Economic mantra is pie in the sky
Not an equal slice, of course – heaven forbid, I’m not a communist! But a slice that will heat the house, fill the petrol tank, keep the kids in watertight shoes and food on the table. For everyone.
‘We have to grow the pie’’. I hadn’t heard this gem for a while, but I heard it this week from someone proposing a course out of the current economic omnishambles. It was about the same time that I read about people having to skip meals to ensure their children were fed.
To be clear, ‘grow the pie’ is not some hokey advice to the less well off that combines putting in a veggie garden with learning some simple baking skills.
It represents a way of thinking about wealth and how it is distributed. Like-minded phrases include ‘‘a rising tide lifts all boats’’ and ‘‘trickle-down economics’’.
The first of those last two at least has the advantage of conjuring in the mind’s eye an idyllic scene, some unspoilt seaside village in the Greek islands perhaps, where the fishing boat and the simple honest dinghy bob together in the sundappled blue waters. The second lends itself to a more scatological analogy relating to what the rich do to the poor.
Anyway, ‘growing the pie’ is all about putting one’s faith in the pronouncements of an all-seeing, all-knowing entity called ‘the market’.
If the world were a science-fantasy film, ‘the market’ would be played by a black-caped Benedict Cumberbatch, perched regally on a rocky throne atop a lightning-lit mountain, pointing at things and declaring their worth.
In real life, ‘the market’ also determines the value of each and every one of us, but without the accompanying theatrics. Invisibly, as Adam Smith may have said. Thusly, if you are, say, a hedge fund investor (no, I don’t know what that means either) then your worth is deemed to be many-fold more than someone who, say, cares for, showers and wipes the bottoms of residents in aged-care facilities.
And so in the pie of life, the hedge fund investor gets a nice fat piece approaching the size and shape of a gibbous moon, while the bottom-wiper is left with a narrow wedge.
Or, to use the ‘rising tide’ metaphor, the hedge fund investor’s superyacht with helicopter pad rises on the very same tide as the aged-care worker’s barely-floating door from the just-sunk Titanic.
Why? Because the market deems it so.
Now this may strike you as unfair, particularly if you’re approaching an age where the wellbeing of the person who will (literally) be in a position to help you perform your ablutions assumes greater significance.
But to be fair, ‘fair’ was never one of the market’s unique selling points when it was unveiled in the showroom. ‘Efficient’, yes, and ‘‘your chance to make some serious coin’’, absolutely. But ‘fair’, not so much.
So when the unfairness in the market-driven pie model is pointed out – when you say ‘‘I say, how is it that in 2022 that person over there is having to skip meals to get by?’’ – its defenders feel bound to provide an answer.
It may not surprise you to know that that answer is not ‘‘You’re right! Why don’t we slice the pie another way? Evenly!’’
Oh, no. That sort of talk calls up nightmares of 90% personal tax rates followed by the storming of the Winter Palace and the forced confiscation of dachas in the countryside.
No, the answer is always ‘‘we must grow the pie’’. Grow the pie, and it will be all no worries, and sweet as for everyone. Full speed ahead to the land of milk and honey.
But here’s the thing: I’ve been hearing this mantra for decades. Way back into the last century. Just as greed will save America, so growth will save us.
And yet all that time the ‘pie’ has actually been growing. Well, not all the time. Occasionally there’s some shrinkage (I believe the technical name is ‘recession’).
And lordy, do we hear about it, with so much wailing and gnashing of teeth that it’s pretty clear growth, growth, growth is the expected course.
That given, my question is when will the pie be big enough that everyone actually gets a good enough slice? Not an equal slice, of course – heaven forbid, I’m not a communist! But a slice that will heat the house, fill the petrol tank, keep the kids in watertight shoes and food on the table. For everyone.
When will the pie finally be big enough for that to happen?
Well don’t look at me, I’m just your jobbing columnist.
I imagine the actual answer has less to do with bringing back Muldoon-era income tax rates and more to do with tax avoidance and the increasing aggregation of unearned wealth amongst the wealthiest. But we’ve had a go at unearned wealth already with a crack at a capital gains tax. And look how that was met.
With a wall of objections about complexities and loopholes and red tape that served to mask the more primal, honest response of ‘‘How very dare you!’’
Anyway if you have any answers, please write to me care of Stuff, enclosing a crisp five-dollar note.
Meanwhile, I could do with not hearing about growing pies for a while. But I could certainly go a sausage roll.