From Heather Stewart in the Observer this morning (a gift that just keeps on giving today):
In the heady days before the credit crunch, the logic was that business leaders must be allowed to become filthy rich, so they would go on sprinkling their fairy dust on the rest of us.
But that won't wash any more. ... [T]he myth of the "wealth creator" has been well and truly shattered. Many of Britain's top earners are not entrepreneurs in any meaningful sense: they're financial engineers, speculators or smash-and-grab venture capitalists, whose winnings are earnings, pure and simple, and should be taxed as such.
Precisely so.
Now all we need to do is get at least Labour to understand that. It may be a step too far for the so-called business friendly Tories who are anything but.
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This is the world of Krugman blog November 18 2010 ‘Debt, Deleveraging, and the Liquidity Trap’ in which the paradoxes of thrift, toil, and flexibility befuddle the microeconomic businessmen. And as for the City profiteers, Brad DeLong did some number crunching for the growth of Wall Street in his column ‘America’s Financial Leviathan’ 2011-12-30, and found that:
“In 1950, finance and insurance in the United States accounted for 2.8% of GDP, according to US Department of Commerce estimates. By 1960, that share had grown to 3.8% of GDP, and reached 6% of GDP in 1990. Today, it is 8.4% of GDP, and it is not shrinking…overall, however, it remains disturbing that we do not see the obvious large benefits, at either the micro or macro level, in the US economy’s efficiency that would justify spending an extra 5.6% of GDP every year on finance and insurance.”
Facts look like facts to me.
I have long wondered about the difference between wealth creation and wealth re-distribution. Some people do create wealth; for example James Dyson helped to give us cleaner floors, and cleaner floors are, actually, a form of wealth. We’re better off when he have them.
Compare and contrast that with fund managers (just one example), who charge regardless of how successful they are.
Is there any way of taxing one form of wealth more highly than the other, and thereby just possibly changing some behaviours? Probably pie in the sky, but it’s an interesting thought.
We used to tax wealth redistribution more than wealth creation
Now we do it the other way round
It is possible to reverse the situation
They are actually the destroyers of real wealth., not the creators of it All they do is take vast swathes of money out of the economy that could be invested in genuine wealth creation, actually making things people want to buy, and speculate with it. All they do is create money from money, or more precisely, debt out of debt.
Why invest in something that actually makes real things that provides money to circulate as real wages when it takes two years are more to see any real returns when specualting with money can see returns in a few weeks?
Instead of creating real wealth,real wealth is devalued on the currency exchanges. Literally trillions every week is sucked out of the real economy in order to get juicy returns on the speculation ponzi scheme.
And if they overreach themselves again, as they surely will, who will be left to pick up the bill? Three guesses!