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Taxation, neo-liberalism and how the global system got rigged

Taxation must be the ultimate tool for the redistribution of wealth. It is the ultimate determinant of the distribution of income from production and can be used to encourage productivity or even discourage it.

Largely it is the globally accepted tool for economic justice in the global production system as well social justice for the disadvantaged and less endowed in society. However, the current World order obscures this fact, twisting the parameters and resulting in the increasing spate of an unequal world that works for a few.

Historically the polemic conventional ideologies, right to centre or left to centre provided the basis for the contest of how resources from production must be allocated or distributed. These conventional ideologies, no matter how imperfect, provided the basis for debate and choice for the people.  Refer to them simply as capitalist or socialist or pro-free market versus pro larger government and they can evoke emotions, but they nevertheless enhance debate and provide choice.

In recent times however, the lines have blurred! On the ideological scale, they slide from the centre to their respective extreme reaches, referred to as either far to the right or far to the left but it is the Centre ground that is more appealing because it offers pragmatism. Currently, the contest for political dominance by these ideological poles has been to pitch towards the Centre, the middle ground.  Call it pragmatism, and it is attractive to the populace but this bottom-line Centre, has been long rigged by the neo-liberal fringe.

Neo-liberalism, the laissez-faire economic model, ascribed to unleashing the free hand of the market, is an extreme tribe of the far right. It has usurped the traditional contest between the right and left. Neo-liberalism blurred the lines between the two known ideologies by creating a kind of Centre ground that is already far to the right.

That is to say the imaginary Centre is further to the right even before any contest starts. It’s like buying a pair of shoes from the streets of Accra. The seller starts you off with about 200% hikes in the base price. This means no matter how hard you haggle, you may never come close to a fair price. And that is the kind of deal the world has with neo-liberalism in the fray.

Neo-liberalism dominates the global economic space like a plague, whether left or right. It has become the Normal, seen as a modern economic wisdom even though contested. I call it a plague because even some, who describe themselves as belonging to the Centre to left ideology, usually in leadership, spend all their energies advocating something else but implementing neo-liberalism. Whether knowingly or not, it is an unprincipled stand against the tribe they belong to, the left.

Neo-liberalism therefore has supplanted and blurred the conventional ideological lines of old, for both the right and left. That’s why we have just one world order, a rigged normal! Political opportunists, from all spectrum of the divide have exploited these to grievous selfish ends.  Instead of a genuine battle for the Centre ground of pragmatism, it has become a politics of the neo-liberal convenience, of some selfish elements from both ends of the political competition.

The point is, political ideologies or contestation is about choosing the best possible way to share resources for the ultimate benefit of all society. Where this is missing, we have the world we have today. Unbridled neo-liberalism that takes no prisoners!

Neo-liberalism has long succeeded in altering the natural central ground, far to the right even before the argument begins because people of the left allowed it. The sad bit is that there are people who say they are progressives but are failing see where the lines must be and they have become staunch advocates for neo-liberal order.

For example, in our local case, in Ghana, it is easy to see how the above narration has played out. Most people cannot in all sincerity differentiate between a Centre to right government like the NPP and a Centre to left Government NDC. They, over the years in our democratic experiment have tended to belong to nowhere, swapping positions, mixing and matching with just sloganism for their true colours. I believe it is fair to sometimes see NDC as more pro-market and NPP more pro-government by their actual deeds over the last 16 years.

But it is not only in Ghana that the lines have been blurred. In the USA and UK, the Right to centre ideological leanings seems to be running scared of the phenomenal neo-liberal World order. Consider Brexit and why it happened in Britain or the shocking election of Donald Trump in the USA. These are traditional Conservatives, Right to Centre governments, yet from recent actions, they are basically retreating from their often backed neo-liberal tendencies, the unfettered opening up of the market where neo-liberalism gets its oxygen and festers. That’s not to condemn opening up but it became the substrate upon which neo-liberalism is grubbing its way for just a few. Currently the Conservatives in the UK and in the US are grumbling that, they have not benefited equally from global economy. Likewise, this is the case for many other silent sufferers around the world. The birds of inequality are now roosting at home.

So, neo-liberalism cannot be good for anybody, except the few vested interests. And they have no ideological parents, they play both sides of the divide, whether left or right to an unfair world.

It must be noted that ideological concepts are models for resource allocation from production systems. And they are a good starting point for fairer contests. But if it is becoming difficult to separate them in this regard, we must not fail to see collusion at the top, instigated by neo-liberalism.

To reduce all this to the core issue of taxation, it is about how resources are allocated from the production systems around the world. And when it comes to this point, there are no differences but greed for which neo-liberal policies are the conduits.

The tax system around the world has been rigged to keep the poor, poorer but the rich, richer. It is the balancing act of taxation as a tool to encourage productivity and as a tool for both economic and social justices that has gone missing. And it is so because, the neo-liberals succeeded in making all of us dance to the views that, the bearer of capital must have the lion share of production because it is better for productivity than economic and social justice. And this is how the ideological Centre tilted to the right. Unless we see through this to help tweak the Global tax system, inequality will exacerbate.

A Global tax system that considers the balance between rewards for increased productivity and economic and social justice must be the way to go. While the Centre to left Governments will typically pull towards economic and social justice, Centre to right Governments typically pull towards the rewards for increased productivity. Ultimately a good balance is what the world needs, but neo-liberalism has muddied the waters for this debate.

Bernard Anaba is a Policy Analyst at ISODEC.

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