Thought you'd like this:
A recently published book argues that the richest Americans now pay lower tax rates than any other income group. We asked Yale political scientist Jacob Hacker to explain how this situation developed and why it’s proved politically difficult to raise taxes on the rich.
insights.som.yale.edu
The obvious answer is to raise taxes on the rich, which is in fact a very popular position right now. Politically, however, raising taxes has proved difficult, because the affluent are well represented in Washington and because there has been a persistent belief among political elites (not very well supported by the evidence) that higher taxes on the rich will destroy entrepreneurialism. Senator Elizabeth Warren (who’s been advised by Saez and Zucman) wants to test the idea that major new taxes on the affluent are a political non-starter. We’ll see if she gets the chance!
Indeed. You should read Zucman's books, if you haven't.
My professional concern (to say nothing of the moral catastrophe and devastating blow to future productivity that austerity always brings) is the sheer economic incompetence of it all.
It is nearly impossible to deliver stable returns for worthy clients (mostly pension funds in my case) because, frankly, the rich have way too much money and they are hoarding it all. Corporations are sitting on unprecedented piles of case, and rather than invest in capex as the Laffler generation of economists assumed, they are instead buying back their shares (which boosts management compensation through the roof), or using it to fund mergers in order to eliminate competition and raise prices. Or, like Apple, literally just sitting on it because there is so much that have no idea what to do with it all.
Meanwhile, the transit services decline, hospitals close, schools can't stay open on Friday, wages stagnate and thus the high street withers, in other words, the real drivers of economic growth drive to a halt... and all the while we are doing nothing whatsoever to try to prevent looming global ecological meltdown. Because taking the Duke of Wellington's 10x inherited hoard and using it to do something useful would be the greater evil.
Again, never mind the moral case - the status quo is
fiscally incompetent. Even if you think the poor are all neanderthal northern Brexit simpletons who deserve every misery you can inflict on them, the Tory agenda (and
especially the Liberal Democrat agenda, because Javid at least is starting to get it) is an utter disaster for financial markets.
As I've explained elsewhere several times, the Liberal Democrat and Conservative/Eurozone decision to deliberately contract the economy at the height of the worst crash in 80 years, has been an unrelenting economic (not to say moral) disaster. Central banks have had to very reluctantly respond by flooding the system with QE money and gutting interest rates, but because the coalition was intentionally shrinking economic growth, there were and still are no safe returns for the newly-created capital to be found. The money instead poured into inflating stock prices (not because of investment but buybacks and sleazy M&As), and real estate bubbles. There is now almost no capital city
in the world not at war that isn't suffering from a real estate bubble.
Now, that's all fine and good for the get-rich-quick private school set that are the Tories and Lib Dems bread and butter, but for people who actually value markets, it is a catastrophe, because pension funds and other institutional investors, which want nothing more than stable, safe, modest long-term returns, are having to chase all the QE froth and private equity speculation (ie asset-stripping which is devastating to local high streets incidentally), which in an age of negative interest rates (!!!), are the only game in town. This is only compounding the market distortions, and it means that when it finally becomes apparent that the entire economy is WeWork, and the whole mess comes crashing down, the scale will be astronomical compared to 2008, and there will be
nothing central banks can do this time because they've already been pulling on the emergency lever this entire time.
Thus, we now have the IMF (!!!) and even Larry Summers begging - literally begging - Eurozone governments to borrow money and invest, in order to save the financial system, and they still won't do it because their brains ceased all motor function in 1995 at the exact instant that they finished reading
The Lexus and the Olive Tree.
Government borrowing is the
life-blood!!! of finance. It is the beating heart of how capitalism and the financial sector works. It is the prime mover of everything else that follows (you should read Mariana Mazzucato, by the way:
https://www.wired.co.uk/article/mariana-mazzucato) The fact that liberals have managed to convince themselves otherwise will be one day be the epitaph of the entire species. When you attack that, you destroy everything. And that is exactly what has happened since 2008, when we doubled down on everything that created the crash in first place. And when the second, much-larger bill comes due, Brexit and Trump will seem like sunday league compared to the much-deserved but no doubt destructive popular backlash that will follow, which will probably destroy every last bit of the civic and political values that liberals (despite having delivered the death blow) think they hold dear.
Labour is, frankly, the only party in Britain that actually understands macroeconomics.
I can see many of you snorting on your cornflakes because it is the opposite of what you have been trained to believe by the corporate cheerleader press (The Times/Telegraph/Economist et al). But in more sensible publications like the FT there is an overwhelming consensus in support of Labour's broad policy direction (if not for Corbyn, granted, due mostly to matters of personal taste). No serious macroeconomist questions this.
Middle-class types who know nothing about finance but who bleat on about cutting spending because of 'fiscal responsibility' while patting themselves on the heads for being clever because of their Economist mugs really need to download the latest software and install the newest patch into their brains, because their talking points have been disconnected from reality and economic orthodox for going on three decades now, and the consequences will be unprecedented.
On the bloke in the tweet however, it just seems a morally slippery slope when some third party is deciding whether the way you earned your money is just or not. Very slippery.
Um....what? I mean, it is also the fundamental basis of the entire concept of human jurisprudence...
