Lazy subsidies
...And what they really cost us (☕ spout shout #3)
If you read me regularly, this is a quick diversion from my wealth series.
If you don’t read me regularly, why the fuck not??
Seriously though, this is something I started writing some time ago, but seems relevant to now.
A while back, with all the Ukraine war and Covid supply-shocks and oil price inflation stuff, the Government here devised a policy to deal with a “cost of living issue” known as ‘Transport’. Their solution was a rough two-prong affair, which halved public transport costs, and also included a, not-insignificant, 25 cents/litre discount to the tax on fuel.
More recently, that same government announced a further “cost of living issue” election promise around ‘food’, to remove the consumption (GST) tax off selected fruit and vegetables.
It’s fair to say, these sorts of things are popular policies. Disengaged punters hear “remove tax” and understand it as a thing that will leave a few more dollars in their back pocket. But policies like these don’t attempt to ‘grow the economy’, they just shuffle opportunity around.
We all know our primary-school-economics, so we understand that when a price drops, it should result in some increased use. The question is, who really benefits?
For example, the $4 a week that GST-free fruit and vegetables might initially save a minimum-wage family is not much, if they’re already struggling to pay a $600/week rent. It is, however, pretty good for people who can afford to buy out-of-season limes, shallots, and heirloom mushrooms... I talked about that in an earlier piece:
In the same way, a fuel subsidy most supplementally benefits ‘Never-Bus’ people with ridiculously big expensive SUVs or pick-up trucks, who drive with the same energy as they loudly complain about pedestrian-conscious speed limits at council meetings.
And even the public transport discount only benefits anyone lucky enough to be able to afford a house on a convenient public transport route. Oh, and also, coincidentally, those same “Never-Bus” commuters who drive down any of the less-congested roads as the ‘poors’ on the bus.
Cynically, the intersection on the Venn diagram of people who spend lots in the fresh fruit and vegetable section, can afford a convenient housing location, and who will increase their driving if it costs less, contains quite a sizable ‘undecided’ voting demographic1.
On the other hand, if you don’t have much money and have to drive to work (because there’s no good public transport available) the cost of fuel remains a burden: Just one you have no autonomy over. You either pay what fuel costs, or you don’t go to work.
The fruit and vegetables thing is a bit different, because technically you can just live on KFC and pizza—albeit at great societal health costs. But a poor person who needs a car for work is what economics call an ‘inelastic demand’: Basically, the price is irrelevant to them across a pretty wide band. So, the subsidy might be appreciated, but it doesn’t mean you’re suddenly going to go out for long Sunday drives to enjoy it—you might just buy name-brand Weetbix this week.
My point is, there are better things that could have been done with that money. But they suffer from needing both political thought and effort. And then, after all that effort, they won’t appeal so much to Mr. and Mrs. Median-Voter.
So, these are what I call lazy subsidies. They are politics for focus-group-politicians.
I am, of course, aware that food and transport costs are a significant portion of many vulnerable people’s budgets but, equally, our public transport options are monumentally shithouse and our supermarkets are a duopoly. Making it cheaper to both self-drive and use public transport, with a public transport service that is mostly mythical, basically amounts to making self-driving more appealing.
The other aspect of this is the causes of high prices are largely solvable with time and concerted political negotiation. After all, it’s not like fuel costs were high because major world governments had all got together to sensibly tackle climate risk with something as courageous as Fossil-Fuel Extraction Taxes or something!
Ahhh, hahahaha! Fuck. Imagine that! RoFL!!
I have a great deal more to say about the benefits of public transport—that’s a series of newsletters in its own right—but let’s just say, great public transport or city planning will always be a more beneficial play overall than temporarily-cheap fuel.
Likewise, there’s a series in the collected benefits of incentivising healthy eating but, to my mind, that has to start with taxing junk-food. We’re not going to make any progress on good eating until Coke is not cheaper to buy than milk in a country that prides itself on having one of the world’s largest dairy companies.
Oil companies, retail fuel sellers, and supermarkets have quite a bit to answer for, with climate change and anti-competitive behaviour and all that shit; and they are hardly in the business of voluntarily lowering prices because some poor bugger is ‘feeling the cost of living’.
