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Letter: Inequality will stalk society until stock markets are curbed

The “pre-distributionists” (“People’s capital is an idea whose time has come”, Opinion, June 21) are thinking in the right direction, but far too timidly. They, and Rana Foroohar, are right to state that taxing the rich by itself will not really right the maldistribution of income and wealth. Any conceivable tax rate will only make a tiny dent in the unequal distribution, unless wealth is expropriated by the state and incomes are strictly regulated. Then you have what we could call state socialism.

But the pre-distributionists’ proposal for citizens’ participation in the proceeds from capital markets, financed either by a share of excess taxes (how many states will have surplus taxes?), by contributions from philanthropists or by a small government share in start-ups, is based on maintaining the absurd growth rates of stocks relative to gross domestic product — the culprit of the wealth gap — in order to let some crumbs fall on the plates of citizens.

Instead of reining in the absurdity of financial markets should we strengthen them and give them even more “democratic legitimacy” by letting citizens participate?

Why not extend US president Joe Biden’s plans for free tertiary education to everybody? Why not attempt to install a universal health and a pension system which includes also gig workers, the self-employed and precarious workers? In Europe, socially minded Christian (ie, conservative) parties and also Social Democrats have for a long time promoted “citizen capitalism” — ie, having workers own shares in the companies in which they work. This idea would also imply — as workers’ participation does in Germany and Austria — that workers have representation at the company’s board, thus enabling them to enhance stakeholder capitalism. Scandinavian countries have dabbled with more extensive ideas, most famously the Norwegian wealth fund which owns shares in nearly all listed companies and makes its influence felt by putting pressure on climate-related activities of its portfolio. Part of the fund’s proceeds are used for social purposes.

It is true: redistribution through the tax system does not achieve a fair distribution of wealth and incomes.

But the proposed pre-distribution scheme will not succeed either, because it would “feed the beast” — financial markets — which causes this extreme maldistribution. We have to go further and attack not the symptoms but the root cause.

Kurt Bayer
Former Government Official and Board Director of the World Bank
Vienna, Austria

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