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woke this is would have you believe those who have a vested interest in opposing social and civil rights and keeping the left nailed to an agenda that will never allow it to win the problem on the contrary is that it still has not decided to embrace radical policies for a really shared prosperity categories global economy usa tags acemoglu biden centrism centrists democrats globalization harris inequality inflation median voter middle classes moderates musk polarization precarization progressives trump u s u s elections united states wages an interesting lecture on ai and shared prosperity october 9 2024 leave a comment yesterday daron acemoglu gave the inaugural hirschman lecture at unesco in presence of the family here on youtube i found it very interesting and i was left with some questions acemoglu started with the standard neoclassical causal link innovation productivity employment he noticed how over time this went sometimes well but sometimes less so he pointed to some early industrial revolution examples of technological progress that was detrimental to workers he then highlighted that these finally started benefiting from progress when they acquired power mostly through unionization he then pointed to the trente glorieuses the post wwii period in which shared prosperity happened for real as a result of a favorable power balance result of unions regulation taxation the next step of the lecture was to highlight how in the 1980s the power balance shifts acemoglu uses friedman as the personification of that shift and how prosperity ceased to be shared on the contrary real wages at the bottom lost ground this led to the final part of the lecture in which he argued that to return to shared prosperity in this phase of ai development we need on one side to rely like in the trente glorieuses on the public hand regulation taxation etc on the other on restoring union power but acemoglu argues this is not enough there is the need to orient technological progress and ai he makes the example of the dramatic decrease of the cost of production of renewables that he says could not have happened just relying on markets the talk was rich in historical examples and references and i truly enjoyed it also i find very welcome the reference to power as a determinant of growth and distribution that highlights institutions that cannot be reduced to simple market enhancing then i found interesting acemoglu s reference to the golden age of the trente glorieuses and the fact that that like many others he points to the role of government i like to call it the regulatory state more than just standard keynesianism in making that possible he seems to have a diagnosis that is very similar to e g thomas piketty s on what made that period so special yet concerning the conclusion i am left with more questions than answers for a start i am unclear on how this idea of directing technology differs from standard government intervention on that i would have liked to have more details then precisely piketty argues that the trente glorieuses were an outlier and that before and after we lived and live in gilded ages of predatory capitalism thus i would have asked acemoglu how to restore shared prosperity in a world of pervasive rents how can democracy regain its hand in the age of elon musk co how to prevent vested interests to steer the ai revolution towards control of economic and political processes in a sentence how to direct innovation when its protagonists platforms big tech etc have a firm grip on the democratic process and on the diffusion or not of information at any rate food for thought worth listening to the lecture in my opinion categories growth theory wages tags acemoglu ai artificial intelligence economics growth regulatory state shared prosperity technical progress technology trente glorieuses taxing the super rich to save capitalism from itself march 13 2024 leave a comment usual caveat ai generated translation with slight edits of a piece written in italian the distribution of income has become topical again in recent days and it is likely going to be one of the issues that will characterize the debate on the global governance of the economy in the coming months first u s president joe biden announced a plan to reduce public debt centered on raising the minimum corporate tax from 15 to 21 and on a minimum income tax of 25 for billionaires the announcement is especially significant because it was made in the traditional state of the union address a solemn moment that this year also marks the beginning of the election campaign for the november elections it is no coincidence that biden has decided to call on the super rich and corporations especially the largest to contribute the most to public finances healing they are in fact the two categories that have managed to offload most of the inflation of recent years on consumers wages and the less well off categories in general the plan is highly unlikely to become a reality in a congress dominated by a radicalized republican party united behind donald trump and conservative democrats but its symbolic significance is important and makes it clear what interests the president intends to defend in the november elections with this proposal the biden administration proves once again at least as far as economic issues are concerned to be the most progressive in recent decades much more courageous in attempting to protect the middle classes than the iconic but ultimately too timid barack obama a minimum tax rate for the super rich the issue of tax justice and this is the second piece of recent news is also at the center of the agenda of lula s brazilian government which in 2024 holds the rotating presidency of the g20 the g20 is probably the most significant body today for the coordination of economic policies at the international level it is therefore particularly significant that the idea of reintroducing more progressivity by taxing the super rich which is not new in itself is being discussed there in front of the g20 finance ministers that were meeting in são paulo the berkeley economist gabriel zucman pleaded for a fairer global system first of all insisting on how tax progressivity being crucial for financing public goods such as health education infrastructure is one of the pillars on which the growth and the social contract of well functioning democracies are based second documenting how the tax systems of most countries have in recent decades become fundamentally regressive especially with regard to the few thousand super rich that sit at the top of the income distribution in france for example the poorest 10 of the population pays almost 50 of their income in taxes while the super rich pay less than a third the figure is taken from the 2024 global tax evasion report the reasons for this aberration are well known the unbridled rush of recent decades to fiscal dumping the benefits offered by many countries to multinationals and higher income owners in an attempt to attract them have created a multitude of tax niches and possibilities for the wealthier to structure their income and their fortune in such a way as to generate low or no taxable incomes precisely to avoid fiscal competition between countries which allows the wealthier but also multinationals to travel in search of tax havens zucman and others are pushing for a global solution along the lines of the beps agreement reached at the oecd in 2021 on the taxation of multinationals