Latest news with #JosephStiglitz
New York Post
4 days ago
- Business
- New York Post
The ‘woke right' free-trade critics are only fooling themselves
Capitalism gets a lot of hate. I expect it from the left. They blame free markets for racism, 'horrifying inequality' and even, according to economist Joseph Stiglitz, 'accelerating climate change.' People on the right generally defend capitalism, but today, a growing number agree with the left. Advertisement Author James Lindsay says, 'They make the exact same arguments that we've heard for decades: 'capitalism has made everything about the dollar. Everything's about GDP . . . you lose everything that really matters, like kinship and nation and identity.' ' Tucker Carlson, who Lindsay calls 'woke right,' praises Democratic Sen. Elizabeth Warren's economic programs, saying they 'make obvious sense.' 'Astonishing!' says Lindsay. Advertisement 'Warren put forth something called the 'Accountable Capitalism Act,' which was going to restrain the way that corporations are able to behave under the brand name of 'accountability'.' Even Vice President JD Vance attacks free trade. 'While the government shouldn't be controlling the American economy,' Vance said, 'we should . . . put a little bit of a thumb on the scale . . . protect nascent industries from foreign competition.' That is 'just another way of saying, 'your company got too big, so we need to take some of your property and distribute it further down the chain,'' says Lindsay. Advertisement The veep is 'very against large multinational corporations and the things that they do and wants to limit them.' But why? Large companies get large mostly by doing things right. Businesses don't make profits unless they please their customers. Look at places that mostly embrace free markets — the United States, Singapore, Switzerland, New Zealand and Hong Kong (until China's government clamped down). Advertisement These are good places to live. People prosper when markets are free. 'It works!' says Lindsay. 'When you have free people who can engage freely with one another and trade . . . you actually have a rising of all ships. Because what you have is a people who are free to do with their things as they will. 'They, therefore, can implement their stuff, their money, their resources, their talents, whatever they happen to be, to solve problems for other people. And when you solve a problem for other people, even if it's a kind of silly thing, like entertaining them with a silly game on their phone, when you solve a problem for other people, they'll give you money for it in exchange.' Exactly: Trade is win-win. Otherwise, we wouldn't engage in it. So it puzzles me that as markets continue to lift more people out of poverty, capitalism faces more attacks — even from the right. 'The problem,' says Lindsay, is 'it requires people to be free . . . You can't control people who are free. 'So we need to have a government system to tell them to do the right thing in the name of the common good. That's the mentality.' Advertisement Get opinions and commentary from our columnists Subscribe to our daily Post Opinion newsletter! Thanks for signing up! Enter your email address Please provide a valid email address. By clicking above you agree to the Terms of Use and Privacy Policy. Never miss a story. Check out more newsletters Lindsay once hoaxed a conservative magazine, American Reformer, into publishing part of the 'Communist Manifesto,' merely by substituting Christian nationalist language for words like 'proletariat.' When the editors learned that they'd been tricked, they left the article up, saying it was 'a reasonable aggregation of some New Right ideas.' Advertisement Yikes. Government-managed trade, protection for politically connected industries, state promotion of Christianity, speech restrictions, morality laws, state-owned industry, cronyism — these are bad ideas, no matter which side sells them. John Stossel is the author of 'Give Me a Break: How I Exposed Hucksters, Cheats, and Scam Artists and Became the Scourge of the Liberal Media.'
