The Economics of Enough_ How to Run the Economy as if the Future Matters - Diane Coyle [141]
3. Introduce policy measures to encourage increased savings by individuals. One important kind of measure would encourage saving directly. The details of how these might work will be specific to each country, but they could range from “opt out” schemes for retirement saving and additional tax incentives for long-term savings to the encouragement of cultural change—for example, by including the importance of saving in the school citizenship curriculum. Another kind of measure would discourage spending, via taxes on consumption and specifically high-carbon consumption. Many countries have preferred to tax income because it is easier to make this a progressive system, taxing the well-off relatively more heavily. However, income tax systems have become complex with many distinctions and loopholes. A consumption tax approach could be much simpler, with some scope for progressivity, and could also readily be used to discourage high-carbon products and services. It always used to be commentators on the right who favored a consumption tax, but the increased concern about over-consumption has also swung some left-of-center commentators behind the idea.23
4. Ensure that tax systems encourage businesses to invest, and to do so over a longer time period than the two-year payback period that characterizes much current business planning. Again, the practical details will differ in different countries. But to give some examples, the tax treatment of dividends versus debt will affect companies’ financial time horizon; the tax treatment of acquisitions as opposed to investment in organic growth likewise.
5. Make the old-fashioned virtue of public service a priority in implementing the inevitable cuts in public expenditure and reforming the provision of services. The process of cutting spending on services is bound to be painful, as the early experience of Greece shows, and is bound to be affected by compromises and deals. Still, it’s essential that electorates have a sense that reforms are driven by more than financial necessity, and there are important principles and values involved as well.
6. Governments should address the extremes of income inequality. There needs to be a three-pronged attack. The first prong is the use of the moral scope for governments to influence behavior and norms through public comment. The second prong is using the tax system and the law to drive out the excessive use of bonuses; for example, the tax law might state that bonuses should not exceed base salaries. The third prong is tackling legal and regulatory structures that give some professions market power allowing them to charge high fees and salaries, such as undue restrictions on entry into professions such as law and banking.24 These steps should come on top of the government’s normal use of the tax and welfare system to support society’s poorest and most vulnerable members.
7. We need experiments in the use of the Internet to engage citizens more directly in public policy. Even if relatively few people take part, methods such as deliberative consultations on important decisions might prove an effective way of improving transparency and legitimacy in decision-making, and offer a defense of policy decisions against lobbying and legal gaming. Some political scientists are skeptical about the role online engagement can play in political processes, especially given some evidence that it can polarize opinion rather than achieving greater consensus.25 But even if these skeptics are right about its direct impact, the Internet will indirectly affect the important role of the media in democracy and the provision of information to citizens.
8. Governments should consider also introducing or making greater use of institutions with an explicit duty to take account of the long-term and future generations. For example, one idea that emerged from the two opposition parties in the