It makes sense too; after all, the middle class was created out of the lower class at the expense of the upper class. Not really, the middle class was born in a large chunk by productivity increase. Not by confiscatory taxes.
championing the lower 90-99 % of society Then you end up with mostly symbolic policy without real impact.
Finally, I disagree with your analysis of the reasons that the greens ally with the conservatives. Personal experience and (German) media consumption lead very clearly to my conclusions. It maybe that it is country specific. Anyhow, did you know that the "Stromeinspeisungsgesetz" 1991, which guarantees fixed prices for renewable energies was implemented by a conservative gov. Did you know that about 67% of the German taxes on car fuel were implemented by CDU led govs, the biggest increases and of the eighties and in the nineties by Kohl? Did you know that in Germany the ministry for environment was founded and hold for the first 12 years by conservatives? It can be simply a sign of the corresponding times, but in my opinion the conservatives have been and are today overall more environment friendly than the social democrats. Der Amerikaner ist die Orchidee unter den MenschenVolker Pispers
Not really, the middle class was born in a large chunk by productivity increase. Not by confiscatory taxes.
Yes it was, at least in France and the US, with the help of inflation and wars.
The Middle Class was built in the 50's and 60's when the top marginal rates were around 90%. Those targeted not incomes equivalent to 50-100 k€ (the top decile) but much higher incomes, essentially the top centile and even narrower tranches of income (something nowadays politicians dare not do). Associated with a higher Estate Tax, this made sure the share of the GDP going to the top percentile got much lower (from as high as 20 % of global income...), with a corresponding rise of the share of income going to the rest of society. Un roi sans divertissement est un homme plein de misčres
The very rich (those whose wealth got redistributed) usually own financial capital rather than real estate, too (At least in France). That is much more sensitive to inflation. The effect of renting wrt inflation also depends on the regulatory environment ; rents in the regulated 20's to 60's in France fell very, very low as their variation fell behind inflation. Un roi sans divertissement est un homme plein de misčres
I think stock markets have a much longer tradition in the US and France than in Germany. Here the traditional enterprise is personal business with low equity and a lot of credit. So the rich people in Germany are often large borrowers of money from the middle class (their workers), instead of creditors. In recent years there are increasingly people with lots of money, who have never been entrepreneurs, but I think that is really a newer development. Der Amerikaner ist die Orchidee unter den MenschenVolker Pispers
However, today even when taking more from the very rich is feasible, it would be an illusion to think one can help all the weaker people in the society without a large contribution of those who are just rich, but not the very rich. Der Amerikaner ist die Orchidee unter den MenschenVolker Pispers
The benefit is a much lower cost of governance as you don't have to fight teeth and nails for every itsy-bitty reform against skewed, bought and paid media, politicians and opinion makers. Then, it becomes much easier to create single-payer health care systems, public corporations to develop infrastructures, universal retirement insurance, etc.
what were gas prices then, 5c a gallon? ~"When an inner situation is not made conscious, it appears outside as fate." Karl Jung~
what were gas prices then, 5c a gallon?
First part true, there were even strict tariffs on oil imports. Second part not so much - in current dollars gas was in the $2.00-$2.50 range for most of the period between WWII and the first oil shock. Furthermore, mileage and salaries were lower.
But I am not talking about confiscatory taxation when I say that the middle class exists at the expense of the upper class. I am talking about a social system that makes sure that the gains from productivity (increases) are distributed in an equitable fashion. The difference, in other words, between Roosevelt capitalism and Reagan Capitalism. My apologies for being unclear.
If, however, you would argue that equitable sharing of the gains of productivity increases does not happen at the cost of the upper class, then I would ask why the current crop of upper class seems to disagree with you about that?
The Danish welfare model has been described with some accuracy as "the richest 90 % paying to the poorest 90 %." I should think that the achievements of the Scandinavian social system are rather more than merely symbolic.
Germany is weird w.r.t. environmental policy. Or maybe I'm just being anglophile here (in terms of what defines the political spectrum, Denmark is a surprisingly anglophile country, I think). But my hat is off to the German conservatives. Some of them are a bit too cosy with the Papacy for my taste, but I'll take someone brownnosing the Pope to someone brownnosing Washington any day on the week and twice on Sundays.
