Shahab Sabahi
Energy and Environment for Development – Policy Analysis Research Group
“When economic distress reaches a certain point, the individual citizen no longer uses its political power (in a democratic system) to serve in the public weal, but only to help himself. Its ideal of political liberty pales before its ideal of economic equality. Once this sentiment has eaten its way into the hearts of majority of a nation, any political system is doomed to failure”. They are words written by Erich Koch – Weser in 1931, the former minister of justice – Germany
The world today faces the same troubles as it was in the 1920s and 30s. Financial crisis, shifting power, social class – conflicts and competition of states occur in a similar pattern. Despite the facts that our world has come long way since then with the dark experience of World War II, dozens of regional wars, ethnic clashes, ideological wars and consequently demise of communist system and the contraction of authoritarian regimes, yet it lacks a concrete and reliable global governance system.
Our leaders claim the fruits of globalization only in words. However the facts display contradictory achievements. It is expected that technology advancement and the expansion of human’s knowledge perpetuate the world toward an international peace, cooperation and sustainable growth. But again when security comes fore, the ideal system fails and it plunges in the same pitfalls as it did in the early twentieth century.
The world is not thoroughly ruled by reason but passion influences when time is on its side.
When a man is driven to despair he is ready to smash everything in the vague hope that a better world may arise out of the ruins (E. K. Weser)
Simply state, part of the problem and the solution is the distribution of wealth and resources throughout the world. Overall the poverty level is increasing disproportionatly to all material things available and companies exploiting workers who cannot live on wages earned. In order to repair this human disparity, institutions of learning, companies, employers, and government have to strive to create a balance whereas people are educated, trained, and gainfully employed to provide them with an acceptable standard of living. This will resolve the frustrations and anxiety of those who are struggling to rise above their present unlivable conditions.
ReplyDeleteI agree that wealth disparity is a problem. "The rich grow richer while the poor grow poorer." Here is the reason and also the solution:
ReplyDeleteThe rich only spend part of their income for goods & services. They "invest" the rest and get richer.
The Poor spend all their income and the funds provided by government on items their families need to live leaving none for investments. Many continue to spend by over-utilizing available debt so their debt grows and they get poorer. This ain’t rocket science.
SOLUTION----(Libertarians and many conservatives won't like my answer although I am a fiscal conservative and a social moderate. We are not hermits and we live in a "society" so some "induced sharing" is necessary.) Let’s don’t call it “redistribution of wealth”.
In our capitalist system, we must not impede investments because large businesses with their associated jobs cannot be created without "capital formation". Only those people who spend less than they earn have the capital available to put together for such capital formation. If they have "confidence" that the economic environment is conductive to making a profit, they will risk some of their capital for capital formation. It they don’t, they will continue their luxurious lifestyles while sitting on their excess capital and wait for a better business environment. Businesses with excess capital have no obligation to create jobs. Job creation is a side effect. Therefore we can impose a reasonable tax on their incomes and on their consumption, but we MUST NOT tax their incomes excessively. The problem is with WEALTH ACCUMULATION, not annual income creation. State, county and city governments assess taxes on wealth accumulation by assessing taxes on property and intangibles such as stocks, bonds, and other "investments". Rich people often strive to earn more money because of the competition and thrill of earning. It drives more people than does the thought of wealth accumulation.
The solution is to set a very high benchmark on wealth accumulation such as $200 million and put punitive tax penalties on accumulated wealth above that. Our system does not require that we have billionaires, but we do need some millionaires. This would allow very high lifestyles of luxury but not limit their annual incomes. The tax code should be devised to induce them to donate wealth above that level to charities of their choice. We should not seize the excess for government programs. Government has proven to be a poor steward of capital and it is an incubator for corruption.
The rich would be induced to invest (and risk) large sums in hopes on increasing their annual incomes. Most of us like to be successful and money is how we keep score. This would recreate lots of jobs while not limiting income.
The charities would compete with each other for the donations and would reap great windfalls of funds enabling them to do lots of projects now done by government.
The government MUST overhaul the tax code to accommodate this.
The government MUST overhaul the public education system so the poor can qualify for the additional new jobs which would lift them out of poverty. Our present public education system is really sick. It doesn’t just need more money. It needs a total reform.
