Policy can support global finance and welfare
Subject
Financial globalisation and policy.
Significance
Trade globalisation has triggered debate about its effects on income distribution in advanced economies. The introduction of the most substantial US tax reform in 30 years at the start of the year is now drawing attention to the impact of financial globalisation on inequality's rise around the world, boosting populist support for nativism. However, modelling shows judicious tax and spending policies can counter this.
Impacts
- The weaker security of online and gig-economy employment will intesify calls for governments to invest in social security.
- The European Commission, UN and OECD favour a global solution to taxing the digitalised economy, but many countries favour the status quo.
- Disagreements over the basis of taxation and weak capacity in developing countries to implement solutions impede a global consensus.
- Technology and democracy give young populations a louder voice to campaign for resources; populist voting and social unrest may increase.
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