Long Live Socialism!
I am now convinced that we need to think about a new way of going beyond capitalism, a new form of socialism, participative and decentralized, federal and democratic, ecological, multiracial, and feminist.
History shows that inequality is essentially ideological and political, not economic or technological.
The share of the richest 1 % of the population fell sharply during the twentieth century; it was around 55 % of total wealth on the eve of World War I and is now close to 25 %. The poorest 50 % currently own just over 5 % of the total wealth.
One of the most decisive factor of this movement was the rise of the welfare state between 1910-1920 and 1980-1990, with the development of investment in education, health, retirement and disability pensions, and social insurance (unemployment, family, housing, etc.) At the beginning of the 1910s, total public expenditure in Western Europe amounted to barely 10 % of national income. Total public expenditure reached 40-50% of national income in the 1980s and 1990s.
Investment in education increased more than tenfold over the twentieth century, reaching 5-6% of national income in the 1980s and 1990s.
In Germany and Sweden the trade union and social democratic parties succeed in imposing the form of so-called co-management system to shareholders with employee representatives on the board.
I support the idea of a more proactive solutions, in the form of a minimum inheritance for all (120.000 Euro and 180.000 USD) paid out at the age of twenty-five. This can also be referred to as a “universal capital endowment”. Once you have a small property, you have access to more choices you can afford to refuse certain proposals before accepting the right one.
The participatory socialism I am calling for is based on several pillars: educational equality and the social state, the permanent circulation of power and property, social federalism and sustainable and fair globalization.
Toward a different globalization 2016-2017
Hillary, Apple, and US
Trump’s strategy is classical: he explains to the poorer whites, who have been the losers in globalization, that their enemy is poor Black, the immigrant, the Mexican, or the Muslim, and that the things will get better if the big white millionaire get rid of them.
It is easier to attack immigrants than financial capitalism or to imagine another economic system.
One solution for Europe would be the introduction of a significant minimum tax rate – at least 25 % or 30%.
The IMF, the Inequality Debate, and Economic Research
IMF uses inappropriate measures of inequality. It uses a measure of inequality of income and not inequality of wealth.
The exact labor vs. capital share varies over time and country, but typically amounts to 70 % vs 30 %. R-gap is the dynamics of the incomer from capital and its distribution.
Some mechanisms influencing the working of the labor market: inequality in access to education and skills, technical change, and international competition, evolution of the role of trade unions and of the minimum wage, corporate governance and rules for determining the salaries of managers.
A higher return on capital and a lower growth rate lead to multiplying and prolonging the inequalities in wealth continued in the past.
The second problem posed by the IMF study is the way in which the gap between r and g is measured. R uses the measurement of interest rate on the sovereign debt. Different levels of wealth have access to very different returns. The highest levels of wealth have risen at a rate of around 6-7% per year since 1980 compared with 2, 1% for average wealth and 1,4% for average income.
The French Right and the European Budgetary Rules
In the 2017 the level of economic activity in the eurozone area will with difficulty rise to its 2007 level, with huge regional and social disparities. In the meantime, the rest of the world will have continued to grow.
As far as tax cuts in France are concerned, priority should go to relief in the property tax for those who wish to become property owners and the structural reduction of the tax burden on labor instead of the CICE – tax credit scheme for employment and competitiveness.
Europe was built on the cancelation of past debts in particular, to the benefit of France and Germany, to enable investment in the future.
Gender Pay Inequality 19 % or 64%?
We see that inequality increases very sharply with age, from just over 1.2% at the beginning of a career to more than 1.6% at the end of a career. 19 % gap becomes 64 % at retirement.
Women do not work in the same jobs.
Agenda for Another Globalization
The main lesson for Europe and the world is clear: As a matter of urgency, globalization must be fundamentally reoriented. The main challenge of our times are the rise in inequalities and global warming.
It is time to change the political discourse on globalization. Trade is a good thing, but fair and sustainable development also demands public services, infrastructures, and health and education systems. In turn, these themselves demand fair taxation systems.
Basic Income or Fair Wage?
Everyone should have a minimum income. We should also address our educational system which too frequently produces or even exacerbates inequalities.
We must protect the role of trade unions and the minimum wage and salary scales.