The Guardian
14-07-2025
- Business
- The Guardian
‘Neoliberalism lite' is no solution to Australia's cost-of-living and productivity crises. We must curb wealth concentration
With a national productivity roundtable on the horizon, Anthony Albanese is seeking answers to flagging economic performance, cost-of-living pressures and growing economic anxiety. But productivity debates rarely confront the elephant in the room: four decades of rising wealth concentration has coincided with Australia's worst productivity performance in living memory. The treasurer, Jim Chalmers, signalled his intent to 'grasp the nettle' on tax reform – a bold invitation to reckon with a structural driver of slowing productivity. Sign up for Guardian Australia's breaking news email The scale of the task is significant. The top 10% of households now control 44% of all wealth in Australia. The collective wealth of the richest 200 Australians has nearly tripled over two decades, mostly from property and resources – economic activities that extract value from existing assets rather than new productive capacities; what economists call 'rent-seeking'. The relationship between wealth concentration and productivity warrants examination. As economist Joseph Stiglitz argues, not all wealth represents productive capital. Rent-seeking concentrates wealth away from productivity-enhancing investments – in business innovation, public infrastructure, and worker wages. This leaves ordinary people paying ever-higher proportions of their income for necessities. French economist Thomas Piketty expanded Keynes' insight; without deliberate countermeasures, market economies naturally concentrate wealth as returns on assets outpace wages growth, making inequality an inherent feature of capitalism. This natural tendency can be accelerated by crises. The 2008 financial crisis and Covid-19 pandemic both triggered massive upward wealth transfers. While central banks' emergency measures prevented economic collapse, they disproportionately benefited those at the top. This marks a dramatic reversal from post-second world war prosperity, when countries like Australia, Canada, the UK and the US experienced broader wealth distribution. Institutional safeguards of the era, such as strong unions and progressive public policy, have steadily eroded, contributing to growing wealth concentration that now approaches pre-war levels. When middle and working-class families lose purchasing power, consumer demand falters. Since consumer spending drives 60-70% of economic activity in advanced economies, wealth concentration and income inequality trigger a demand spiral that weakens both business profitability and government revenues. Meanwhile, wealth inequality frays the social fabric. Financial hardship brings higher rates of anxiety, depression, suicide, addiction, family breakdown and domestic violence – placing further strain on public resources and healthcare systems. Despite growing awareness of wealth concentration's role in undermining economic performance and social health, political responses remain muted. Labor's re-election offers a revealing case. The party won not by proposing bold redistributive reform but by channelling voter anxiety around global uncertainty and cost-of-living pressure while keeping structural inequality off the table, as evidenced by Australian Labor's retreat on negative gearing reform. Despite commendable efforts to lift wages, wages of Australians have only returned to 2011 levels. This strategic ambiguity epitomises a modern centre-left paradox: parties can win elections on cost-of-living concerns only because they don't threaten the wealth concentration causing them. As seen in other advanced economies, failure to address underlying inequality eventually opens the door to movements that scapegoat minorities, immigrants and institutions while further slashing taxes for the rich – deepening the very discontent they exploit and threatening democracy. Chalmers has broken ranks with the usual political caution, stating that 'no sensible progress can be made on productivity, resilience or budget sustainability without proper consideration of more tax reform'. He has vowed to 'dial-up' Labor's ambition to change the tax system, signalling he is open to controversial ideas. However, newly surfaced Treasury advice suggests that while Chalmers signals political ambition, the institutional response remains conservative – tinkering at the edges while avoiding any serious confrontation with wealth concentration. Such a reset will require acknowledging a core contradiction at the heart of current policy: those who champion deregulation and resist redistribution undermine the very consumer base their prosperity depends on. The wealthy few cannot consume enough to replace the spending power of millions and the resulting demand weakness eventually undermines the economy. Unlike past technological revolutions, generative AI can perform non-routine cognitive tasks – affecting professionals across virtually every knowledge-based field . AI entrepreneur Ed Newton-Rex warned that tech elites are openly discussing their ambition to own the entire means of production through 'full automation of the economy'. As the adoption of generative AI accelerates, it threatens to decouple productivity from labour input – increasing unemployment and underemployment, pushing down wages and reducing disposable income. Sign up to Breaking News Australia Get the most important news as it breaks after newsletter promotion Unless proactively managed, the transition to an AI-driven economy will see instability due to large-scale job displacement