How To Deal With The Gap Between The Rich And Poor?

On LBC Radio yesterday was raised a question about how to solve the problem that the gap between the rich and poor is growing and for the first time in recorded history the people of the age of up to 35 will earn less than their parents, or at least something like that! And the Radio presenter, James O’Brien, urged the callers not to blame immigration in any way. Is he right to do that, does he know the true impact of the immigration on all those processes in the society?

In economy there is never one issue causing the problems and in the same way there is no one solution solving even a single problem. So when addressing this problem with growing gap between the rich and poor, I would like to address quite a few, but far from all issues, that affect these outcomes.
First of all I would like to offer a short list of things that should be brought about if there is a real wish to solve this and many other economic issues. And I will try to explain how they affect the prosperity of individuals and the state itself. So let us move to those questions.
1. Progressive income and corporate taxes and higher minimum income.
2. Taxes on extended properties and, especially, empty houses, that are empty at least 6 month over 12 months. Put short, housing and properties in general policies and taxation.
3. Progressive VAT, where the basic products have been freed from the tax and luxurious products receive quite a high VAT – again, it must be progressive.
5. Stop the immigration!!!!!!!!!!!!!!!!!!!
6. Change back to Free Market, which has been disabled and is extremely damaging to any economy, and causes the UK to lose in trade with the EU alone 68 billion a year…
7. Globalization versus protectionism!
And, as I said previously, those are just a few of things that must be done if there is any genuine desire to make the UK Great and Independent again…
Let us discuss all those a bit closer…
1. Progressive income and corporate taxes and higher minimum income. 
We live in a very globalized world and the big companies have a natural advantages over small and medium businesses. On top of that we all know that big corporations have so much money that it is advantages for them to employ some other companies that help them “to hide” the income and avoid taxes. So it means that on top of natural advantages they also are more likely to avoid taxes all together. For this reason not only higher taxes should be applied to them, but also different and progressive taxation should be applied to properties.
As we know this from theory, it is small and medium businesses that make the society very prosperous on all levels. And not only prosperous, but also very elastic and capable to adopt to certain changes. And for this reason, the efficiency would be much better also.
I have read not so long ago in news that the medium class is shrinking rapidly in the UK. And this problem is a clear sign that the income is being shared very unfairly, and it is damaging whole society on all levels, leaving higher criminal activity, lower productivity, higher need for prosecution services and social benefits. And this can be changed only by progressive taxation. The problem is, not only income taxes must be progressive, but all the others too, for the rich will find the way to avoid the tax.
People, and even politicians do underestimate the impact of a huge gap between the rich and poor on the society, on the democratic processes in general, but also on the business opportunities as well, and I will try to prove this later on in this very text. This is a very important issue if there is a true  wish to make to country Great and Independent.
2. Taxes on extended properties and, especially, empty houses, that are empty at least 6 month over 12 months. Put short, housing and properties in general policies and taxation. 
Many rich build enormous houses that require servants. Those servants are low paid non-producing workforce. It means, that by this they create a huge employment that actually does not contribute to the prosperity of the country, and for that reason it must be restricted. If it is not, than in real industries will appear a shortage of workforce, for people prefer to do easier jobs in houses of the rich and not the job on the field or in the factory. And the need for the immigration has been created.
The rich can afford that only because the market has been damaged and people are in quite miserable situation and for this reason are ready to work for any money. So it is quite cheap to them to employ sometimes armies of servants. If the properties had serious progressive taxes, where certain amount of properties would not be taxed at all, but the rest affected quite seriously, the sizes of houses and properties would reduce, together with the need for servants involved in looking after them.
In today’s world the rich always gain, the poor get always abused and heavily exploited, which also results in shortage of human resources in other areas of the economy.
Let us look into some of housing problems!
In the UK there is this ridiculously tragic unfairness in place, that keeps me wondering every day – how was it possible to get there. And the problem is this – the rich can buy some 10 houses on mortgage, and rent them to poor, who receive a housing benefit, which they pay to the landlord and, for this reason, the state is paying off the mortgage of the rich person’s, sometimes several houses.
