Bhubaneswar, July 11: The Orissa Economics Association oganised a webinar of July 11, 2020 in which Professor Prabhat Patnaik spoke on the theme “A Strategy for the Post Pandemic Development”.
Before the Pandemic the chronic unemployment rate in India was very high at nine per cent. The real consumption rate had declined by six percent. Similarly, the growth rates in India and the world were slowing down. This problem in inherent in the current neo-liberal economic structure.
Professor Keynes in his article in Yale Review had suggested that the capital should be local. Nations will not be able to control the global capital. Whenever the economy slows down the global capital will go away. The monetary policy in the USA had basically promoted the bubble in the financial market.
When interest rates go down that basically helps to create a bubble in the property prices. The share of wage in the national income has been declining perpetually. State investment has been declining. Except, in the USA, most of the countries around the world are having Fiscal Rules that limits the scope of the Fiscal Polices to revive the economy. Therefore, most of the countries are relying upon monetary policy.
In order to revive the economy from the slowdown state states needs to increase the spending at least by 10 percent of the GDP. For this we need to increase revenue collection by seven per cent. This can be done through borrowing as well as higher taxation of the capital. There should be higher tax on capital, wealth and inheritances of wealth.
A higher tax on wealth has also been argued by the famous French economist, Thomas Piketty. Like political rights, the Government should ensure at least five justiciable basic universal economic rights: (1) Right to Food,
(2) Right to quality and publicly provided free health care through a national health facility ,
(3) Right to quality and publicly provided free higher secondary education, (4) Right to Old age pension and disability benefits and
(5) Right to employment.
Imposition of two per cent wealth tax on the richest one per cent and one third inheritance tax on the rich will be able to finance all these five basic universal economic rights.