Recently I went to a "Chatham House" style briefing where a respected financial figure gave their view on the world economic outlook. It was pretty grim to say the least. The speaker argued that we are basically stuffed and leverage (debt) is the key worldwide problem facing both the private and public sector. We all face years and years of recession and cuts in our national income (GDP) before this debt is paid off. All in all a pretty dire doom and gloom prediction.
The speaker was less forthcoming about possible solutions but did mention a recent study in Boston had recommended that there could be a one off international wealth tax which could be be used to pay off and resolve the debt crisis at a single stroke. I was the only one at that meeting to openly express a view that this seemed a "good idea".
There was the counter argument that you could never get the wealthy to agree to such a measure, they have too powerful economic and political domestics interests to allow such a tax to be considered and that there would be a "flight of capital" from any country or continent that would want to adopt such a measure. I was not convinced.
When I got home I searched for this study. I found the original report by the Boston Consultancy Group (BSG) from September 2011. The BCG is a leading world wide management consultancy firms, who are not at all a "leftie" organisation. Check out their solution. In ancient times debt use to be wiped clean on special occasions. So why not now?
To pay for this wipe out of debt they propose a "one-time wealth tax" on financial assets and other taxes on property. Only for those with assets above 100,000 euros.
I also think that the wealthy have enjoyed in recent years unprecedented growth in their share of national income and the value of their investments. So they will still be ahead even if they did have to take a substantial "haircut". Remember, if we don't deal with this debt mountain and we face the armageddon of decades of depression, then surely it is in the interests of the wealthy that they pay this one off tax to preserve the long term value of their remaining capital?
I also think that people underestimate the ability of liberal western democracies to take drastic action when they are up against the wall. If their economic survival is at stake then you can rule nothing out.
The first successful modern day capitalist revolution had its roots in Boston in the 18th Century. Who knows, the next one may have already started in Boston in the 21st Century.