The right wants low taxes for the rich so that they can live on the returns from their accumulated and inherited capital from an early age. The right wants high taxes and low wages/remunerations for low income earners to pressure them to become cheap servants of the rich.
How do tax cuts for the rich work?
Lower taxes for high income earners raise inflation because the rich can quickly accumulate money to withdraw and this lowers the supply of productivity in relation to demand.
How does high tax work for workers and the middle class?
Reduced tax on low-income earners means that they can get by on less money and still maintain production with their consumption. This lowers inflation and reduces resource use ecologically.
Budgets in countries with fiat currencies
In a country with fiat currency, like Sweden, there is no shortage of government money. The government creates all the money used in the budget and takes it away through taxes. When taxes are cut for the rich and benefits are cut for the poor, it is based on a false connection – there is no actual connection between these measures. Those in power, allied with the wealthiest since the 1970s, exploit this false belief to push workers and the middle class into powerless and underpaid servants.
Reduced government support to municipalities and the public sector
The same principle applies when the state reduces support for municipalities, schools, care and social care. This is done to create a low-wage market. When welfare deteriorates, it is used as an argument for privatization, allowing the richest to profit from the basic needs of citizens.
The job tax deductions will pressure the wage earners
But the working tax credits for the poor then? How does it affect society's taxes for the poor and the rich? These have been combined with height general payroll tax which erodes benefits in the event of unemployment, illness and old-age pension. Then the tax is still much more favorable for the very richest. Poor workers have been tricked into eating themselves when they are healthy when they are sick and unemployed or old age pensioners. The employment tax credits have no government financial reason other than to push workers and the middle class to work harder for less pay for fear of insurance coverage in the event of illness or unemployment.
Crooked tax policy with save-in-the-barns
So with the right-wing reforms, the tax has become higher for low and middle income earners and very favorable the richer people are.
Then there will be problems with productivity if all of society's talented and highly paid can save so much via tax cuts that they can retire at the age of 40-45. This is a phenomenon in financialization.
Increased financialization means that the economy and society become more dependent on financial markets and financial institutions. This means that financial transactions, investments and speculation take on greater importance compared to the real economy, where production and services take place. It can have several negative consequences for the economy, equality, the climate, peace and individual freedom:
1. For the social economy:
Financialization often leads to more resources going to short-term speculation instead of long-term investments in productive activities that can create jobs and growth. Banks and companies focus more on maximizing shareholder value rather than investing in employees, research and development. This can create bubbles that, when they burst, lead to crises that affect the entire economy, like the financial crisis of 2008.
2. For equality:
Financialization tends to benefit those who already have access to capital, while those working in the real economy, especially those with lower incomes, risk being left behind. When large corporations and investors make money from financial speculation without the creation of new jobs or improved wages, social divides widen. Capital owners receive a disproportionately large share of the economic profits.
3. For the climate:
Financialization often favors short-term profits, which means that investments in long-term sustainable and green technologies are often overshadowed. Quick profits are often prioritized in sectors such as oil, gas and other resource-intensive industries, which leads to continued emissions and environmental damage. It will be a brake on the necessary transition to a sustainable economy.
4. For peace:
Financial markets can in some cases contribute to instability, both within and between countries. When economic crises hit hard, as during the financial crisis, social unrest, conflict and political tension increase. In addition, states may be tempted to increase their military spending to protect financial interests, both domestically and internationally, which can lead to conflict.
5. For the freedom of the individual:
As economies become increasingly financialized, the risk that individual freedom is limited also increases. Private indebtedness increases when people need to borrow money to buy housing, education or consumer goods. High indebtedness makes people more vulnerable and less free to make their own decisions. In addition, power becomes more concentrated in financial institutions and large companies, which reduces the individual's room for action and influence.
Summary:
Increased financialization may lead to short-term economic gains for some, but the long-term effect on society is often negative. It creates economic instability, increases inequality, makes the fight against climate change more difficult, promotes conflict and restricts individual freedom through increased indebtedness and concentration of power.
But in one fiat currency like Sweden, there is no shortage of government money. The government creates all the money it spends in the budget and destroys all the money it receives in taxes. The only reason you want to cut benefits and benefits for the poor when you cut taxes for the rich is because it sounds like a logical connection, but it's an illusory and false connection that doesn't exist. The powers that be allied with the richest since 1973 take advantage of people's belief that this connection exists to pressure more of the working and middle classes to become hard-working, disenfranchised serfs of the rich.
In the same way, this is why the state is reducing state subsidies to municipalities, schools, care and social care. It is to create low-wage workers and when welfare stops delivering quality, the state can be excused to privatize so that the richest can get rich on the citizens' most necessary needs.
