“Any man can make mistakes, but only an idiot persists in his error,” said the Roman philosopher Cicero. Now that we know how inequality harms the health of societies, individuals, and economies, reducing it should be our top priority. Anyone advocating policies that increase inequality and threaten the wellbeing of our societies is taking us for fools.
Kate Pickett and Richard Wilkinson
Why Inequality is bad for your health
Oh, the irony! Two worlds collide. Davos and the World Economic Forum versus the planet and its citizens. As David Attenborough hosts a series of talks on the dangers of man-made climate change and Oxfam shines a light on growing global wealth inequality, an estimated 1500 individual private jets fly into the Davos summit which is gridlocked all week with limos while the global elite sport their freebie ‘I’ve been to Davos’ blue bobble hats and quaff champagne. It contrasts starkly with the world outside the bubble. A world where climate change is making its presence felt in extraordinary climate and weather events from drought and crop failures to storms, floods and rising sea levels, extreme temperatures and forest fires and the threat of ocean warming. A world where the damaging effects of a deliberately manufactured and growing gap between the world’s poorest and richest is made worse by climate change threatening to drive hundreds of millions of people into more poverty or into refugee status. It is a stark and unsupportable future we face without direct and urgent action now.
The corporations, politicians and rich elite in Davos pay lip service to it, whilst divvying up the resource spoils ever more unfairly at huge expense, not in financial terms but in costs to the health of citizens and the survival of the planet. The global elites have it well and truly all sewn up in their own favour, it would seem.
Last October in one of its first blogs GIMMS reported on the IPPC’s (Intergovernmental Panel on Climate Change) comprehensive report on the state of the climate which warned that we only have 12 years left to halt the worst effects of climate change. Regrettably, those warnings may not even reflect the true seriousness of the challenges we face as the clock ticks on and our leaders behave as if time were not of the essence. As the new leader of Brazil, Jair Bolsonaro, commented at the collapse of a dam which killed many workers a few days ago and which seems to reflect a common position ‘Environmental protection shouldn’t interfere with growth’. An ostrich with its head in the sand approach is being taken by our leaders, and not just the worst tyrants, at a time when the capacity of our natural world to support life is threatened.
And whilst the planet starts to behave like a fortress under siege, people are bearing the brunt of government choices led by orthodox economic ideologies which suggest that the rich are the wealth creators, that the state has only a minimal role to play in the economic success of a nation and that a lack of money is stopping government acting in the public interest. The shift of surplus value from labour to capital has left wages stagnant and working people ever more exploited and the foundations of civil society under threat.
Oxfam estimated in its 2019 annual report, released just before the Davos forum got underway, that 26 of the richest people in the world owned as much wealth as the bottom half of the world’s population put together. In 2018 it noted that 42 people held as much wealth as the poorest half of the world’s population and that 82% of global wealth generated in 2017 had gone to the wealthy 1%.
In 2018 it called on world leaders to tackle tax evasion and boost the pay of workers. This year it suggested that “a wealth tax on the 1% would raise an estimated $418bn (£325bn) a year enough to educate every child not in school and provide healthcare that would prevent 3 million deaths”.
Nobody can deny the well-meaning intent. Equity is of paramount importance. But it is regrettable that Oxfam and other well-intentioned commentators from politicians to journalists and economic institutions focus on collecting tax to remedy not just this injustice but also to deal with the threat posed by climate change to the planet’s survival. If they did but know it, they are limiting the very action government could take to remedy these very serious issues.
Of course, most people believe that a government must collect tax (of whatever kind including National Insurance), or borrow, to cover government spending; how government provides public services, the NHS, the education system or pays for the social welfare which covers our pensions, unemployment and disability benefits. It’s a natural assumption which is understandable. However, a tax on the rich, which no-one should doubt is needed for reasons of equity and to redistribute wealth and resources more fairly, will not raise a bean towards the capacity of any currency issuing government to spend on education or indeed healthcare. In fact, a government which issues its own currency (in our case the £ – or it could be the dollar or the yen) has no need of the tax of the rich or anyone’s tax for that matter in order to spend. Indeed, logically, a government must spend the money into existence first before anyone can use it to pay their tax. This reveals the nonsense of the tax and spend narrative.
