There is a reason why business owners have traditionally despised unions and voted Liberal, and why many workers have been convinced to punch themselves in the face by doing the same. It’s because they’ve bought into two big lies told by liars – Liberals, big business, employer groups and their parrots in the media. The first lie is that corporate tax cuts create jobs, and the second is that pay rises are bad for the economy.
I call them big lies because they have big consequences for all of us; they clearly hurt workers, who haven’t had a pay rise in years, and also hurt the businesses who rely on their customers having money to spend. In turn, these lies hurt the economic prosperity of the entire country, reducing spending, gutting demand and discouraging investment. So, you can see why it’s time we understood just how corrosive these lies are, and worked to convince the lied-to to stop putting the liars in control of the economy.
The first lie is easy to refute. Corporate tax cuts do not create jobs, nor do they increase wages. I’ve explained here why this lie is codswallop. Sure, tax cuts could be spent on higher wages and hiring new staff, but could doesn’t mean they are. The best predictor of the future is the past, and judging by the past experience of companies receiving tax cuts, workers aren’t getting a pay rise from Turnbull’s latest round of cuts.
The reason why workers and business owners believe this lie is because they are lied to so regularly. Whenever they open a newspaper, they read statements like this from the AFR:
‘The Labor party and an increasingly determined Australian Council of Trade Union secretary Sally McManus are punting on winning hearts and minds through a return to interventionist wages policy. Pitted against them is a Coalition determined to do what it can to stoke investment, hiring, and pay packets through corporate tax cuts’.
You don’t even have to read between the lines here to see the clear implication is that villainous Labor and unions will hurt ‘investment, hiring and pay packets’ by intervening in the economy, whereas the heroic Coalition (liars) will ‘do what it can’ to improve all these things with a corporate tax cut. Lies!
The truth is, there is only one reason why the liars want, lobby for, and deliver through their political-arm-Liberal-Party, corporate tax cuts, and that is to increase their profits. Increased profits are great for them and their off-shored millions, but do nothing to increase employment or wages. Lies!
The second big lie – that pay rises cost jobs – was on display on Q and A Monday night, when spokesperson for the liars, James Pearson, CEO of the Australian Chamber of Commerce and Industry said:
‘there’s something worse than having subdued wages growth, and that is not having a job at all’.
In other words, stop complaining that you haven’t had a pay rise in years – you’re lucky to have a job at all! This threat, that pay rises cost jobs, as I explain here, has been a clever little strategy for the liars as it has resulted both in productivity increases going unrewarded and also workers, through fear of job losses, turning against unions. Unions negotiate pay rises, and therefore in the lied-to-workers’ eyes, unions threaten their jobs.
These two big lies have therefore become a circular problem for the lied-to-workers, the business owners, and in turn, the economy. Workers have been so successfully turned against unions and the Labor Party – turned against themselves – that the labour movement is struggling to deliver pay rises for workers who fear losing their jobs if they are paid more, and in turn, businesses are struggling because their customers can’t afford what they’re selling. What an economic clusterfuck the liars have caused!
But wait, I hear you say. Businesses aren’t struggling – they have had huge profit increases year after year. So how can they be struggling if they’re making so much money? And yes, you’re right. Not ALL businesses are struggling.
At this point it’s important to differentiate between big business, and medium or small business. And, for medium and small businesses to see how the big business liars, who they keep voting for and helping to bash unions, are hurting them too.
Big businesses are making huge profits. That’s true. Big businesses also care most about corporate tax cuts, because they’re the ones who benefit from them most. Big business are the ones who most often get away with paying little to no tax because they can afford clever accountants with offshore tax schemes. Big business, often foreign owned, are more credible, but still not entirely credible, in claiming they can take their investment elsewhere if we don’t do what we’re told and vote for Liberals who will give them a tax cut. In reality, I can’t really see how Qantas is going to move offshore and still service Australian-based customers, or how BHP is going to mine Australian dirt in South Africa, or how huge banks and energy companies are going to gouge Australians of almost every cent they earn without investing their capital in the Australian economy. But either way, hugely profitable big businesses, who don’t pay their fair share of tax, who offshore most of their profits, who fund the employer groups and the Liberal Party in order to get the tax cuts they want, who own the newspapers which lie about tax cuts and pay rises, are, I admit, not the ones most hurt by low wages.
No, the ones hurt by low wages are the local small businesses, the medium sized employers, the Australian investors, who are suffering because their cash-strapped-customers can’t afford their products and services. It’s the owners of these businesses who are being hurt by the big liars, just as much as the workers missing out on pay rises.
Sure, small and medium businesses might not enjoy giving their staff pay rises, but they sure enjoy their customers earning more cash. Without pay rises, the self-employed painter sees his customers paint their homes every 10 years instead of every 5. Without pay rises, the café owner sees less coffee orders. Especially after paying their mortgages to hugely profitable banks and their power bill-shockers to privatised overseas owned electricity companies, workers without pay rises can’t afford to spend. This means small and medium business owners can’t afford to invest, and can’t afford to hire anyone, because there is not enough demand for the products and services they sell. As any good economist knows, capital investment comes from the promise of return on that investment. Return comes from demand. Demand is dependent on the customer’s ability to pay. When customers haven’t had a pay rise in years, they can’t afford to pay. So, bye bye revenue, bye bye potential returns, bye by investment, bye bye jobs and economic growth.
Remember this equation when you hear the Labor Party and unions opposing corporate tax cuts and calling for higher wages. Be warned, there might be a little voice in your head, put there by the liars, that makes you think Labor and unions are hurting the economy. But think of the small and medium businesses. Think of workers as customers, and understand why the economy relies on customers who can afford to spend. Call out the lies that are hurting all of us.
And next time you speak to a small and medium business owner, tell them they should join unions and vote Labor instead of supporting lying-employer-groups and voting for the liar-Liberal-Party. Tell them this story to explain why, if they really want to see their businesses succeed, this is the smartest thing to do. Unions and Labor governments are good for the economy, no matter what part in the economy you play. Spread the word.