OK, first of all I realize I have not posted a blog for a month and a half… shame on me! Time flies and I did happen to be a bit busy… So I’m taking advantage of bad weather in the Swiss Alps to write instead of skiing today.
To put things into perspective, I’ll try to sum-up in just a few points what direction things should be taking to go down the right path next year and beyond…
Would anyone disagree, I’ll be more than happy to take any questions and comments. I promise to reply to all, whatever the tone or content.
First, some points to mention:
Yes, if the European economic crisis does not get solved, it is the whole world that will take a beating, like it or not. And things are not getting better…
Regarding possible solutions, keep in mind that public recognition of the reality of the crisis has not yet even started, be it from politicians or the media.
Macroeconomic realities are never exposed and the only voices echoed throughout the media and the political circles are those of the banking & financial services’ industry lobbies! I am not kidding, go out there and check….
The direction things are taking is NOT good. Unemployment is rising in beyond alarming proportions (esp. for the youth), without mentioning the financial precariousness of people who do still have a job. This will feed the extremes in political views: watch the next elections.
Obama got reelected (to my American friends I am not sure you heard how loud the sigh of relief was throughout the world) and take note that I cannot think of any incumbent who did get reelected anywhere in the past two years… oops sorry, I forgot Chavez and Putin (though the latter was technically not a re-election – another Russian twist on “democracy” I guess). My point is that Politics is crumbling into ever more demagogic electoral promises and the escalation is just starting: watch the next elections…
So what to keep in mind as solutions for 2013 and beyond?
It is not consumption that creates growth, it is employment! And Governments do not create jobs! The best way for Governments to create jobs is to increase taxes on corporate profits and do so in the simplest way possible, i.e. by increasing the tax rate and slashing the “deductibles”. One must absolutely avoid inventing yet another ton of fiscal paperwork to reward job-creation by those corporations, and trust me, that is what they will lobby for, not more taxes, but less against jobs created. Taxing profits makes an investment of that profit into new ideas and jobs cheaper and “cheaper” is what corporations like, so increase the taxes and they will create new jobs… It cannot get simpler than that and I am ready to debate about it anytime….
Yes, the EURO-Zone needs to find solidarity in guaranteeing members’ debt, however that goes with strict enforceability of yet-to-be-defined rules on fiscal discipline and of automatic sanctions would they be breached; i.e. members need to give-up sovereignty to be part of that solidarity-club, and that is so far off that the whole situation might blow-up before the need of it is recognized and accepted. That is what History tells us, though I hope History will be proven wrong….
New State revenues (read taxes) need to be “invented”, which will promote economic activities that serve the common good by taxing those that don’t. That is why the Tobin tax would be a great move, along with a severe clampdown on the fiscal set-ups the cyberworld has made possible (see the taxes paid by the likes of Amazon, Google, etc) and many other fiscal structures that unduly reduce taxes to maximize profits of corporations (see Starbucks). This by the way takes us back to the previous comment on corporate profit tax rates and the need for drastic simplification.
By doing the math on the two previous points, the revenue boost would be enormous and it would create jobs as well. Simplicity has many charms….
Now of course, the “right ways” need to be promoted by enlightened politicians who would not only understand the situation, be visionary enough to see the solutions, carismatic enough to get elected on such ideas and then manage to implement them….
That is why I think we are running in circles. Promoting the “right ways” will not make you many friends and in any electoral rhetoric, you would be creamed by opponents promising the moon, backed with enormous financial means provided by the many economic interests which do not want changes to occur. Back to my initial fear: it will have to blow up before reason prevails.
Am I missing something here? Any ideas? If yes, be LOUD please!!!
Happy New Year!
Simon Q.