Proof everyone is NOT doing their bit for the 2014 Budget

Tonight, the Australian Govt budget was released.  To see the number of organisations being interviewed afterward almost in tears was quite devastating to watch.  The CEO of St Vincent De Paul put it eloquently:

‘There’s nothing admirable about humiliating people who can’t find work, nothing good about building the economy on the backs of the poor, and nothing smart about making it unaffordable to see a doctor’.

Out of the 20 or so interviews I watched on ABC News 24 this evening, there was only ONE person who was positive outside of the lot, and that was the representative of a Corporate Australia group.  Unsurprising?  Now who knows, maybe that’s bias, but lets look at the facts.

I have heard a bunch of rhetoric around “everyone must do their bit” to fill this budget deficit, as an answer to the deep cuts. For the moment, lets set aside the stuff that Labour and Greens keep talking about in terms of whether we really do have a problem or not (or whether the problem is as big as Liberals say it is), just because we have a Triple A credit rating, better than the US (blah, blah blah).

What I want to know is, when a representative of Corporate Australia smugly says “we’ll cop it, we’ll do out bit for the good of the country” – is it a FAIR ‘bit’?  i.e. are corporates/companies copping a proportionately fair amount of either cuts to services or additional taxes?

I don’t have exact figures on this, it has got some assumptions and worked backwards from this pie chart which shows a breakdown of tax contributions by segment to the Australian Govt annual revenue.  It’s 12am and I should be sleeping before an 8am catch up in the city and not writing a blog but I need to get this out!


So based on this, lets assume Corporate Australia (or at least companies) make about $153 billion in revenue post-costs (as company tax rate is 30% and that’s 3 times 76.6 billion) and according to the budget, they’re going to cop a $500m reduction (+ some other minor millions for certain key industries such as the auto industry).  That’s a 0.3% contribution based on total company revenue.

Australian citizens on the other hand, they’ll pay a total of $138m for an average of 6.9 visits to the doctor annually, plus $400m from the “top earners” paying a short term 2% extra tax on any amount earned above $180k which is already taxed at 45 cents in the dollar – (in the mean time, companies pay 30 cents in the dollar despite earning billions).

Lastly add to that the losses, the cuts of $80 billion across Health and Education (forget the investment into Medical Research…$20 billion is nothing in the world of Pharma – if a cool $20 billion was all it took to cure cancer as Joe Hockey tried to sell, trust me, it would have been done).  So, we add the taxes and the losses together for the average Aussie citizen and we get a total of $80.5 billion.  That’s a 13%  “contribution” by Australian citizens who let’s say earn an aggregate of $600 billion in wages minus tax deductibles (again I’m guessing based on working backwards from the total tax bill).

Let me repeat and make clear: 13% effective contribution averaged across ALL Aussie citizens verses 0.3% effective earnings contribution from companies. So I think we can safely say, that corporate Australia is happy for a reason…because they have in fact, not come even CLOSE to putting in their fair share for these services cuts and new taxes.

In the mean time, companies like Apple are being investigated for massive tax evasion (they paid just $193m tax on $27 BILLION REVENUE – that’s right kids, close to 10 BILLION worth of the 80 billion budget cuts being made could have been covered by the tax bill of the company you bought your last iPhone or iMac from).

Then there is the LOST revenue of the carbon tax which was going to be over $4b a year – now resulting, instead, in cuts to health and education when that could have been borne by business.  Instead, Aussie’s were worried about it hitting their pockets through high electricity bills.  Well guess what, its hitting their pocket anyway…and its even worse than the electricity bill.

In the mean time, a single mum with 3 kids has just been told today she’s going to need to shell out an extra $7 every time she takes one of her kids to the doctor…and then more at the pharmacy…and then more when she fills up on petrol…

Now, I’m not a maths whiz by any means…nor am I anti-corporate or company.  I have 3 start ups and I run my own business!  But I am also a citizen of the world and it seems to be, something is seriously, seriously wrong here.

Let me put it this way:
– Apple pays their outstanding tax bill and keep that money comin’ in for another 2 years ($24b)
– Australian companies pay an extra 5% in tax for ONE YEAR – I’ll happily sign up for that to save my friends and family affected by this ($7.6b)
– Abbott govt DOESN’T scrap the carbon tax for 3 years ($12b)
– Abbott reneg’s on his ridiculous purchase of military fighter jets ($12b)
– Top earning Aussies contribute 2% of earnings for 3 years ($1.5b)

And that’s already $57 billion over a 3 year period.  Budget problem solved. Hehe.

