January 12, 2013

The Economist

Green Army: Communications

Adam Smith (1723–1790):
No society can be flourishing and happy, of which the greater part of members are poor and miserable.

A True Progressivism


Bold moves are needed to tackle inequality and boost growth …
  1. [Curbing] cronyism and [enhancing] competition …
    • [Freeing] monopoly sectors [such as mining and railways in China.]
    • [Freeing the] financial sector, with market-driven interest rates …
    • [Removing] subsidies for too-big-to-fail financial institutions …
    • [Increasing] competition in … education. …

  2. [More] targeted and progressive social spending.
    • [Replacing] expensive universal subsidies for energy with tailored social safety nets.
    • [Wider] use of conditional cash transfers [eg] tying social assistance to individuals’ investment in skills and education. …
    • [Shifting] government spending …
      • from transfers to education, and
      • from older and richer people to younger and poorer ones.
    [America] spends barely more than 0.1% of GDP on “active labour-market policies” to get the less skilled back to work, one-fifth of the OECD average.
    Only half of American children attend pre-school.
    China plans to have 70% of its children in three years of pre-school by 2020.

  3. [Tax reform.]
    Economists argue about the disincentive effects of higher tax rates.
    [Some analysis suggests] that the optimal top income-tax rate could be as high as 80%. …

    In countries where the state is already large, rebalancing government spending should take precedence over raising more revenue.
    [Given] the mess that public finances in most countries are in, more tax revenue is likely to be necessary, particularly in less highly taxed countries such as America. ..
    • Closing the] “carried-interest” loophole, which allows private-equity managers to pay (low) capital-gains rather than (higher) income tax on their earnings.
    • [Withdrawing tax deductibility] for charitable contributions [and] mortgage interest [which disproportionately benefit the wealthy].
    • [Reducing] corporate tax rates …
    • [Narrowing] the gap between individuals’ tax rates on capital and labour income would [lead to] richer people pay[ing] higher average tax rates.
    • Higher property taxes …
    • [Reforming inheritance tax] so that it falls on individual beneficiaries [to reduce the risk of a hereditary elite.]

Asia


Almost 100% of China’s rural population now have basic health insurance … and a majority have basic pensions. …
China’s minimum wage … rose by an average of 17% [in 2011].

(Special Report: Inequality and Social Mobility, 13 October 2012, emphasis added)