MacroscopeTax the rich and Big Oil to avoid a global recession

Name: Pakistan’s poor suffer as surging inflation pushes up price of most consumer goods
Uploaded: 2022-10-31T14:00:13.000Z
Duration: 1 min 24 s
Description: Pakistan’s poor suffer as surging inflation pushes up price of most consumer goods

Policy tightening is a recipe for disaster, increasing the odds that recession will follow in some parts of the world

Instead, more progressive taxes are needed to make the wealthier help fund welfare reforms, and to rein in excessively profitable energy companies

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A Shell sign is seen at a petrol station in London on October 27. Calls for windfall taxes continue to grow as oil companies profit from high energy prices due to the war in Ukraine. Photo: EPA-EFE

David Brown

Published: 10:00pm, 31 Oct 2022Updated: 11:59pm, 31 Oct 2022

How much money do you really need to thrive or, more critically, to survive in the modern age? Oxfam, the international charity focusing on the alleviation of global poverty, has said the world’s 26 richest people own as much as the poorest 50 per cent.

It’s an unfortunate sign of our times that global inequality is getting worse, poverty and malnutrition are becoming more acute and world welfare levels leave much to be desired. There is a critical need for a global levelling up across nations, but where does it start?

Initiatives for debt forgiveness for the world’s poorest countries have lost momentum, Covid-19 has provided a bonanza for some of the world’s richest billionaires in Silicon Valley, while international energy companies have made a killing out of the present energy spike.

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Pakistan’s poor suffer as surging inflation pushes up price of most consumer goods

It’s time to redistribute global wealth and put resources back into the hands of the needy, to re-energise consumer spending and to help jump-start sustainable long-term recovery for the benefit of all rather than a privileged minority. It’s a big challenge but the world is crying out for change, especially at a time when global growth is heading into another spell of stagnation.

In its recent World Economic Outlook, the International Monetary Fund was pretty downbeat about the next few years, with the world economy facing multiple headwinds from the Ukraine war, the energy price spike and the cost-of-living crisis.

The IMF believes global growth could slow down to an average of 3 per cent over the next two years from 6 per cent in 2021, with a 25 per cent probability that growth could come in below 2 per cent in the worst-case scenario. It would mean some parts of the world slipping back into recession at a time of dire economic stress.

Central banks are tightening monetary policy while some governments are trying to rebalance their books by tightening fiscal policy with new austerity measures. It is a recipe for disaster, increasing the odds that recession will follow.