessions.

A number of people complained that there were no increases in family tax benefits for those earning over $150,000, which I thought was incredibly surprising as those on $150,000 are definitely rich given that the average household earns around $70,000. For Australia to get back into surplus, spending cuts need to be made or taxes need to be raised, and cutting spending or increasing taxes on the poor is not only highly immoral but could actually kill them. Therefore, the rich need to be sacrificed. I am surprised that there was so much opposition to this idea, even among religious people and poor people.

The budget contianed no details about the coming carbon tax, which is disappointing. I am happy with the carbon tax as I think it is one of the best ways of cutting carbon emissions in Australia. It gives me great pleasure when I look at those people driving large SUVs and live in large McMansions and know that they will soon be punished for their behaviour. The carbon tax is understandable unpopular with many people believe most people don't like the idea of cost of living increase. This is why I believe that Prime Minister Gillard needs to give very generous compensation to low-income people. It is already disappointing to hear that only half of the revenue raised will actually go to compensating low-income people (it should ideally be 100 per cent). If I were Prime Minister Gillard or if I were her adviser, I would suggest that the way she go about compensating people is to made amendments to the low income tax offset (LITO). Specifically, she should increase the LITO payout and increase the threshold when you are no longer eligible for it. This will put money back into the hands of the poor and give a moderate amount to the middle-class. If the compensation is large enough, I am sure just about every single Labor supporter will be happy and a substantial number of Liberal voters will switch sides and vote Labor to secure for themselves the compensation, and Prime Minister Gillard will win the next election.

We'll see what she does.