Winning government by reducing inequality

Shann Turnbull

How can politicians win government to cure the current levels of inequality, identified by Thomas Piketty[1]? A compelling counter-intuitive approach that is not considered by Piketty is to reduce taxes. However, the reduction would be conditional upon the rich sharing their assets with the poor.

The distribution of assets rather than income is not taught in economic courses. However, it has been practiced from ancient times. The Bible describes the year of Jubilee where debts are forgiven and land ownership redistributed. Over the centuries investors have built and owned infrastructure projects like toll bridges and roads that are later transferred to public ownership. They are described as Build, Own, Operate and Transfer (BOOT) projects.

As a serial entrepreneur the author has obtained millions of dollars offering investors limited life investment contracts[2]. Limited life is normal in business. Most productive assets wear out and all intellectual property rights terminate. Patents may only last 20 years.

Corporations are a crucial business exception. This is because corporations were developed by English Sovereigns in the 17th century to privatize the cost of empire building. After their war of independence, US states adopted time-limited corporations as then found in Europe. This was to avoid corporate re-colonization[3]. It also avoided overpaying investors to generate inequality.

Around 40 per cent of Australian business is foreign owned. This can drain cash out of the economy many times greater than the money invested. As noted by Professor Penrose it introduces 'acceptance of an unlimited, unknown and uncontrolled foreign liability'[4].

It means investors can get overpaid in perpetuity. Domestic national income available to Australian citizens is reduced and so inequality exacerbated both domestically and internationally. To makes matters worse the Reserve Bank notes: 'that income accruing to foreigners is understated and national income is overstated'[5].

Another fundamental problem is that accounting doctrines do not identify and so report investor overpayments. What is not reported is not noticed by economists or managed by politicians. An exception was Dr Evatt. He stated that General Motors Holden dividends were 'about 8 per cent of the dollar export receipts in the Australian balance of payments for 1954-55'[6]. They wer