- Jake If you only spend 20 minutes of the rest of your life on economics, go spend them here.
I think it's less weird - I definitely think that Kohl's CDU jumped on the environmentalism bandwagon out of fear of votes (one shouldn't discuss this without forgetting the sometimes violent mass protests), and did so without real conviction. Some of it was motivated by the opportunity hopes of the firendly high-tech industry.
I note though towards Martin that
The suit is bad enough, smacking of those social-democratic leisure suits from the 1980's. But with those shoes, man!
I wonder how he takes himself seriously when he arrives to work... Fai de bčn a Bertrand, te lou rendra en cagant
No. I simply know how to dress.
If you're going to wear a business suit of any kind, don't wear Nike. Alternately, if you are going to wear a swim suit, dress shoes look equally silly.
I'm sure he thought he was making a point by wearing his sweat-shop made tennis shoes with his thoroughly social-democratic "business" suit, but I'm equally sure it was lost on everyone but his (limited circle of) supporters. Fai de bčn a Bertrand, te lou rendra en cagant
When you have a properly equal society, everyone knows how to dress properly. A very wealthy American friend of mine who knows France well, travels to Paris a lot, once remarked of his frustration at the fact it was impossible for him to tell, based on how a Parisienne dressed, a sales woman from La Redoute from a properly bourgeoise woman from Neuilly.
Obviously he exagerrates a bit, but the underlying point was true, and this to me is a good thing. Everyone should have access to the same expression of common aesthetic sensibilities. Not just those who have far too much money and subsequently create their markers, to which you allude (and incidentally create counter markers in the underclass, as a reaction).
Not to say everyone should conform to a proper dress code, but there's a difference, you know, between differentiation of modes of dress informed by great inequality (against which we should always be striving) and those informed by simple attention-seeking. Note take that there will always be somewhat less than serious people who will wear school-boy knickers with their business suits or something similar, so as to make a certain impression, often bourne of an over-excessive consciousness of self.
Anyhow, since the object of my comment is a German Green, I rather doubt the sneakers were a statement of class consciousness. Fai de bčn a Bertrand, te lou rendra en cagant
However, I'm not a BIPist. If some people own so much of a scarce and important resource, that they can dictate the society how to behave, then there is a problem. If you only put a ton of gold in your basement, what's the problem? I want to have the right to let my assets be as idle as I want, without losing them. What is possession of something if I can't decide to do what I want with it. Why are others deciding that my gold is an asset, while I think of it as my shrine for the god chrom.
And high taxation has slowing effects on the economy. Maybe not for entrepreneurship. But e.g. for the willingness of nurses to work extra hours over the trade agreement it has. I have currently the impression that the taxation at the moment is more or less fine as it is. Der Amerikaner ist die Orchidee unter den MenschenVolker Pispers
And high taxation has slowing effects on the economy.
No. Misallocation of resources and investments has slowing effects on the economy.
Taxation is about property structure. Various property structures may or may not be conducive to an efficient allocation of resources and a well-oiled economy. But this is very dependent on cultural factors. In a situation of highly concentrated private ownership, society becomes completely dependent on the moral tenets and social goals of a narrow propertied class. It may or, far more often, may not work.
Another example. Somebody lives together with his elderly parents in their home. He is an poor artist, while his parents were lawyers and so have a big house in a good site. When his parents die, the rooms in the house, where his parents lived before, are empty and unused. Neither does he want others in his home, nor want others, who could pay him enough to pay an appropriate wealth tax live in a home with him. So a wealth tax will force him to sell the house.
Another example. Somebody owns a piece of forest. The value is given by similar pieces of forest, where forestry is going on. Unfortunately the most profitable forestry is in monocultures. He loves butterflies and knows that the variety of butterflies in his piece of wood will drop, when the different trees are substituted by a monoculture.
The other question is of course, if you have an income tax and a wealth tax, will with 3% inflation the net income after a wealth tax conserve the principal? If one reduces income tax and increases wealth tax, then the lucky who make more money with their wealth than the average pay a lower share of their income, than the unlucky. Der Amerikaner ist die Orchidee unter den MenschenVolker Pispers
Someone inherits millions and builds a media empire with them, which he then uses to get himself elected president, with disastrous results for everyone except himself and his cronies.
