Tax the rich

Backlash in rich nations against globalisation

By Chris Giles in London

Published: July 22 2007 18:11 | Last updated: July 22 2007 18:11

A popular backlash against globalisation and the leaders of the world’s largest companies is sweeping all rich countries, an FT/Harris poll shows.

Large majorities of people in the US and in Europe want higher taxation for the rich and even pay caps for corporate executives to counter what they believe are unjustified rewards and the negative effects of globalisation.

Viewing globalisation as an overwhelmingly negative force, citizens of rich countries are looking to governments to cushion the blows they perceive have come from the liberalisation of their economies to trade with emerging countries.

Globalisation Harris Poll chartThose polled in Britain, France, the US and Spain were about three times more likely to say globalisation was having a negative rather than a positive effect on their countries. The majority was smaller in Germany, with its large export base.

Corporate leaders fared little better, with 5 per cent or fewer of those polled in the US and all large European economies (except Italy) saying they had a great deal of admiration for those who run large companies. In these countries, between a third and a half said they had no admiration at all for corporate bosses.

In response to fears of globalisation and rising inequality, the public in all the rich countries surveyed – the US, Germany, UK, France, Italy and Spain – want their governments to increase taxation on those with the highest incomes. In European countries, a large majority want governments to go further and to impose pay caps on the heads of companies.

Europeans still overwhelmingly support the principle of free competition within the European Union, contrary to Nicolas Sarkozy’s wishes at the recent European summit, but in France, Germany and Spain, the populations want their political leaders to play a larger role in managing their economies.

The depth of anti-globalisation feeling in the FT/Harris poll, which surveyed more than 1,000 people online in each of the six countries, will dismay policy-makers and corporate executives. Their view that opening economies to freer trade is beneficial to poor and rich countries alike is not shared by the citizens of rich countries, regardless of how liberal their economic traditions.

The issue of rising inequality is now high on the political agenda of every country and will feature prominently in the 2008 US presidential election.

http://www.ft.com/cms/s/2a735dd0-3873-11dc-bca9-0000779fd2ac.html

 

Why Income Inequality Matters

 

Good article thanks for sharing.

 

Tax the poor and make them pay for their own welfare.

 

I despise these corporate hogs and their obscene comp packages, but I equally despise all this whining about inequality and social justice. The reason Brazil is poor is because they have long had a mismanaged economy, a large part of their population would rather party than work and they have a terrible corruption problem. Now the rule of law is also vanishing. They could wake up one day and find themsleves living in a fialed state, not unlike Iraq. No doubt they will find a way to blame it all on the US.

Here, it seems to me a few truths need to be recognized. I'll grant the liberals one point. Corporate compensation is out of whack. Corporate governance has totally failed when failed CEO's like Hank McKinnell of Pfizer walk away with $200 million packages. Maybe Bob Nardelli did a good job at GE. He still wasn't worth anything remotely like the $200 mill HD paid him. Even if he had been a big success at HD instead of a miserable failure, it wouldn't change anything. Ditto that Exxon guy who pocketed a huge package. What did he do that was so great other than being CEO of an oil company when oil prices skyrocketed? If you have to have that kind of money, start a hedge fund. Don't expect public shareholders to underwrite it. I support congress doing something to limit these packages, because the corporate governance mechanism is seriously broken.

On the other end of the income scale, no doubt it is tough to be born into slums. The schools suck, violence is rampant and your role model is a drug dealer. Sorry, but I refuse to take responsibility for it. These poor unfortunates are the same people who vote in corrupt hacks like Marion Barry and other big city liberals. Study after study has proved that there is no connection between the money spent on schools and the educational outcomes. Liberals' solution? Spend more money. My solution? Expel troublemakers, have a suffocating police presence and stop subsidizing dysfunctional behavior.

In this country the key to getting ahead is in getting a good education, but these underclass communities don't value education. In fact, they devalue it. A good student is ostracized for "acting white." There are huge amounts of scholarships available for minorities who are minimally qualified. It is not a matter of money but of attitude. The federal government doesn't have to spend billions to get urban youth to play basketball, but for some reason policy-makers think spending enormous sums is a necessity to get them to do something productive.

Personally, I'm sick of it. I'm sick of being lectured about how it is my fault that they can't read or that they don't have health care. Maybe if they wouldn't have five kids out of wedlock and with no job, they wouldn't have these problems. I'm really sick of being expected to foot the bill for all their social problems and the incompetent bureaucracies liberals' policies have created.

