Martin Wolf has a long and thoughtful article on capitalism's woes in the FT today. I don't agree with it all, but I do with much of it. I especially like this:
As the Organisation for Economic Co-operation and Development, the Paris-based think-tank, showed in a recent report, high-income countries have seen large rises in inequality over the past three decades.
Many would argue that inequality is unimportant. To this, there are two powerful responses. The first is that it is important if it is politically salient. It is. The second is that inequality of outcome has a strong bearing on equality of opportunity, about which many more do care.
What are the answers? Among them must be explicit fiscal redistribution from the winners to the losers and particularly to the children of the losers; subsidisation or direct provision of jobs; big efforts to improve the quality of education and childcare for all, including public financing of access to higher education; and a determination to sustain demand more effectively in severe downturns.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
If any subscriber cares to test Martin Wolf’s argument, they’ll do no better than read the politically unbiased “The Spirit Level” by Richard Wilkinson and Kate Pickett. I am coming round to the view that a government which directly addresses the magnitude of wealth inequality would see it’s society and citizens soon reap the benefits of such leadership. Furthermore, I would argue that such a state would actually need to interfere in people’s lives far less than the current or any previous government has done as the population would come to make life improving decisions of their own accord. It seems however that we need to see the emergence of a new political force before the disaster that is neoliberalism is finally shown the door.
At a time when there is a proposal to save money for the state by capping benefits to the poorest 10% in society, shouldn’t caps be put put on the various tax reliefs generously provided by the state and shamelessly exploited by the richest 10% ?
Yes
More on that soon
Rousing speech at Le Bourget yesterday by Francois Hollande (socialist party), moving up a gear in his bid to overthrow Sarkozy in the forthcoming French Presidential elections. His “”real enemy”? The world of finance which (roughly translated) “in front of our eyes, in 20 years, has taken over the economy, society and even our lives”. He proposes, among other things, a radical overhaul of the tax system, together with investment in education (with creation of more posts), youth employment, housing and health, and maintains his intention (if elected) to renegotiate last month’s Eurozone ‘agreement’.
How much of that he could or would achieve remains open to question. But it was heartening to hear at least some clear ambition and drive for real change and a fairer and more just society. Hope springs eternal!
Report (in French) in Le Monde http://www.lemonde.fr/election-presidentielle-2012/article/2012/01/23/francois-hollande-surprend-ses-adversaires-et-ses-proches_1633189_1471069.html#ens_id=1590109 with more details here http://www.lemonde.fr/election-presidentielle-2012/article/2012/01/22/finance-laicite-francois-hollande-esquisse-son-programme_1633012_1471069.html
Just found report in the Telegraph – brief, but in English!:
http://www.telegraph.co.uk/news/worldnews/europe/france/9031220/French-front-runner-pledges-to-cut-his-pay-by-30-per-cent-as-he-aims-to-become-next-president.html
May I ask a (hopefully related) stupid question, Richard? We don’t appear to have a progressive tax system in the UK.
As I understand it from http://www.hmrc.gov.uk/,
Income tax: Above £7k, 20%. Above £35k, 40%. Above £150k, 50%. OK.
(Personal allowance is removed at £100k adding £1.4k tax max. Minor.)
But: National Insurance: Above £7k, 12%. Above £42k, only 2%.
Combining tax & NI: Above £7k, 32%. Above £35k, 52%. Above £42k, 42%. Above £150k, 52%.
This is an almost flat tax curve. Add in capital gains tax or investment income and the effective tax rates will drop further at the high income end. For example, effective tax rates in the US.
Why don’t high earners pay National Insurance? Am I wrong to regard it as a tax? Have I got something wrong?
You’re bang on
But build in VAT and council tax and it’s actually regressive
That’s how bad it really is
And still the 1% say they’re over taxed
Now factor in the benefit system.
Yes
And….
You clearly don’t realise how mean benefits are
Not sure if you read the comments, some were quite interesting. Nick from Norwich popped up and mentioned the Robert Kett memorial march we were at last month. I gave you another shout out, have already been telling them how good your book is. Funny how many folk one meets at Occupy seem to pop up on the FT.
Occupy is in all the right places!