Atle finished reading this book when in the
land of milk and honey (Norway).
Interesting book, indeed.
Here is an extremely short summary:
In the period from 1700 to 1900 (La Belle
Epoque) the currencies of France, Great Britain, and USA was pretty stable with
almost no inflation. One thousand Pound Sterling in 1700 and 1900 did not
change much in value.
Around 1900 national capital was about 7-8
times national income. The capital was mostly private as the countries above
did not possess much net capital.
The first and second world war changed this.
Due to the costs of waging war national capital was reduced to 2-3 times
national income around 1950. The class of rentiers was almost liquidated. The
reason was inflation, printing of money to pay the enormous national debts
after the wars.
In 2015 the ratio between national capital
and national income is close to what is was during La Belle Epoque. Low
inflation, low birth rates favour the growth of capital.
The really big capital owners in the world do
not have to declare their assets, but their revenue from capital probably is
around 10 per cent a year. Very different from you and me these days. American
universities have to declare every cent of their assets. Illinois University,
which has a small moneybag, gets 3-4 per cent interest. Harvard University,
which has the biggest moneybag of American universities, got about 10 per cent
a year; Harvard can afford to pay top professionals to invest their moneybag.
This for the summary.
Most citizens can not afford to hire
professionals. If we are lucky our assets in cash will get 1-2 per cent
interest. And we have to pay tax (in Norway about 28 per cent) of the scanty
interest. We can not pay lawyers to evade tax as the really rich can.
In 1900 there was no democracy as we know it
now. The really rich could in many ways do what they wanted; they were not
controlled.
Things have changed since then. We have what
we call democracy, but still it seems that there is an exemption for big
private capital. Whenever voices rise to
tax capital and the revenue of capital to make capital contribute directly to
the state coffers, big capital has the possibility to move to tax havens. The
ordinary citizen can not do this.
To make big capital pay a fair share of
revenue to society, the states of the world could only agree on a system that
all assets were to be reported for tax. To make a system like this to work is
certainly very difficult. On the other hand there is a threat to democracy and stability
that the really rich do not contribute to society as most citizens have to.
The national capital/national income ratio
will probably not rise to 20 to 1 or more. Still it is not difficult to foresee
that a steady rise in the ratio can lead to major problems and revolts.
The country of Greece is bankrupt (but big
capital in Greece is not). Italy and Spain are on the verge of bankruptcy (big
capital is not). USA would probably have been bankrupt if not many other
countries would go down the drain if this happened.
In Great Britain big capital has the lion’s
share of money while people suffer cuts in social benefits . Even in the land
of milk and honey, Norway, politicians promise to cut expenses while big
capital grows as almost never before.
Everyone, rich and poor, should contribute
before eating the fruits of labour. One way of contributing for the rich is to
pay a progressive tax on revenue of capital.
