Finance2 min read

France needs to read my paper

By · Published by Everything Blog

In short

While the populace seems unwilling to accept cuts in spending or increased taxes, the debate splits over whether the people can simply work harder or if the economy can afford to pay out more. A new paper by the author and co-author, titled "Pinning the Wage to Scarcity and Technology," suggests a simple solution: tax the bad capitalism, defined as returns from capital that does not develop and improve the economy, while keeping the good capitalism, which comes from real growth and innovation, untaxed. This approa…

Key points

  • While the populace seems unwilling to accept cuts in spending or increased taxes, the deb…: While the populace seems unwilling to accept cuts in spending or increased taxes, the debate splits over whether the people can simply work harder or if the economy can afford to pay out more.
  • A new paper by the author and co-author, titled "Pinning the Wage to Scarcity and Technol…: A new paper by the author and co-author, titled "Pinning the Wage to Scarcity and Technology," suggests a simple solution: tax the bad capitalism, defined as returns from capital that does not develop and improve the economy, while keeping
  • This approach, similar to Henry George's theory of Georgism, could be a more effective wa…: This approach, similar to Henry George's theory of Georgism, could be a more effective way to address the issue without causing undue hardship.

Sources checked by our analysis pipeline: 1

I’m sitting in a macroeconomics strategy review held by my employers economics team, and they are staring dumbfounded at the french sovereign bond yield and it is evident they don’t know exactly why this is happening, nor what to do with it. The French government and opposition seems to also have no better ideas, seemingly paralyzed.

Everyone can see that France needs some change to their fiscal system, but even the most expert policymakers are scratching their heads. The only two options seemingly on the table feel unworkable:

- Savings, cut spending, is something the french populace seem unwilling to accept

- Taxes will surely slow an already strained economy

Half of the debate thinks that the people can take it, they just need to work harder. The other half believes the economy can afford to pay out a bit more. Neither are correct (although perhaps some are closer).

Not to sound too grandiose, because it isn’t my idea at its core, but myself and my co-author have written a paper that can explain what is going on.

Pinning the Wage to Scarcity and Technology by Johan Båge, Stella Wilson :: SSRN

That’s a somewhat heavy macroeconomics theory paper, so here’s one analogy of what we have developed: we split “capitalism” into two

- Good capitalism: Returns from capital that come from real growth, development, innovation.

- Bad capitalism: Returns from capital that does not develop and improve the economy. The academic term is economic rent and rent seeking.

And then the policy you want is simple: Tax the bad capitalism, don’t tax the good capitalism. If this sounds familiar, it’s quite close to the 150 year old theory of Henry George and Georgism. How do you tax the bad capitalism? Well, some parts of it are hard, and some are less hard, but the theoretically most effective method is using both a tax and a benefit, specifically a Land Value Tax (LVT) that pays out a Universal Basic Income (UBI).

That’s it. You’re welcome. If I sound annoyed it’s because I am. None of this pain and hardship and confusion is necessary. France just needs to read my paper.

Original source: wilsoniumite.com

Finance

More in Finance