and unprecedented wealth capture. The current policy mix – 'neoliberalism lite' – will not solve these challenges. Australia needs a bold vision beyond tax reform that redirects economic returns toward broad-based prosperity. Norway's Government Pension Fund Global and Alaska's Permanent Fund show how sovereign wealth funds deliver public returns that can be reinvested for collective benefit. The entrepreneurial state model also ensures public investment yields public returns. Governments already underwrite innovation but rarely retain equity. Social production wages could pay those displaced by automation for charity work, caregiving, environmental restoration, informal mentoring and civic participation. Job guarantee schemes would ensure full employment through public service roles, underwritten by the returns of sovereign wealth funds. Whatever the approach, rather than framing public investment as wasteful spending, we should recognise it as essential. Central banks may be heralding their victory over inflation but ordinary Australians have little to celebrate. Slowing inflation merely reduces the pace of price increases – it doesn't reverse the cost-of-living surge. When wealth becomes too concentrated, it erodes not only economic dynamism but also the institutional foundations of productivity. Chalmers is right to say that reform is a 'test of the country'. The upcoming roundtable should acknowledge wealth concentration as a systemic risk and confront it directly. Now is the time for cross-sector leadership. Curbing wealth concentration may no longer be just a progressive preference. It may be capitalism's only lifeline. Associate Prof Jo-An Occhipinti is an NHMRC principal research fellow and co-director of the Mental Wealth Initiative at the University of Sydney's Brain and Mind Centre Dr Ante Prodan is a computer scientist and complex systems researcher with the school of computer, data and mathematical sciences at Western Sydney University Prof John Buchanan is a labour market researcher and co-director of the Mental Wealth Initiative employed in business information systems at the University of Sydney Business School
Business Recorder
10-07-2025
- Business
- Business Recorder
Debt crisis and SDGs
'Today, 3.3 billion people live in countries that spend more on interest payments than on health, and 2.1 billion live in countries that spend more on interest payments than on education. Interest payments on public debt are therefore crowding out critical investments in health, education, infrastructure, and climate resilience. Governments—fearful of the political and economic costs of initiating debt restructurings—prioritize timely debt payments over essential development spending. This is not a path to sustainable development. Rather, it is a roadblock to development and leads to increasing inequality and discontent. – An excerpt from the recently published 'The Jubilee Report', which was chaired by economics Nobel laureate, Joseph Stiglitz Developing countries, including Pakistan, are under serious debt crisis. More than accumulating the debt itself in recent years while the pace of new debt being taken has significantly slowed down, the main problem due to over-board exercise of austerity policies has been in the shape of interest payments on debt. At the same time, the existential threat of climate change crisis has been fast-unfolding, which has created greater resilience, and sustainable development needs. Adopted in 2015, the Sustainable Development Goals (SDGs) with target for 2030, include important goals on health, education, and resilience. Lack of growth due to pro-cyclical austerity policies, and also high debt repayment needs have not allowed both low-income, and middle-income developing countries to spend adequately on meeting SDGs. Hence, the application of pro-cyclical policies has negatively affected economic growth, and with-it revenues, and exports and, in turn, have not allowed creation of effective debt repayment capacity in developing countries. Moreover, lack of multilateral finance under weak multilateral spirit, and absence of an effective sovereign debt restructuring framework – especially one that meaningfully involves the private sector, given significant increase of debt from private sources over the last decade or so –has made it difficult for developing countries to restructure external debt, so that rather than facing huge challenge of gross external financing needs – like in the case of Pakistan – external debt is repaid in a sustainable manner, which means not postponing or reducing much needed spending for enhancing growth, or meeting SDGs. A recently published seminal 'The Jubilee Report: A blueprint for tackling the debt and development crises and creating the financial foundations for a sustainable people-centered global economy' has shed very meaningful light on the fast-approaching global debt crisis situation, how it has negatively impacted growth, development-, and resilience related expenditure. Moreover, it also points out how pro-cyclical policy has exacerbated the debt, and development crisis facing developed countries. Highlighting the issue with policies that has led to this debt crisis, in terms of the various stakeholders involved, the Report pointed out: 'All sides share responsibility for the current debt situation: Debtor governments that borrowed too much, often at too high rates and too short maturities, failed to adopt capital account regulations to deter destabilizing speculative flows, prioritized the short term, and now are not doing all they could be to resolve their debt crises—typically shying