galbraith retirement social security vacant tax

Fighting Back Against Poli-Econ Tyrants
real wage patent copyright

Economist Galbraith says Cut the Retirement Age

Leveling the market would favor workers and players. We excerpt from two 2012 articles from (1) Moneynews, Nov 30, on retirement by D. Weil and (2) Aljazeera, Nov 28, on rent recovery by D. Baker (co-founder of the Centre for Economic and Policy Research).

by Dan Weil and by Dean Baker

University of Texas economist James Galbraith thinks the retirement age — now 67 for full Social Security benefits — should be lowered.

It would ease pressure on the labor market with the unemployment rate at 7.9% For older blue collar workers who are unemployed, the odds of finding a new job is bleak.

Others argue that an increase would discriminate against the poor and uneducated. Those people often work in physically taxing jobs and thus would have difficulty working for additional years. They also have lower life expectancy rates than their wealthier brethren, which means they may not have much time at all to enjoy retirement if the age limit is increased.

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One thing eurozone crisis countries should begin doing is forcing property owners to lower rents for their housing and apartments by imposing a vacancy tax [EPA].

If a modest tax (eg 1.0 per cent of value) were imposed on properties that were vacant for more than three months, it would give property owners a substantial incentive to sell or rent out empty properties. Given the large number of vacant properties in many countries, this could lead to large declines in rent.

That in turn would mean increases in real wages. In most countries actual rent, or the implicit rent on owner occupied housing, is close to 30 per cent of consumption expenditures. Rent is often 40 per cent or more of the expenditures of lower paid workers. If this policy could lower rents by 10 per cent, it would imply an increase in the real wage of an average worker of around 3 per cent and possibly more than 4 per cent for lower paid workers.

Another route that the crisis countries could follow is to try to find creative ways to reduce payments for patent and copyright fees. These archaic property forms are an enormous drag on the economy and transfer huge sums from consumers to holders of intellectual property claims, most of whom will be foreigners.

There are vast amounts of money at stake here. For example, Spain spends roughly 1.5 per cent of its GDP on prescription drugs. If drugs were sold in a free market without patent monopolies, it would spend about one-fifth as much. There is potential for huge savings in many other areas as well, such as computer software (both business and consumer), recorded music and video material, and even seeds for food crops.

The crisis countries can push trade agreements to the limit, allowing for as much market competition as possible. They can also make the protection of intellectual property a low priority for law enforcement, for example by putting it behind tax evasion and financial sector fraud.

The right has been using the levers of the market to redistribute income upward for the last 30 years. If progressives are too lazy to think of ways to rig the market to produce more equal distributions, then they will be losing for the next three decades as well.

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JJS: There really is no excuse for anyone to suffer economically, modern economies are that powerful. They’re so bountiful that the suggestions above are actually rather timid. A society could realistically pay its members a dividend that’d be big enough to make everyone’s lives much easier.

From whence the money? The tiny tax on vacant lots above points the way. A government could use taxes or fees or dues to recover the “rents” that society spends for all aspects of nature, from surface land to buried resources to airwave frequencies. Plus, there are the values of government granted privileges, such as the patents, but also don’t forget about corporate charters, bankers’ sovereignty, utility franchises, medical licenses, etc. Altogether, we’re talking easily the biggest part of an economy’s GDP, now enriching a few but capable of endowing the many, making life much more worth living.

This shift of taxes from our efforts to our common wealth and of subsidies from special interests to the citizenry at large could be called geonomics and has been successful wherever tried, to the degree tried.

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Editor Jeffery J. Smith runs the Forum on Geonomics and helped prepare a course for the UN on geonomics. To take the “Land Rights” course, click here .

Also see:

After Arresting Corrupt Bankers
http://www.progress.org/2012/recovery.htm

Firms Keep Wage Taxes, Don't Pay Profit Taxes
http://www.progress.org/2012/aprilirs.htm

What a 19th-Century Economist Can Teach Us
http://www.progress.org/2012/freeland.htm

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