Don’t get me wrong. I have nothing against the middle class and people who have a couple of houses, for various reasons, and by doing this they don’t do anything illegal. Even more, if I was in their situation, I would have done just the same. Still, it does not change the fact, that there is a very tragic unfairness involved in this system and the poor are always loosing in it.
The problem is, if the poor gets on the housing ladder, he is denied the housing benefit, if his income shrinks. If another person bought 3 more houses ON MORTGAGE, he would get those houses paid by the housing benefit…, if he rents them to the poor persons, who can’t afford the full price.
So again – the benefits paid by the state can and do pay off the mortgage of the landlord of few houses, while the poor person is denied housing benefit for himself is he has his only housing…
And the banks favor those with many houses. So the whole market is built to suit those that are better off and to keep the poor far away from the prosperity…
And London and many other areas are full with houses in which nobody lives, for those are being kept for the profit or as a second or third house etc. It all rises the housing prices and combined with the benefit system, ruins the hopes of the poor, favoring the rich. So it clearly contributes towards the gap between the rich and poor, and this gap is FINANCED BY THE STATE ITSELF…, which always has puzzled me.
And it keeps going for some tens of years like that, and no political party can or will do anything about that.
The only thing they would be capable to do, like George Osborn definitely would, when confronted with this, they would scrap the housing benefit altogether to avoid it being paid to the rich, but it would damage again only the poor…
So to sort out the housing market these are few things that should be looked at. First of all the taxes on any next property and to very large properties, that require servants to look after them. Also additional taxes on houses that are left empty for at least half a year in any 12 month period. If all those people would sell their houses, the house prices would fall and would become affordable to those earning less. And, of course, housing benefit should be available to all people for their only home, be it a rented property or his own. On top of that there is a need for a social housing and affordable housing in general. Both these could be solved in many ways if the properties are taxed properly. It definitely would reduce the gap between the rich and poor.
Basically, all things I am bringing up in this article, are naturally Labour or Social Democratic policies, that have been abandoned by all socialists favoring the same policies that Conservatives have…, and that leads nowhere.
3. Progressive VAT, where the basic products have been freed from the tax and luxurious products receive quite a high VAT – again, it must be progressive.
Again, the most basic products in all groups, including small, cheap to run cars, not only food and closing and education materials etc, should be without any VAT whatsoever. And next products, those of higher quality and more posh, would face progressive, and quite high VAT taxes applied to them. This would help the poor to save some money, and the rich, who want some posh products, would separate with their money and in this way support the state…
This approach is especially good for the rich, as I have said already previously, quite often avoid taxes, and in this way they would pay some of it back. So some kind of fairness would return to the society.
5. stop the immigration!!!!!!!!!!!!!!!!!!!
I totally and utterly disagree with James O’Brien about immigration. First of all, a small shortage of the workforce is very healthy for the market, and helps the so-called “invisible hand” of the Free Market. Huge immigration numbers ruin this principle, ruin the Free Market, and the only real gainers from that are, once again, the rich…
Imagine, if there is a shortage of plumbers in certain area, the rich would be the first to pay extra amount in order to be served first. It is good for the plumber and for the fairness of income in society.
Today, the rich dismisses the local plumber who works for 15 pounds an hour, because there are some 5 hungry foreign plumbers ready to do the job for half the price.
The outcome of “this benefit” is, that the local plumber loses income, or it reduces so much that he becomes dependent on benefits just to survive. So instead of being proud of being independent and contributing to the state with his taxes, he starts to demand from the state… And there is nowhere to go for him. naturally, he becomes very unhappy, and he starts to blame immigrants.
I would urge those people not to be angry and blame immigrants, but the immigration policies of their own politicians, and especially that of the EU…
Interestingly enough, that those immigrants, actually, are earning such a small amount themselves, that they also become dependents on benefits…
Long story short – it is lose – lose situation for the state and ordinary skilled workers. The only winner is the rich guy… No wonder people like Lord Alan Sugar and Sir Richard Branson were advocating staying in the EU before the Brexit by sending letters to people all over the country. I have received myself some of them…
But let us continue…
Look for example at the building industry. The prices of new-builds have rocketed in some last 10-15 years. Interestingly enough, the pay to workers has not only stayed the same, but on many occasions even dropped, because of ever-growing competition. But if the housing prices in some areas have even doubled, where does all the money go??? The rich guy wins again… And so it is whenever you look. No wonder they advocated the Remain in the EU Camp.
