The author of the book Deaths of Despair, which he co-wrote with his wife fellow economist Anne Case, said in an interview that a one-time wealth
tax is “likely to turn into a permanent,” just as the income tax did. Britain introduced taxes on pay to fund the Napoleonic War, and now it’s one of the most prominent sources of revenue.
After a decade of austerity in Britain following the financial crisis, Deaton also recommended against cuts to social services, warning that “the doom sayers, the deficit hawks, the austerity mavens” created a disaster by slashing funds for health and education.
He’s leading a panel of experts in the UK probing how to reduce inequalities, where the young and those with less education increasingly fall behind the wealthy. The Institute for Fiscal Studies plans to publish its findings in 2023.
Deaton said the pandemic accentuated trends already unfolding in both the US and UK For one, education is becoming a more important variable in determining life outcome of people. Also, unemployment is becoming less useful as an indicator of economic heath. While a recovery from recessions caused by the pandemic will create jobs, Deaton said many more are being left behind.
“In economic booms, it always picks up, but it never picks up as far as the previous peak,” Deaton said. “You get this endless downward ratchet. That’s something we really need to turn around, and it’s going to be hard.”
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