away from the international 'fights' that may be required to protect their citizens from excessive demands of their creditors; creditors that provided excessive financing, seeming experts on risk that knew they were lending under conditions that implied that there was a significant risk of default, but now, when the risks have materialized, are reluctant to provide the relief needed to restore debt sustainability; and international financial institutions (IFIs) whose lending policies enable these behaviors on both sides— policies that put off dealing both with today's debt and with the underlying flaws in a global financial architecture that repeatedly gives rise to such development and debt crises while an entire generation in the affected countries loses hope for development. There is also a broader reason for the debt situation—the international community failed to address the flaws in the global financial architecture and to enable and embolden the IFIs to take stronger measures to prevent and resolve these recurrent debt and development crises.' At the same time, the few countries that did go for restructuring, including Sri Lanka, have not had the luck of a revisionist recovery plan from multilateral institutions like International Monetary Fund (IMF), who continue to prescribe pro-cyclical policies. At the same time, there has been no urgency shown by the global financial architecture, especially from the leading developed countries to throw their weight behind serious reform of not only multilateral financial institutions, but to also push them for improving the sovereign debt restructuring framework. Globally renowned economist, Jayati Ghosh, in her June 16 'Institute for Political Economy' (IPE) published article 'Alternative debt restructuring strategy' pointed out in the case of Sri Lanka – but which is applicable for all debt distressed countries, including Pakistan – the need of a better policy response both from the country itself, and the IMF, without which the country is unable to spend appropriately towards meeting SDGs, and even ran the risk of defaulting again. In this regard, she advised the following in the article: '[1] Foreign Exchange-Based Targeting: Link debt repayments to a fixed share of current foreign exchange earnings, rather than GDP, to reflect real capacity to pay. [2] Set Realistic Repayment Benchmarks: Cap total debt servicing (interest + principal) at a sustainable level—e.g., no more than 5% of current foreign exchange earnings. [3] Avoid Costly Global Borrowing: Reduce and eventually eliminate reliance on volatile and high-interest global financial markets from 2028. [4] Protect Economic Sovereignty: Resist IMF performance monitoring of domestic fiscal and monetary policy. [5] Join the Global South Debtors' Coalition: Collaborate with like-minded nations to pursue collective negotiation strategies and advocate for structural reform of the global financial system.' In addition to the advice given above — which Pakistan should also include as much as possible its debt management, and growth strategy, including spending on SDGs – both the IMF, and the developing countries need to move away from the pro-cyclical policy stance, and towards adopting a counter-cyclical policy. The issue with following this policy has been meaningfully explained by 'The Jubilee Report' as 'The current debt and development crisis in developing countries is not an isolated fiscal misfortune. The fact that excesses of debt have afflicted so many countries, with debt and development crises occurring so often suggests that are systemic causes and consequences. …One defining characteristic of this dysfunctional system is that, for developing countries, capital flows are procyclical: During global financing booms, money floods in; in busts, it flows out even more quickly. Successive phases of promising development cannot be counted on to continue. More often than not, a positive phase is a prelude to a painful contraction, especially when they are financed by debt. For advanced economies, the reverse holds true. In times of crisis, capital flows toward them. In a storm, safe financial 'havens' become all the more attractive. This asymmetry enriches the rich, impoverishes the poor, and reinforces itself, as the procyclical movements weaken the poor and the countercyclical movements strengthen the rich, making them an ever more attractive safe haven.' It needs to be understood that pro-cyclical policy is due to neoliberal policy – which in addition to other things, in this particular aspect means adoption of weak regulation of capital movements and, for instance, not applying 'Tobin Tax' which, according to Britannica, is a '…proposed tax on short-term currency transactions… to deter only speculative flows of hot money — money that moves regularly between financial markets in search of high short-term interest rates' — and austerity-based policy – where policy rate is primarily used to control inflation, and creates a competition for foreign portfolio investment (FPI) between developing and developed countries, while institutional issues on the aggregate supply are not addressed, although those are significantly important in terms of determining inflation. Rising interest rates in turn mean higher debt repayment needs, and lower investment capacity at the back of increase in cost of capital. The same Report pointed out in this regard: 'Since 2015, gross capital formation in low-income countries has stalled at just 22 percent of GDP — well below the 33 percent average for middle-income countries.' Here, the Report highlighted important factors behind poor performance