Online Articles

Stalin said: No man – no problem.
EU governments’ tax policies are following suit. Shifting taxes onto a man who does not (yet) exist is one way of solving problems. Are governments also subtly changing existing taxes into less visible ones? Is this a more humane form of “No man protesting – no problem”? IREF investigates.

Tax harmonisation in the EU is pursued in order to prevent competitive lowering of tax rates, an alleged race to the bottom. What race?, IREF asks. Taxes are an ever increasing (at best stable) portion of GDP, and have been for years.

Prostitution is going to enter official Italian GDP figures, allegedly to help the government meet its fiscal targets… The story went viral.
IREF brings you the real story beyond the headlines. Prostitutes in GDP are perfectly normal, everywhere. It’s the way that we measure our governments’ indebtedness that is not normal…

How economics – and the fiscal cycle – affect voter turnout is a richly studied question. But what about the other way? Can turnout – how many or few voters turn up to vote – affect the fiscal situation in the following period? IREF investigates and finds that people simply going and voting can be good for fiscal freedom. At least a little.

Cypriot government has unilaterally “redefined” one of the conditions of its 10bn bailout package and lifted a ban on government officials traveling business class. Is this an exercise in customary opulent luxury or is it actually a hidden subsidy? And aren’t all governments guilty?

Voter turnout at the latest European Parliament election is much debated. Many countries saw further drops compared to last EP elections in 2009, fuelling concerns about widening democratic deficit. Beyond the general facade, IREF discovers an interesting geographic pattern in the turnout numbers.

The concept of Living wage is gaining popularity throughout the EU. The social pressure of its advocates probably stands behind the recent proposals to increase substantial minimum wages. Closer scrutiny of the proposed levels of living wages by the IREF reveals, however, that the relationship between Living wages and Minimum wages is quite unexpected.

If the Yes campaign wins today, Switzerland will have by far the biggest minimum wage on this planet. We analyse this trend in a wider context of contemporary European popular movements. We suggest that the Swiss Minimum wage proposition has actually very little to do with the traditional concept of “minimum wage”. Lessons for the EU go much deeper than the standard effect of minimum wage on jobs.

In his new Capital in the 21st century, as forbidding as his previous work on High Wages in France in the 20th century, Thomas Piketty presents a mass of data on asset growth in several European countries and the United States. This information improves the knowledge of our society’s relationship to capital and the divide between the richest and the poorest. Except that the author abuses these data, following 19th century scientific materialism.

Like Marxist authors, he endeavours to transform his discourse into a scientific demonstration. He wants not only to convince, but to hit home his own truth, supposedly grounded in the mathematical formula that he presents. Granted, he states that “we should be wary of any economic determinism in this matter” (p. 47), but he uses econometrics to announce the expected wealth distribution in the 21st century, as if there were little or no risk of making mistakes.

And his claim is that the divide between rich and poor will inevitably widen, although he admits that the opposite took place during the 20th century. He extrapolates trends, as did Malthus in the 18th century or the Rome Club in the 1970s to predict that the world would die of starvation. He questions Kuznets’s inequality bell curve, sketching trends that ignore human action. He notes that “Marx totally ignored the possibility of technical progress and continuous productivity growth” (p. 28) in his theory of infinite capital accumulation killing off capitalism, but on the other hand he reproduces a theory of constant wealth growth.

Abstract:

– Thomas Piketty presents statistical graphs in the manner of Malthus in the 19th century or the Rome Club in the 1970s

– Piketty’s theory of boundless wealth accumulation does not withstand factual analysis

– There is first confusion between capital (productive, financial and real estate) and negotiable assets

– Thomas Piketty claims that for the past 20 centuries, the asset rate of return is 4 percentage points above the rate of economic growth

– But how could he possibly obtain such data for the past 2,000 years? This is absolutely impossible

– Further, and contrary to what he claims, the average asset rate of return of households cannot be higher than the rate of economic growth

– If Piketty’s calculations were accurate, then the wealthiest 1 per cent would own all available assets by 2016!

– Piketty’s calculations are wrong because he ignores reality: the economy is not a zero sum game, capital is saved, reinvested or even wasted; social mobility is extremely important and inequalities are not set in stone

Nobody likes poverty. But how do we end it? Suppose we give everyone some money. This will automatically include the poor, we don’t have to identify them, problem solved. Is it doable? Will anyone still work, create new ideas, write poetry, love?

The answer depends largely on how basic the basic income is, as we show.