We should also work on tax schemes. Keep wealth tax, reduce property taxes and introduce the deduction of income tax at source.
The Passing of Anthony B. Atkinson
Together with Simon Kuznets, Atkinson single-handedly originated a new discipline in the social science and political economy, the study of historical trends in the distribution of income and wealth.
All subsequent work on historic trends in income and wealth inequality to a certain extent follow in the wake of Kuznets’s and Atkinson’s groundbreaking studies.
On productivity in France and in Germany
If we calculate the average labor productivity by dividing the GDP of the total number of hours worked, we find that France is at practically the same level as the US and Germany. 55 euros per hour worked in 2015. More than 25 % higher than the UK or Italy. Three times higher than 1970.
The number of hours worked is roughly at the same level in France, in Germany, and in the US. The UK, Italy and Japan are approximately 10-20 % lower.
It was the investment in education in the Trente Glorieuses which enabled France and Germany to catch up with US between 1950 and 1990.
Productivity is more proper concept of estimating economic potential of countries than competitiveness (which is mainly defined by trade surplus as compared to trade deficit). Germany and Japan, countries with more demographic challenging structure (older habitat) have more trade surplus than younger countries like US.
A very significant share of goods and services produced in Germany are neither consumed nor invested in Germany. After unification German government went too far with wage freeze to keep its competitiveness.
Long Live Populism
Populism is merely a somewhat confused but legitimate response to the feeling of abandonment experienced by the working classes in the advanced countries in the face of globalization and the rise of inequalities.
On Inequality in China
The share of the poorest 50 % in the national income in China fell from 28 % to 15 % between 1978 and 2015, while the income from the richest 10 % rose from 26 to 41 %.
The share of public capital constituted 70 % of national capital in 1978 and has stabilized around 30 % since 2006. In capitalist countries, the share of public capital was in the range of 20-30% during the main period of the mixed economy (1950-1980), but this share has collapsed since 1980.
In 2007, only Italy had negative public capital (with debts greater than assets). In 2015, this situation was found in the US, the UK, and Japan (France and Germany have barely positive net public capital).
For Democratic Eurozone Government
The eurozone needs a proper government: a joint budget, common rules of taxation, an investment and borrowing capacity, a growth strategy, and a model for sustainable and equitable development.
The Council of Finance Minister should be replaced by a true parliamentary assembly for the eurozone.
We should also bear in mind that Germany makes up 24 % of the population in the eurozone, while France, Italy, and Spain together constitute 51 %.
Public Capital, Private Capital
On the one hand, we have the steady rise in public debt, and on the other, the prosperity of privately owned wealth.
In the 1970s, private wealth represented 300 % of national income, whereas in 2015 it had risen to, or exceeded 600 % in all the rich countries.
What Would a Democratic Eurozone Assembly Look Like?
France, Germany, Italy, and Spain together represent 76 % of the population and GDP of the eurozone.
It is important to know that on questions of the European economy, budgetary policy, the restructuring of debt, the Italian, Spanish and French right stance is usually on the opposite end of those from the Germa right.
What Reforms for France? 2017-2018
Inequality in France
A longstanding legend has it that France is a profoundly egalitarian country.
France was the last country to adopt a progressive income tax and did so under the law of July 15, 1914. France also experienced a sharp rise in inequality.
To promote mobility, it would be more judicious to lower the property tax (which is by far the principal tax on wealth – it generates 30 billion euros compared with 5 billion euros for the wealth tax).
What Reforms for France?
Our social system has been constructed in stages with layers of reform stacked one on top of the other. The result is considerable complexity and illegibility.
Macron is conservative, he is only focusing on the increase in the general social security contribution, whereas today, what is urgent is the deduction of income tax at source.
Reagan to the Power of Ten
Trump’s tax agenda can be summed up in two central measures: reduction of federal income tax on corporate profits from 35 % to 15 %, and a total end to inheritance tax.
During 1910 to 1930 the US set up a level of progressive taxation hitherto unknown in history. The rate applied to the highest income was on average 82 % between 1930 and 1980 with 70 % rate for transmission of the biggest estates.
Reagan left a high corporate tax in place and high progressive rates of taxation on estates.
Let’s hope that Europe – which in some way is threatened by a similar development with the working classes having greater faith for their defense in the anti-immigrant forces than in those who describe themselves as progressive – will be capable of learning the lessons of history.
