• Sweden's March Towards Capitalism
    5 replies, posted
[media]http://www.youtube.com/watch?v=vG51uCrYxVM[/media]
The current design of Scandinavian welfare states, as for many other welfare states around the world, are economically and fiscally unsustainable. One of the prime concerns is that of retirement pensions. This also applies to Social Security in the United States as well. When such schemes were implemented, you had like five workers paying for each retiree. In the coming decades, that ratio is going to drop to two to one. To maintain fiscal sustainability, the burden on the working-age population has to increase while the benefits realised by retirees has to drop. If I recall correctly, there are only two countries in the world with sustainable retirement systems - Australia and Canada. I don't know what Canada does, but here in Australia you are mandated to save for your retirement through investment in a kind of managed fund on the market, with a means-tested aged pension available as back-up. Then there's also of course healthcare funding. Single-payer is not the way to go for fiscal sustainability and the imposed tax burden. Healthcare in the United States may be shit now, but that's for a number of reasons. The standard method of pricing - fee-for-service - incentivises unnecessary care and waste. Alternatives such as bundled payments are rightfully being explored and have the potential to improve quality of care and cut costs. Lack of exposure to costs - not just in the US but particularly in other social welfare states - also means that healthcare systems can be burdened by things like unnecessary GP visits - increasing government spending or insurance premiums. There needs to be a balanced, market-based approach. Another problem with most states is how they are funded - through the kinds of taxes they levy. Many countries levy corporate income taxes, capital gains taxes and personal income taxes. They descend in that order in terms of mobility - you already see how US corporations have the means to avoid paying immense US corporate income taxes by making use of tax havens like in the Cayman Islands. Capital is also incredibly mobile in today's globalised world, and harsh capital gains tax regimes can deter both domestic and foreign investment. Personal income is less-mobile, however it's mobile enough for the people who pay the most of it - millionaires and billionaires. States should be moving to less-mobile and broader tax bases for long-term equity and sustainability and to reduce compliance costs - tax bases like consumption (such as New Zealand's GST - not the narrow-base/high-rate European VATs which make no sense) and tax on unimproved land value. One idea that's occasionally floated is like a 0.1% tax on all bank transactions and 0.2% tax on cash withdrawals - which has the potential to raise serious revenue given how broad the bases are, and significantly reduce deadweight loss.
I want to say you're wrong because I tend to lean toward a light socialism, but I can't really find any faults in your argument. Those are a lot of good points, and the whole thing's well thought out. All I can say is there has to be some middle ground between unfettered capitalism and unsustainable socialism, but I'm not really sure what that is.
[quote]One idea that's occasionally floated is like a 0.1% tax on all bank transactions and 0.2% tax on cash withdrawals - which has the potential to raise serious revenue given how broad the bases are, and significantly reduce deadweight loss.[/quote] Banks would DEFINITELY start charging bigger fees for transactions and withdrawals if we did this.
[QUOTE=Helix Snake;48756941]Banks would DEFINITELY start charging bigger fees for transactions and withdrawals if we did this.[/QUOTE] The idea does have problems which is why I didn't necessarily say I supported it. For instance, the cascading effect of each and every transaction being taxed can have serious implications, similar in line to what you said (however I wouldn't expect such fees if such a tax replaced the bank's compliance for corporate income tax - all that the bank would need to do to meet their obligations is sum up the debits and/or credits of each account in each period and charge that to the account holder, forwarding the payable amount to the tax office - the deadweight loss is much-less than income tax filing). Other problems include it can substantially benefit firms with vertical integration over smaller firms especially - if a business owns its suppliers and distributors, it might not need to engage in monetary transactions for its inputs and outputs - reducing their tax liability. Another problem is that, as this would tax absolutely every transaction, it does mean liquidity of financial markets can be negatively affected (potentially leading to a crash of securities exchanges), and it minimises the potential for growth of retirement savings accounts which are often engaged in trades of things such as bonds and shares. Such a tax could potentially undermine the entire monetary system over time, too. However that all doesn't excuse the amount of deadweight loss that income tax creates (think of the legions of tax accountants out there - especially for businesses), the increasing mobility of personal income as a tax base, and overall the ease of avoidance of tax. Just worth mentioning as an alternative to how governments currently raise revenue. [editline]25th September 2015[/editline] [QUOTE=woolio1;48756938]I want to say you're wrong because I tend to lean toward a light socialism, but I can't really find any faults in your argument. Those are a lot of good points, and the whole thing's well thought out. All I can say is there has to be some middle ground between unfettered capitalism and unsustainable socialism, but I'm not really sure what that is.[/QUOTE] I'd say I'm centre-right, however I still think there's a need for means-tested welfare in some scenarios, such as with the retired if they didn't save up enough for retirement, or the disabled who are restricted in their ability to work. The biggest concern for all governments though should be how to deliver such services as effectively and as sustainably as possible. It's good to want to have your citizens able to receive healthcare, but it's not good if the pricing models used in the industry incentivise waste (such as unnecessary tests), or don't discourage people from seeking unnecessary care. Countries like the US have fiscal problems and most of that is attributable to social security and healthcare. Fiscal repair needs to start with making those systems more efficient. For instance, the US could push for triple-tax-advantaged retirement savings accounts (like health savings accounts) to encourage people to save for retirement, or they could do like what we do and mandate everyone to save for their retirement, such as through replacing either the employee or employer FICA taxes with mandated contributions to retirement savings accounts. Things like the bundled payments pricing method have the potential to cut healthcare waste compared to fee-for-service, and along with consumer-driven healthcare there is the potential of substantially cutting insurance premiums while maintaining a strong quality of care, offering savings for Medicare, Medicaid and Obamacare. [editline]25th September 2015[/editline] Sorry for the walls of text everyone, I can't help it lol
[QUOTE=Helix Snake;48756941]Banks would DEFINITELY start charging bigger fees for transactions and withdrawals if we did this.[/QUOTE] In order to recouperate their losses, they would add another 0.1 or 0.2 bank comission. The client would end up paying 0.2%-0.4%. I think that's reasonable enough.
Sorry, you need to Log In to post a reply to this thread.