We’re told we need to circumscribe discussion on political reform, because “politics is the art of the possible”. If we accept that the media is beholden to big-moneyed interests, how can we possibly remove the metaphorical strait jacket from reform if the media won’t cover the discussion?
Aren’t you being a bit cynical here? What political reforms are really off the table because “big-moneyed interests” stifle them?
Well, we have the current scenario:-
Even with wages growth at low levels, most small business costs remain high and profits are marginal – but not for the monopolies, including banking. Therefore, the workforce has had to become more casualised in order to reduce business costs. This was occurring before the emergent wage-slave ‘gig economy’.
If this has been a retrograde step, what can be done about it?
Well, the taxing of productivity is at least partly to blame for the casualisation phenomenon: Martin Feldstein tells us that income taxes insert deadweight losses of twice the amount levied into the economy. That bears thinking about: income taxes cost the economy that much?
You’re suggesting we get rid of income taxes? That’s not possible!
So, we need to take that option off the table? Not so. It’s been done before. As the following chart shows, when the USA expanded enormously during the progressive era (1890-1920), income taxes were low and property taxes were much higher. And it worked. Infrastructure spending grew massively at local government and state government levels, and property taxes garnered back part of the uplift in property values these capital works provided: in a virtuous loop, you might say.
But this situation changed dramatically at the great depression. Americans were told it was only ‘a temporary measure’.
In Australia, all three levels of government had significant taxes on real estate values. These included taxes on land values. WWII changed this. Again, it was only a ‘temporary’ measure.
So, doesn’t reverting to taxing publicly-generated land values more highly and reducing company and income taxes offer the prospect of great socio-economic reform? The economy’s deadweight losses from income tax would reduce accordingly, and people and businesses would retain most of their earnings. That’s a big plus. So, other than “It can’t be done!”, why not do it? That it hasn’t been a consideration reflects vested interests’ preference for the increasingly-threatening status quo.
Next: a living wage universal basic income (UBI). No go? Why not? At the moment the 0.1% is currently getting the greater part of our economic rent. Poverty is increasing at a great rate, therefore, the economy’s surplus profit needs to be spread more equally.
Now here’s the thing. You can’t expect to have the UBI plus your existing salary. Therefore, businesses wouldn’t have to pay existing salaries. They’d only have to pay sufficient, additional to the UBI, in order to attract or retain workers. So, business costs would decrease significantly. That’s surely win/win, for everyone?
So, this is going to cost a poultice. How’re you going to pay for it?
Well, we’re simply retrieving some of the 50% of the economy extracted by rentiers (and their untoward tax regime), and replacing it with land value taxation, the community-generated surplus.
What’s more, this “How’re you going to pay for it?” has whiskers on it, anyway. Ask any modern monetary theorist. And it ain’t just theory. Moreover, the UBI will not only do better than MMTers’ proposed “job guarantee”, but it’s backed up by the only deduction necessary to keep all inflation at bay – a land value tax, aimed at capturing back, equally to everyone, the unearned land rent now largely expropriated by the 0.1%.
This is an overarching review of genuine reformative action; not an add-on to what’s currently being done. Impractical? Certainly not. In fact, implementation of these reforms is essential in socio-economically distressed times worsened by the coronavirus.
The alternative is a sad proposition. We may keep adding ineffectual “job-keeper” and “job-seeker”-type bandages that the political parties and media consider to be the only options our ‘politics’ allows.
So, maybe it’s time for big thinking?
Oh, and then there’s this. In the 15th century, a labourer with a family of 5, and no particular skills, could save the greater part of his income, after food, clothing and shelter. Can he do that now, or is he deeply immersed in debt? The question’s rhetorical.