Meeting of the Parliament 05 March 2025
The causal link is that a focus on economic growth, instead of on tackling inequality, results in crime. We know that societies that have gross inequality, such as America, have more crime. Where societies are more equal and people feel that they have a greater opportunity in life, as is the case in Europe and in European countries that have higher taxes and more opportunity for people, there is lower crime. The member is shaking his head at me, but crime rates in Europe are lower than those in America. The inequality that we see in America is part of that story.
Growth is not everything—it does not solve all your problems. Even when you have high growth, you still need redistributive taxation, including wealth taxes, and you have to invest money in public services and in reducing carbon emissions. Maurice Obstfeld, the former chief economist at the International Monetary Fund, wrote yesterday in the Financial Times, in an article on the ills of the American economy, about
“appropriate economic policies to help America.”
He said that
“Better targeted policies could include a more redistributive tax system, limits to corporate market power, further healthcare reform, and workforce development.”
It does not matter if you have the highest growth in the world, you still need to do those things. Even with the lower rate of growth that Germany and Japan had between 1980 and 2023, gross domestic product per capita grew at a rate of 1.4 and 1.5 respectively, compared to America’s rate of 1.8. With that lower growth, Germany and Japan managed to provide full-coverage public healthcare and had lower poverty rates and significantly greater longevity. The differences in outcomes for these countries are down to the policy choices that they are making and not to how much growth they have or have not achieved.
To rebalance the economy, we need to be clear about what we are trying to achieve. Increasing pollution, cutting back on the social safety net and cutting back healthcare and benefits might increase your GDP number, but at what cost? The cost is that of lives cut short, of health ruined and of damage to the environment that cannot be undone or that it will be very costly to reverse—the cost of allowing the rich to get richer while the poor get poorer.
When you take the costs for essentials out of the public domain and put them into the private domain, inevitably, the rich can buy them and the poor cannot. That is sometimes called cost savings, but an essential service is not optional. People who are forced, through poverty, to go without heat, timely healthcare, good-quality education and training and good-quality food still need those things and they are harmed by not having them.
Even if the heartless discount the cost of human suffering, they cannot discount the cost to society. Poverty is expensive. People who experience poverty have higher mental and physical medical needs and they are able to contribute less due to lower achievements in work and study. We hear a lot of nonsense about this or that public service or benefit being unaffordable. Rubbish! What we cannot afford is billionaires. We cannot afford to let a few individuals hoard the wealth of millions. The rebalancing of the economy that I would like to see would be a move away from enriching a few people while constantly whittling away at the services that everybody else needs. It would be a move away from subsidising polluters and high-emission industries and investing that money into environmentally sustainable sectors. It would be a move away from a fanatical obsession with GDP growth and a move to a broader focus, ensuring that everyone in society can thrive.
History will tell the tale in the end, but I am sure that the lurch to the far right in America and the distrust of institutions, and even of democracy, that has led to the second election of Donald Trump is, at least in part, due to the disconnect that Americans feel about the story that they are being told about their economy—“Look at that growth”—and the reality that they face every day of not being able to get affordable, good-quality healthcare, food, education or public services.
We need to rebalance the economy towards ordinary people by taxing extreme wealth and the pollution that the very wealthy produce at a rate that far exceeds that of any ordinary person, with private jets, luxury cars and frequent flying. We need the UK to remove the subsidies and tax breaks for high-polluting industries, crack down on tax avoidance and ensure that global corporations pay their taxes and their employees properly. To rebalance our economy, we need to defund the billionaires.
15:30