Trickle-down economics doesn’t work but build-up does – is Biden listening?
A new study confirms tax cuts for the rich do not benefit the rest.
Politicians rarely want to raise taxes on the rich. Joe Biden promised to do so but a closely divided Congress is already balking.
That’s because they’ve bought into one of the most dangerous of all economic ideas: that economic growth requires the rich to become even richer. Rubbish.
In a new study, David Hope of the London School of Economics and Julian Limberg of King’s College London lay waste to the theory. They reviewed data over the last half-century in advanced economies and found that tax cuts for the rich widened inequality without having any significant effect on jobs or growth. Nothing trickled down.
Meanwhile, the rich have become far richer. Since the start of the pandemic, just 651 American billionaires have gained $1tn of wealth.
In December 2020 what Americans believe the mass of Americans will benefit from the very wealthy becoming richer? Does Robert Reich honestly think this is why Congress objects to wealth taxes? This article perpetuates the fallacy that American politics increase disparity of wealth out of some sort of ignorance, from misguided altruism. Tax breaks for the wealthy are a mistaken attempt to help the impoverished. Ah, but now a new study provides corrective evidence which was lacking. Who possibly believes this?
Ten of the richest people in the world have boosted their already vast wealth by more than $400bn (£296bn) since the coronavirus pandemic began as their businesses were boosted by lockdowns and financial crises across the globe.
The extra wealth accumulated by the 10 men – approximately $450bn, using Forbes figures – over the past nine months is more than the £284bn the British government is estimated to have spent on tackling the pandemic and the economic damage it has wrought on its 66 million people.
In a related report, the campaign group Americans for Tax Fairness estimates the collective wealth of America’s 651 billionaires has risen by $1.1tn over the same period. Frank Clemente of Americans for Tax Fairness said:
“Their pandemic profits are so immense that America’s billionaires could pay for a major Covid relief bill and still not lose a dime of their pre-virus riches. Their wealth growth is so great that they alone could provide a $3,000 stimulus payment to every man, woman and child in the country, and still be richer than they were nine months ago.”
Ana Arendar, the head of Oxfam’s inequality campaign, said the fact that the richest of the rich have made so much money during the coronavirus pandemic “proves beyond a shadow of a doubt that the global economic system is not fit for purpose”.
“Allowing the wealth of a tiny few to explode while hundreds of millions suffer is nothing short of a dereliction of duty,” she said of global governments’ inaction on widening inequality.
“Extreme poverty is rising for the first time in a decade and hundreds of millions of people face dire hardship; in many cases failing into debt, skipping meals and being forced into destitution,” Arendar said. “Governments need to stop pandering to the richest.”
The language here perpetuates illusions, of course.
“The global economic system is not fit for purpose”? What purpose is envisioned?
“Allowing the wealth of a tiny few to explode … is nothing short of a dereliction of duty”? What duty is imagined?
“global governments’ inaction on widening inequality”? Inaction? How is the widening inequality thought to have been generated?
Last year on the occasion of Habermas’s 90th birthday, Die Zeit:
Für Habermas ist der Hinweis auf die “Komplexität” moderner Gesellschaften zur faulen ideologischen Ausrede geworden, zu einer Art Selbstentwaffnung politischer Eliten, die den Mut zur gestaltenden Politik verloren hätten. Anstatt alles dafür zu tun, die transnationale Zusammenarbeit zu vertiefen, beugten sie sich einer “abstrakt beschworenen Wettbewerbsfähigkeit” und damit dem Trend wachsender Ungleichheit.