Essentially then, these sorts of ‘discounts’ became a pretty good way of making middle-class voters smile and likely obscuring a little profit-taking—2 cents here, 3 cents there—behind a combo of Ukraine conflict, supply-shock inflation, and “cost-of-living” spin, with business-as-usual behaviour.
Explicitly, I have zero doubt that, in the margin-friendly perishable fruit and vegetable section, supermarkets have already worked out exactly what customers are willing to pay. They have to because, otherwise, all they would be doing is throwing away both rotten food or profit. Therefore, no matter how carefully they are watched, the tax elimination will just slowly-slowly be wound back into profit, because customers are already well-trained to pay variable rates for their fruit and vegetables.
To make matters even more frustrating, that cost of living crisis…
…Actually. Sorry… let me just quickly say this:
A large chunk of our population has been in a ‘cost of living crisis’ for fucking decades! It pisses me off that the media and politicians have only recently started to field that phrase. And it’s because, now, people who can afford a deposit on a $1.3m house are panicking about their mortgage interest going up, and Lewis Road Creamery butter being suddenly a bit “out-of-reach”.
I used to wonder why we had so many children in my country coming to school without breakfast. After all, you could “buy a $3 jar of peanut butter and a $1.50 loaf of bread, and do breakfast for a week”… But, I realise now, that is both a shit life to have to stoop to and, regardless, even that is no longer possible!
For a large portion of our population, they have skills and pride and a work ethic; they already deserved more than having to feed their kids sugary peanut-butter and chaff-bread. Yet, despite all that, we have had a worsening (garbage)-bread-and-(peanut)-butter crisis for years, and we’re fixing it with weak election-cycle shit. So, if some desperate people were using crime or addiction to try and find some respite from that, I think a new segment of the lower middle class are just starting to get a taste of what might drive those behaviours.
As landlords continue to use this media-propagated crisis to excuse rent rises, and supermarkets use it for food price hikes (in order to maintain their costs-of-living), our absolute poorest are entering an (unpublicised) brutality-crisis.
…Sorry, where was I? Ah, yes, lazy subsidies.
People on $140k salaries (read: “voters”) have suddenly been feeling a little pinch, so the ‘cost of living crisis’ has justified all this bluster going into our election, including extensions to the original fuel tax discount in the past year (although, now we’ve, for real this time, lost it).
Credit where it’s due, the Government—much as I understand they largely just want to get re-elected—is likely aware of most of the above. So, they retained some discounted public transport. Now if we could just ensure public transport was actually good, and publicly owned and operated, so the subsidy doesn’t become another ‘2-cents-here, 3-cents-there’ profit-boost for private operators… But, again, probably a newsletter for another day!
It’s been said many times, but social concerns like decent public transport and poverty are more often a choice than we care to admit. And, that means any social burden from climate change and crime, or poor healthcare outcomes stemming from profit-taking, garbage public transport or poverty, are therefore also a choice.
When this is blatant, like when a government gives obvious tax cuts for the rich, or bail-outs to irresponsible banks, we can see what a clear choice it is. But when it’s just a lazy subsidy—like some narrow means-tested thing, an opaque tax reduction, or some other bureaucracy-building exercise—designed to drum up votes but not substantially improve the life outcomes or habits for anyone who really needs it—a choice is still being made: We’re just less inclined to see it.
The harsh truth is, our economic system, our accumulated resources, and our collected wealth all represent a choice: To work and fix our problems; or to continue to stick fingers in ears and say “lah lah lah” hoping they go away; or to react with things like subsidies that only move the needle that measures ‘electability’.
Of course, if we were to let an idea like that really burrow deep into our brains, it would drive us quite insane.
So, instead, us voters equate the value of a middle-class car driver with a bus full of 60 passengers. We trust supermarkets with a discount on their most margin-rich and variably-priced product lines. And we kick the can down the road on real things with dangerous limits.
And then we actualise it, in black-and-white-physicality, in the centrist policies of the lazy subsidies of our modern political campaigns.
-T
Cynically, it also doesn’t hurt its electability (with some of this crowd) when a “hand-out” is limited to “good” things like fuel and healthy food… Heaven-forbid we just give the poor money, as they then might spend it on cigarettes and booze!
I like Angry Tim.🤬 More please.🫣