The implications of jubilee

harvest finished in autumn_optIn the last post we had a very brief look at the idea of jubilee. In this follow up post I am going to suggest how we might if not have something similar, at least follow the spirit of the jubilee.

As I wrote one the inescapable conclusions about the jubilee was it was an attempt to reduce inequality.   At the moment inequality is rising almost everywhere (at least in developed OECD countries).  Especially in the US and UK.  There has also been much talk of the rise of a new middle class in the “BRIC” countries recently.  An article by Paul Mason in the Guardian recently suggests that these people are not nearly as wealthy as we would think of the middle class in the developed world.

He goes on to write;

What was unthinkable 20 years ago is now becoming tangible: that the real incomes of skilled workers, knowledge workers and managers in “developing countries” are overlapping with those at the bottom of the heap in western society.

Another statistic being banded around last week was that the richest 85 people in the world are worth as much as the world’s 3.5 billion poorest.  The reasons for this are self evident. Off-shoring has hit manual jobs in the West and taxes have been cut for the wealthiest.

Does any of this matter?  I think it does.  There are good practical reasons to make societies more equal.  We all ultimately end up paying the price somehow through crime, bigger prisons, paying for ill health etc.  But I also think its offensive to God.  The prophets clearly saw morality as more than just “personal morality”.  See Amos 2v6 for example.  Jesus and the whole bible does appear to have a bias to the poor (Mathew 25v31-36.  Its not that the rich are less precious to God but as my minister put it recently, he knows they can look after themselves.

So what could we do to follow the spirit of the jubilee?  Looking at a graph provided in the print edition of Will Hutton’s article (link in the previous post) on the total income going the richest 1% of the population, there are some clues.  The 1970’s in the UK was when the wealth difference between the richest and poorest was at its narrowest. Incidentally its also when were at our happiest.  Here are my suggestions;

  • Raise taxes on the wealthy but cut taxes for the those at the bottom of the income pile.  The UK government has done half of this, raising the point at which you start paying taxes dramatically.  However, they also cut the rate of income tax for the wealthiest.  The opposition labour party has just said they will raise the top rate of tax if elected which is causing an enormous political row here.  There is no doubt in my mind that so far the burden of reducing the post crash government deficit in the UK has fallen too much on the poorest and too little on the richest.  At the same time food and energy prices have soared, leading to a cost of living crisis.  We can see the results with burgeoning foodbanks.
  • Strengthen trade unions. In the 1970’s trade unions were very powerful in all developed countries.  They got too powerful, especially in my country.  Mrs Thatcher introduced a whole heap of legislation to control them.  Just recently here some commentators have started to whisper that maybe unions are too weak.  In companies where there are strong unions there are good wages and conditions and these companies have high productivity.  No one wants to go back to the days of the 70’s with wildcap strikes but maybe the German model with union representation on boards is the way forward.  German companies are very successful, they look after their staff and who can remember the last major strike at a large German company?
  • Pay not just a minimum wage, but a living wage.  Over the last 25 years median wages have not increased in real term in the UK and US.  Over the last few years the minimum wage has decreased in real terms.  The UK government is talking about raising the minimum wage way ahead of inflation.  Some of this is politics but some is to do with tax credits.  It may surprise US readers but in the UK the government subsidies Google, Amazon and a variety of other large and small companies.  They do this through tax credits for low paid employees in these companies, who can claim back tax when their income is below certain thresholds.  This is crazy.  It would be better to pay these employees better in the first place.  Then the benefits bill would fall (tax credits are counted as part of welfare).  This idea is known as the living wage, above the minimum wage it is set at a value you can actually live on.  In London many Christians have joined with other faith groups to get cleaners in the city of London paid it.  In the US McDonalds employees went on strike demanding it.  I understand McDonalds response was to print a leaflet telling employees how to survive on low pay.  A living wage fits in with the spirit of the jubilee.
  • Promote full employment.  Not easy this one, especially in a static economy we will have post oil.  As we wrote in “No oil in the lamp” the Christian economist Herman (Daly) the economist is unsure about this; “Daly does not claim to have all the answers; for example he is unsure whether such an economy could support full employment (his counter argument is that he doesn’t think the current globalised one can either).  As I have blogged before many jobs will disappear post peak, but others will be created.  But governments such do everything they can to ensure the maximum number of people are usefully employed.
  • Do a debt forgiveness or a one of wealth tax to pay off national debt.  That well known communist organisation the International Monetary Fund has suggested countries implement a one off tax to pay off national debt.  At the moment we have the crazy situation where much of the tax we pay is going to debt interest.  If we could get that of the government’s books we would have more money to play with.  There are three ways of doing this.  A write-off of debts in keeping with the jubilee concept.  (I would include non-governmental debts in this as well since banks like RBS are apparently struggling to collects the debts they are owed).  A one-off wealth tax or finally unconventional economics from central banks – instead of QE why not “parachute” money in pay off the debt.  If you did any of this you could increase spending or maintain it without borrowing and cut income tax for everyone.
  • Reform the tax system. At the moment most developed countries tax systems are massively over complicated.  Simplifying them would not allow individuals and businesses to avoid tax so easily.  This will not be easy and take a long time.

These are just some suggestions for a new jubilee.  Part of an occasional series on new economics.

Neil

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