There is a debate going on in Australia at the moment about superannuation. In particular, the percentage of superannuation payments that companies must make for each employee.
Currently, the law says that 9.5% of the base salary is the minimum requirement.
Some companies go with more than that in order to provide attractive remuneration for staff. For example, the university sector has very generous superannuation levels well into double figures. But overall, weak investment returns and stock market volatility will leave many workers with modest super at retirement.
In response to this future problem, the Federal government promised to raise the minimum rate of employer superannuation contribution to 12%.
This has benefits to workers but also to the economy as a whole when those workers become retirees and have more money to spend.
Only the Australian PM Scott Morrison is considering delaying the legislated increase from 9.5 per cent to 12 per cent… to protect jobs.
It is a boon for politicians to stand up and say “isn’t it wonderful that we are trying to improve the superannuation rate”. Even if they then say that they will delay it to protect jobs in tough times.
When the PM or any of his ministers stands up to speak though, he probably doesn’t tell everybody that his superannuation as a member of Parliament is already 15%.
Imagine standing up and saying well, ladies and gentlemen, I get 15 per cent you get nine and a bit, but we’re going to raise yours a little bit or maybe not now that COVID-19 has stuffed everything up.
That is really not going to go down too well – one rule for you and one rule for me.
Jeff Bezos is worth $US183 billion according to Bloomberg’s Billionaires Index.
Since March 2020 when the COVID pandemic was declared, Bezos’ wealth has swelled by $US67 billion.
His income is roughly $US2,000 per second.
The arrival of the COVID pandemic with its lockdowns, social distancing, and unprecedented hand sanitisation has been a shock. It’s jolted perception of the way the world works and made a few folks think twice about how our societies function.
People are reminding themselves of exactly what goes on in the system of economic production and social organization. The one structured around profit. The successful are those who are able to sniff profit from gaps in the market, new products, and price anomalies — the everyday activity of trade.
And trade makes us all happy from shoppers to shopkeepers, groceries wholesalers or investment bankers who trade in futures, derivatives and their latest invention for a complex financial instrument. It doesn’t matter what type of financial transaction you’re engaged in, ultimately you’re looking for more in return than you give away.
It is often said that the best products are those where the buyer perceives greater value than he’s giving you in payment. Only you must receive from him more than it costs you to deliver the goods or service.
When this happens everyone wins.
So what is there to question given that the pandemic is, after all, just a blip in the never ending growth trajectory? Well, how about the privatization of asset recycling and the fundamental belief that free trade and minimum government will maximize our society and the profit opportunity?
Apparently, the theory of free trade and the mathematical formula that underpin it still holds true. Minimum government is ideal until there is no work for people to do and then maximum government is necessary, spending big by printing money to prevent everything crashing, and, of course, maintaining the opportunity for profit. Governments whose prime agenda had been to balance the books have racked up extraordinary levels of debt. Global debt in US dollars is now pushing US$270 trillion. That’s an increase of $50 trillion in less than five years.
Great success according to Jeff; US$2,000 a second anyone?
Over the years of promoting profit, growth and more growth, many economists jettisoned an equally important concept on the other side of the ledger. They forgot about distribution. What should happen for any system of trade to be sustainable is that the wealth creation is evenly distributed or at least has the potential to flow down to the lower levels of the system. If it doesn’t flow fast or far enough then a critical mass of people might become disgruntled enough to cause a ruckus.
Only what we’ve seen is that the distribution of wealth is now concentrated more and more into fewer and fewer people.
Check out this excellent website that shows just how much wealth is concentrated into first Mr Bezos’ accounts and then those of the 200 most wealthy people in the US.
Take your time, it is hard to fathom.
The gap between the unimaginable levels of wealth of the people controlling the money compared to working-class living is growing and not because living standards in the developed world have declined in recent decades. The decline that fueled the popularism that delivered Trump his presidency.
It is because of wealth creation and concentration.
The liberalization of financial markets has seen debt levels explode at a national corporate and personal level. There’s now so much cash injected into the global financial system by reserve banks that the traditional business cycles have halted. It’s added to our past excesses, rather than curbing them. And all the while the wealth has become ever more concentrated at the top.
The .com crash added debt. The global financial crisis was solved with more debt. Now we have the COVID health crisis shutting down the global economy and the solution is even more debt.
Remember what debt is ”an obligation that requires one party, the debtor, to pay money or other agreed-upon value to another party, the creditor” only a huge chunk of this printed money is making a handful of people… Well, you know what I am saying.
There are only three possible outcomes. One is that central banks wind that an economic recovery allows them to withdraw their stimulus without collapsing asset prices like stocks and housing. The second is that governments take over pick up the slack in jobs and corporate cooperate with each other the solved global poverty and equality. The third is war this yard uses the most likely and the least pleasant outcome.
