While financial markets wait on President Donald Trump’s tax cut plan, money manager Jeremy Grantham is calling for tax increases on capital and the very rich.
In the latest quarterly report from GMO, the firm he founded and for which he is chief investment strategist, Grantham writes that “capitalism has lost its way … and has badly diluted the value of democracy along the way.”
He favors tax increases for the wealthy coupled with more training and education for workers to improve the “long-term job displacement” and reduce income inequality.
Grantham is very concerned about income inequality, writing that it harms the social cohesion necessary for a healthy society. When income inequality rises, life expectancy and literacy decline while homicides, drug use and imprisonment rise, writes Grantham.
“This country does indeed need to be saved from ‘the rich and powerful,’” writes Grantham.
Instead it has elected a “new strong leader …. who is surrounded by capitalists and billionaires who, to further advantage corporations and the super-rich, are apparently prepared to wage war on the already sadly diminished regulations that defend ordinary people (and, yes, with no regulations corporations would make more money),” writes Grantham.
“The war would also include direct tax cuts for the rich and corporations, which would further increase the share of the pie going to corporations.” Such a strategy “could not possibly be worse for the workers if he tried,” writes Grantham, noting that workers could feel betrayed or “bamboozled enough not to notice.”
Ironically, a Reuters/Ipsos poll of 45,000 people that took place in early evening of Election Day found that voters wanted “a strong leader to take the country back from the rich and powerful,” writes Grantham.