So this most certainly should also have contributed to the question – why for the first time in recorded history those under 35 will be doing worse than their parents… The short answer is – the EU with its immigration, combined with enormous amount of other wrongs in how the economy is being run. So it is not only EU immigration that is dangerous. Any immigration is… The world is huge. And if a country allows immigration, than better those are people from similar cultural background. Unfortunately, it becomes impossible usually.
And I have not touched yet the problem that the socially – cultural environment is changing so rapidly and strongly, that many people, especially those  over their 50’s, feel like they live in the country that has been invaded and changed completely without their permission. And they feel they are not welcome in those new societies… It is what I call – “A Social Rape”… 
6. Change back to Free Market, which has been disabled and is extremely damaging to any economy, and causes the UK to lose in trade with the EU alone 68 billion a year…
This is very tricky, very important and much more difficult to change…, and much more damaging than any other topic affecting the prosperity of the country in general. And the most difficult of all described previously to describe and to understand as well.
The thing is, the Free Market does not exist. But is should! And it is not just those few regulations that are in place. They are fine and does not affect the Free Market, as the Free Market is meant to work within certain borders, certain restrictions. The main damaging force is one that NOBODY EVER ADDRESSES at all… It is the Monetary policies that the modern world is applying, and imposing to all the other countries around the globe.
What people should understand, the currencies are also a products, they are ALSO WARES. In Free Market, if you as a person from country A wish to buy something from another country B, you need the currency of that country. If you don’t have it, you cannot get the products from that country. Of course, there are quite a few ways how to get that currency of theirs.
Main three ways how to get the products from another country are these:
a) you simply offer them your own money, and they agree
b) you sell something to them and so you have earned the money to spend on their products
c) you borrow the money from them and buy their products…
Let us go through all these options.
a) you simply offer them your own money, and they agree
This would be a very good option. Still, there are some things to keep in mind when dealing with that. Your money will be accepted only if the seller sees good products he wants from your market. If he is not to sure what does he want, if anything, he may require higher, not adequate pay for his products. This would secure his prospects not only not to lose in this trade, but also to have a good profit. And if somebody from another country earns too much of your money in this way, he may start to buy out some products from your country that are vital for the existence of the country, for the sufficiency of certain products in it. By the way, it can cause a price rise also on some or all products, so some kind of damage can be done anyway.
b) you sell something to them and so you have earned the money to spend on their products
This is one of the best options, especially if you can agree that you both spend your earnings instantly or over very short period of time after earning it. This principle keeps the trade in balance. And if at certain point you cannot see any advantage of buying their products, or they yours, than you can bargain about another deals… This approach would be the most close to the Free Market Principle, leaving no damage to any of the countries, IF IT ALL IS CONDUCTED PROPERLY.
c) you borrow the money from them and buy their products… 
The other and most popular way today is – you borrow… AND THIS IS THE WORST OF ALL, especially knowing the conditions under which it is being applied in today’s world.
Any money that has been borrowed must be given back with interest rates… And when you have done it once, you have reduced your own income over very long period, and by this the income of all people who depend from you and/or are affected by this trade. And it will really last for ages…
You haven’t got idea how damaging this really is…
So in the Free Market, if you have not got much enough of money from the country B, and you are willing to buy some products from their market, but they accept only their own money, you can borrow it. And you can borrow it personally, if anyone is interested to lend you, or it can be done by the state, with certain warranties… And of course, this is the way that is the most accepted.
Even more. The states make sure, that these currencies of other countries are being sold at certain rates, very far away from what the “invisible hand” of the Free Market would have done… And this is so extremely damaging the whole Free Market philosophy as nothing else. This approach completely disables it, and the countries that tend to buy more from others fell into abyss of debts and ruined or weakened manufacturing…, which, naturally, results into poverty and lost Independence, lost pride of your own country.
