Once again it has been brought to my attention that the world's economy is royally screwed up. This time it's the tiny island/nation of Cyprus in the eastern Mediterranean that has imploded. It seems Cyprus and its banks have become a major tax safe-haven for the world's oligarchs, particularly the newly-rich Rooskies.
Except, as with banks almost everywhere, the Cypriot banks didn't have enough safe places to invest their depositor's money. Instead they chose the high-yield but also high-risk route and invested in Greece. Yes, THAT Greece.
Here's the problem in a nutshell: There is too much money concentrated in the hands of too few people. The wealthy have already bought essentially everything they want....homes, islands, exotic cars, planes, trains, jewels, art....and they still have trillions of dollars left over. Their excess cash just piles up and they often have no where but high-risk places to put it. That's a disaster just waiting to happen.
Meanwhile, with too much of the world's wealth in the hands of too few, there isn't enough left for the masses to buy enough of the things that spurs production and creates jobs. That's why unemployment is so high worldwide. The wealthy simply can't buy enough "stuff" to keep the rest of the world busy producing it.
So how do you fix it? No, you don't just pull a "Robin Hood" and confiscate money from the rich and drop it on the poor. That's a double-bad move. The rich won't have any incentive to work because they'll just have their gains taken away from them, while the poor won't have any incentive to work because they'll just be handed a windfall for doing nothing.
So what then? Level the playing field. We need a new tax code written on a clean sheet of paper and not just another band-aid on what we have now. Start right now phasing out all the hundreds (thousands?) of tax credits and deductions and subsidies that are increasingly making our "free-market" economy anything but.
The idea that we need to give all those loopholes to the wealthy so they can have more money to "invest" in the economy is bull! They have several trillion (with a "T") dollars on the sidelines right now doing very little. (And let's be honest....it isn't just the wealthy that benefit from loopholes. We all benefit from a few....it's just that the rich's are bigger.)
Without special favors for a few I think you'd see in short order income becoming more equal based on the efforts of those working and not just flowing one-way to those who know someone important or can afford a lobbyist.
The rich can still work and get richer, but it will be due to their superior intelligence or by the sweat of their brow and not by just knowing a congressman willing to sponsor their heavily camouflaged loophole. More well paid workers = more consumers = more production = more tax revenue. See how this works?
It's called "growing the economy", and it's not a new idea. We've heard a lot of talk about it recently, but very little movement towards it. That's because some toes will have to be stepped on for it to work.
Finding someone willing to do a little "toe stomping" is the first challenge. Any volunteers?