Another Cameron Opportunity.

OK what is apparent under capitalism is that capital migrates to those with capital; the rich get richer. Also that as this capital is withdrawn from circulation into private hands governments have to run deficits to maintain the rest of society at a reasonable standard. And finally that this state of affairs has become unsustainable. There seems to have been a hidden assumption in free market capitalism that the unproductive and unemployed will simply disappear, that as one’s income becomes zero one also becomes zero and disappears from the earth as well as the balance sheet. The reality is somewhat different. So as the end of western capitalism looms, which might level us all, there needs to be a new approach. Just as a starving snake might begin to consider chewing on its own tail might there be a way to circularise capitalism? Connecting the top with the bottom? We are used to taxation as wealth redistribution but might there be a different form to solve this situation. Not deductible tax but an enforced percentage to be used to provide capital availability. Individuals and corporations would pay tax normally together with a percentage compulsorily paid into a government holding fund that would pay interest, much like the compulsory purchase of government gilts. This way the interest of the top is connected to the rest of society in that if the society as a whole gets into difficulty the interest paid by the fund would decrease. Its main purpose would be to provide the government with a cheap and controllable source of funds. For example the income of high earners would be taxed normally but say 70% of any amount above say £300k would be compulsorily invested in ‘government liquidity bonds’ paying say 4%. It would remain the property of the earner and provide a return but the return of capital would be regulated and inheritance taxed normally. Where currently market based euro government bonds are having to pay an unsustainable 7% because of their indebtedness having a governed wealth based borrowing facility at 4% would maintain sustainability. This may be total b*****x but it’s obvious that capital needs to be governed in order to benefit the whole of society because the poor have a habit of staying alive long after they cease to appear on a balance sheet. Nearer to home Dave nearly got stuck in the cat flap.