Someone else inherits millions and uses them to build an international newspaper and TV empire, which he uses to spew racism and banality and to influence the election outcomes of all of the developed countries which don't have equal-time rules.
Someone else inherits millions and uses them to propagandise 'small government.' He wants 'government drowned in a bathtub' and when a hurricane strikes a major city he gets his wish. Meanwhile his cronies plunder the national treasury and start a disastrous - but profitable - war.
I could go on. There's not shortage of examples to choose from.
Politically, trust fund babies like these are poisonous to democracy. They're born with massive power and an equally massive sense of spurious entitlement.
If you're looking for the origins of Anglo-Disease, these are its disease vectors.
Making sure they pay their way and aren't allowed to run around breaking everything they touch is the main reason for high levels of progressive taxation. Not only does taxing them give governments more money to spend on social investment, it also means they have to get a proper job like everyone else, instead of being dilettante politicians, which is what so many of them seem to aspire to.
Berlusconi, Murdoch & CO own shares of the media market, which are huge and were partially not build up organically, but bought together. Nothing would have spoken against forbidding them to buy so large shares of the media market. In Germany the ProSieben-SatEins Media AG (TV), could not be sold to the Springer ("BILD") publishing company, because they already have so much market share with newspapers. That would even work, if those media networks were profitable (what I think they are). As in case of Murdoch we are speaking of a stock corporation (?), how would you value the corporation for the wealth tax anyhow? Isn't the stock market value, which will be low, if the earnings are low, the best measure for the value of a stock based corporation? My personal opinion is, that strong public media is the best remedy for such kind of opinion manipulation. Of course there has to be a layer between the politicians and the media. ARD/ZDF in Germany work rather good. I think BBC in UK is as well OK, but has already a bit more problems to keep itself out of reach of politicians Der Amerikaner ist die Orchidee unter den MenschenVolker Pispers
Nothing would have spoken against forbidding them to buy so large shares of the media market.
Except when you already own that much of the press all you have to do is threaten politicians with a negative campaign if they don't pass your favourite 'liberalising', legislation and their careers will be over.
This is part of what happened in the US with media deregulation, and part of what happened in the UK - although Thatcher already had press support before the election, and didn't need to be convinced to hand over democracy to a press thug like Murdoch.
Martin:
As in case of Murdoch we are speaking of a stock corporation (?), how would you value the corporation for the wealth tax anyhow? Isn't the stock market value, which will be low, if the earnings are low, the best measure for the value of a stock based corporation?
It's all Capital Gains and/or Inheritance, both of which are taxed leniently in the Anglo countries, especially on large estates.
Back in the 18th and 19th century English economists were very interested in the differences between English and French law (the writings of J S Mill but also A Smith are full of comparative political economy) and one of the main differences was that in England inheritance tended to go undivided to the eldest son, whereas in France it was equitably divided among all the children. Inheritance taxes and legally mandated division of inheritances work to prevent the accumulation of excessive fortunes in the hands of a few over the generations and are an unqualified social good. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
However, for inheritance tax I don't think it matters, if it is unearned wealth. It is the sole right of the person who makes the gift, not the person who recieves. Der Amerikaner ist die Orchidee unter den MenschenVolker Pispers
It is not the person who leaves the inheritance that is taxed, but the recipient f it. I said the principle of private property doesn't limit the right to give inheritance, but it does limit the right to receive it.
The question is whether you want a system which amplifies wealth differences or not, quite simply. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
Francois asked me to bring up other examples than gold, for why somebody would not use an asset for producing revenue. He should have asked you, as you brought the idea up, that a wealth tax is better than a pure income tax, because of the incencitive to use the asset. I have invented a rather realistic example. And yes, of course there is the question, what system one wants. And as all the examples others brought up, were about much bigger wealth, the question is, amplifying wealth to which degree, so that e.g. one answer to my example could have been, to speak about a wealth tax only for the people who are much richer than just a selfused property, even if it is a house in Munich. Another answer is to tax appropriately already on that level, as it already means to be much richer than most others. And these answers have different effects and will attract different voters. However, what's your problem? I said, I want something specific. Some comments later you write the question is what I want. That I said in the first place.