for this reason the initiative of the brazilian presidency and the decision of the g20 finance ministers to commission a report that goes into the details of the proposal are very good signs beyond the details that will need to be worked on crucial to avoid loopholes and avoidance the proposal by zucman the economists of the tax observatory he heads on which the g20 will discuss in the coming months is that of a minimum rate of taxation on the super rich designed taking as a model the aforementioned oecd agreement on the minimum rate for multinationals since income for the reasons mentioned above is very difficult to compute the international community should agree that taxpayers pay at least a certain percentage of their wealth in income taxes zucman proposes 2 the proposal has several advantages 1 those who already pay high income taxes would not have any additional burden while those with large wealth that manage to hide their income from the tax authorities in a more or less legal way would be called upon to pay 2 in many countries there are already instruments for assessing wealth which would therefore only need to be generalised and harmonised 3 as with the minimum tax on multinationals mechanisms can be devised to discourage the relocation of wealth to countries that decide not to cooperate 4 even with just a low rate like the one proposed by zucman it would be possible to obtain tax revenues of hundreds of billions a year which are needed above all by the poorest countries to finance welfare ecological transition and infrastructure for growth last but certainly not least being able to get the richest to contribute to the common good would help at least in part to restore the sense of justice and trust in the social contract that has progressively eroded in recent decades as zucman concludes in his address to the g20 ministers such an agreement would be in the interest of all economic actors even the taxpayers involved because what is at stake is not only the dynamic of global inequality it is the very social sustainability of globalization from which the wealthy benefit so much the conservative revolutions of the early 1980s ushered in an era in which the watchword was simply get as rich as you can and think only of yourself exemplified by gordon gekko s praise of greed in oliver stone s masterful wall street that era did not bring us the promised prosperity or stability on the contrary we now live in sick democracies unstable economies characterized by intolerable levels of rent seeking and inequality in the 1930s one of keynes s goals in pleading for an active role of the government was to save capitalism in crisis and threatened by the rise of the soviet union the many who are in love with the supposed great moderation of the 1980s and 1990s stubbornly opposing all attempts to correct excessive inequality should think twice instead they should endorse wholeheartedly attempts such as that of the g20 brazilian presidency to save capitalism above all from its internal enemies far more dangerous than the external ones categories global economy inequality tags beps biden brazil fiscal cooperation fiscal dumping g20 g20brazil income distribution income inequality keynes lula minimum tax multinationals oecd public goods rents super rich tax justice trump wealth wealth tax welfare state zucman austerity the past that doesn t pass march 2 2024 leave a comment as usual lately this is a slightly edited ai translation of a piece written for the italian daily domani the european commission recently revised downwards its forecasts for both growth and inflation which continues to fall faster than expected in contrast to the united states there is no soft landing here as argued by many monetary tightening has not played a major role in bringing inflation under control even as of today price dynamics are mainly determined by energy and transportation costs instead according to what the literature tells us on the subject it is starting 18 months after the beginning of the rate hike cycle to bite on the cost of credit therefore on consumption investment and growth this slowdown in the economy is taking place in a different context from that of the pandemic back then central bankers and finance ministers all agreed that business should be supported by any means a fiscal whatever it takes today the climate is very different and public discourse is dominated by an obsession with reducing public debt as evidenced by the recent positions taken by german finance minister lindner and the disappointing reform of the stability pact the risk for europe of repeating the mistakes of the past in particular the calamitous austerity season of 2010 2014 is therefore particularly high in this context we can only look with concern at what is happening in france where the government also announced a downward revision of the growth forecast for 2024 from 1 4 to 1 at the same time the finance minister bruno le maire announced a cut in public spending of ten billion euros about 0 4 of gdp to maintain the previously announced deficit and debt targets this choice is wicked for at least two reasons the first is that it the government plans making the correction exclusively by cutting public expenditure focusing in particular on spending for the future 2 billion will be taken from the budget for the ecological transition 1 1 billion for work and employment 900 million for research and higher education and so on in short it has been chosen once again not to increase taxes on the wealthier classes but to cut investment in future capital tangible or intangible but regardless of the composition the choice to pursue public finance objectives by reducing spending at a time when the economy slows down goes against what economic theory teaches us even more problematic for a political class at the helm of a large economy it goes against recent lessons from european history the ratio of public debt to gdp is usually taken an indicator actually a very imperfect one but we can overlook this here of the sustainability of public finances when the denominator of the ration gdp falls or grows less than expected it would seem at first glance logical to bring the ratio back to the desired value by reducing the debt that is in the numerator i e by raising taxes or reducing government spending but things are not so simple because in fact the two variables gdp and debt are linked to each other the reduction of government expenditure or the increase of taxes and the ensuing reduction of the disposable income for households and businesses will negatively affect aggregate demand for goods and services and therefore growth let s leave aside here a rather outlandish theory which nevertheless periodically re emerges according to which austerity could be expansionary if the reduction in public spending triggers the expectation of future reductions in the tax burden thus pushing up private consumption and investment the data do not support this fairy tale guess what austerity turns out to be contractionary in short a decline in the nominator the debt brings with it a decline in the denominator gdp whether the ratio between the two decreases or increases therefore ends up depending on how much the former influences the latter what economists call the multiplier if austerity has a limited impact on growth then debt reduction will be greater than gdp reduction and the ratio will shrink albeit at the price of an econo...
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