The tax codes could be modified to require that all publicly held corporations provide common stocks at the end of every fiscal year to an individual account for each employee and have them immediately vested. Every board of directors of such corporations should have at least one director selected by the minor stockholders and one selected by a consortium of the labor unions of their employees (if any). If an employee worked from age 20 to age 65 (45 years), he/she could retire with an investment portfolio that would place them in the middle class. The goal of this proposal is to broaden the ownership of wealth and enable the poor to lift themselves out of poverty.
@ Winston
ReplyDeleteIt is not easy as it may seem. I wish it would have been a rocket science, and then human being could quickly come up with a solution. The problem falls in the realm of social science and it should deal with a big variety of individuals’ interests and behaviours. It enormously contributes in the complexity of the problem.
The platform that you subscribe and take on the problem, liberalism, may help you formulate the abstract framework and prescribe based upon a straightforward solution. Despite the well-built socioeconomic structure bases on the idea of liberalism in national and regional levels, as you finely analyse, liberalism faces difficulties when its socioeconomic structure moves into a global scale.
Let me add the liberal foreign policy dimension to your assumption. The mobility of money and workforce has lubricated international investments and trade. It has contributed significantly in improving standard of life globally!! This move had generated large profits for investors and also increased the number of wealthy people. It has generated middle class in developing countries and new classes in developed nations. It draws a new division line in labour market.
They are all the fantastic side of a liberal foreign policy (Nixon’s détente like)
Giving this context, when investors and riches can easily invest WHERVER they wish, WHEREVER tax level is as low as zero, and can reside wherever they love,
HOW can an old fashion tax code which does not accommodate realities of our days, be effective?
Developed nations have been long restructured their economies. New social classes have emerged and political polarity overwhelmingly is hot
How can an old fashion tax system guarantee distribution of wealth? Or in fact which wealth?
One of the credits, in the idea of liberalism, is Strong State. It, side by side with the rule of law and accountability, has long proven the sustainability of states. No matter the size, strong state can collect tax
Given globalization and mobility of money, political polarity (and all facts counted above), Does one expect the sustainability of developed states?
Can one hope a strong state with sufficient authority to collect tax?
Can one see a day when states would not owe the private creditors?
Liberalism has always been the finest ideology that has provided a suitable platform for human beings to live up their needs and realize their dreams. It explains why liberalism has been, will be the default ideology. HOWEVER there is a chronic problem with liberalism as the conservative economist Joseph Schumpeter wrote in his 1942 book Capitalism, Socialism and Democracy, that capitalist society was culturally self-undermining.
So it won’t be easy, unless capitalism can overcome its weaknesses…..Its own choice being Whig, China-like capitalism, Realism and….
To my friend, Shahab,
ReplyDeleteyour response used the word liberal eight (8) times and I could find no solutions in your response. There is no "liberal" solution. You may disagree with my proposal but if you do, please offer us your own solutions.
regards,
Winston
@ Winston
ReplyDeleteThanks you for calling me “your friend”…..it is worth a lot for me.
In a professional manner, you initially established your ideology. Then you took on the doctrine of that ideology, to formulate the issue and possibly a solution, well-done; skilful and respectful approach (I clicked the button “like”) ……However I regard it just a perspective.
My original post does not intend to formulate any solution for this social complex issue. It rather tries to capture different perspectives. These perspectives, then, enable us to critically analyse and identify the influential elements involved in shaping this social issue.
Naturally individual looks into issues from its desirable viewpoint and prescribes solutions with the use of its value system
Having the chief purpose of the original post, argument on what is right or wrong OR who agrees or disagrees, is immaterial
Perhaps I would disagree with the term “simple solution” that you used in your comment. In my earlier comment at length, I explained why I disagreed with this term.
True, I used Liberal more than 8 times. There are several reasons for this, but chief among them is a broad consensus about the legitimacy, at least in principle, of liberal as a default ideology (Amartya Sen). It regards as the unit block of other ideologies such as liberal democrat, social democrat, etc. So it gives a common ground to compare different perspectives.
Like you, the liberals come up with their own solutions. However, AGAIN, the liberals also look into the issue through the lens of their ideology.
Indeed, in the time of chaos, disorder, and the case of complexity, liberal has more to offer than others (it roots into its certain socioeconomic structure) however there is possibility of failure in certain circumstances (Self undermining disease)