Adam Smith (1723–1790):
No society can be flourishing and happy, of which the greater part of members are poor and miserable.
Bold moves are needed to tackle inequality and boost growth …
- [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. …
- [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.
Only half of American children attend pre-school.
China plans to have 70% of its children in three years of pre-school by 2020.
- [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.]
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)
The United States
Equality versus Efficiency