Will Macron’s Marchers Take Power?
The deduction of income tax at source was implemented in 1920 in Germany and Sweden; during WWII in the US, the UK, and the Netherlands; and in the 1960s-1970s ion Italy and Spain, France is the only developed country which has not introduced this.
In 2017 Macron’s postponed it again.
The CICE Comedy
The government has now announced the postponement until 2009 of the replacement of the CICE (Tax Credit for Competitiveness and Employment) by a long-term reduction in the employers’ contribution.
Rethinking the Capital Code
What is really to be regretted is that the government has not even taken this opportunity to strengthen the involvement of the employees in the governance of the firm,
In the 1950s, the Nordic and German speaking countries adopted legislation which completely changed this balance. The stated aim was to promote “code termination” that is, genuine power sharing between capital and labor. In Germany employees hold half of board seats. In Scandinavia one third.
In 2014 for the first time in France one seat was attributed to employees.
Suppression of the Wealth Tax: A Historical Error
The suppression of the wealth tax constitutes a serious moral, economic, and historical mistake.
During the first globalization period between 1870 and 1914, a strong international movement gradually took shape which sought to promote a new type of redistribution and taxation. Based on progressive taxation system on income, wealth, and inheritance, this new model was aimed at a better distribution of productivity gains, and the structural reduction of the concentration of property and economic power. It was successfully implemented in the period 1920 to 1970.
The government’s argument is that the wealth tax would provoke a fiscal hemorrhage.
The fact is that a wealth tax at a rate of over 1,5 % or 2 % is not a serious threat to a fiscal base which rises at a similar rate.
Budget 2018: French Youth Sacrificed
The abolition of wealth tax will cost the state budget over 5 billion euros. The losers in the 2018 budget are the young. It will cost the fall in student expenditure per capita per higher education.
Money in absolute terms maybe grew, but if you consider also the rise of prices and the growing number of students, than the amount per student decline.
The Catalan Syndrome
Spain is one of the most decentralized countries in the world in budgetary and fiscal matters.
Since 2011 the base for income tax is split 50-50 between the federal and the regional governments. Each region can also decide to set its own income tax bads and its own additional rates, higher or lower than the federal rates.
This sort of system poses numerous problems. It challenges the very idea of solidarity within the country and comes down to playing the regions against one another.
In comparison to US where income tax was always almost exclusively federal.
Local tax could be ok, if they remain moderate.
Trump, Macron: Same Fight
Trump and Macron are both working in a similar way regarding tax reforms. They are doing in the direction of fiscal dumping in favor of the richest.
Macron proposed a reduction of corporate tax from 33 % to 25 %. 55% income tax.
Trump refers to the wealthiest as job creators, Macron refers to the as lead climbers.
By supporting the richest Trump and Macron are exposing us to three major risks: the working classes have a feeling of abandonment which sustains an attitude of rejection toward globalization and immigration in particular, the refusal to tackle inequalities complicates the challenge of addressing climate change, the refusal to correct the inequalitarian tendencies of globalization has extremely negative consequences for our capacity to reduce global poverty.
2018: The Year of Europe
The crisis of 2008 originated in the increasingly obvious weaknesses of the American system: excessive deregulation, an explosion in inequalities, indebtedness of the poorest.
Europe challenges are: the global drift to inequality, the North-South divide and the East-West divide.
The inflow from European Union between 2010 and 2016 in Poland amounted to 2,7 % and the outflow was 4,7 %. For Hungary it was 4 % and 7,2 %.
Parcoursup: Could Do Better
In the US, the chances of accessing higher education are almost entirely determined by the income of one’s parents, barely 20 % for the poorest 10 % and over 90 % for the richest 10 %.
Toward the Union in the Union
The number of immigrants entering the EU was much higher before the financial crisis (1.2 million per year between 2000 and 2008). The number then collapsed (500.000 per year between 2008 and 2016).
The threat to the world today is not a trade war but a social war, conducted by means of aggressive policies of fiscal dumping that benefits the wealthiest and the most mobile.
Confronted with the global challenge Europe has now a special responsibility to keep the free trade zone but strengthen political and fiscal union. That can only be done if the four major countries: France, Germany, Spain and Italy work together.
