Stephan Richter and Uwe Bott, January 26, 2021 are no fans of neo-liberalism.
Rising tide floats all yachts
In an article for the globalist they look who is now suddenly disavowing it. Klaus Schwab and the World Economic Forum are running away from their past 50 years of tax cuts for the rich that failed to trickle down, an economics study says.
It also means tackling global mega corporations, especially those based in the United States. Beginning with their often-grotesque tax shenanigans, they are the real free riders in a troubled world. Their systematic effort to avoid paying their fair share — and thereby to contribute to preserving democracy and fairness in our societies — can no longer be tolerated. Holding these mega corporations to account firmly — even breaking them up — is in their own collective self-interest. For unless this happens, the essence of what these companies ultimately depend on the most — i.e., a consensus in favor of continued global integration — will vanish. It is already brittle enough.1
Aimee Picchi reports for CBS news that a paper, by David Hope of the London School of Economics and Julian Limberg of King's College London, that examines 18 developed countries — from Australia to the United States — over a 50-year period from 1965 to 2015. The study compared countries that passed tax cuts in a specific year, such as the U.S. in 1982 when President Ronald Reagan slashed taxes on the wealthy, with those that didn't, and then examined their economic outcomes.
Per capita gross domestic product and unemployment rates were nearly identical after five years in countries that slashed taxes on the rich and in those that didn't, the study found. But the analysis discovered one major change: The incomes of the rich grew much faster in countries where tax rates were lowered. Instead of trickling down to the middle class, tax cuts for the rich may not accomplish much more than help the rich keep more of their riches and exacerbate income inequality, the research indicates. "Based on our research, we would argue that the economic rationale for keeping taxes on the rich low is weak," Julian Limberg, a co-author of the study and a lecturer in public policy at King's College London, said in an email to CBS MoneyWatch. "In fact, if we look back into history, the period with the highest taxes on the rich — the postwar period — was also a period with high economic growth and low unemployment."2
Patrick Foulis writes in the Economist about a new type of creative destruction as Covid-19 is up-ending capitalism. Business top dogs will face a new climate in which three tenets of modern business—the primacy of shareholders, globalisation and limited government—are in flux.
A stakeholder capitalism
Firms will be under pressure to pay less attention to shareholders and more to workers. The pace of global buybacks almost halved in mid-2020 and won’t bounce back fully even as profits recover. The stagnation of globalisation means that more multinationals will have to operate as federations of national businesses and will be unable to reap the full efficiency gains from being run as a single globally integrated organisation. And as the size of government expands everywhere, the levels of regulation and taxes will inevitably rise. For the top 3,000 global firms the median effective tax rate paid has dropped from 33% two decades ago to just 22% now; the only way is up. At the end of this recession the world of business will have been shaken up—and so will the rules of capitalism.3
The business that survives COVID 19 will likely increase responsibility to stakeholders, balance global trade with local production, and work in greater partnership with government policy objectives.
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