The story we’re constantly told is that we should ask the rich to pay for services to the poor in a Robin Hood kind of way; a sort of charitable donation or obligation on the rich to make a generous contribution to society. The implication is that without such contributions the state could not provide the public infrastructure on which we all depend. Society, however, is not dependent on the rich man’s benevolence. It depends instead on a government acting to protect the interests of all its citizens through reducing income inequality which has very destructive consequences on the health and well-being of people.
Of course, there will always be those who say that objecting to excessive wealth is just the politics of envy. However, we only have to look around us, on our streets and in our communities, even in our close or extended families, to see the destructive effects of income inequality. It is important to counter the arguments that the blame lies with individual irresponsibility. Excessive wealth has given a few people undue control, which enables them to buy influence in the corridors of political power. It enables them to appropriate an unfair share of the world’s natural resources and exploit those who labour to create the real wealth which sustains us.
The bottom line is that all governments make choices about their spending priorities which have nothing at all to do with the state of the country’s finances or whether it has collected enough tax to fund public services. They make their choices based on their ideologically driven political agendas. Neoliberal governments across the world have chosen to inflict damaging fiscal austerity on their citizens, which has driven the rising poverty and inequality which charities aim to address.
Yes, let’s tax the rich for equity, and to allow a fairer distribution of our wealth in terms of real resources, but it’s time for charities such as Oxfam to recognise that their taxing the rich to spend narrative does not represent the options open to any sovereign currency issuing government when making policies to deal with the challenges we face. This is a political issue driven by ideology and it’s time for those with public voices to get up and say so.
It really is time for change.
The right is worried about “moving left” because “socialism!!” By “moving left”, it simply means that the balance of money creation is going toward government currency investment and away from bank credit.
Today, the economy is mostly credit-dependent, which has (intentionally) caused a massive private debt. Our Wall St government prefers to extend loans because it makes them lots of $$. But government isn’t doing what it’s designed to do – invest in public purpose! This is an egregious conflict of interest.
True fiscal responsibility means balancing the economy.
“A lot of money in the system is, indeed, bank credit, but this is only because our government is eternally running an austerity program, constraining net issuance of its own currency, and thereby increasing demand for bank credit.
Austerity is, in short, a policy to subsidize the financial sector by creating [artificial] currency shortages.”
“This idea that governments should not create money implies that they shouldn’t act like governments. Instead, the de facto government should be Wall Street. Instead of governments allocating resources to help the economy grow, Wall Street should be the allocator of resources – and should starve the government to “save taxpayers” (or at least the wealthy). Tea Party promoters want to starve the government to a point where it can be “drowned in the bathtub.”
But if you don’t have a government that can fund itself, then who is going to govern, and on whose terms? The obvious answer is, the class with the money: Wall Street and the corporate sector. They clamor for a balanced budget, saying, “We don’t want the government to fund public infrastructure. We want it to be privatized in a way that will generate profits for the new owners, along with interest for the bondholders and the banks that fund it; and also, management fees. Most of all, the privatized enterprises should generate capital gains for the stockholders as they jack up prices for hitherto public services.
You can see how to demoralize a country if you can stop the government from spending money into the economy. That will cause austerity, lower living standards and really put the class war in business.”
http://michael-hudson.com/2017/03/why-deficits-hurt-banking-profits/?fbclid=IwAR06awK0L-3z172I_q003EZMVaoAYfqxNg0xqjWXXtFb9mmWMdhOTwqnE4I
This criminal intent, to covertly mismanage government finance for private gain, has consequences. Top heterodox economists Steve Keen and Michael Hudson have tirelessly advised that all accrued private debt caused by neoliberal economic policy over the past four decades should be written down or cancelled altogether.
https://www.youtube.com/watch?v=cHkmJwIYuzk&t=6s