Capital in Russia
Marx was thirty years old at the time of the 1848 revolution and he died in 1883, the year of Keynes’ birth.
When Stalin died, 4 % of the Soviet population was in prison, more than half for “theft of socialist property”.
The Soviet disaster led to the abandonment of any redistribution. Since 2000, income tax is 13 %, whether your income is 1.000 roubles or 100 billion roubles.
There is no tax on inheritance in Russia, nor in the People’s Republic of China.
Today’s postcommunism has become the worst ally of hypercapitalism: Marx would have appreciated the irony, but this is not a reason for putting up with it.
May 1968 and Inequality
May ’68 Movement was the start of a historical period of considerable reduction in social inequalities in France which ran out of steam later for quite different reasons.
Society had never been so patriarchal in the 1980s, 80 % of the total payroll was paid to men.
The answer is not to turn our backs on the spirit of May 1968 and social movements. On the contrary, we must turn to them to develop a new internationalist program to reduce inequalities.
The Transferunion Fantasy
In France, there is a tendency to lay the blame on other people. The truth is that teh French proposal are so vague that they are open to almost any interpretation.
Merkel and Macron share the same conservatism. Ultimately, these two leaders do not wish to make any fundamental changes in present-day Europe, because they suffer from the same norm of blindless. Both consider that their two countries are doing quite well, and they are in no way responsible for the ups and downs of Southern Europe.
To overcome the fear of Transferunion, one would probably need to guarantee that the future budget of the eurozone, funded by a common corporate income tax of the profits of companies and on the highest incomes and property holders, voted by a genuinely democratic assembly, should benefit each country in proportion to its fiscal contribution (with net transfers limited to 0.1 % or 0.5 % of GDP).
Europe, Migrants, and Trade
The migration flow entering the rich countries have fallen since 2010. From 1990 to 1995 they stood at approximately 2 million people per year. From 2000 to 2010 at 3 million, they are back at 2 million after 2010. The population of rich countries is around billions. So, the migration is only 0,2 % per year.
Europe has a surplus in trade. So if there does come a time when Europe wishes to revive the policies for integration, it will have to begin by learning how to invest and how to consume again.
Social-Nativism: The Italian Nightmare
Since spring 2018, Italy has been governed by a strange social-nativist coalition of the Five Star Movement (M5S) and the Lega. M5S is an antisystem and antiestablishment party. The Lega is a regionalist and anti-tax movement.
Together they agree on the politics of guaranteed basic income and the flat tax.
What makes Salvini so dangerous is precisely his capacity to link nativist discourse with the social, and migratory discourse with the debt.
As long as the centrists on all sides practice a similar form of antisocial liberalism, social-nativism will have a promising future.
Brazil: The First Republic under Threat
In Brazil, the right to vote for the poor dates from the 1988 constitution, just a few years before the first multiracial election in South Africa in 1994.
Brazil abolished slavery in 1888.
When the progressive forces have succeeded in reducing inequalities in the twentieth century, it is because the fought for an ambitious, egalitarian agenda based on political reforms while at the same time implementing fiscal and social reforms.
Le Monde and the Billionaires
It should be specified that in France, as elsewhere, there are rules governing the concentration of ownership of the media. We still believe that a joint stock company constitutes the normal way for the media to be organized with, as a basis, the principle of ‘one euro, one vote’.
But our generous donors-shareholders in the media can at any time threaten to pull out of the business and to resell their share, as they did in the case with Le Monde.
To Love Europe Is to Change It 2018-2020
Manifesto for the Democratization of Europe
We, European citizens, from different backgrounds and countries, are today launching this appeal for the in-depth transformation of the European institutions and policies.
Our proposal are based on the creation of a Budget for democratization which would be debated and voted by a sovereign European Assembly. This Budget, if the Assembly so desires, will be financed by four major European taxes, the tangible markers of this European solidarity. These will apply for profit of major firms, the top incomes, the highest wealth owners and the carbon emissions.
Yellow Vests and Tax Justice
The crisis of the “yellow vests” raises a key issues both in France and in Europe, namely, that of fiscal justice.
Macron attempted to justify the abolition of the wealth tax by stating that this tax was instrumental in wealth leaving France.