Victor Schvets, Macquarie group managing director and group head of Asia Pacific.
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New Zealand Prime Minister, Jacinda Ardern took her global reputation for compassionate leadership that many of us crave and won the New Zealand election in a landslide.
The Labour Party she represents can now form power on its own without any alliance with minor parties. To achieve this in a small country with a proportional representation voting system is remarkable. It seems the majority of people in New Zealand are not only proud of her and what she’s achieved but want her to carry on.
Curiously then we see in the left and right-wing media in Australia articles that are saying “Oh but she’s got so much more to do”; “It’s now when the real difficulty begins”; “She won’t be able to carry on.”
The classic tall poppy slash. A poppy grows up and becomes tall to shine light and beauty on everyone else. And so we have to chop it down.
What is with this? What is wrong with us? Why are we so obsessed with cutting down success in all but our sporting heroes?
Ardern has shown what can be done, what a sense of humanity and empathy can do in a leadership position. And you’re not telling me that a person can rise to lead a political party in the west in modern times without being a fierce politician. She battled away to that position, just like anyone else would have done. I suspect that in the negotiating room, she’s as hard as the next one.
The difference with Jacinta Ardern is that she seems to remember where her humanity lies. There’s a photograph of her taking homemade scones to thank her campaign helpers. The article presents that in the narrative as though it was a cynical thing to be doing. Not at all. I believe that she actually has that level of empathy and understands that it’s people that matter.
And it’s the little things that you do for people that they remember.
It would be truly splendid if many more politicians developed this level of empathy. But more importantly, the skills to show it. Not only to people one-on-one but also to the rest of us who never have the privilege of meeting them.
I think it’s time we called out some of this tall poppy bullshit and gave people the credit they deserve for achieving great things.
The fact that the flower puts itself up above the rest to attract the insects is a risk to the plant. It takes courage and bravery to become a tall poppy.
That should be admirable.
Instead, the slashers come out.
It’s time that we recognized that courage for what it is and to be thankful that there are some people left prepared to show it.
This post is a little petty, a bit of a whinge, and yet necessary.
There should be some advantages to high office. Typically the benefit is not stellar remuneration. For example, the Prime Minister of Australia earns A$550,000. Whilst this amount is considerably more than the average punter, the top ten CEOs in Australia all earnt over A$10 million in 2019.
If you want to make millions don’t try for the top political jobs. You won’t starve but you won’t be buying a yacht anytime soon. You will need to borrow one from your business mates.
The head of the Reserve Bank of Australia, technically a bureaucrat given that the government pays his salary, Dr Philip Lowe earned just over A$1 million in 2019 and was responsible for managing a $182 billion balance sheet. The highest-paid pure bureaucrat was the Department of Foreign Affairs and Trade secretary with a total remuneration of $936,442.
Alright, so the more significant monies go to the private sector and the help.
Now I am not sure this is even remotely sensible for two reasons.
The first is that how are the best people for the job going to apply if they can get an order of magnitude better money elsewhere. Politicians are underpaid. Never thought you would hear that one. Only the current crop is overpaid for their capabilities but if we are to attract the best to do the toughest jobs, we need some pay parity to make the remuneration for messing about in parliament worthwhile.
The second reason is that CEO salaries are way too high. The way to achieve parity is to get a grip on the private sector’s excesses. Sure a reward for responsibility is necessary and they also want to compete for the best minds but really, $10 million. That is just taking the piss.
But wait, I have missed something.
There are perks to high office.
Here is one taken up with extraordinary enthusiasm by the recent POTUS.
Meantime the CEOs are circling their wagons.
The biggest Australian telco, Telstra CEO decided to blame the kids. Back in 2019 he was quoted as saying “Young kids are earning $5m playing Fortnite but when a business executive devotes a huge portion of their life … that it’s somehow morally wrong they get rewarded for it.”
Wait a minute.
A youngster with millions of online followers who love everything their hero does can earn a hefty sum. This is a simple supply-demand function that the CEO should understand. Just that same way that top-level professional soccer players with massive followings for themselves and their clubs can command crazy salaries, the CEO can get one too.
The point is the balance has gone. High public office should be rewarded by more than a medal for service and the CEOs should be paid on performance, not by their mates on the board.
Australian billionaire, Solomon Lew, pocketed $24.25m in dividends after his retail empire, Premier Investments, received almost $70m in wage subsidies during the coronavirus crisis.
What bullshit is this.
If 50% richer during a global crisis that put workers into lockdown in their homes doesn’t raise your hackles, then paying out big dividends to shareholders with one hand whilst holding out the other for a subsidy surely will.
It makes the abuses of power by Trump look benign.