From my first diary: "Conservatism means a declining loyalty starting with individuum, family, region, country, (Europe), world." I see property not only as individual property, but as 'clans/family' property. Inheritance is only the formal overscription of the 'clans' property to the next generation, while the real ownership, that one by the clan, does not really change. Der Amerikaner ist die Orchidee unter den MenschenVolker Pispers
Having clarified our positions regarding dynasties, we have to agree to disagree.
Anyway, to answer your question, taxing wealth is independent of taxing unearned windfall income (be it inheritance, gifts or capital gains). When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
The Wikipedia article on Wealth Tax claims the rate in Switzerland is progressive up to 1.5%, in various US states it varies from 1% to 4%, and in France the Solidarity Tax on Wealth taxes up to 1.8% for wealth above €750k (but the lowest nonzero marginal rate is .55% and the highest rate is only reached at €15M).
None of this seems "confiscatory". When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
Why were you arguing in the first place? Der Amerikaner ist die Orchidee unter den MenschenVolker Pispers
I believe redistributive taxation played a huge role in creating the middle class, but I don't know my econometric or economic history to be able to back that assertion. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
A proper asset tax will hit at, say, 10 millions euros at a few percents then at 100 millions euros with annual rates of 20%, etc.
The goal is to prevent anyone from amassing enough wealth to interfere by sheer economic power with the institutions.
Berlusconi would simply not exist in this system.
The first example is a red-herring. Successful professionals. It's worth, what?, 5 or 10 millions euros. Those are not an issue. My problem is with Silvio Berlusconi, the Bush family, Francois-Henri Pinault, those levels of wealth.
Essentially, the division is between people who are well off but fully dependent on society and its common infrastructure for their daily life - police, hospitals, etc. - and those are rich enough to try to isolate themselves and abstract their person from society while profiting from its benefits and influencing it for their sole benefit.
This argument is a common plow in debates about taxation: conflating vastly different levels of wealth as a single issue. The right wing is using it actively, because 1) they are paid to do that and 2) it creates a false solidarity between well-off upper middle class, most of it meritocratic in nature and who are politically influential, and the truly rich, who, by dint of their very small numbers, have no influence except the one they buy. The left wing is also falling for it and helping the right-wing by making the same conflation by hammering the upper middle classes (easy) rather than attacking the truly rich (a far more complex task and, occasionally, a dangerous one).
As I mentioned in another comment, asset taxes, inheritance taxes and very high taxation of very high incomes are not an issue of social justice and redistribution but a matter of institutional stability and democratic health.
"And as all the examples others brought up, were about much bigger wealth, the question is, amplifying wealth to which degree, so that e.g. one answer to my example could have been, to speak about a wealth tax only for the people who are much richer than just a selfused property, even if it is a house in Munich. [...]"
I was asked to bring up examples why somebody doesn't use a viable asset to make revenue from it. Actually I was the wrong receiver, as Migeru brought the idea up, that wealth should be taxed because otherwise productive assets might not be used. You could have said before what dimension of wealth we are talking...
I in general dislike such taxes, but if the wealth is so much that as you say it is a matter of institutional stability and democratic health, I agree that something has to be done, despite one can discuss what. Der Amerikaner ist die Orchidee unter den MenschenVolker Pispers
Although I think that a case can actually be made for taxing a single person living alone in a two-family house at levels he will find painful.
First, such taxes serve to restrain speculative bubbles in the real estate market - bubbles that do real harm to first-time buyers even on the occasions where they are deflated more or less peacefully, nevermind the cases where they bring the whole economy to a screeching halt.
Second, if you have an apartment designed for ten to fifteen people (yes, we actually have such apartments in Copenhagen), then you have to supply public infrastructure for ten to fifteen people, because infrastructure planning has a somewhat longer time horizon than home-ownership (at least good infrastructure planning has).
And finally, I would remark that living space in cities is a very much finite resource - and I think it's fair enough that people who hold down more than the average share of finite and valuable resources pay through their nose for the privilege.