The wealth tax should have risen to almost 6 billion in 2022. With its abolition and the replacement with real estate tax, the revenue has fallen to just over 1 billion euros in 2018.
If a carbo tax is to succeed the totality of the net proceeds must be allocated to the social measures associated with the ecological transition.
1789: The Return of the Debt
One of the ideas raised by the yellow vests is the possibility of a referendum on the cancellation of the public debt.
Germany, France, and the UK all found themselves with debts ranging from 200 to 300 % of GDP post – WWII, which have never been repaid. Their debts were written off in a few years by a mix of cancelation pure and simple, inflation, and exceptional taxation of private property.
The German external debt was frozen by the London Debt Agreement in 1953, and then definitively written off in 1991.
Wealth Tax in America
Elizabeth Warren proposed the US wealth tax rate of 2 % on fortunes valued at between 50 million and 1 billion USD, and 3 % above 1 billion USD.
Between 1930 and 1980, the rate applied on the highest incomes was on average 81 % in the US. And the rate applied to the highest inherited estates was 74 %.
Reagan, then Bush and Trump subsequently endeavored to destroy this heritage.
To Love Europe Is to Change It
It is ridiculous to spend time explaining that it is impossible to tax the richest at national level, without proposing anything specific to coordinate action at a higher level.
In the US, progressive taxes on the top incomes and estates are managed primarily at the federal level. In Europe, it is the reverse. EU regulates VAT, but leaves individual states to deal with the damage of cutthroat competition in the matters of taxation on company profits, incomes and estates.
If Europe does not stand for fiscal justice, than the nationalists will win the day.
Basic Income in India
The biggest election in the world history has just begun in India. There are over 900 million electors.
India may be the biggest democracy in the world, but it is not without inequality and poverty. Investment on health is at 1,3 % GDP and investment in education at 2,6 %.
Modi is massively funded by Indian big business.
Europe and the Class Cleavage
In all the referendums for the last twenty-five years, the working classes have systematically expressed their disagreement with the Europe presented to them, whereas the richest and the most privileged classes supported it.
Hayek defended the vision most permeated with economic liberalism. He wanted a purely commercial union based on competition, free markets, and monetary stability.
It was Beveridge, along with the sociologist Barbara Wooton, who proposed a federal income tax and a federal inheritance tax at a rate of over 60 %, along with a system of income limits and a maximum inheritance.
There is no reason why present-day Europe should remain imbued with a Hayek-type vision.
The Illusion of Centrist Ecology
It is increasingly clear that the resolution of the climate challenge will not be possible without a strong movement in the direction of the reduction of social inequalities at all levels.
The taxes on fuels paid by the lowest incomes have been used to finance the abolition of the wealth tax and the progressive tax on income in France.
Will Money Creation Save Us?
The problem is that not all problems can be settled by monetary creation.
If we could save banks with a click of mouse, why not do it for energy transition, reduction of inequalities or investment in education and research.
What Is a Fair Pension System?
Setting up a universal system is in it-self an excellent thing, and a reform of this type is long overdue in France.
Aware of the difficulty, High Commissioner Jean-Paul Delevoye’s plan stipulates that a quarter of the contributions will continue to be allocated to ‘solidarity’, to subsidies for children and interruptions of career, or to finance a minimum retirement pension for the lowest salaries. This estimates takes no account of social inequalities in life expectancy.
This government has a big problem with the very concept of social justice.
Toward a Circular Economy
The idea of the circular economy frequently brings to mind issues of recycling waste and materials. With the difference in wealth which exist at the moment, no ecological ambition is possible.
It is not because a person had made a fortune at the age of 30 that they should continue to concentrate power as a shareholder at the age of 50, 70 or 90 years.
The Triumph of Injustice, a book published in the US by Emmanuel Saez and Gabriel Zucman, demonstrates that there are more ambitious solutions with the key element being financial transparency and the return to fiscal progressivity in order to finance health and education for all, and the ecological transition.
Surpassing Identity Conflict via Economic Justice
After having been the party of slavery during the American Civil War in the 1930s, the Democratic Party gradually became the party of Roosevelt and the New Deal.
After 1960s the Democratic Party turn its back to segregation and the Republican party started to get the racist votes.
Several Universal Retirement Schemes Are Possible
Could we possibly have a reasoned debate about the several alternative retirement schemes?
