Page 22 - Spanish Insight - August 2019

Progressive Capitalism,

Taxation and Plastic

by Gary Miles Advisers in the Clinton Administration. In his
book he argues that Capitalism needs to be
The Father of Modern Capitalism is widely brought under control because corporations
regarded to be the Scottish intellectual Adam don’t pay for the damage they do to societies
Smith who wrote The Wealth of Nations in and the planet. If a corporation devastates a
1776. Socialism was invented in 1834 by jungle to make way for a palm oil plantation
Pierre Leroux the French philosopher (not Karl it pays for the land but doesn’t pay for the
Marx who pinched his ideas when he was in damage to the world’s eco system. If a
Paris in 1843). Ever since then we have been corporation pumps out millions of over salted,
in an endless competition to see which is the over sugared burgers to children across the
best system, Capitalism or Socialism. We planet then they pay for the ingredients but
have fought wars over it (Korea and Vietnam, they don’t pay for the costs associated with
etc.), committed genocide over it (Stalin, Pol the obesity epidemic that ensues. Moreover,
Pot, etc.) and the argument still rages on corporations have got really good at playing
today on the streets of Paris and Caracas. countries off against each other. They make
Yes, Capitalism is way ahead on points but I sure they don’t pay tax twice but quite often
think this is a fight to the death. they don’t pay tax at all. Yes you Starbucks,
Google, Amazon.......
Stiglitz says it is time for a new kind of
Capitalism – Progressive Capitalism. Here we
exercise control over corporations in order
that they serve society as a whole.
The mechanism for this control is, of course,
taxation. Clearly a corporation which
damages the planet or society should make
reparation through taxation. But how should
these taxes be applied. Do you tax the profits are producing plastic in ridiculous quantities.
of the corporation or do you tax the product? In 1987 we produced 100 million tonnes of
Taxing profits isn’t working as accountants plastic by 2015 this had grown to 387 million
This argument strikes me as odd as, to my can move money about to give the optimum tonnes and it is still growing. To date, as a
way of thinking, Capitalism is a means of level of profit globally to minimise taxation. A species, we have manufactured 8 billion
generating wealth while Socialism is a way of coffee company makes a profit in country A tonnes of plastic. Now, what proportion of
distributing wealth. In a balanced and mature but has to pay that profit as a charge for the that plastic gets recycled? Well of the 387
society they should work hand in hand use of the brand to country B where the rights million tonnes we produced in 2015 we
together. Choosing between Capitalism and to the brand are held and the tax on profit in recycled only 19.5%. 25.5% was incinerated
Socialism is like asking someone what kind of that country is low. which adds to the atmosphere’s already over
car they would like, one with an engine or one charged greenhouse gases. The rest, 55%,
with a transmission? Clearly the way forward is to tax the product was thrown away into land fills, dumped in
and the more damaging the product the jungles or washed into the oceans. In 2015
Now I always thought that I was alone in higher the tax. Of course the administration alone we dumped 213,000,000 tonnes of
this idea until I picked up a copy of Joseph of such a system would be difficult but given plastic. I just weighed a plastic bottle, 14g.
Stiglitz’ new book, People Power and Profits. that unless we do something radical now we We just dumped the equivalent of 15 trillion
Stiglitz is a Nobel Prize winning economist, may not have a planet to live on in 100 years. plastic bottles in a single year.
ex Senior Director at the World Bank and
was the Chair of the Council of Economic Let me give you one example, plastic. We How on earth did we get to this? Well I
have one explanation. Which is cheaper,
brand new plastic (made from oil) or recycled
plastic? Yup, its new plastic. Because of
the low price of oil its cheaper to buy new
plastic pellets than recycled. This is crazy.
The answer surely has to be a huge tax to
be levied on the production of new plastic. If
you taxed new plastic so that it was twice the
price of recycled plastic what would be the
result? Yup, nearly every manufacturer would
buy recycled pellets and that would create
value in discarded plastic. A new industry
would emerge, Plastic Recovery. Machines
would be developed to retrieve plastic from
the oceans, people who previously used
metal detectors would now scour beaches
for washed up plastic, kids would drag plastic
bottles out of hedges to earn extra pocket
money.
One can dream.

22 Spanish Insight August 2019