Tuesday, January 29, 2013

Reaction to Oxfam themes and recommendations

Conversations are where we go exploring. From Davos, Sweden, this month a conference offered pronouncements about the world economy (Global Risk report pdf). In response Oxfam issued its reaction The cost of inequality: how wealth and income extremes hurt us all as a 5-page briefing.

Their themes are spot on! They cry out against conditions in line with my own concerns. My view is that they want to nibble at the edges of the problems rather than seeking full prevention of the problems in the future. They are suggesting measured responses at one place and then at another, over one policy issue and then at another. What must be regulated is the greed. If the greed is not regulated, then the innovations that greed inspires will simply circumvent any policy changes they propose.

Quoting from the Oxfam Brief:
"Free public services are crucial to levelling the playing field. In countries like Sweden, knowing
that if you get sick or that you will receive good treatment regardless of your income, is one of the greatest achievements and the greatest equalisers of the modern world. Knowing that if you lose your job, or fall on hard times, there is a safety net to help you and your family, is also key to tackling inequality. Similarly, access to good quality education for all is a huge weapon against inequality.
"Finally, regulation and taxation play a critical role in reining in extreme wealth and inequality.
Limits to bonuses, or to how much people can earn as a multiple of the earnings of the lowest
paid, limits to interest rates, limits to capital accumulation are all only recently-abandoned policy instruments that can be revived. Progressive taxation that redistributes wealth from the rich to the poor is essential, . . . ."

Each of the gains from these policy changes will be short lived in every Western-style democracy as long a the powerfully rich see these changes as stifling their abilities to profit and draw up their economic advantages. Free services will become "separate yet unequal" then some times done away with for being without worth; healthcare promises can skew the market place's demand and price setting mechanisms, safety nets and education systems have been dismantles time and time again. Finally tax policies have been set to progressive intentions in the past and then redirected gradually and strategically to favor the powerfully rich.

My idea is to put a limit on individual income per year. If we can have 80 percent of people in democracies agree on this regulation, then the fix is permanent. Enforcement will take some doing and nations will need to be vigilent, but we could under such a system agree to the limit and prevent the problems caused by excessive inequality.

All my best,
Auntie Greed