Time to make the rich pay {eurozone}

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http://www.presseurop.eu/en/content/article/2538941-time-make-rich-pay

Once again this year, Sigmar Gabriel joined with the unions in demanding an increase in taxes paid by the wealthy to ensure a fairer distribution of the burden of the crisis. For the social-democrat leader, the imposition of further demands on the rich is a matter of “social patriotism”. However, at the other end of the political spectrum the Christian-Democrats and the liberals were quick to step up to the plate to defend the better off, and to accuse Gabriel of wheeling out a well-worn socialist routine. As a result, debate on this issue has now assumed the wearisome air of an electoral squabble.

But we should not be beguiled by this impression. Over the years, the issue of growing disparities in wealth and incomes has evolved to the point where it is no longer a simple matter of equality. The reality is that these disparities are one of the main causes of the current crisis.

The increase in wealth that is concentrated in the hands of a small minority has meant that a considerable proportion of national income is now feeding a demand for financial products, and reducing the level of investment in goods and services.

Foolhardy investments
The well-off in Europe invest in bonds issued by banks, property companies and states, like Ireland, Portugal, Greece and Spain, which offer attractive rates of interest. In so doing, they have financed ill-judged investment on an enormous scale – the construction of housing and motorways that remain unused and other foolhardy infrastructure projects – that these countries would never have been able to undertake on their own.