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The Great Reset

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Smurf1976 said:
You’ve just described it.

From the middle class to the lower.

Then it’s spent.

That leaves rich and poor with a large gap between them.

The inability of young people to afford housing is a major symptom.
Click to expand...


In the US in terms of wealth the greatest transfer of wealth ever has / is happening already, according to Time $50 tril from the lower income to the top 1%.
Remember Trumps unfunded tax cuts to the top end? Adds nicely to the above figure widening the gap further.

The so called golden age in the US (MAGA) was also when they had the highest tax rates.

Australia hasn't to the same degree but we are headed down the same road the Coalitions unfunded tax cuts being of the same ilk along with killing penalty rates for the low payed reeks of the same mind set.

If you are talking about government revenues being transferred to the poor from memory the aged pension soaks up the biggest share welfare payments are a long way behind.

My points before were intended to be more about the size of the middle class roughly equals the strength of the democracy and political stability.

Edit: sorry re derailing the thread.
 
What has to be kept in context when talking about tax cuts, it has to be remembered that with inflation and normal economic growth wages increase, therefore tax brackets have to be moved and why Labor is reducing the tax on the highest paid workers next year.
For example when I started work, the top tax bracket was 60% and it started at $35,000.
If that was still the case the people who are screaming now to not reduce taxes, would be screaming just as loud to reduce them, the debate is way to focused on political bias not on economic realities.
The coalitions unfunded tax cuts on the middle class, was to alleviate the pressure off them, as they do most of the heavy lifting, the high income earner tax cuts next year are the contentious ones.
This is a good article, which covers a lot of the situation that is currently happening, all over the western world.
Is it a reset, yes, a reset from a changing economic model that has developed over the last 30 years IMO.

As 2023 looms, the global economy is undergoing a momentous shift. Here are five things shaping our future

At the beginning of the year most were convinced inflation was a short-term reaction to the pandemic. Now it's proving to be far more persistent, writes business editor Ian Verrender.
www.abc.net.au
 
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The current tax cuts (US and AU) are simply a transfer of wealth as there were no other changes to the tax system.

In Australia's case even more so, they were sold as reforms which Australia's taxation structures badly require however the cuts were unfunded and with no other changes to plug the revenue hole.

Governments require revenue no matter what size, the round of tax cuts without real reform is senseless IMHO when we have outstanding a $trill debt with government deficits' far out into the future and no plan to reduce at least during this generation.

Another frustration I have (without getting political) was the $40 bil jobkeeper given to profitable business's another greatest transfer of wealth in Australia's history from tax payers to private interests around $20 bil went straight over seas.

The big question and concern in my mind is the reduction of the middle class / income group that maintains stability not only in the political sphere but through out communities. The middle class will carry us all through major calamities rather than allow the current dog fight divisions that are occurring in the US that could go anywhere IMHO.

The reduction is perhaps driven some what by changing economies, working environments and types / availability of employment.

Is this all exacerbated due to aggressive conservative governments weakening work place laws, not supporting high end manufacturing, providing conditions such as cheap energy and attractive environments for value adding industry, debasing training for middle class aspirants that don't go to university etc.

Compound this with center left governments that also fail at running the narrative to allow the above to happen and not compensate with the required policy's.

Of course there is much more and better minds than me here that would see it differently.
 
Yes @IFocus workers earning less than from memory about $50k pay no effective tax, add to that those on unemployment, pension, disability and the middle class are the ones who have to fund it.
The wealthy, those who operate a business etc have ways to minimise tax and fines etc, whereas the middle class wage earner have their tax, their super etc removed before they see it.
It isnt only conservative Govts that attack the worker and their conditions, despite the narratove.
 
Dudes, tax cuts for the wealthy are chump change in the wealth distribution game, most completely irrelevant.

Look to central bank and treasury actions, creation of money and the Cantillon effect, among other related things.

If you think taxation has anything major to do with wealth distribution, you just haven't been paying attention.
 
For those who want to actually read upon the Australian tax system, it is a bit dated 2011-12, but it gives a great breakdown of the progressive personal income tax system. Also not a lot has changed since the report was written.