Obviously I am oversimplifying it, I get that.  But, sometimes looking at things simply, can help gain perspective.  One of my startups had a business model with a very complex formula, and today the business valuer found an error because he checked the math doing some really simple backward calculations.

In my very humble opinion, we live in a highly symbiotic relationship – businesses, and individuals – particularly in the way our capitalist society with socialist elements has been set up here in Australia.  That means that any major structural changes…to either side, can be highly damaging.

You can’t just take from one segment, you must take in proportional amounts, and those proportionate amounts must take into consideration the fact that equal contributions may not be enough (i.e. company profits go back into the company but profits are not forced to be distributed into new labour hire so i.e. more money for companies doesn’t automatically equal more jobs. Often they go to shareholders in dividends, and people who can afford to purchase company shares, are not those living on the poverty line – which means companies could AFFORD to bear a greater financial burden, and yet instead they are currently being asked to be just a fraction of it).

To shift the cycle, the cuts MUST be done so carefully as to have a proportionate negative effect.  Are cuts necessary – may yes, maybe no – that’s actually beside the point.  The point is, for the cuts not to wreak havoc by potentially causing other issues (e.g. low education and health standards in research is always correlated to low GDP contribution and low employment rates…etc), the negative effect must be carried fairly by the variety of parties who currently make up the tax revenue for the Australian government.

Alright time for bed.  I just hope others can find the time and patience to do a bit of sense checking themselves, and come to an informed conclusion, rather than hearing and believing whatever is they hear on TV (regardless of which political party its coming from).


Why money shouldn’t be a measure for progress

What do “happiness”, “progress” and “the meaning of life” all have in common?  They are all used to describe each other in some way, and yet, when used together they don’t always add up.  Here are the two most common implied equations I’ve seen:
Meaning of life = happiness /  Happiness = progress
Meaning of life = progress / Progress = happiness

The inherent assumption in that a state of happiness is directly and upwardly correlated with progress which feels inherently flawed to me because…

1.  It assumes an understanding of the meaning of life for each individual
– Science would suggest the only meaning of life is that your cells replicate and enable another human being to replace you – biological survival 101.  Therefore the only relevance of progress in this context is biological, and even then this may not mean extending life given that could reduce replication. Science would also place emphasis on the uncovering of new knowledge as progress for humanity in discovering an overall meaning which has not yet been found yet.

– Islam places great emphasis on the afterlife and suggests the meaning of this life is preparation for the next – therefore progress is not particularly relevant.

– Buddhism places emphasis on the achievement of positivity and the potential for reincarnation into a new body to live again – again progress is not the emphasis.

– Christianity places emphasis on positive personal relationships and a personal relationship with God or Jesus.

– Capitalism places emphasis on the achievement of material wealth, progress is an emphasis here as it “creates fuel for the fire” – by providing a progress as a proxy for meaning in order to create wealth.  The important thing to note is that in capitalism, the “winner” is the entity with the most highest dividend pay outs to its investors, so the end game is not progress or happiness.

With all of these broad brushstroke ideas about meaning, the individual is ignored – even though it is the individuals perception of meaning that matters.  Interestingly I found it pretty much impossible to find any large scale scientific study on people’s own perception of the meaning of life for themselves personally and then for the human race in general which seemed odd…given we’re all alive and doing “stuff”…surely we’d want to know, in general, what others think its all for!

Apart from Capitalism…which isn’t really a philosophy, its a way of managing money markets…there isn’t an interpretation of the meaning of life requiring any link whatsoever to Gross Domestic Product GDP(which is what most countries used to determine their country’s relative position in comparison to other countries when it comes to progress)

I did find this interesting graph showing GDP vs. happiness…showing there really is no correlation.  The poor people of Columbia and Guinea are just as happy as some of the worlds richest countries by GDP: Switzerland and Denmark, and are more happy than people in the US which enjoys the worlds second highest GDP.

2.  It assumes a meaningful life equals a happy life and that meaning is derived through progress which is derived through a combination of health and income
In many ways meaning and happiness are connected – if you feel having a purpose or meaning is important to your life, then without it, you’ll probably be unhappy (although there’s still people out there who don’t require stated purpose or meaning to experience happiness…most kids don’t!).  So that connection feels right (again I wasn’t able to find any large scale scientific studies on it – weird).

