Not for the first time, economist and columnist David Crane gives us information that confirms that our present economic system is in long-term crises. (Boosting growth is the key challenge, Advocate, Sept. 2, 2014)
Although Crane remains optimistic, his observations are enlightening:
“Moreover, despite cuts in corporate tax rates and the low interest rates policy of the Bank of Canada, business has not been investing for the future. Instead, it is sitting on record levels of cash, what former Bank of Canada governor Mark Carney described as dead money.”
A French economist, Thomas Pikitty, has achieved world fame on the basis of his new book, a best seller, called Capital in the Twenty First Century.
Pikitty explains in clear terms, backed up by painstaking historical research, that the growing inequality between the owners of capital and the rest of society is now the normal state of affairs.
He demonstrates that periods of diminishing inequality, like the post-war boom from 1948 to 1975, are in actuality an exception — that economic stagnation and rising inequality are the new normal.
Crane’s optimism unfortunately leads him to the utopian conclusion that Canada can, by raising the productivity of labour, export its way out of the continuing crises.
Pikitty, however, fears for the very survival of the present economic system on a world scale and in his book he recommends something that is for the owners of capital a drastic unthinkable solution: a global tax on wealth.
This, of course, demonstrates that Pikitty must also be utopian to seriously believe that those who possess the wealth would willingly give it away.
The Economist writes on May 3, 2014: “The book’s success has a lot to do with being about the right subject at the right time. Inequality has suddenly become a fevered topic, especially in America — Americans stung by the excesses of Wall Street, are suddenly talking about the rich and redistribution. Hence the attraction of a book, which argues that growing wealth concentration is inherent to capitalism and recommends a global tax on wealth as the progressive solution.”
The charity Oxfam revealed that 85 billionaires own as much as the bottom half of the world’s population and the wealth gap continues to grow.
After six years of economic crises, there is increasing concern for the future.
In stark contrast to austerity, unemployment and falling incomes, the banks and big business continue to make record profits.
What concerns the most far-sighted economists is the threat to the existing economic system from an enormous build up of discontent.
Resentment is building in populations who, while suffering austerity cuts, are being asked to believe the obvious fallacy that we are all in this together.
This situation has been called socialism for the rich and the market economy for the rest. The wealthy take no risks because they are bailed out by the state and the workers get the bill.
Both Crane and Pikitty would in all probability regard themselves as practical people and would probably regard socialists, who advocate a democratic planned economy, as utopians.
The present method of running society is nevertheless at an impasse, it is time we ended the injustice and inequality that is the result of the existing mode of production, distribution and exchange.
Keith Norman Wyatt
Innisfail