WARREN Buffett is one of the richest persons in the world today. One can arguably say he is capitalism personified. I am no economist but I am reacting to his recently reported two ideas on how to improve the lives of the working class without necessarily changing the capitalist way of doing business.
He premises his two proposals on his admission of two fearsome socio-economic realities. One, as capitalism advances, the gap between rich and poor widens. And two, class warfare exists that his class of wealthy capitalists is winning, thus leaving the working class behind in all aspects of human life.
It is thoughtful of him to propose ways of closing the gap and not leave the working class behind in capitalism’s advance to greater heights of business success. But my reaction is that, at least in the Philippines, his two ideas are not workable and will not be of any substantial help to the working class.
His first idea is “a refundable tax credit for low-to-moderate-income working individuals and couples, particularly those with children.”
But low-to-moderate income is relative to a country’s economic status. The tax credit might be substantial in first world countries with powerful currencies and high hourly minimum wages. But how much would that be to daily minimum (as in non-living) wage earners in the Philippines with its weak peso? Besides, low-to-moderate wage earners need additional income for their daily family expenses. A tax refund before release would only be a form of forced-savings that do not help meet a worker-family’s daily cash requirement.
The second idea, which is even less workable, is to impose “higher taxes on the very wealthy.”
Again this does not go directly to the workers to help with their daily expenses. Tax is paid to the government and in this country nobody knows if it will really go back to the working class in the form of additional welfare services or simply line the pockets of corrupt government officials... a good slice of it anyway.
Mr. Buffett’s ideas are not workable in countries where wealth controls government decision-making by underwriting the election of key top government officials. With no voice in government, workers in these countries are left much farther behind than their counterpart in developed countries.
Mr. Buffett’s class cannot come up with anything more substantial and direct because they require that capitalist economics stays. Yet one really does not have to step out of the capitalist box to consider some form of co-ownership like, say, profit sharing. This helps substantially and, because it does, might also prevent the workers from rising against a system programmed, as Mr. Buffett admits, to leave them behind.