I think where we get off track is when we assume that the meaning itself is derived through progress which we assume comes from income and health.  There could be so many other interpretations of progress and meaning – and in fact when people talk about life meaning or purpose, they often talking about “leaving something for their kids”, having a positive impact on others” – none of these things require progress or money to do.
As a side note, the rise of obesity and depression in Western Societies also shows the pursuit of personal income comes with some heavy side effects

The other important aspect of how meaning is described in an economic progress context is often on a macro, rather than micro level.  That is,  the effect felt by humanity as it progresses after an individuals death, not the meaning experienced by the individuals themselves during their own lifetime.  For example – how much meaning would someone working in the industrial car age have received in working on the same car parts every single day?  I’d say not as much as the meaning derived by humanity in the ability to now transport themselves hundreds of miles in mere hours that perhaps allows them to live, work or visit family that would have otherwise been difficult in the past.  Does progress require that some must suffer so that others may benefit?  And if so, are there some benefits that are not worth the suffering, when the benefit only contributes to economic progress and not directly to meaning or happiness?

So what’s more important, meaning or happiness?
Well logic suggests a balance of both.  And the data suggests countries could achieve this balance in ways other than measuring GDP which does not correlate to happiness forever.  Compared to ancient market forces, capitalism is a baby.   Who can say whether it will continue to sustain itself.  If (or as some would say, when) it fails, we need a system that can maintain happiness and meaning in balance or the humans of that generation will suffer a deep psychological chasm that could hurt generations into their future.  If we used Guinea or Costa Rica or Colombia as case studies, we could find key elements to a new structure that would enable meaning to thrive without capitalism.  My guess is it is heavily reliant on a sense of family and community and is supported by cultural modes of working and interacting that are native to the area – although I’d need more time to look into it.

The reality is most humans aren’t going to turn around and sign up to a new way of working if it sends them back to the dark ages and having to farm their own fruit and veg living naked on a commune farm in Tasmania (sorry to my dear Hippy friends!) – so we need a system that allows us to maintain similar lifestyle but also make considerable leaps forward in our personal well-being and happiness.

This would be my checklist for finding an alternative:
1.  Run a survey to 50k people on Google Consumer Surveys for $10k (cheapest way to run surveys around!) and get responses to two key questions:
a) What do you believe is the meaning of life for you?
b) What do you believe is the meaning of life for human kind?
c) What makes you happy?
d) Do you think that happiness and meaning are connected? (e.g. without meaning, you can’t have happiness or visa versa)
f) Do you believe you would be happier if you earned more money?

2.  Study societies where GDP and happiness are not correlated, find the source of happiness for those communities and look at ways these could be applied in other societies.  Bhutan’s fourth Dragon King, Jigme Singye Wangchuck  was onto something when he coined the term “Gross National Happiness” as a way of measuring a countries psychological state as an important and connected measure of progress, verses just the traditional monetary economic measurement.

3.  Study societies where technological and scientific progress occurred without capitalism or communism, then get sci-fi fantasy writers and economists into a room for a brainstorm session!  Creativity and logic are powerful combinations for innovation.

4.  Get the economists to create economic models, to model out the transition to the new state (or the transition from a failed state to the new alternative) because it has been too long really since anyone properly got their hands dirty on this one as there are so many things that need to be taken into account – particularly in a transition model where the transition would necessarily begin with education of young minds and would need to occur over perhaps 100-150 years.  Some good alternatives exist for business which you can read about here, but communism and socialism tend not to work if applied as the only system of governance across a country because humans have an inherent need to be individual while also being a part of a community and that must be balanced appropriately.  (Australia has some socialist constructs which were created with the best of intentions but do end up with some unwanted side effects in the market – such as Medicare which provides much needed care for our poorest, but also encourages those with enough money to rely on and overuse the system, come to expect more than necessary and makes doctors and clinics dependent on the system also which may have some impacts on innovation.)

We measure money and not happiness because its EASY.  But easy doesn’t make it fit for purpose.  1+1 = 2, but that equation won’t solve Einsteins theory of relativity.   It simplifies humans to a common denominator that doesn’t even match their perceived experience of reality!

I don’t have $10k lying around right now to do the research, but I’d be interested to know YOUR answers to those survey questions if anyone would like to share 😀