of sovereign debt restructuring framework as 'Sovereigns in distress must negotiate with a complex array of creditors—public and private, bilateral and multilateral—without a guiding framework that ensures equitable, efficient, and timely resolutions. The creditors often have long experience in such renegotiations… [and] are typically well-diversified and can withstand long negotiations… Against this backdrop, new concerns are emerging that further complicate the landscape of sovereign debt and development finance. First, the emergence of major new creditors has made restructurings more complex. Since the 2010s, developing countries have increasingly borrowed not only from traditional Western governments and IFIs, but also from bond markets and non-Paris Club official creditors. …Second, the turn toward blended finance and public-private partnerships (PPPs) (sometimes argued to be substitutes for official development assistance) has created a new wave of contingent liabilities—typically opaque, procyclical, and difficult to restructure. These mechanisms promised to mobilize large volumes of private capital by using public resources to insure investors against losses. In practice, however, they have largely failed to deliver transformational investment…' With regard to solutions, the same Report highlighted weaknesses in recent initiatives, and called for launching a second 'Highly Indebted Poor Countries Initiative' (HIPC); where the first one was launched in 1996. The Report indicated in this regard: 'The international community has a moral obligation to advance a 'HIPC II.' …Various recent initiatives such as the Common Framework for Debt Treatments and the IMF's Global Sovereign Debt Roundtable have fostered important dialogue among creditors. While some progress has been made — such as through the Debt Service Suspension Initiative — these measures remain insufficient to deliver the level of debt relief required to restore debt sustainability, a necessary condition for resolving the current debt and development crisis. A HIPC II would require a multilateral framework, supported by governments, that is accompanied by changes in lending policies and the legal frameworks of countries or States in which sovereign debt is issued.' More broadly, the Report advised the following policy actions to deal with the current global debt crisis: 'Members of the Commission [that produced 'The Jubilee Report'] recognized recent efforts to address the debt crisis. For instance, some members recommend extending the Debt Service Suspension Initiative that was established in 2020 and expired in December 2021, which allowed low-income countries to suspend debt service payments to official bilateral creditors. The Initiative could be expanded to also include middle-income countries facing comparable distress, ensuring that more countries have the fiscal space they need to invest in recovery and resilience. Where debt is clearly unsustainable, treatment must go beyond suspension to reduction. …Debt-for-nature swaps can be a valuable tool in the development finance toolbox. By allowing countries to redirect a portion of debt repayments toward conservation projects such as biodiversity protection or climate adaptation and mitigation, they offer a dual dividend: fiscal relief and environmental stewardship. However, to fulfil their promise these instruments must be well designed. They should not restrict development priorities, such as by diverting scarce resources from urgent needs like poverty reduction or investments in infrastructure. Transaction costs should be kept low, and private intermediaries must not extract excessive profits. Above all, these agreements must be transparent and aligned with national development strategies. Importantly, debt-for-nature swaps are not substitutes for restructurings of unsustainable debts.' Copyright Business Recorder, 2025
CTV News
01-07-2025
- Business
- CTV News
Canada U-turn leaves Europe in the lurch on U.S. tech taxes
Prime Minister Mark Carney walks with U.S. President Donald Trump after a group photo at the G7 Summit, Monday, June 16, 2025, in Kananaskis, Canada. (AP Photo/Mark Schiefelbein) PARIS -- Canada's dropping of a tax on U.S. tech giants under the pressure of Donald Trump is fuelling concern about the future of such levies in other countries, particularly in Europe. 'Currently, about half of all European OECD countries have either announced, proposed, or implemented' a digital services tax pending global action, said the Tax Foundation, a think tank which supports the introduction of such taxes. But the future of such measures is unclear after the Group of Seven nations agreed Saturday to exempt US multinational companies from a global minimum tax imposed by other countries. The move sparked a pointed reaction from Nobel prize winning economist Joseph Stiglitz. 'This is about more than trade -- it's about whether democratically elected governments can regulate and tax powerful corporations or whether tech billionaires can dictate policy through political proxies,' he said. Who has imposed such a tax? Austria, Brazil, Britain, France, India, Italy, Spain and Turkiye are a dozen large countries which have imposed or planned to impose special taxes on big tech firms. The objective is to force them to pay taxes where they carry out business as well as to counter the tax optimization strategies they often practice. Generally, the taxes target sales revenue and focus essentially on US firms like Alphabet (Google), Amazon, Apple, Facebook (Meta) and Microsoft. But they differ from one country to another in terms of sales that are taxed, with some targeting advertising revenue and others sales of data. 