Mind the income gap

Much better thought and written than last Saturday's topic.

The rich agree philosophically that they ought to be taxed more to help the rest. That is a very elegant way of saying they are adverse to being taxed heavily.  Rachel Chang has done a good job putting this fact across obliquely.

The rich is a global class. We lived in those times where every country is engaged in a price war to attract them to their shores. Therefore taxes are relative. Lawrence Lien was disingenuous to suggest that in the 80s when the top rate was 55% vis a vis Hong Kong 15% and we didn't lose out. Actually to a certain degree we did. We had always lagged Hong Kong but now we have overtaken them.

The collateral consequence is that when we succeed at attracting the wealthy here, they inadvertently raise the cost of living in the non-tradable economy especially real estate.

A concentration of entrepreneurial, scientific, engineering and artistic talent is always a bonus. On the other hand the agglomeration of asset rich people often take away far more than they give to society. They don't create as many jobs or opportunities but they drive the prices of everything up. They only benefit those who serve them, from private bankers to those who housed, feed and look after their health etc., We have brought in the wrong type of wealthy people. This is the result of a careless thinking government in a toxic mixture of cocky self confidence that they could solve any problem that might arise. They are now learning the hard way that they can't.

Then we busied ourselves with our careers and leave the government to navigate the ship of state. As they screwed up, now more and more of us are taking that responsibility away from them and making them account for every action.

The only way the income and wealth gap can be sustained is when those at the bottom believe rightly or wrongly they could also succeed if they work hard and smart. Today this belief is badly eroded here and elsewhere. Since this is a global problem and it is not sustainable, the present order must change. Beginning with those large societies who can afford to take a risk with their rich, taxes for them will rise - already happening especially in France. If we can stay together long enough the external environment will allow us to implement measures to more effectively address this rich-poor divide. The courageous and superior solution is one where we tear down the high walls of those who had previously succeeded meritocratically now erected to protect their gains from competition. Therefore the the prizes of meritocratic success must be allowed to be expire and re-contested on a level playing field. Sadly our leaders have no guts to do this because it will put their own positions at risk. That is the meaning of putting their party interest ahead of the nation's. Someone once left a message for me on this blog that a fish rot from its head.