Research

Research
www.aph.gov.au

  • Conclusion​

    This paper has attempted to provide some context to the ‘national conversation’ about individual income tax by providing details of the value of the major deductions and offsets in the individual tax system to tax payers across the income range. As such is does not address other tax concessions available to individuals such as the exemption of the family home from capital gains tax considerations, or most of the concessions relating to superannuation.
    While there are clearly some deductions that are of much more value to those with high incomes, in many cases this reflects their higher income in the relevant area and the increased complexity of their tax affairs. Rental deductions are the largest deduction on average across all income ranges, with deductions being greater than the income received in aggregate for all income groups.
    Tax offsets in total are more targeted at those on low incomes, in many cases removing them from paying any tax. However, the termination payment offset is second only to low income tax offset in total value, and is of most benefit to high income individuals.
    Overall, these deductions and offsets reduce the proportion of gross income paid in tax by those on high incomes more than by those on low incomes. This is not sufficient to significantly distort the progressive nature of Australia’s individual tax system, but does have considerable revenue implications.
 
Manufacturing.

It was never glamorous but ultimately it gave pretty much anyone the opportunity to do some sort of work, from professional to manual, that was reasonably secure and well paid. Regardless of whether you were in the analytical lab or whether your job was to stack the product on pallets, it was stable employment and paid well enough.

Then the West abandoned manufacturing and what's replaced it is much of the problem. We've got industries such as finance, mining and medical that pay extremely well but employ not many people. For the rest, it's low end service industries that don't pay anywhere near as much. That right there splits society into two.

We always had some service industries yes but previously they were a minor part of the economy and those who ran them could charge more in real terms since the customers all had well paid jobs in other fields.
 
IFocus said:
Germany?
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Well you never know when there will be a war. ?

Check out where VW have their plants, the majority definitely ain't in Germany.

List of Volkswagen Group factories - Wikipedia

en.wikipedia.org

Turkish guest workers transformed German society – DW – 10/30/2011

In the 1960s, Turkish workers arrived in Germany to fill the demand for cheap labor in a booming post-war economy. Many of them never left, creating a minority community that changed the demographics of Germany forever.
www.dw.com

Germany marks 60 years since Turkish ‘guest workers’ came during labour shortage

Two children of Turkish migrants to Germany developed Pfizer Covid vaccine
www.irishtimes.com
 
some want the middle class extinct

i don't know where those folk studied economics and business , but they should demand a refund

the plan seems to be 'break everything' and 'build back better' but those folks seem to be incapable of doing anything for themselves ( and they WILL be doing mostly for themselves , because they will not be able to trust the minions )

maybe AI machines will be the answer ( WINK )
 


Haha don't mention the war... ?

Germanys manufacturing base has changed some what but they are still a manufacturing power house, however as noted by Divs rising energy costs or lack of energy as a result of the Ukraine war will stretch / hurt them.

Worked with Germans on a fully automated plant 1986 (it actually worked) , two electricians 23 year old and a 26 year old made it happen they were next level made Australian elects (me) look like kindergarten kids.
 
i see other base metal shortages as well ( but probably not iron ) , Germany used to excel in efficiency , and the after the fall of the Soviet Union cheaper labour from East Germany , but now they are relying on complex supply chains ( like several major industrial nations ) can Germany keep that edge ??

and if Germany stumbles the EU will have fainting spells
 
IFocus said:
Germany?
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There are exceptions as with most things.

Germany still has significant manufacturing and it's not a coincidence that Germany is the economically strong country propping up the EU overall.

It's not just the jobs bit, it's that taking low value raw materials and turning them into a higher value product brings real money into the country. With every shipping container that goes out with whatever product in it, money comes in.

In the Australian context well Adelaide and Melbourne in particular were built on the back of manufacturing but it wasn't confined to those cities by any means. A generation ago pretty much every tradesman and handyman in the country had screwdrivers which looked exactly like these:



Look closely at the handles.

Factory was in the northern suburbs of Hobart with the same company manufacturing other tools in other states.

No doubt it was noisy and unglamorous but ultimately it gave reasonably well paid work that no longer exists in this country. However many people were employed to make screwdrivers and stick them in boxes which were shipped across Bass Strait there's a lot fewer employed to just unload a shipping container of imported products that turns up from China. Meanwhile the money goes straight overseas.

Then there's the supply chain to make it happen. Even for a really simple product like hand tools there's steel, plastics, logistics and even cardboard boxes and printing. And of course there's the upstream supply chain for those industries too.

Now my point there isn't political, it's just economics. As a society, we can't get rich delivering food and our current standard of living is on borrowed money and borrowed time. A "reset" of sorts is inevitable for all countries in that situation - the present economy is simply not sustainable.
 
and the trend to power tools only makes the problem much worse

( hint DON'T throw away that old stuff granddad owned )
 


Still have a couple originals from my apprenticeship days paid for them out of my $28 a week wage, great pic Smurf.
 
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