Half a Century of Skillfully Engineered Inequality. Now The Results Are In.

Joe Stiglitz knows a few things about inequality. It was the focus of his doctoral thesis and the mainstay of a career that saw him rise to chief economist for the World Bank and, eventually, the Nobel Prize in economics.

Doctor Stiglitz knows more than a few things about inequality, why so many are impoverished while so few enjoy riches beyond most people's comprehension. He summed it all up in  his brief 2012 book, "The Price of Inequality: How Today's Divided Society Endangers Our Future." (It's available free in PDF. format online.)

Stiglitz details how modern inequality is neither market nor merit-based. It is primarily legislated. That's right. The people we elect to high office routinely put the narrow, privileged interest ahead of the public interest. You might have noticed their handiwork in the rise of such things as the destruction of organized labour, the ascendancy of the "gig economy," and the malignant spread of what Alan Greenspan called (with approval) "the precariat," workers who live without financial security, paycheque to paycheque, job  to job, never far from falling between the cracks. 

Even Canada's Liberal government is in on it. That much was made painfully clear when then finance minister, Bill Morneau, blithely warned lesser-order Canadians, the likes of you and me, that we had to prepare for a future of "job churn." A future of hopping from job to job, usually with neither protections nor benefits, willing to do whatever was necessary to keep clothes on our kids' backs, a roof over their heads and food in their stomachs. Morneau said that and it didn't raise an  eyebrow among the Liberal caucus much less the prime minister.

Financial dystopia, you'll get used to it.

When it comes to inequality, America leads the way. Disgraceful as it was, Congressional Republicans drove through a two trillion dollar tax cut, almost entirely for the richest of the rich, in the runup to the 2018 midterms. Lindsey Graham warned his legislative colleagues that the "donor class" had laid it on the line - no mega-tax cut, no more campaign donations. They heard that dog whistle and they delivered. And Trump's Gullibillies? Oh, it was just part of MAGA.

A study was released this week out of the London School of Economics. Researchers went back to the introduction of America's great confidence game, the racket known as "trickle down economics" that Ronald Reagan used to scam the American people. They looked at records going back 50 years and found - wait for it - there is no "trickle down."

Tax cuts for the wealthy have long drawn support from conservative lawmakers and economists who argue that such measures will "trickle down" and eventually boost jobs and incomes for everyone else. But a new study from the London School of Economics says 50 years of such tax cuts have only helped one group — the rich.

The new paper, by David Hope of the London School of Economics and Julian Limberg of King's College London, examines 18 developed countries — from Australia to the United States — over a 50-year period from 1965 to 2015. The study compared countries that passed tax cuts in a specific year, such as the U.S. in 1982 when President Ronald Reagan slashed taxes on the wealthy, with those that didn't, and then examined their economic outcomes.

The incomes of the rich grew much faster in countries where tax rates were lowered. Instead of trickling down to the middle class, tax cuts for the rich may not accomplish much more than help the rich keep more of their riches and exacerbate income inequality, the research indicates.

"Based on our research, we would argue that the economic rationale for keeping taxes on the rich low is weak," Julian Limberg, a co-author of the study and a lecturer in public policy at King's College London, said in an email to CBS MoneyWatch. "In fact, if we look back into history, the period with the highest taxes on the rich — the postwar period — was also a period with high economic growth and low unemployment." 

One solution, for the UK at least, suggested by the researchers is something I have touched upon in the past - a wealth tax, some degree of confiscatory taxation. 

Our leaders, in Canada also, are working from the same dog eared playbook issued during the Reagan era as conservatives ushered in the neoliberal order. The nice thing is that it spares our leaders from the chore of original, critical thinking. Think that's not true? Think that's unfair? Ask yourself why these leaders, Liberal or Conservative, still cling to the destructive notion of perpetual, exponential growth? It's because thinking on the logical contradiction, dwelling on the future that perpetual exponential growth portends, is just too damned scary for them.

 


Comments

  1. Wealth taxes will have to be a global effort. Not likely to happen in our lifetimes.
    That kind of cohesion might kick in during the coming collapse in a few decades ... as the alternative will be extinction.
    But don't 'hold your breath'.

    ReplyDelete
    Replies
    1. Unfortunately, NPoV, we may not retain the "demos" part of democracy unless we tame inequality. The path we're on, as we ought to be observing in the States, leads to oligarchy with the trappings of democracy but that's all.

      Delete
  2. .. You'd think we don't actually mind the great grift

    Morneau and wife are so wealthy he plumb lost track of a Chateau in a country somewhere. And wasn't it ol 'sack of hammers' Peter McKay who as a supposedly educated lawyer, suggested those charged with minor drub offenses 'should sell a property ' to raise Bail Money (salamander via iPad 2)

    ReplyDelete
    Replies
    1. I was angry when Morneau consigned rank and file Canadians to a future of "job churn" but I was absolutely outraged when it failed to provoke any repudiation from the Liberal caucus and the prime minister. They love to wear progressive laurels but that's kabuki theatre.

      Delete
  3. This comment has been removed by the author.

    ReplyDelete

Post a Comment

Popular posts from this blog

Washington Post Calls for Doug Ford to Resign

The Stammering Man

Navigating the Minefield of Short-Termism