But that is a somewhat different discussion (then again, this thread has been threadjacked so many times already, so what's one more...)
What allows you to have possession of assets and to do as you please with them is that society - the community you live in - decides to protect your right. But that comes at the cost of supporting the functioning of said society or community. If the society at large decides that gold is an asset that shouldn't be hoarded, then either you put up - in exchange for society's protection of your other property claims - or you hire a bunch of thugs to protect your assets from those thieves outside your door who call themselves "the community". When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
The Conservative view always seems to be reducible to 'I have mine and I don't want to share with anyone.'
This is fine as far as it goes, but unfortunately in a world where there are plenty of redistribution channels which exist solely to steal wealth from those who don't own capital, it's not a very convincing argument - at least not as long as the same right isn't granted to everyone equally.
Capitalist redistribution is far more destructive of real wealth than taxation is. From the point of view of everyone except the so-called independently wealthy, there's very little difference between paying 30% of income in taxes and having 60% of productivity taken away and given to shareholders.
If anything government taxation is a much lighter burden. It doesn't demand that anyone work evenings and weekends, and it doesn't inflict the kinds of psychological pressures which corporate working environments are famous for.
The answer would be genuine participatory corporate democracy. So far all we've had are half-democracies where there are limited voting choices for formal government.
But since policy is now decided almost exclusively by consultants and lobbyists, and not by democratic accountability, the antidote is formal democratic accountability for corporations, not just for shareholders but for anyone whose property, lifestyle or working time is affected by corporate decisions.
I don't know what you define as "to have a problem with". The constitutional court of Germany ruled, that what you suggest would mostly be possible without changing the constitution, if the parliament decides it. I would not vote for a party suggesting that. And anybody who wants to implement something against the decisions of the parliament, is in my eyes a criminal to an extend, that the parliament and the constitution are to defend even with violance. But if you get a majority to vote for a party that wants to implement democratic access to corporate governance, then it is so. I accept to live in a democracy. Der Amerikaner ist die Orchidee unter den MenschenVolker Pispers
In fact progress only happens when they're changed.
As for not voting for a party which suggested that - all you're doing is denying others the rights which you claim for yourself.
This is hardly unusual for conservatives. But even so - let's be clear that this is what you're doing.
If a corporation builds a plant which affects the air quality for miles around it, on what basis should they not be held accountable?
Practical democracy is about what comes through your door - or in this case, through your windows.
What justification is there for arguing against that kind of accountability?
If I control the press, then I control what information you have access to. Not in the crude sense that I can send a goon squad to prevent you from googling "contras nicaragua" (at least I usually can't) - but in the far more insidious sense that I can prevent you from even knowing that there is something called the contras. In point of fact, I can prevent you from even knowing that there is a country called Nicaragua.
OK, maybe not you, and maybe not with the Contras. You have an internet connection and enough time and interest to use it politically. But even so - even though you are probably among the most politically active and informed 10 % of the population - I will still make a wager: That while you have an easy time recalling five major terrorist attacks against Europeans and Americans in the past ten years, you will be completely unable to recall five civil wars in sub-Saharan Africa from the past ten years (without researching it first). Despite the fact that atrocities take place in sub-Saharan Africa that make - say - Saddam Hussein look like a boy scout in comparison.
Zaire/Congo (could probably count as several, but hey - one) Angola Rwanda (with side ordre of genocide) Algeria (I think it counts as civil war) Mozambique Sierra Leone Cote d'Ivoire Nigeria (low level, but permanent)
sigh... maybe it would be simpler to list the countries with no civil war there... In the long run, we're all dead. John Maynard Keynes
Does Sudan count?
Somalia?
Eritrea? When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
I would argue that Eritrea does not count as the Eritrean-Ethiopian civil war ended in 1993, and later violent conflict within Eritrea has not risen to the level of war. The uncivil Eritrean-Ethiopian post-1993 conflict escalated to war, but with both states widely recognised it is not civil war. A vote for PES is a vote for EPP! A vote for EPP is a vote for PES! Support the coalition, vote EPP-PES in 2009!