13 responses to “Tax for poor and rich, early retirement and cheap servants"
There is also the simple explanation: that the government directly represents the rentier capitalists and has no goal whatsoever other than that they should increase their share. Rentiers have no interest in production.
Yes, this short-term economy erodes society and makes room for social conflicts and shortcomings. Not implementing the necessary investments in social benefits and the environment increases future costs with increased losses
"Merchants and industrialists go from being risk-takers to becoming rentiers and save their energy. Consumption based on given incomes increases, saving decreases. Different interests push their issues at the political level, and if enough of them do so, they block effective government action. Income distribution tends to become more skewed, the rich getting richer and the poor poorer. With greater access to political power, the wealthy are likely to oppose an ethically appropriate distribution of national burdens, such as the costs of defense, reparations, infrastructure, and other public goods.”
The result is general economic stagnation. Observed by Kindleberger in Northern Italy and Spain since the 1500th century, by George Modelski in China from the 1200th century, by van Bavel in Iraq from the 800th century. A typical consequence of inequality: the rich don't have to exert themselves. And because they are in power, it means that the whole society is decaying. And since only the rich benefit, fights arise over belonging, which means that even the upper class is divided, and becomes increasingly brutal.
You are so insightful. In today's society, mainly working life on the floor is so pressured that everyone wants to become an academic. But even the graduates are incredibly employed, so they want to become rentiers.
The problem is that it is not possible to become a rentier without having a lot of money (or equivalents). And you don't get that with a simple academic degree. Most academics are becoming more and more proletarians.
You're getting more and more right as time goes on, because it's getting harder and harder for capital to overperform as rates are already high and we're destroying the earth. But for those who got a job in 2000 and were in work since then, according to AI, SEK 1000 could provide a not inconsiderable amount of capital to cover the salary with. Answer from chat GPT: "To calculate the total capital that a person would have had today if they had invested SEK 1000 every month in Investor, Latour, Kinnevik, HM, Lundbergs and Castellum since the year 2000 and reinvested all dividends and returns, need we know the average annual return for each share and how many shares would have been acquired each month with the 1000 kroner. These figures can be difficult to calculate accurately without access to historical stock data and dividend information. But if we assume an average annual return of, say, 7-10% for each share and that all dividends were reinvested, the total would likely be substantial, especially considering the effect of compound interest over a period of over 20 years. An investment calculator or financial modeling could provide a more accurate estimate based on historical data and assumptions about future returns.”
I know a friend who had regular jobs as a web editor and communicator and has had a job since 2000. He says that he is no longer as dependent on his salary. and Since Reinfeldt's reforms, we have gained 155 dollar millionaires who are then rich enough to become rentiers.
Part of the increasing class gaps since the year 2000 comes from those who have been able to have work regularly and have been able to set aside part of their salary regularly in shares.
Then it can become rich which, in addition to a normal salary or reasonable social insurance, can live frugally. Much of what can be bought is crap. The one who instead lives a little more frugally but still well and invests in shares.
Now I'm not sure how long the stock market can continue to outperform.
Then a society that relies on welfare for those who are successful and craps on everyone else and the people's production is not sustainable socially, economically or ecologically.
I just wanted to point out that both well-paid workers and graduates who regularly had work and invested were able to build up a capital that can exceed their salary.
155.000 is just over one percent of ten million. Or let's say three if you include relatives. Not a very large part, it's probably about the percentage of overpaid that Turchin is counting on.
Most people were scared away from stock speculation by the crashes around 1990 and around 2000.
However, there is an opportunity for those who manage to maintain their health and a full-time job with a salary of 30-45 per month to save a substantial amount of capital through monthly deposits. Maybe not to retire, but to earn more.
Of course it's possible... You can starve yourself all your life in order to live well after 67 - and then you die in a traffic accident at 66 and then everything was in vain.
I think the majority rejects that kind of puritanism.
Of course, it was then finance minister Ann Wibble who believed that everyone should have a bank account of at least one year's salary. However, she refused to hand out one.
However, that is what one is forced to do in today's austerity policy. Anyone who consumes everything when they have work will quickly starve into a job that is harmful to their health in case of unemployment after illness. Anyone who does not save a little over time will never get a share of capital's increased share of the production cake. I'm not saying this is right or easy, but it's what low- and middle-income earners are forced to do if they want to be able to live and not be starved into unhealthy jobs.
There is also the simple explanation: that the government directly represents the rentier capitalists and has no goal whatsoever other than that they should increase their share. Rentiers have no interest in production.
Just like that
Yes, this short-term economy erodes society and makes room for social conflicts and shortcomings. Not implementing the necessary investments in social benefits and the environment increases future costs with increased losses
Just. Fatal.
