‘Decades of falling wage shares mean that millions of households are ready to spend more if only they could earn more income. A well-calibrated recovery strategy that combines public spending on goods and services with regulation of predatory corporate behavior and effective redistribution can unleash a virtuous growth circle that improves living standards for the vast majority and strengthens government finances even as it generates resources to boost public services and tackle the environmental catastrophe.
‘Such a strategy would consist of the following elements:
- A prolonged fiscal expansion with immediate support to employment creation and social services, including a strong component in the care economy;
- Public-infrastructure investment to accelerate the energy transition by combining policies to encourage investments in renewables and discourage fossil fuel extraction;
- Policies to improve industrial capacity based on raising productivity and greater energy efficiency;
- Progressive tax reforms shifting the burden from indirect taxes such as sales and value-added taxes (which are regressive and discourage spending) to direct taxation, especially on high-income earners (whose consumption is relatively unaffected by taxation) and on corporate earnings and rents (with exemptions depending on employment creation).
Read here (The American Prospect, Nov 27, 2020)
