Money, money, money……time to change?
Oxfam recently reported that the 85 richest people in the world own as much wealth as the poorest HALF of the population of the world.
Oxfam said that this elite group had seen their wealth collectively increase by $668m (£414m) a day in the 12 months to March 2014. It found that it would take the world’s richest man – Mexico’s Carlos Slim – 220 years to spend his $80bn fortune at a rate of $1m a day
The rate of inequality is increasing rapidly. Thomas Picketty, the French economist whose book “Capital” has taken the world of economics by storm, has shown that this trend is set to continue because the returns on capital are so much greater than the rate of growth in the economy.
Is this accumulation of wealth into the hands of so few healthy? Is it just? Is it fair? Is it acceptable?
The extent to which inequality causes harm was laid out very clearly a few years back in “The Spirit Level” by Richard Wilkinson and Kate Pickett (no relation to Picketty!). Their work showed strong correlations between the degree of equality in a country and the extent of a wide range of social and health problems.
What can we do about it?
The Oxfam report makes a number of suggestions –
With an endorsement from Andy Haldane, chief economist at the Bank of England, the report said a 1.5% billionaire wealth tax would raise $74bn a year – enough to put every child in school and provide health care in the world’s poorest countries.
A billionaire tax? Is there the political will in the world to deliver that? What else does Oxfam suggest?
a clampdown on tax dodging; investment in universal, free health and education; a global deal to eradicate extreme poverty by 2030; shifting the tax burden from income and consumption to capital and wealth; ensuring adequate safety-nets for the poorest, including a minimum income guarantee; equal pay legislation and promote economic policies to give women a fair deal; and the introduction of minimum wages and moves towards a living wage for all workers.
Herman Daly, who worked for the World Bank from 1988 – 1994 suggests two very interesting measures to tackle this growing problem.
we need a serious monetary diet for the obese financial sector, specifically movement away from fractional reserve banking and towards a system of 100% reserve requirements. This would end the private banks’ alchemical privilege to create money out of nothing and lend it at interest. Every pound and dollar loaned would then be a pound or dollar that someone previously saved, restoring the classical balance between abstinence and investment.
Now, there’s a fascinating idea! That money should represent something REAL in the world! With all these elaborate “financial instruments” money and measures of economic “health” of countries is becoming increasingly detached from real activities, real use of resources and real people. Maybe such a proposal could begin to shift the balance back from capital to labour? He also suggests
a small tax on all financial trades would reduce speculative and computerised short term trading, as well as raising significant revenue
That latter idea is what others call “the Robin Hood tax“.
So, there’s an interesting selection of ideas – a billionaire tax, a move towards 100% reserve requirements and a financial transaction tax. Which political party is trumpeting these ideas? Which political party is prepared to put tackling inequality these ways at the heart of its manifesto for upcoming elections?
Anyone? Anyone?
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