The practice of capitalism has brought great dividend to the advanced economy of the world; however, the evils of the practice of the mode of the economy still linger, and perhaps, it is getting worsened in the recent time.
The wide gap between the rich and the poor as well as the wide chasm between the developed economy and the third world is a testament to this. Though the practice of socialism is regarded to have been annihilated in the opinion of many around the world, with the dissolution of USSR in the 1990s, a call for a more appropriate way to curtail the demerits of capitalism in the USA was offered by Crypto Bull, Mike Novogratz in an interview with CNBC recently.
Mike Novogratz which is a former Fortress hedge-fund manager pointed out the ills of modern capitalism according to CNBC, and he offered a possible measure to reshape and remodel the challenges of capitalism that is rocking the United States in the contemporary time. Mike Novogratz noted that there is a rising income gap in the united states as well as lack of investment in public education in the country. This could be changed via redistribution of wealth, according to Mike. “I think you need a redistribution of wealth, there are a lot of different ways you can do that,” Mike Novogratz stated on CNBC’s “Squawk Box ” Friday.
In his suggestion of a possible fix to the menace of capitalism, via redistribution of wealth, he suggested the introduction of a tax on wall street transactions. “I think a Wall Street tax is an interesting one,” he stated. His opinion on curbing the menace of capitalism seems great, but it’s noteworthy that there will be an extension of the taxing from the wall street to the nascent Crypto industry as well.
Notably, the nascent Crypto industry has been considered as a possible tool for the masses to escape the ills of capitalism, with the projection of a possible global economic meltdown ahead, which is expected to usher in the mainstream Crypto adoption. To this effect, a prominent author and billionaire Robert Kiyosaki referred to Cryptocurrency as the “people’s money.”
While some in contrast to Mike Novogratz view cite American economist Milton Friedman, a champion of free-market capitalism, He noted that “If Milton saw where things had gone today, he would have a different view.” Mike Novogratz explained in a tweet that “Ray is right. Milton Friedman and shareholder value have been way overdone. We need a moral revolution to get businesses to think of the other constituents – labor, customers, the planet, and the communities they operate in.”
For example, under Frank Delano Roosevelt, the top tax bracket was as high as 95%. Until the 1970s, absurdly high taxes were the norm. The Reagan era brought about a reduction in top-tier taxes that has continued through today. However, the question that needs to be answered is that will wealth redistribution be the proper solution to the wide gap in society.
Mike Novogratz is not the only person to have called for a fix to the wide gap between the poor and the rich in the society. Prominent personalities such as Warren Buffett, Jamie Dimon, Ray Dalio, Howard Schultz, and other business leaders have called for fixes to a widening income gap and under-investment in public education.
Ray Dalio noted in a paper that was published online in April that the level of inequality that is between rich and poor Americans is as high as it was in the late 1930s. Also, he noted that the wealth of the top 1 percent of the population is now more than that of the bottom 90 percent of the population altogether. Dalio described the circumstance as an existential risk.
Proffering appropriate solution to the menace of capitalism in the society and the world at large through redistribution of wealth seems a great option, but how effective will taxation solve this. This might lead to devising dubious means to evade the tax system and may increase the trend of corruption. How effective will Mike Novogratz suggestion be?
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