There have been a blizzard of articles in the last few days following the release of the Oxfam report that 8 individuals have equal wealth to the combined wealth of the poorest 50% of the world’s population. Last year, it took the combined wealth of the top 62 individuals to equate to the wealth of the poorest 50%. If ever there was a statistic that shows what a lie the neoliberal concept of “trickle-down” is, you need only look at the ever widening gulf between the haves and the have-nots.
In this well meaning but misguided article (“It’s time to target the top end of town and the obscene profits of the super-rich“), Helen Szoke makes the error of predicating our ability to improve equity on taxing the rich. Yes, the richest should pay tax and it’s fairest that they pay the most, but the nation is not dependent on that occurring before money can be injected into the economy at the bottom.
The idea that we cannot do anything until we tax the rich is one of the more pernicious myths that keeps the national economy from reaching its potential.
You do not automatically improve the wellbeing of the poor by taxing the rich: that “revenue” does not magically find its way into the hands of the least well off. The federal government is not Robin Hood, redistributing the tax dollars it gets from the mega-rich to the poor and needy. This is all part of the great hoax that the federal government’s budget process is like a household’s, and like us, they should be “saving for a rainy day”. It’s rubbish. The federal government is the issuer of the currency. Every dollar that exists does so because the federal government spent it into existence by putting it into someone’s bank account at some point.
You improve the wellbeing of the poor by directly improving the wellbeing of the poor! You do it by injecting money into the economy where it will be the fastest moving (i.e. into the hands of those that will spend virtually all of it), thus increasing aggregate demand for goods and services, which creates jobs. At the point where this additional government spending starts to create inflationary pressures, then and only then do you need to have a conversation about where to apply the taxation that will relieve that pressure. But that point occurs when we can’t find any more unemployed workers to make more things, and we’ve reached the limit of our productive capacity.
Whilst there’s unemployment and idle means of production, government spending is not inflationary.
In this well meaning but misguided article (“It’s time to target the top end of town and the obscene profits of the super-rich“), Helen Szoke makes the error of predicating our ability to improve equity on taxing the rich. Yes, the richest should pay tax and it’s fairest that they pay the most, but the nation is not dependent on that occurring before money can be injected into the economy at the bottom.
The idea that we cannot do anything until we tax the rich is one of the more pernicious myths that keeps the national economy from reaching its potential.
You do not automatically improve the wellbeing of the poor by taxing the rich: that “revenue” does not magically find its way into the hands of the least well off. The federal government is not Robin Hood, redistributing the tax dollars it gets from the mega-rich to the poor and needy. This is all part of the great hoax that the federal government’s budget process is like a household’s, and like us, they should be “saving for a rainy day”. It’s rubbish. The federal government is the issuer of the currency. Every dollar that exists does so because the federal government spent it into existence by putting it into someone’s bank account at some point.
You improve the wellbeing of the poor by directly improving the wellbeing of the poor! You do it by injecting money into the economy where it will be the fastest moving (i.e. into the hands of those that will spend virtually all of it), thus increasing aggregate demand for goods and services, which creates jobs. At the point where this additional government spending starts to create inflationary pressures, then and only then do you need to have a conversation about where to apply the taxation that will relieve that pressure. But that point occurs when we can’t find any more unemployed workers to make more things, and we’ve reached the limit of our productive capacity.
Whilst there’s unemployment and idle means of production, government spending is not inflationary.