'Most of the proposed or adopted rates are in the 2-5 per cent range,' of the revenue stream targeted, according to analysts at the Canadian Tax Foundation. Most nations adopted the taxes pending a global agreement which would see multinational companies pay some taxes in countries where they operate, but the prospects for such a deal now look bleak. What these taxes generate The taxes tend to raise more money year after year, according to the latest data from the EU Tax Observatory, which dates from June 2023. Britain, France, India, Italy and Turkiye have seen steady increases in the revenue their taxes generate. Both Britain and France each raised approximately US$1.1 billion last year via their digital services taxes. Italy saw its revenue from the tax jump by 90 per cent from 2021 to over $530 million last year, according to local media. But Spain, which hoped to raise more than a billion per year via its tax, only raised only around $350 million in 2023, according to La Vanguardia daily. Other dominoes to fall? Before Canada, India had already halted in April its six per cent tax on online advertising by foreign firms against the background of trade talks with the United States. The taxes may fall elsewhere. While Britain has reached a trade deal with the United States to avoid the worst tariffs, it wants to go further and has refused to rule out a modification or elimination of its digital services tax. EU nations so far haven't indicated that the tax is on the table. A German government spokesman said Monday that Canada's dropping its tech tax had 'absolutely no bearing' on Berlin's position as it considers it considers its tax policies. But worries remain. National digital service taxes are 'vulnerable to economic and political threats -- particularly from the US, which has historically protected its digital multinationals from fair taxation abroad,' said the Tax Justice Network, a coalition of researchers and activists. By Ali Bekhtaoui with AFP foreign bureaus
CNA
30-06-2025
- Business
- CNA
Canada U-turn leaves Europe in the lurch on US tech taxes
PARIS: Canada's dropping of a tax on US tech giants under the pressure of Donald Trump is fuelling concern about the future of such levies in other countries, particularly in Europe. "Currently, about half of all European OECD countries have either announced, proposed, or implemented" a digital services tax pending global action, said the Tax Foundation, a think tank which supports the introduction of such taxes. But the future of such measures is unclear after the Group of Seven nations agreed Saturday (Jun 28) to exempt US multinational companies from a global minimum tax imposed by other countries. The move sparked a pointed reaction from Nobel Prize-winning economist Joseph Stiglitz. "This is about more than trade - it's about whether democratically elected governments can regulate and tax powerful corporations or whether tech billionaires can dictate policy through political proxies," he said. WHO HAS IMPOSED SUCH A TAX? Austria, Brazil, Britain, France, India, Italy, Spain and Türkiye are a dozen large countries which have imposed or plan to impose special taxes on big tech firms. The objective is to force them to pay taxes where they carry out business, as well as to counter the tax optimisation strategies they often practice. Generally, the taxes target sales revenue and focus essentially on US firms like Alphabet (Google), Amazon, Apple, Facebook (Meta) and Microsoft. But they differ from one country to another in terms of sales that are taxed, with some targeting advertising revenue and others targeting sales of data. "Most of the proposed or adopted rates are in the 2-5 per cent range," of the revenue stream targeted, according to analysts at the Canadian Tax Foundation. Most nations adopted the taxes pending a global agreement which would see multinational companies pay some taxes in countries where they operate, but the prospects for such a deal now look bleak. WHAT THESE TAXES GENERATE The taxes tend to raise more money year after year, according to the latest data from the EU Tax Observatory, which dates from June 2023. Britain, France, India, Italy and Türkiye have seen steady increases in the revenue their taxes generate. Both Britain and France raised approximately US$1.1 billion last year via their digital services taxes. Italy saw its revenue from the tax jump by 90 per cent from 2021 to over $530 million last year, according to local media. But Spain, which hoped to raise more than a billion per year via its tax, only raised around US$350 million in 2023, according to La Vanguardia daily. OTHER DOMINOES TO FALL? Before Canada, India had already halted in April its six per cent tax on online advertising by foreign firms against the background of trade talks with the United States. The taxes may fall elsewhere. While Britain has reached a trade deal with the United States to avoid the worst tariffs, it wants to go further and has refused to rule out a modification or elimination of its digital services tax. EU nations so far haven't indicated that the tax is on the table. A German government spokesman said Monday that Canada's dropping its tech tax had "absolutely no bearing" on Berlin's position as it considers it considers its tax policies. But worries remain. National digital service taxes are "vulnerable to economic and political threats - particularly from the US, which has historically protected its digital multinationals from fair taxation abroad," said the Tax Justice Network, a coalition of researchers and activists.
