How do you view the G20 declaration on effectively taxing ultra-high-net-worth individuals in the backdrop of issues you have been raising?
I regret that India has not been pushing with Brazil for this global tax on billionaires and it’s a pity because India needs more tax justice. But the rest of the world also needs India to participate in this discussion now. When I wrote ‘Capital in the 21st century’ and published it 10 years ago proposing a global wealth tax, everyone said this will never happen. Now, when I see that the G20 governments were seriously discussing the global wealth tax, this makes me feel that things can change. I count on a lot of countries from the Global South to push in this direction because I think global wealth tax is not just a way to help each country tax its own billionaires, it’s also a way to redistribute the tax revenues all over the world.I think countries like India and more generally, countries in the Global South are going to suffer enormously from climate change. We live in an era where the issue of climate reparation and of course colonial reparations are sort of mixed. But just the climate reparation itself is a very big issue and I think a global wealth tax should also be a way to pay for that. The bottom line is the minimal tax on billionaires should generate revenue that should then be distributed to all countries, not in proportion to their number of billionaires, but in proportion to their population and exposure to climate change.Is this an easy or a simple discussion to have? No, this is going to be a very complicated discussion. But I think in the end if the countries in the Global South push in this direction, this can change the global distribution of power. I’m expecting a lot from India not just to solve the problem of India, but also to help the rest of the world solve the problem of the world.
How is technology, especially AI, going to impact intra-country and cross-country inequality?
If we do it by privatising knowledge, by privatising basically all the information that has been produced by humans in books, articles and making it a new territory for private appropriation, it would be catastrophic in terms of inequality. This is a little bit of what’s being done now.The kind of application we are talking about for AI are all driven by the desire to create sort of new private property rights on things which have been publicly produced by other people, typically journal articles, books. People doing AI algorithms, they don’t even need to make public what they used. And they have managed to convince some public authorities that all their algorithms are so complicated and they cannot disclose what they have used. We need to build new nuclear plants everywhere to feed electricity to make our algorithm work. It looks like a nightmare future to me.
How do you see the impact of the breakdown of globalisation, especially now with the change in administration in the US?What we see today is basically the breakdown of neoliberalism. I think the 2008 financial crisis and the Covid crisis have shown that market deregulation is not going to solve everything. Now the question is, what comes next? One solution is a form of narrow nationalism, which is a little bit way Trump is doing. (Prime Minister Narendra) Modi is also doing that in a very different manner. I think neonationalism, especially of the Trump kind, is not going to solve any of the social environmental problems. We will have to build some kind of new social democracy for the 21st century. This is where we are back to the Global South. So we are back to India, given Trump, given all the political difficulties in Europe. I think the fact that the initiative in the G20 came from Brazil is in itself interesting and to me is potentially informative of where the political challenge could come in the future.Despite being a labour-intensive country, India’s businesses opt for capital solutions. How can this be addressed?
This partly has to do with the tax system. In short, labour should be taxed less than capital. And if you do the opposite, which is that if you exempt from tax wealth accumulation and capital accumulation, you will favour very capital-intensive choices. So that part of the answer has to do with the more balanced tax system. We also need to change the governance of corporations.There is a view here that rapid economic growth can address inequality…That’s not something we see in history. What we see in history is that the reduction of inequality comes from changing policies and changing institutions. If you don’t have a more progressive tax system, social security, or public services, you don’t see any example of a country that was able to reduce inequality just waiting for growth to do that.
Greater financialisation of the economy is also seen as an issue impacting inequality here…
Those who have very little savings and wealth to begin with find it very difficult to start accumulating and are very often hit by inflation. We need some saving vehicles, which allow the poor to get some protection (from inflation) and get some positive real return. In the long run, we will need some kind of redistribution of inheritance. It’s good to have a basic income, but I think basic inheritance in the long run should be part of an ideal system. There are other ways to do it-land reform or loans to access property.
Policymakers in India have questioned your report. You are meeting some during this visit. Would you be able to convince them on some of the findings and recommendations?
I’m trying to convince them. What I’m trying to tell them is first, please release more data. We know we have less information about income tax calculation today in India than what we had 50 years ago. Instead of just criticising the work we’ve done, please help us get more data. Even with the very imperfect data, we can be sure of one thing, that India is not an equal country.
Is taxation the only way to tackle this?
No, it’s not but it’s necessary if you have only 13-14% of GDP in tax revenues.
Content Source: economictimes.indiatimes.com