After a week of talking and writing about our Survival of the Richest report, I spent the weekend listening to Joseph Stiglitz’s brilliant interview with my colleagues Nadia and Nabil on their Equals podcast.
For me, here are five points that Professor Stiglitz made that I found really compelling.
- Windfalls. It is shocking that following the COVID-19 pandemic – a time that has been so difficult for so many – the super-rich and many large corporations have seen phenomenal increases in their wealth and yet have been allowed to ‘make off like bandits’. In the last year, as the conflict in Ukraine has pushed up energy prices, oil companies have raked in tens of billions of dollars in profits. Yet when proposals were made to share some of this wealth via a tax on windfall gains, they resisted strongly. In any other context, that would be called war profiteering. Most of the very wealthy have got at least a fraction of their wealth out of exploitation, whether it’s big corporations violating competition laws, or individuals engaging in more explicitly exploitative behaviours.
2. Inequality is a choice. By continuing to choose to keep so many children growing up in poverty when we have the resources to change that, our politicians are damaging countless lives and putting our future in jeopardy. The international community must come together to close tax havens and to ensure that the voice of the poor, and poor countries, is heard in multilateral efforts towards tax framework reforms.
3. This isn’t about being anti-success. If billionaires knew a large fraction of the profits they make beyond 5 or 10 billion dollars would be taken as tax, it wouldn’t stop them from innovating. It’s a question of sharing that wealth in ways that will make our societies function better.
4. Raising resources, protecting cohesion. Income tax rates of around 70% on the highest earners might see people at the top working a little less, but our society would gain by becoming more egalitarian and cohesive. But it’s wealth taxes that would have the biggest impact; the revenues could be used to alleviate many of our societies’ problems. There is enormous scope for taxing the rich and wealth in low and middle income countries too, instead of simply accepting the IMF line that these countries must implement austerity measures if they’re to service their mountains of debt.
5. Glimmers of hope. The debate is moving from ‘if’ we should tax the rich more, to ‘how much more’ and that’s encouraging. There is a greater focus on inequality, including within bodies like IMF, a recognition that austerity hurts and isn’t the way to repay debt or promote growth, and new views on how to deal with debt sustainability. The consensus that once existed around what the global financial architecture should look like is fragmenting and that’s a good thing.
I’d love to hear your thoughts on this debate.