 

Kinda like unemployment?

Sounds good to me if they could stick in an interest bearing acct and give me the balance if I wanted it....

 

Viva la revolucion .

 

I totally agree with what AAA has said here. Corporate compensation is totally out of whack.

These CEO's who walk away with big $$$ packages should be ashamed of themselves.

 

from investors business daily:

"A Financial Times-Harris poll of more than a thousand people found that those in the U.S., Britain and France were three times more likely to think globalization hurts their country than helps it.

And "in response to fears of globalization and rising inequality," wrote Financial Times reporter Chris Giles, "the public in all the rich countries surveyed . . . want their governments to increase taxation on those with the highest incomes."

That is, people want to tax the rich — an age-old urge — believing it will somehow help feed the poor. Unfortunately for those who believe this, it doesn't work that way.

"Taxing the rich" might be satisfying on some level, given the general level of envy people have for those who are more successful. But carried out as a matter of national policy, such ideas will have disastrous consequences for the world economy, leading to less growth, less investment, fewer jobs and lower standards of living.

It's a well-established fact that globalization — simply another word for free trade — has been, overall, a major boon, raising both incomes and standards of living worldwide. And that includes rich countries as well as poor ones.

Raising taxes might make some people feel better — after all, who doesn't want to take all those newly minted billionaires down a peg or two — but it will do nothing .

Any nation that begins applying punitive tax rates to its rich will soon find that they are taking their money — and the investments and jobs that go with them — elsewhere.

Those who see the world "worse off" because of globalization must explain why, as global trade has surged over the last 30 years or so, the rate of poverty around the world has plunged.

As Surjit Bhalla, an economist affiliated with the Institute for International Economics, recently wrote: "World poverty fell from 44% of the global population in 1980 to 13% in 2000, its fastest decline in history. Global income inequality has dropped over this period and is at its lowest level since 1910."

But what about workers in rich countries like the U.S. who worry about inequality? Will higher taxes correct their so-called inequities? Not at all. U.S. economic inequality has virtually nothing to do with globalization or free trade, per se. It has everything to do with education and skills.

A recent study for the National Bureau of Economic Research found that those with a bachelor's degree can expect to earn $51,000 or so a year. Those with just a high school diploma earn $28,000.

So the "income gap" is really an education and skills gap. And it's quantifiable: $23,000 a year, or nearly $1 million over a career spanning 40 years.

Taking more money from people who did the right thing — went to school or pursued more high-level training — isn't the way to run an economy. That is, unless you want to run it into the ground.

Even so, globalization is a boon to all Americans. From 1980 to 2006, our total trade in goods and services soared 543%, from a mere $575 billion, or 20.6% of GDP, to $3.69 trillion, or 28% of GDP.

Has that huge swing decimated our economy? Hardly. We've created 46 million new jobs over that time. And personal disposable income after inflation has surged 64% to $27,770 from $16,938.

In a study released just last month, economists Matthew Slaughter, Grant Aldonas and Robert Lawrence found that American families gain as much as $15,000 a year due to globalization — that is, freer trade. The benefits are not illusory. They're real.

By the way, countries that raise taxes to punish the rich end up punishing only themselves. At least that's the growing economic consensus. The largest recent study, by economists at the 26-nation Organization of Economic Cooperation and Development, found "tax rates negatively correlated with economic growth." A large number of earlier studies bolster their findings.

In other words, higher taxes mean lower growth. And vice versa. Higher taxes aren't a solution to inequality. Nor is protectionism.

Globalization isn't without its problems, of course, but overall it has made all of us a lot better off. We should be talking about how to improve it — not how to kill it off by erecting trade barriers and raising taxes."

 

"Expel troublemakers" To where? A school for troublemakers? Problem is the troublemakers mate and breed.

Spend more money on education? Ta da. The "more money will solve our problems" syndrome is about benefits for the BOE corporation not educating the students. Every been to a school meeting, we have your school psychiatrist, sometimes a school lawyer, a parent advocate, a counselor, several teachers, a director of the meeting, sometimes a social worker, maybe a parent will show up. Do you realize how much paper work this generates?

Everyone speaks their own language to draw up a remedial plan to get 4th grade Johnny to read. Have Johnny stay after school for assistance, Psy replies; "It'll ruin his self-esteem" Parent- "f that sh*t, nothing wrong with my kid, it's the teachers fault" The teachers says "He falls asleep in class" and so on and so forth. Bunch of bs but employs a lot of people.