“De government (…) explained that the social minimum had been raised in the preceding years in such extent that it could be considered to provide means to pay taxes.”
The latter statement is rather shocking. Subsistence is by definition a net concept, and the politicians don’t stick to that definition. The statement also means that someone who falls in the tax void is forced into a benefit situation. [51]
What is alarming too, is that Duisenberg was not alarmed, didn’t veto this nonsense.
After this ‘Duisenberg disaster’, the issue disappeared from people’s mind, it got transformed into an annual debate on indexation and the topic of discussion became the level of benefits for the needy. In 2005 Holland still suffers the consequences.
Book IV
Presentations for the general public
In March / April 1996 I put two presentations for the general public in the Economics Working Papers archive at the Washington University at St. Louis. In August 1998 there was a third paper. [52] These papers are directed to a general audience, and to teachers and students. Since this current book basically addresses economists and uses quantitative methods, I doubted whether I should include these texts here, also since there is some overlap that can be distracting. There however are two good arguments to include them with little adaptation: (i) Once a fellow economist is starting to grow convinced of the value of my analysis, then he or she will face the same problem of explaining it to others. These texts then can be of use. (ii) The historical date of these texts underlines the co-ordination problem. Even when a good summary was available, and even when the moral imperative facing Western nations was clearly formulated, our failing systems of economic policy making limped along, and caused misery upon misery for many of its citizens.
15. Unemployment solved !
A breakthrough in economic theory
Since the early 1970s Western economies have been plagued by mass unemployment and the threat of inflation. Over the years since then various economists have proposed various possible solutions, but never quite convincing ones. Now there is a novel analysis that means a breakthrough in economic theory. The present author is quite certain that the “missing link in the model” has been found. If true, this analysis offers guidelines for full employment under price stability, just as Western economies enjoyed in the 1950s. The main point is: don’t tax lowly productive labour. Why ? To keep it competitive so that more productive labour will not demand inflationary pay rises. Though this new analysis is only in the stage of presentation and introduction at the scientific fora, there is no reason to withhold the present rough sketch for a general public.
It is well-recognised these years that Western economies have a problem with jobs with a low level of productivity and thus a low level of market-earned income. The United States tolerate more poverty - the working poor - while Europe sets its minimum wage much higher so that Europa has more unemployment.