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Where to From Here?

Entry 2040, on 2020-04-29 at 20:29:08 (Rating 3, Politics)

There is a lot of commentary around at the moment which offers supposed insight into how society might change as a result of the coronavirus pandemic. The consensus - even from those who you might normally associated with the status quo - seems to be that change is both necessary and inevitable.

So most people seem to be in agreement that we need change, but almost no one is saying what that change should be, apart from some vague prognostications around greater equality, less dependence on capitalism, and more "people-centric" policies. I agree, this is a great opportunity to improve the social and economic systems we currently have, but exactly how can they be made better?

Well, I've got to be honest here: I don't know. And I don't think anyone else does either. Anyone can offer an opinion that we need change - especially since that now seems to be the default position that many hold - but when it comes to saying exactly what that change should be, there is a conspicuous silence.

Most suggested changes I have seen involve less dependence on capitalism. I'm not sure if everyone totally agrees on what this word even means, but I like this simple concept: that the core components of the economic system (services, production, administration) are owned and run by private individuals and companies with the key aim being to make a profit from them. The alternative to this is state ownership and control, and while that might appear to have a lot of benefits in theory, in practice it usually turns out to be a disaster.

The most conspicuous "experiment" along these lines must be the USSR versus the USA, post World War 2. It's not a perfect experiment, by any measure, but the superficial result was very obvious. Which society would you rather live in? Which had the higher level of personal freedom, wealth, and general well-being? I think it is rather obvious that capitalism beat communism (or socialism, or whatever else you want to call it) on that occasion.

And there have been no really successful examples of socialism anywhere. Sure, I know many people say that is because no one has done it properly, but that defence is rather weak and could be used to defend any failed system. Others say that interference from the West has prevented socialist governments from succeeding, but again this seems rather weak. Finally, people point to countries with conventional Western economies with a high degree of socialist influence, such as the Scandinavian countries, who seem very successful. But these aren't socialist countries; they are conventional capitalist countries with some socialism thrown in.

In fact, every country has some aspects of socialism, if you want to use the broader definition. Welfare programs, government construction programs, and government regulations on trade, employment, and industry could all be seen as this. But the underlying model is still capitalism.

But what about the obvious increase in wealth disparity between the rich and poor, which is presumably the result of capitalism? Well, that's a genuine issue; the difference in wealth between rich and poor has got worse, and capitalism probably is to blame. But another way of looking at the issue is this: the poor are much richer now than they used to be. In fact, the elimination of poverty has progressed faster than the UN expected. So the poor have got richer, but the rich have got even richer at a faster speed. Is this fair? Well, probably not, but we should be careful about eliminating an economic system which is improving the standard of living for most people.

There are other issues which need to be considered, too. Is capitalism responsible for the damage to the environment, climate change, and loss of biodiversity? Well, sure. It needs to accept some of the blame for that, but I do need to point out that the environmental records of some socialist countries is possibly worse.

I think capitalism has a lot of good points, but the problems with it need to be addressed. There is plenty of money around to solve all of the world's problems, but there is no motivation for private business to do anything, so let's just take the money we need.

Economist, Thomas Piketty wants to introduce wealth taxes of 90% on any assets worth over $1 billion. This would provide plenty of money which could be used to do something worthwhile. The big problem there is, could we trust the governments who collect the tax to use it any more sensibly than the private companies who are being taxed? If a law guaranteed that taxation gained this way could only be used for significant projects, then that problem might be avoided.

What would those projects be? Well, just US$30 billion per year is needed to end world hunger. That is almost nothing in the bigger picture. For example, the US spends 20 times as much on the military alone. So hunger could be eliminated easily. There are issues with access to the areas where food needs to be distributed, of course, but that might also be fixed at a slightly higher price. But we really should just spend what we need to, to fix the problem.

What about homelessness, which is an issue even in rich countries? There are more empty homes in the US than there are homeless people (and the same applies to many other countries), so just confiscate them (or pay a fair, non-negotiable price) and re-allocate them. Problem solved. Now I really am starting to sound like a socialist!

Next is unemployment. Many people are unemployed because of deficiencies in their skills, work ethic, or character, but we should still support them, at least in a minimal way. Others have lost jobs because of automation, or other issues beyond their control. We should support them too, of course. If we had a UBI (universal basic income: a guaranteed amount everyone automatically gets) we could make sure everyone had enough to live, and full employment would not be necessary. All complex, and often unfair, welfare payments could be stopped because they would no longer be necessary.

A UBI doesn't need to cost a lot. Well, actually it would be about $4 trillion in the US, but that is less than the cost of current social programs.

A common objection to proposals such as these is that what motivation would people have to work? If you are going to tax the rich, they need to have some motivation to get rich. Why would anyone start a company, or take a highly paid job if they were going to lose all their income in tax?

That is a good question, but luckily I have some good answers. First, many rich people have said that they really don't do what they do for the money. They have far more than they could reasonably use, and the drive to make more comes from a need to win in a sort of game. Also, if you made more, you would always get to keep more too, just not as much as you do now. So the UBI would be a minimal amount needed to live, but to live well you would still need a job.

Another objection is, if one country implements a regime like what I have described, why would the rich in that country not just move to somewhere else with a more generous tax regime?

That is another very good question, and a difficult one to fix. The same rules would need to apply to every country, and that is both difficult (maybe impossible) to arrange, plus I am uncomfortable with global rules, created by who knows what organisation - maybe the UN? That doesn't inspire confidence!

If several large countries accepted this idea on principle, they might be able to create sufficient pressure (through trade sanctions, etc) to force others to follow. I freely admit this is a difficult problem to solve, but no one said this would be easy!

There is one other issue we need to pay attention to: overpopulation. We need to provide food for every country, even those who are "breeding recklessly", which always tend to be the ones where a much lower population increase would be better (mainly in Africa), but we need some pressure to decrease birth rates. If excessive family sizes are the result of religious beliefs (Muslims, Catholics) we need to control those churches. Just tax them according to their teaching. A lack of money will soon make them see sense.

So here's the plan: Keep capitalism, but control it for the benefit of everyone. Tax the rich and use the money to fix global problems, especially hunger and homelessness. Introduce a UBI to make sure everyone has a minimal standard of living, but encourage employment for fair wages. Encourage reduced family sizes so that the world population decreases, to around a billion. Do this and all our problems will be greatly diminished.

That's where we need to go to from here.

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Comment 2 (5267) by Anonymous on 2020-04-30 at 11:26:57: (view earlier comments)

I'd vote for that plan, i.e. second last paragraph

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Comment 3 (5268) by OJB on 2020-04-30 at 11:55:10:

Clearly I need to start my own political party, so I can implement some of these brilliant ideas!

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Comment 4 (5269) by Anonymous on 2020-04-30 at 14:06:01:

Errr, (1) have you spent anytime living in the USA? Don't confuse the wealth of a nation with the wealth of its people. (2) I think you left out Hinduism when you were stereotyping world religions...

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Comment 5 (5270) by OJB on 2020-04-30 at 15:03:48:

I've only visited the US twice, for a week or two each time. But I am talking about the average wealth of people, worldwide. Check the stats: the average "wealth" of people, even in third world countries, has increased faster than expected. I'm not sure if Hinduism is responsible for the overpopulation in India; I just know those other two religions are definitely partly to blame for the lack of birth control in nations which really can't afford too many more people.

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Comment 6 (5271) by OJB on 2020-04-30 at 15:06:36:

You might like to refer to the graphs on this page: https://ourworldindata.org/extreme-poverty.

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