Beyond Stuff That's In The Ground

Originally posted by Melanerpes
The idea here is to find a way to get more of the wealth into the hands of the poorest sectors of the population. One approach would be for the government to raise taxes on the wealthy and use it to raise living standards and increase opportunity. But this would be quickly denounced as "socialism", and it could drive many of the wealthy people to leave the country and seek "friendlier" business climates elsewhere. What ideas do you have for solving this problem?

Originally posted by FMF
The wealthy here are taxed enough I think. And besides there are not really that many wealthy people so tax revenue from them would be somewhat of a drop in the ocean. Their businesses could be taxed more though. And I don't see the wealthy leaving the country and seeking "friendlier" business climates elsewhere, al la Mick Jagger in the 70's Britain. At least not in significant numbers. My brother in law is a fairly senior civil servant in the national tax office in Jakarta. He has plenty of stories about how little tax many businesses pay - especially foreign businesses.

There's a whole load of stuff in the ground here. Growing on top of it too. And the 4th biggest population in the world: an enormous pool of relatively low cost labour and potentially an enormous market. I am unconviced by the "they'll walk away" threat. Foreign companies didn't walk away when they had to bribe the Soeharto clan and deal with grotty generals and look the other way as people-talking-to-other-people were helpfully murdered. Having been through all that, I can't see how a slightly more muscular tax regime or a minimum wage or some regulations and safeguards are going to send them running for cover. Doesn't make any sense.

Originally posted by Melanerpes
You mention about all the "stuff that's in the ground". And you're probably right that you could raise taxes to some extent on these businesses without worrying about them fleeing.

But if you really want to improve things for the poor, there needs to be a much wider array of businesses doing a lot of things that don't involve pulling stuff out of the ground. Especially businesses that can offer the kind of jobs that offer a large increase in the living standards of the current poor.

What ideas do you have for solving this problem?

Originally posted by Melanerpes
[b]What ideas do you have for solving this problem?[/b]

I support Social Contract Theory. In exchange for being taxed and spending our money on the government and business, the government maintains order and protects us. We are expected to obey laws etc. So for those that refuse to abide by society's laws and continue to commit crimes; they should receive no public assistance whatsoever. Imagine no crime or war and the taxes we pay were used for infrastructure and the better for all mankind. How many people do you know on welfare, food stamps, disability etc. that are dealing drugs, committing crimes and making new babies to perpetuate the cycle. Locking the non violent offenders does not help either...they are not rehabilitated and we spend even more money keeping them behind bars. To bad banishment was not still around....wasn't Australia a penal colony once?

Originally posted by FMF
Broadly speaking, civil society.

I would look at long-term policy's effects on on society in a long-term macroeconomic sense with a goal of reducing poverty and minimizing infrignments on the freedom of others. In fact, one of the benefits to freedom from excessive regulation and taxation is the long-term growth. Of course, effective regulation should be kept in place, but excessive or inefficient regulation should be improved. Safeguards on credit quality and excess leveraging are important to me.

However, one reason for this is because crisis affect the poor greatly.

I believe poor countries would do their poor citizens a favor by favoring high-growth strategies, even if that means cutting spending and raising savings, reforming and attracting investments even if it means short-term costs, and even though social disruptions may occur in the short-term, I believe the long-run and sustainable reduction in poverty would outweigh these costs.

When you look for high growth, I would consider low and stable taxes a very strong attraction for investments.

If a government can invest well in its people's education, it can also do great good. However, I think that by far most governments tax and spend way too much on political interest groups and unions in such a way as harms the non-unionized poor excessively and they suck up resources from the rest of society's potential pool of investments.

I value the future and the poor greatly. Therefore, I believe in investing in the future, in seeking high GDP growth rates for sustained periods, and even in government investments in its people through education and for example programs like conditional cash transfers and microfinance.

Not a typical Utilitarian by my definition either.

I think once a country has become an upper-middle income country, it should continue to grow rapidly until it and its people become high income.

One reason is because growth and investments are one of the best way to help people, including the poor.

I agree in general with what elfejesus is saying here. If you want all of the poor people to have a decent sized piece of pie, you need to have a pie that is large enough.

But you can have a large and growing economy where almost all of the benefits end up at the top, and very little of it trickles down. That rising tide might not reach the boats that are stranded too far from shore. Or economic development can actually do harm by disrupting resources that the poor people depend on (FMF has already discussed this issue at length.)

So you need to have a strategy that allows the economy to grow in a way that provides a large number and variety of good-paying jobs that will enrich a broad spectrum of the population - creating a very large and prospering middle class, and not just a small wealthy elite.

And you need to minimize the negative impacts that development can have on certain portions of the population (and it's the poorest (and least powerful) who get stuck with the brunt of the "toxic sludge" ).

In my humble opinion you are all departing from a step after what
should be the original question.

I truly recommend reading Gilbert Rist's "The History of Development:
From Western Origins to Global Faith".

By all means it is worth of praise that all those educated and good
intentioned people in the Western world want to "give more to the
poor". But... has anybody asked the poor what they want and if they
want it despite the price tags attached?

The academia has shifted the debate about development into a true
moral self-searching about why the hell "development" has to mean
what it means according to Western ethics. Moreover, scholars and
regulators alike are finally debating about the moral justification to
"impose" development (aka "Westernization" )

Formulas to "give more to those who have less" must be discussed
and originated at grass-roots level. A must read here is Laclau and
Mouffle's "Hegemony and Socialist Strategy: Towards a Radical
Democratic Politics" particularly the part where the public space of
discourse as creator of change is analyzed.

It is impossible and counterproductive and the path to environmental
chaos to say that the solution is more, more, more economic growth.
That is so 1980 and everybody has moved on.

We should too.

Originally posted by Melanerpes
So you need to have a strategy that allows the economy to grow in a way that provides a large number and variety of good-paying jobs that will enrich a broad spectrum of the population - creating a very large and prospering middle class, and not just a small wealthy elite.

Originally posted by Melanerpes
I agree in general with what elfejesus is saying here. If you want all of the poor people to have a decent sized piece of pie, you need to have a pie that is large enough.

Originally posted by Bosse de Nage
I've never thought the pie a good economic metaphor.

Originally posted by Bosse de Nage
I've never thought the pie a good economic metaphor.