-Counter attack of mainstream against Pikettys charge on orthodoxy- Thomas Piketty boldly charged on capitalism by showing sharply increasing inequality and suggesting a solution through massive data. His solution is a progressive global tax on capital (or wealth). Robert J. Shiller, a 2013 Nobel laureate in economics, admits Pikettys description but disagrees with his solution. He argues like followings. Increasing wealth tax proposed by Piketty seems not only unrealistic but also unfair. Why is it unrealistic? A progressive global tax on capital (or wealth) must come with unrealistic level of international cooperation. Thats because super rich can emigrate to country with lower tax rate. For this reason, Finland, Austria, Denmark, Germany, Sweden, and Spain dropped it. Why is it unfair? A progressive global tax on capital (or wealth) can damage older people who have accumulated wealth through their whole life. To make matters worse, It may crowd out saving. As an alternative, Robert J. Shiller proposed “inequality insurance” which are long-term plans to make income-tax rates automatically higher for high-income people only if inequality worsens significantly. The advantage of income-tax increases is more realistic and more fair than A progressive global tax on capital (or wealth). However, it doesnt care about current inequality. It can only take effect to prevent existing inequality from becoming worse. Historically, counter attack of mainstream against radical challenge comes at the name of policys feasibility. In most cases, it sounds more persuasive.
Posted on: Sun, 18 May 2014 12:38:08 +0000
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