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Socialist for modern times

, July 4, 2017, 0 Comments

socialist-governments-capitalist-marketexpress-inSocialism had its golden age after World War II. Taxes in the belligerent countries had gone sky-high during the War; people had got used to paying high income taxes. Governments had no use for the revenue once the enemies were defeated; what better use for it but to improve the conditions of the poor? No country rewarded the poor for just being poor; they had to be young, or old, or unemployed – unfortunate in an additional dimension – to qualify for subsidies. India, for instance, invented a scheme and named it after its saint, Mahatma Gandhi: a poor man had to be prepared to do hard physical work in the open, however hot cold it was, to get a paltry wage. No wonder middlemen found it easier to invent poor men and pocket the wage in their name; it was thus turned into the world’s biggest corruption programme.

But bad solutions do not get rid of the problem; the poor continue to suffer, and however incompetent or dishonest governments may be, the need for a solution remains. One of its lifelong pursuers was Sir Antony Atkinson, an academic with a social conscience. His last book was about rising inequality in most of the capitalist world, which is so widespread that people think it is global fate. He argued against this pessimism and suggested innovative policies to reduce inequality.

They include a proposal that every government should create a sovereign wealth fund. At present, it is normal for governments to run deficits and finance them by borrowing or printing money; Atkinson thought that governments should also run surpluses in good times, save and invest in companies and property. The profits from ownership, trade and industry should not go to capitalists alone; the government itself should buy into capitalist enterprises, and use the income for social purposes.

Governments levy estate duties, which tax people after they are dead and cease to care. In Atkinson’s view, the government should also keep a record of inheritance and gifts inter vivos that rich kids receive, and levy a lifetime capital receipts tax on it; and it should collect a proportional or progressive property tax, based on up-to-date property assessments. It should introduce an annual wealth tax, and a minimum tax on companies irrespective of deductions.

Many governments subsidize poor grown-ups. In Atkinson’s view, poverty is no less of a curse for the young. They should get a generous child benefit. It should be included in the income of their parents and taxed as income, so that children of poor parents would get more generous subsidies.

Much innovation is directed towards raising productivity and reducing labour requirements; Atkinson wanted the government to encourage innovation that used more workers, and to take account of income distribution in competition policy.

Pensions are normally paid irrespective of how well off the receiver is; Atkinson wanted pensions and pension contributions as well as saving schemes to be covered by progressive income taxation.