Loss of trust in politics goes both ways

There has been a lot of commentary on voters’ loss of trust and faith in politicians. Survey after survey shows it, and election results like Trump and Brexit confirm it. However, this loss of trust and faith goes both ways — and perhaps we should be even more worried about the loss of politicians’ faith in the people.

In recent weeks and months we have seen a wave of troubling policy proposals, both in Australia and overseas, that displays a deep lack of trust in markets and the ability of people to make their own choices about who to listen to, how to spend their money, and now how to plan for their retirement.

The Coalition is pushing ahead with plans to significantly regulate public policy commentary, and ban foreign donations outright; the latest ham-fisted attempt to combat the public not listening to the inane mumblings of their political betters.

In the US, Trump has proposed significant tariffs, which Australia supposedly opposes, yet back home we have the unedifying sight of Australia’s major political parties competing with each other over who can be the toughest on dumping, a different — and more insidious — kind of protectionism.

Finally, this week Labor proposed a significant slug on the incomes of self-funded retirees. It seems they would prefer people to be dependent on the age pension.

All these moves have at their core the same fear of market oriented solutions, and a preference for government oversight, regulation and control.

Yet markets are just people meeting and making choices. Yes, they are more complex than someone trading a bag of grain for eggs in some archaic village, but that fundamental nature of free exchange and choice remains.

This is why tariffs and anti-dumping protections exist: when given the choice, people will overwhelmingly choose what is good and cheap, and they typically won’t pay a premium to ensure that something is made in their country.

There is no better example of the futility of struggling against this basic truth than the multi-decade, multi-billion dollar crusade to keep a failing car manufacturing industry in Australia.

The worst part of this struggle against reality is that the country is better off when consumers are free to make those choices. Efficient producers in other industries become more competitive because they can get cheaper components, capital is allocated more efficiently and standards of living increase. Jobs and growth inevitably follow.

Tariffs might nominally be a tax of foreign imports but in fact they are borne by domestic consumers. Of course some are happy to cut out the middle man and, instead of indirectly increasing taxes through tariffs, to go straight to the source and raise taxes directly.

If Labor can call a huge increase in education funding a cut — compared to their own massive, unfunded spendathon — they have no grounds to object to the Coalition calling their abolition of franking credit refunds a tax increase.

Labor can’t have it both ways. They oppose cutting company tax on the basis it is essentially a prepayment of shareholder tax (a withholding tax as Paul Keating described this week), and therefore the rate doesn’t matter for domestic investors.

But on the other hand they argue franking credits refunds are government welfare and not return of that same withholding tax already paid by the company. This is key: the tax being refunded to pensioners and retirees has already been deducted by the company. Its return is no more a handout than getting a refund from the ATO on your PAYG income tax.

On a more fundamental level, the idea of independence from government money in retirement is being actively undermined by politicians who see the superannuation of self-funded retirees as a big pile of cash they’d like to get their greedy mitts on.

Forget people being able to make their own choices about funding their retirement, apparently it’s far better (and ‘fairer’) that everyone is forced onto the pension.

The only consistency is that government always wins and the individual always loses.

The examples are endless: the sharing economy has to be regulated because otherwise people will agree to avoid our cumbersome and expensive regulatory systems. And the less said about the plan to tax and ban sugar into oblivion, the better. Why wouldn’t the people conclude that their supposed political betters no longer trust them to make their own choices?

Rather than promising to regulate everything that moves and tax everything that doesn’t, politicians should start pushing responsibility back on individuals. Moreover, if individuals really are losing faith in politicians, then we must start demanding that responsibility back.

After all we can’t possibly do a worse job than they are.

Simon Cowan is Research Manager at the Centre for Independent Studies.