Described on the grain by Charles Kindleberger:
"Merchants and industrialists go from being risk-takers to becoming rentiers and save their energy. Consumption based on given incomes increases, saving decreases. Different interests push their issues at the political level, and if enough of them do so, they block effective government action. Income distribution tends to become more skewed, the rich getting richer and the poor poorer. With greater access to political power, the wealthy are likely to oppose an ethically appropriate distribution of national burdens, such as the costs of defense, reparations, infrastructure, and other public goods.”
The result is general economic stagnation. Observed by Kindleberger in Northern Italy and Spain since the 1500th century, by George Modelski in China from the 1200th century, by van Bavel in Iraq from the 800th century. A typical consequence of inequality: the rich don't have to exert themselves. And because they are in power, it means that the whole society is decaying. And since only the rich benefit, fights arise over belonging, which means that even the upper class is divided, and becomes increasingly brutal.
A current book on this regarding the USA is reviewed in the Guardian: https://www.theguardian.com/books/2023/may/28/end-times-by-peter-turchin-review-elites-counter-elites-and-path-of-political-disintegration-can-we-identify-cyclical-trends-in-narrative-of-human-hope-and-failure
You are so insightful. In today's society, mainly working life on the floor is so pressured that everyone wants to become an academic. But even the graduates are incredibly employed, so they want to become rentiers.
The problem is that it is not possible to become a rentier without having a lot of money (or equivalents). And you don't get that with a simple academic degree. Most academics are becoming more and more proletarians.
Peter Turchin describes it this way: https://peterturchin.com/when-a-i-comes-for-the-elites/. A small minority get the well-paid jobs, the rest have to struggle with routines under owner control.
He concludes that there is a self-regulating mechanism in it: Robespierre as well as Lenin and Castro were proletarianized jurists.
You're getting more and more right as time goes on, because it's getting harder and harder for capital to overperform as rates are already high and we're destroying the earth. But for those who got a job in 2000 and were in work since then, according to AI, SEK 1000 could provide a not inconsiderable amount of capital to cover the salary with. Answer from chat GPT: "To calculate the total capital that a person would have had today if they had invested SEK 1000 every month in Investor, Latour, Kinnevik, HM, Lundbergs and Castellum since the year 2000 and reinvested all dividends and returns, need we know the average annual return for each share and how many shares would have been acquired each month with the 1000 kroner. These figures can be difficult to calculate accurately without access to historical stock data and dividend information. But if we assume an average annual return of, say, 7-10% for each share and that all dividends were reinvested, the total would likely be substantial, especially considering the effect of compound interest over a period of over 20 years. An investment calculator or financial modeling could provide a more accurate estimate based on historical data and assumptions about future returns.”
I know a friend who had regular jobs as a web editor and communicator and has had a job since 2000. He says that he is no longer as dependent on his salary. and Since Reinfeldt's reforms, we have gained 155 dollar millionaires who are then rich enough to become rentiers.
Part of the increasing class gaps since the year 2000 comes from those who have been able to have work regularly and have been able to set aside part of their salary regularly in shares.
Then it can become rich which, in addition to a normal salary or reasonable social insurance, can live frugally. Much of what can be bought is crap. The one who instead lives a little more frugally but still well and invests in shares.
Now I'm not sure how long the stock market can continue to outperform.
Then a society that relies on welfare for those who are successful and craps on everyone else and the people's production is not sustainable socially, economically or ecologically.
I just wanted to point out that both well-paid workers and graduates who regularly had work and invested were able to build up a capital that can exceed their salary.
155.000 is just over one percent of ten million. Or let's say three if you include relatives. Not a very large part, it's probably about the percentage of overpaid that Turchin is counting on.
Most people were scared away from stock speculation by the crashes around 1990 and around 2000.
However, there is an opportunity for those who manage to maintain their health and a full-time job with a salary of 30-45 per month to save a substantial amount of capital through monthly deposits. Maybe not to retire, but to earn more.
Of course it's possible... You can starve yourself all your life in order to live well after 67 - and then you die in a traffic accident at 66 and then everything was in vain.
I think the majority rejects that kind of puritanism.
Of course, it was then finance minister Ann Wibble who believed that everyone should have a bank account of at least one year's salary. However, she refused to hand out one.
However, that is what one is forced to do in today's austerity policy. Anyone who consumes everything when they have work will quickly starve into a job that is harmful to their health in case of unemployment after illness. Anyone who does not save a little over time will never get a share of capital's increased share of the production cake. I'm not saying this is right or easy, but it's what low- and middle-income earners are forced to do if they want to be able to live and not be starved into unhealthy jobs.
So far I agree. A buffer is good. But that the middle income earner should be able to save himself rich is "pie in the sky" as the Americans say.