30 April, 2014International financial institutions are “concerned” about the growing inequality in the world. IndustriALL has the solutions: the rich should pay their fair share of taxes, minimum wages should be raised and social protection guaranteed for all citizens.
One of the main themes of the World Economic Forum (WEF) in January 2014 was inequality. Now the International Monetary Fund (IMF) and the World Bank voice concerns about the same problem, but the elite has presented few solutions.
The gap between rich and poor is widening in almost every nation. An increasing amount of the money of the richest people is inherited wealth. French economist Thomas Piketty talks about “patrimonial capitalism” and points out that the ten wealthiest Americans are already heirs, rather than self-made entrepreneurs.
These oligarchs contribute little to the national economy. The Republicans cut the top rates on dividends from 39.6 per cent (taxed as ordinary income) to 15 per cent, and eliminated the real estate tax. A new right-wing road map calls for the total elimination of taxes on interest, dividends and capital gains. Nice life without any taxes; who cares about the poor!
Nobel-prize winning economist Paul Krugman adds that income from capital is concentrated in the hands of a few people in the US. In 1979, the top 1 per cent of households got 17 per cent of the business income. In 2007, the same small group enjoyed 43 per cent of the business income and 75 per cent of the capital gains.
The US is not alone. In Russia in the 1990s, oligarchs took control over national oil, gas and mineral resources at ridiculous prices during murky privatizations. Even in China, a new business elite is rising, joining billionaires in Indonesia, Thailand and other Asian countries which have low taxes.
The problem for democracy is that these oligarchs wield considerable power. They have the money to buy the necessary influence for them to contribute to the common good as little as possible.
Yet part of the solution is that the coupon-clippers, heirs and companies have to take their fair share of financing infrastructure, education, social protection and quality public services. There is no reason why they should pay less taxes than ordinary wage-earners.
In a borderless world, capital moves easily from a place to another. IndustriALL supports the international campaign for tax justice and against tax havens. Despite some modest measures taken by governments, wealthy individuals and major multinational companies are actively dodging taxes.
Improving the conditions for the poor effectively reduces inequality. IndustriALL is actively supporting action to continue to increase minimum wages in countries like Bangladesh, Cambodia and Indonesia, where the lives of tens of millions of people have been improved during the last two years following 50-80 per cent raises. More mobilization will follow to reach the level of a living wage.
Universal social protection is equally as important. According to the ITUC Global Poll 2013, people around the world want affordable health care (97 per cent), education (97 per cent), decent retirement income (96 per cent) and affordable access to childcare (92 per cent). Yet, almost 80 per cent of the world’s population does not have adequate social protection.
Reducing inequality is a question of political will, values and struggle. Let us build union power together and mobilize for economic and social justice!