The Financial Times reports on a FT/Harris survey found a surprising consensus across eight countries in Europe and Asia, as well as in the US, that increasing income disparity was undesirable. Not surprisingly, respondents favored increasing taxes on the rich.
Of course, this poses an interesting conundrum for politicians, given the sway of multinational corporations and Big Finance. As Jean Colbert observed, “The art of taxation consists in so plucking the goose as to get the most feathers with the least hissing.” And those at the top of the food chain know to hiss loudly. So unless the public at large figures out how to get more vocal, any moves to address these sentiments are likely to be symbolic.
And the survey participants appear to understand that dynamic well. For the most part, they expect inequality to worsen in the next five years.
From the Financial Times:
Income inequality has emerged as a highly contentious political issue in many countries as the latest wave of globalisation has created a “superclass” of rich people…
According to the latest FT/Harris poll, strong majorities in five European countries – ranging from 76 per cent in Spain to 87 per cent in Germany – consider that income inequality is too great.
But 78 per cent of respondents in the US, traditionally seen as more tolerant of income inequality, also think the gap is too wide….
For the first time, the FT/Harris poll surveyed opinion in Asia. In China, which has experienced three decades of helter-skelter development, 80 per cent of respondents think income inequality is too great.
However, Japan recorded the lowest figure of all countries surveyed, with 64 per cent….
Clear majorities in all countries agree that taxes should be raised on the rich and lowered on the poor. In Britain, 74 per cent of respondents think that those on low incomes should be taxed less, helping to explain the furore that surrounded the Labour government’s decision to abolish the 10p income tax rate…
US respondents were the most resistant to the idea of lowering taxes on the poor, with 27 per cent agreeing with the proposition that taxes should be kept at current levels.
Note that Japan has one of the most equal distributions of income, if you believe the UN Gini coefficient ranking, although the CIA Factbook Gini points to a very different conclusion. But the Japanese are keen observers of very small status differences (the legacy of having once had extremely strict sumptuary laws), so their sensitivity to income disparity is considerable.
Perhaps it’s time to bring back that noble tradition, in force since the ancient Greeks, through Rome and on to the Middle Ages – the sumptuary laws – only not applied to dress, but to housing.
This blog is better than most describing “bubbles” and their impact on economies and financial markets. Discussions here have highlighed the differences between a global economy marked by both inflationary and deflationary pressures. Labor is clearly in a deflationary cycle with respect to wage rates. It’s an anti bubble. It began with workers in second and third world countries willing to work for pennies on the dollar in many low wage jobs. Now this global labor force is moving up the jobs ladder. With more advances in technology, language skills, and education, the global labor market is pushing down wages in developed countries. This trend will continue. The only alternative is for workers in OECD countries to innovate and create. Americans who understand this have done well as this economy favors creativity. However, there are many American workers who understand their jobs are either vanishing or at risk, but don’t know what to do. Unfortunately, most politicos either do not understand this or are unwilling to explain it in detail.
“many American workers who understand their jobs are either vanishing or at risk, but don’t know what to do. Unfortunately, most politicos either do not understand this or are unwilling to explain it in detail.”
It is also painfully obvious that politicos (in particular in the US) are unwilling to support meaningful programs for retraining workers. At best, they are paying lip service. Workers are supposed to have all the resources necessary to fend off on their own at the very time they lack income.
I wonder how can that be good for the economy. Morevoer, how does that help make this country so awesome?
At this point, I feel sorry for the rich. They don’t see the ugly sacrifice their children will be forced to make with their heads.
Ignore it at your peril but bloody revolutions are the direct result of policies that hurt the middle and working classes–and they can only take so much before they snap.
It won’t happen in the US? The riots after the Rodney King verdict were about inequality. And they weren’t taking place in affluent black neighborhoods.
Ardano is really on point. The best way to improve income in-equality is for those in the labor force to lay claim to that which the top possesses.
Oh sure they can do it by force – through taxation, or revolution – but both are inherently destructive. Or they could do so by improving their skills/abilities and therefore their productivity. Then the money must flow their way, unless we get really stupid and start throwing up more regulations/economic barriers like the Europeons.
Someone said: “The best way to improve income in-equality is for those in the labor force to lay claim to that which the top possesses…they could do so by improving their skills/abilities and therefore their productivity.”
And what skills exactly would those be? Those skilled in the IT profession have seen their jobs outsourced as readily as those of a punch press operator. Accountants, customer support representatives and many other white-collar professionals are finding themselves right behind the programmers on a quick trip to the Indian subcontinent, you can be sure.
Many of the retraining suggestions, while a boon for the education industry, are really ludicrous. “Retrain for the health-related professions”, we’re told. Yeah, we’re all going to feed our families and put our kids through college changing bedpans, drawing our salaries from a health provider and insurance system that’s already creaking.