It must at least be made clear that a contribution rate of 28 % applies to all wage earners, including the highest, instead of failing to 2,8 % on the salary bracket above 120.000 Euros, as stated in the Delevoye Report.
After the Climate Denial, the Inequality Denial
Are we at present witnessing the denial of the rise in inequality?
The governments of the richest countries have not made any genuine attempts to promote transparency concerning the distribution of wealth since the crisis in 2008.
It is urgent for governments and the media to stop using the concept of GDP and concentrated on that of national income. National income is equal to GDP minus the incomes which go to foreign countries and minus the consumption of capital.
The challenges of climate change and the rise in inequalities can only be resolved simultaneously.
Social Federalism vs. National-Liberalism
Two countries that had the choice of ultra-liberalism with Reagan and Thatcher in the 1980s and which, since then, have witnessed the highest rise in inequalities, have decided three decades later to opt for nationalism and a form of return to frontiers and national identity.
The free circulation of capital, goods, and services with no collective regulation or joint fiscal or social policy functions primarily to the benefit of the richest and the most mobile, and undermines the most disadvantages and the most vulnerable.
If we do not oppose national-liberalism with a resolute alternative, it will sweep aside everything in its path.
The Franco-German Assembly, a Unique Opportunity for Tax Justice in Europe
The Franco-German Cooperation Treaty signed in Aix-la-Chapelle by Emmanuel Macron and Angela Merkel on January 22, 2019.
With the Franco-German alignment of taxation on companies, the issue becomes one of breaking the vicious cycle of tax and social dumping which has plagued the EU since the mid-1980s.
Sanders to the Aid of Democracy in the US
The treatment received by Bernie Sanders in the leading media in the US and in Europe is unjust and dangerous.
Sanders is right when he proposes large-scale public investment in favor of education and public universities. He also proposes a considerable rise in the level of the minimum wage.
He chooses to go further than European social democracy with his proposal for a federal wealth tax rising to 8 % per year on multi-billionaires, this corresponds to the reality of the excessive concentration of wealth in the US.
Avoiding the Worst
In response to the emergency situation, the requisite social expenditure (health, minimum income) can obly be financed by borrowing and money creation.
This crisis is also an opportunity to consider a minimal provisions in public health and education for all the world’s inhabitants financed by a universal right for all countries to a share of the tax revenues paid by the wealthiest economic actors in the world: major firms and households with high incomes and personal wealth.
The Age of Green Money
Since 2008, central banks have created massive amounts of money to save private banks from the financial crisis which they themselves have provoked.
The same was done during the Covid crisis.
Why not do it again to finance the relaunch the green and social economy and not to boost the stock market.
Confronting Racism, Repairing History
In the UK, as in France, the abolition of slavery was accompanied on each occasion by compensation of the owners paid out of public funds. In the UK in 1833, 5 % of the British national income was paid out.
Reconstructing Internationalism
The model must be internationalist in its final aims but sovereigntist in its practical modalities.
The Fall of the U.S. Idol 2020-2021
Can the Left Unite on Europe?
In France, as in Germany, and most other countries, the left is heavily divided on the European question, and more generally on the strategy to adopt in the face of globalization and the transnational regulation of capital.
It is crucial to give a chance to genuine social-federalist proposal based on transnational assemblies before arriving at possible unilateral sanctions against countries practicing dumping.
What to Do with Covid Debt
Everyone has started lending and borrowing in unprecedented proportions, with the result that the total private financial assets and liabilities held by banks, companies, and households now exceed 1.000 % of GDP in rich countries compared to 200 % in 1970s.
Global Inequalities: Where Do We Stand?
The share of the poorest 50 % varies considerably from country to country. It varies between 5 % and 25 % of total income.
In Latin America, Brazil, Mexico, and Chile have historically been more unequal than Argentina, Ecuador and Uruguay. In Africa, the south is more unequal. The Middle East appears to be the most inegalitarian region on the planet. Inequality is also rising in Eastern Europe from the 1990s.
The Fall of the U.S. Idol
The system of slavery played a central role in the development of the US, and indeed of Western industrial capitalism as a whole.
If the Democrats want to regain the socially disadvantaged vote, whatever its origin, then more needs to be done in terms of social justice and redistribution.
