This is the second post in my series on the policies of the allegedly “radical” candidates for leadership of their respective countries, Bernie Sanders of the United States and Jeremy Corbyn of the United Kingdom. In this post, we discuss progressive tax reform. Progressive tax reform – a term I’m using to refer to the reform of taxes which tend to target the wealthy – has been targeted by both Sanders and Corbyn. Corbyn, being quite some time out from an election, has been thus far somewhat vague on the issue of taxes as such, but has indicated that a more progressive tax system is needed in the UK, and has targeted corporate taxes and tax avoidance as being of particular importance.[i] Sanders, being in the midst of a campaign for the Democratic presidential nomination, has given a more detailed view of his tax reform.[ii] This includes, among other measures, raising the top income tax rate, raising the corporate tax rate, reforms to capital gains tax, and the imposition of a tax on financial transactions. These kinds of measures have the potential benefit not only of reducing the exorbitant inequality which has emerged over the past four decades in particular, but of making the government more able to do its work in a sustainable manner without crimping anyone’s lifestyle too much.
For years, the major parties on the left in the anglophone world have adopted a policy of “neoliberal lite” in the economic arena. Serious challenges to the neoliberal paradigm of deregulation, privatization, tax breaks for corporations and the wealthy, and (alleged) “free” trade have been less than forthcoming. That is, until recently. The presidential campaign of Bernie Sanders in the United States, on the one hand, and the election of Jeremy Corbyn as leader of the UK Labour party, on the other, represent a serious challenge to this prevalent neoliberal orthodoxy in those countries, with economic policies which would move their countries substantially toward the left.
The issue of the minimum wage has been a hot topic in recent years. The Obama administration wants to increase the US minimum wage from its current rather stingy $7.25 to a modestly more reasonable $10.10, though there is currently a “Fight for 15” movement to increase the wage for fast food workers to $15. Last year, Germany set their first ever minimum wage at €8.50. In some parts of the world, a “Living Wage” movement in which exemplary employers pay a “living wage” to employees well above the minimum wage is beginning to gain traction. Meanwhile, in my home country of Australia, where we enjoy some of the highest minimum wages in the world, the so-called “Productivity Commission” is set to undertake a review of the relevance and impacts of the minimum wage, probably with the aim of reducing it, though whether that will have sufficient political support is another matter. Continue reading →
ImportantCool’s money man Joe McIvor on the ins and outs of creating money from nothing
The United States Federal Reserve has signaled that it is ending its program of “Quantitative Easing”, the controversial program of negative real interest rates and massive asset purchases funded by effectively “printing” money. So was printing a bunch of money to support the financial system a good thing? Well…and this may seem weird coming from someone on the political left…but sort of. Continue reading →
For my first piece I wanted to have a quick look at the notion that the government budget is like a household budget, and that governments in debt need to cut their spending and pay down their debts or they will end up in some sort of economic disaster. It seems that in spite of the metaphor being repeatedly discredited, government debt is repeatedly compared to a household budget: they need to get their affairs in order by stopping profligate spending and thus reduce their reliance on the “national credit card” (a term that seems to get used a lot here in Australia). This seems to be the basis of the austerity programs persisting within parts of the European Union. There’s been a lot written on this and there are a lot of aspects to it (the perpetuity of the government and the lack of necessity of totally paying back debt, the potential role of central banking, etc). Maybe I’ll write more on this later, but for now I’m going to focus on what I think is perhaps the biggest difference between the two, and one that I don’t think is emphasized enough: the relationship between debt, deficit spending, and income. Continue reading →