- Lawrence Mishel and Heidi Shierholz write that we shouldn't let governments and businesses off the hook for regressive policy choices by blaming technology. And Ben Tarnoff points out that any effects on the distribution of income and wealth can be dealt with through a fair tax system.
- Simon Tilford likewise argues that the most important problems with our current economic system lie not in the concept of globalization, but in the decisions made by governments to put businesses ahead of people:
(S)uccessive American and British governments were not forced by ‘globalisation’ to allow executive pay to balloon. This reflects failures of corporate governance. While pretty much all developed countries have seen rapid pay growth at the top, nowhere has the explosion of boardroom pay been as big as in the Anglo-Saxon countries.- Myriam Alexander-Kearns and Alison Cassady write that the Trump administration and Republican Congress are going far out of their way to endanger public health and safety in the name of easy corporate profits. And CBC reports on the continued leakage of mercury near the Grassy Narrows First Nation, while PressProgress exposes how public funding promised for indigenous children is instead finding its way into the pockets of the mining sector.
Similarly, the US choice to cut taxes for the wealthy over the last 35 years was a domestic one, aimed allegedly at releasing animal spirits and driving entrepreneurship. US governments were not compelled to do so in order to bolster the country’s attractiveness to international investors. After all, not all developed countries have followed this route and they have not suffered for it. On the contrary, many of the countries that have flourished from globalisation – the Nordics, for example – are those that levy high income taxes on the wealthy and relatively high taxes on wealth.
Governments need to do much more to ease the burden of adjustment in areas negatively affected by increased trade, much as they need to do more to support areas whose established industries have been wiped out by technological change. Some countries have been successful at doing this, investing in active training policies, and infrastructure in affected areas. Others, notably the US and the UK, have been less effective in doing so.
However, some things do require greater international governance. First, there is some evidence that globalisation does make it harder to raise the tax needed to address inequality and combat declining social mobility. Multinationals can pay tax where tax rates are low rather than where they generate their revenue, and some have chosen this route. As a result, many governments have competed to lower taxes on business, which has meant having to raise taxes elsewhere, usually on low to average earners, and on consumption. Globalisation has made it easier for high earners to avoid tax, because it is now more straightforward to hold wealth offshore and the wealthy derive much of their income from wealth.
Multinationals should be taxed where they generate their cash flow or add value, not where tax rates are lowest. The OECD has done a lot of work on how co-ordination between member-states' governments could bring this about, but implementation has been slow, not least because of opposition from governments of countries that act as tax havens. Closer coordination between national tax authorities is making it harder for the wealthy to hold wealth offshore, but here too there is a long way to go. In the meantime, national governments could also do more to ensure the tax burden is equitable, for example by increasing taxes on immobile factors, such as land, rather than loading more tax onto labour and consumption.
There is little mystery why popular frustration and resentment are rising in many developed countries. Economic growth has been weak for a decade. Living standards are under pressure. The benefits of what growth there has been has largely accrued to the wealthy, and social mobility is under pressure. The responsibility for these trends does not lie with remote, unaccountable global forces, but largely with national governments. Globalisation does not render them powerless. And where it does undercut their power, they could work together to bolster their influence.
- Barrie McKenna takes note of Timothy Lane's justified warnings that climate change stands to radically reshape our economy and society. And Calla Wahlquist discusses the dangers of extreme heat in particular.
- Finally, Jesse McLaren highlights how the fight for fair wages and work conditions ties into the overall goal of greater social health.