The truth is that there are darned few jobs that absolutely cannot be outsourced to someone who will do them more cheaply, especially if the employer doesn’t really understand or care about quality.
What happened to the idea that those who have money and do create jobs have a moral obligation to the country that supported their climb into the financial stratosphere?
“According to the latest FT/Harris poll, strong majorities in five European countries – ranging from 76 per cent in Spain to 87 per cent in Germany – consider that income inequality is too great.”
Any data on the polls leading up to this “significant” latest Harris Poll?
When was the last time the majority of respondents did NOT consider income equality to be too great?
What is meant by the term “too great”, anyway? Is this just an arbitrary figure…or a bunch of arbitrary figures established by each respondent in accordance with that respondent’s notion of “too great”?
You cannot “retrain” your way out of a obviousy unfair system of ever-collapsing wages. An oligarchy has its own logic and no amount of individual action or gumption can overthrow it. The only solutions are political, not economic. “Revolution” could take many forms. There is a limit to how much financial stress people will bear willingly. The recent phenomena of “walk-aways” and the street protest in Antioch, California (foreclosed homeowners leading a march on banks) shows that to some extent, a debtor society depends on the consent of the indebted. Without debtor’s prison, people may simply choose to defy the law en masse–and considering how the decks/debts are stacked against them, who can blame them? There aren’t enough collection agencies to harass a hundred million people into obediently going to their low-wage McJobs and accepting hard-working slow starvation. The super-rich have allowed their fantastic greed to blind them to the long term explosiveness of their own system. They are trying to impose what is essentially feudalism on modern people who have at least a high school education. It will not work. And why does anyone need twenty billion dollars anyway? Most people, I believe,can hobble along quite nicely with twenty million. So the mega-financiers ‘enjoy’ collecting vast sums. Great! Let them play with monopoly money! There is no rational reason on heaven or earth to let a few thousand crazed people drive the rest of us into economic, social, and ecological extinction. They have to play fair or go sit in time out. And that isn’t Marxism … it’s Momism.
There needs to be a way for nations to unite in taxing the super rich and the mega-corporasaurs, otherwise they will just move to the nearest tax haven. In fact, it’s already happening. They have no allegience to anything or anyone but money.
And why does anyone need…?
Wow, judging from that snippet, and many other comments, Yves really needs to rethink the name of this blog.
Wow, judging from that snippet, and many other comments, Yves really needs to rethink the name of this blog.
Which part of the name? Capitalism? That is the false name the system gives to itself. Wealth redistribution by government occurs in both directions and it is not capitalism in either case. What would the “capitalists” say if their handouts and “corporate rights” stopped and the winners and losers were left entirely up to the marketplace?
If we’re going to have entitlements, why not give them to people instead of companies? We’ve tried “trickle down”, let’s try “trickle up”! People spend money – let’s let the companies compete for those dollars instead of taking handouts.
Well said, Jeff. Exactly.
I was under the impression that Yves was interested in fostering a discussion of useful regulation intended to improve the performance of capital for the benefit of the most people.
I don’t give a fig that some have gotten uber wealthy. My concern is whether the majority of everyone else has also improved over a similar time frame. There is solid data out there to say that, of late, people have not done so.
The question then is what can we do to improve the performance of those who have not benefitted? Not how much can we rob the top to give to the middle. Firstly because the ‘top’ never actually gives up much and secondly because those who do get taken to the cleaners are, by definition, those who are most productive. Not a great way to grow the pie.
Naked Wealth Redistribution is a decent name for a blog, and maybe it should be this one’s. That it already occurs is not a valid argument in support of more. It is collectivism, pure and simple.
I’m going to follow the advice of some here and steal something from someone else, just to give it to you.
‘The distinction between “President of General Motors” and “People’s Minister for Vehicle Production, Great Lakes Region” is one of semantics based on wishful thinking. It’s the entrepreneurs and the productive who take it in the shorts under any form of collectivism.’
So, by all means continue in your re-distributionist fantasies, just remember where it leads you; to an ever shrinking pie. Oh, and those on the top? They never go away, why do you think Warren Buffet is an Obama fan?
Anon of 10:28AM,
You may not have noticed I said “If we’re going to have wealth redistribution…” The rest was sort of tongue in cheek, though there is acknowledgement that “trickle up” works: the rebate checks. “Trickle down” is what we mostly get because big companies would prefer the money to go straight into their coffers rather than having to compete for it in the marketplace. Is that capitalism?
I’d wager a million US pesos that were all wealth redistribution to stop, the loudest hissing would be right at the top of the capitalist food chain.