Posted by: r.m. | April 29, 2014

Lebanon’s protestors for wage hikes…and Piketty and capitalism inequity

As I write this email, thousands are protesting in Beirut for a measure of economic justice.

Al-Akhbar reports:

Updated 3:30 pm: Tens of thousands of public sector employees and school teachers marched in Beirut Tuesday to demand lucrative banks and big businesses pitch in to fund the wage hike bill in one of the largest workers rallies to hit Lebanon in years.GI7B2810

The Union Coordination Committee (UCC) – a conglomerate of public sector associations and schools – had asked public and private schools and government offices across Lebanon to observe the one-day strike to rally for higher wages.

شربل نحاس: تمويل السلسلة يتم من خلال فرض ضرائب على مداخيل المضاربات في العقارات وارباح التوظيفات المالية كما في كل دول العالم

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The UCC is calling on Parliament to pass a bill that would increase the salary scale by 121%, and to fund it without raising taxes on basic goods. In addition to imposing taxes on bank profits, activists want to tax billionaires who own the luxury seafront properties.

Banks across the country held a one-day strike earlier this month to let the government know it would not accept a proposal to fund the wage scale by adding a mere 2% tax on profits on their interest revenues…. Last week a report showed that Solidere had collected $55 million in net profits in 2013. The company was behind the most of the multi-million dollar luxury real estate projects in downtown Beirut and along the seafront. Now the UCC is demanding the real estate sector contributes to the wage scale, but like the banks and other other big businesses, they continue to resist.”

This is not the first street protest in Lebanon.

Thousands of Lebanese workers and activists have been pouring onto the streets over a litany of issues since parliament resumed work this month following a year-long hiatus. … 

The movement for a wage increase, led by Hanna Gharib, a former communist stalwart, highschool chemistry teacher and head of the Union Coordination Committee (UCC), has come to represent a struggle pitting society’s underpaid and overworked labor class against their corporate masters.

The UCC is a coalition of smaller unions and associations that include many government workers and the private school teachers’ syndicate, which is the only private sector body under the umbrella of the UCC. Some of those groups are negotiating directly with the officials, such as the airport traffic controllers who held a two-hour strike earlier this month separate from the main UCC actions. But most of those talks have reached a dead end, with activists urging for collective action as the most effective route, and calling for more public and private sector unions to join their movement.

Demands: The UCC wants salaries to increase by 121% — more than double their current salaries — to match the pay hikes promised to public university professors. It would be the first wage scale increase since a 2011 bill raised the country’s monthly minimum wage from $333 to $467. That bill also increased salaries for all workers in the country earning up to $1,200.

The UCC also calls for the pay increase to be implemented immediately, rejecting proposals by business officials and their political allies to introduce wage hikes in increments over a period of three years. Moreover, the union has warned parliament against increasing taxes on necessities to pay for the wage scale so as to not overburden the country’s poor.”

See the link for a brief description of the other protests in Beirut.

The demand of the protestors — to have taxes imposed on bank profits and luxury real estate — fits in line with the demand by a new book published by a prominent economist 

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As the book itself states: “Thomas Piketty analyzes a unique collection of data from twenty countries, ranging as far back as the eighteenth century, to uncover key economic and social patterns. … The main driver of inequality–the tendency of returns on capital to exceed the rate of economic growth–today threatens to generate extreme inequalities that stir discontent and undermine democratic values.”

He demonstrates through centuries of data, that, as Paul Mason of the Guardian explains, “in an economy where the rate of return on capital outstrips the rate of growth, inherited wealth will always grow faster than earned wealth. So the fact that rich kids can swan aimlessly from gap year to internship to a job at father’s bank/ministry/TV network – while the poor kids sweat into their barista uniforms – is not an accident: it is the system working normally.”

In essence, as Nobel Prize Laureate in Economics, Professor Robert M Solow explains: Picketty’s data demonstrates “the rich-getting-richer dynamics”

Capital is indeed very unequally distributed. Currently in the United States, the top 10 per cent own about 70 per cent of all the capital, half of that belonging to the top 1 per cent; the next 40 per cent – who compose the “middle class” – own about a quarter of the total (much of that in the form of housing), and the remaining half of the population owns next to nothing, about 5 per cent of total wealth. Even that amount of middle-class property ownership is a new phenomenon in history. The typical European country is a little more egalitarian: the top 1 per cent own 25 per cent of the total capital, and the middle class 35 per cent. (A century ago the European middle class owned essentially no wealth at all.) If the ownership of wealth in fact becomes even more concentrated during the rest of the twenty-first century, the outlook is pretty bleak unless you have a taste for oligarchy.

As with the protestors in the streets of Beirut today, Piketty supports a progressive tax on wealth.

Piketty’s strong preference is for an annual progressive tax on wealth, worldwide if possible, to exclude flight to phony tax havens. He recognises that a global tax is a hopeless goal, but he thinks that it is possible to enforce a regional wealth tax in an area the size of Europe or the United States. An example of the sort of rate schedule that he has in mind is 0 per cent on fortunes below one million euros, 1 per cent on fortunes between one and five million euros, and 2 per cent above five million euros. (A euro is currently worth about $1.37.) Remember that this is an annual tax, not a onetime levy. He estimates that such a tax applied in the European Union would generate revenue equal to about 2 per cent of GDP, to be used or distributed according to some agreed formula. He seems to prefer, as would I, a slightly more progressive rate schedule.”

What does that mean for the rich?

He calls for an 80% tax on incomes above $500,000 a year in the US, assuring his readers there would be neither a flight of top execs to Canada nor a slowdown in growth, since the outcome would simply be to suppress such incomes.

In essence, he calls for an 80% on high incomes and a 15% tax on capital, enforced transparency for all bank transactions, and overt use of inflation to redistribute wealth downwards. 

Sounds good.

Let’s start by taxing the banks and the real estate in Lebanon.  Tax the wealth.

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