What if a party or party associates try to get the whole press market. That is similar dangerous and would not be stopped by a wealth tax.
And there is not necessarily of such big wealth. From a stern.de articel of 2007 with an elite researcher: "Mighty is as well someone like Manfred Schneider, the former Beyer CEO, still on the control board of 6 DAX enterprises. When he says some time ago 'We seriously have to think about reducing the social standards significantly. Why aren't 25 holidays enough instead of the current 30?', then this is not just said like that. It changes the social climate." Other CEOs like Ackermann can't make the public opinion. But they can put out what is on the public agenda - even with a widely diversified press.
Even with a wealth tax one would need other press protection measures. Der Amerikaner ist die Orchidee unter den MenschenVolker Pispers
As Bill Gates famously quibbed when asked why Microsoft managed to kill IBM's technologically far superior OS2 operating system "They had better coders, but we had better lawyers."[2]
It is far easier and less vulnerable to manipulation and subversion to simply make sure that there is no vast concentration of wealth in the first place. Hard to bribe lawyers and legislators when you don't have anything to bribe them with.
As for your example of partisan control of the press, I fail to see how a single party could acquire control of a controlling share of the media without the kind of capital concentration that a steeply progressive wealth tax would render impossible. There is nothing magical about a political party that enables it to buy media without paying for them.
And as to your CEO example, I would argue that the worship of biznizmen as prophets and demi-gods would be markedly less pronounced in a media picture where the press wasn't run by conglomerates that employ more bizniz school graduates than reporters. Besides, a more heterogeneous media picture would itself serve to limit the herd mentality and routine plagiarism that makes it so easy for spin doctors and other blackhat activists to manipulate the press.[3]
- Jake
[1] If I recall correctly, the anti-trust case against Microsoft fizzled largely because the pieces it was broken into were aligned neatly with market niches, which meant that the individual bits could still exercise monopoly power, just over a smaller sphere of electronic commodities.
[2] Actually, I can't find a place where he is cited as saying that, so it may be an urban legend. But it captures M$'s attitude well enough.
[3] In fact "manipulate" is understating things by some orders of magnitude. It is my impression that we have simply ceased to have a functioning press in many parts of the nominally democratic world. If you only spend 20 minutes of the rest of your life on economics, go spend them here.
United States Microsoft antitrust case - Wikipedia, the free encyclopedia
Judge Jackson issued his findings of fact[11] on November 5, 1999, which stated that Microsoft's dominance of the personal computer operating systems market constituted a monopoly, and that Microsoft had taken actions to crush threats to the monopoly, including Apple, Java, Netscape, Lotus Notes, Real Networks, Linux, and others. Then on April 3, 2000, he issued a two-part ruling: his conclusions of law were that Microsoft had committed monopolization, attempted monopolization, and tying in violation of Sections 1 and 2 of the Sherman Act, and his remedy was that Microsoft must be broken into two separate units, one to produce the operating system, and one to produce other software components.
The DOJ announced on September 6, 2001 that it was no longer seeking to break up Microsoft and would instead seek a lesser antitrust penalty.
The DoJ won the case and then dropped it as a wet towel. But the drop came after an election changed the power in the white house. I have always assumed Microsoft to be a big donor to the Bush campaign. A vote for PES is a vote for EPP! A vote for EPP is a vote for PES! Support the coalition, vote EPP-PES in 2009!
I would argue that even the first ruling didn't go far enough. M$ would still have the next best thing to a monopoly with their OS (at the time). Which means that they were for all intents and purposes able to control what the users could do with their computers, because there wasn't (and isn't) any effective enforcement of open software standards. That's too much power in the hands of a private company.
But we are getting rather far afield, methinks.
So the horse is already bolted, which's door locking we were discussing. Der Amerikaner ist die Orchidee unter den MenschenVolker Pispers
Divestiture is the only thing which could help, in both cases. Der Amerikaner ist die Orchidee unter den MenschenVolker Pispers
However, I think you underestimate the impact that a wealth tax would have solely by making sure that even the richest person in society is dependent on the same police, fire service, hospitals and universities as everyone else. If the rich have to live next door to the poor, they have a vested interest in making sure that the poor don't live in a slum.