The main principle of Free Market is the principle or correlation of demand and supply of products. It teaches that if there is a high demand of certain products or services, the prices of them can and, actually, must rise!!! If someone interferes into this principle, he must be prepared to face the consequences. For this reason, if there is in the market a shortage of plumbers, the pay for their services should rise, and that would be very healthy for the market and fairness. But in reality, the rich go to the politicians, who are complete dilettantes in economy by definition, and demand a cheap labor, stable prices for the services, and are granted them by immigration in the name of promoting businesses.
The sad reality is, they simply satisfy the needs of the rich, and it is damaging for the small and medium businesses and the country’s economy in general. For this reason I never liked this kind of democracy we have today, in which any nice-looking idiot can become a decision-maker about economy (and many other difficult and complex social and other issues too) in whole state.
So the immigration in this way does not promote businesses, but, actually, damage it, in short-term providing the rich with higher profits and lets them escape from actually doing something in order to sort out the problem with the shortage of skilled workers, that exist because of inadequate pay in the area in the first place…
And once again, the Free Market has been disabled. Once again the gap between the rich and poor has been increased…
But let us turn back to the Monetary policies, as they do even bigger damages to the Free Market, if applied in the way they are today!
So if you luck some currency or if the demand of it is extremely high, it would be normal, that the price of it rises, because it means that there is willingness for certain products from another market. Nothing of that happens, because states, including the UK, simply borrow these currencies in any amount needed and sell them to their citizens at certain, fixed rates. So the principle of correlation between Demand and Supply is simply annihilated…
What is the danger of it?
Imagine, you live in country A, which produces cars among many other things. And your neighbor country B also produces them.
Imagine, that many of your country wish to buy the car from the other country. But they have not got the currency. So they can not buy one, and they have to stick with the car produced in their own country. If there is some currency of that other country, but in limited amount, than it should be sold in free market, in which the one who offers the highest price for it, gets it.
And if the lucky buyer wants to spend it on foreign cars, he is free to do that. Only, the real price in the currency of his own country in this case would be much higher than with today’s fixed prices that are achieved by borrowing… And, of course, there would be smaller interest in such business. This is what I call a Free Market.
By the way, only those truly rich would be willing to buy that currency of another country in auction. And, if this auction is controlled by the state, all the money earned in this way would go to the budget of the state, and in the same way improve the fairness of income again… And this would be again win-win for all, apart from the very rich…, who would be forced to separate with their money in case they are too weak to resist their desires for foreign products. And that would be fully in accordance with the principle of the Free Market…
Now – imagine the state borrows any currencies demanded by the people (read – by the rich) and exchanges it at certain rates and lets anyone to buy their cars from country B.
By doing this people not only refuse to buy a car from their own country’s manufacturer. Actually, they pull the whole country into debt and, on top of that, they ruin the prospects of their own fellow people, which further affects the whole economy…
And it creates some very big problems, all people in all countries should understand this before they ever go to election stations.
Let us assume, the buyer of a foreign car or any product is a barber by profession, and he even runs his own business. By buying a foreign car he reduces the income of the car manufacturer in his own neighborhood, and even the number of workers involved in this process. So the consequences of this purchase is – lost jobs and income levels, so their competitiveness and prospects in general.
But all those people happen to be his own (of this barber) customers, compared to those of foreign country, to where he send his money by purchasing the car manufactured there… So because this action he made the income and number of earners in his own neighborhood to reduce, so he affected his own customers, and by this his own future income… Long story short – it reduced, and he reduced it himself by taking the wrong action.
The mechanism of this is very simple. If the number of products sold reduces, it causes to reduce the number of employees. And smaller amount of sold products mean the product has to cost more to make it profitable for the business. Another option to secure the price as it is could be reducing the money paid to workers at this factory… It actually creates a vicious circle, for everyone starts to suffer from reduced turnovers and income and everyone is forced to reduce the wages… And the circle of misery has been created… And because when people are struggling, they are less likely to spend on services like barbers and local restaurants etc., the whole chain, including the income of state, suffers from reduction of income… And they keep affecting each other and pushing the income even further down till it reaches certain level.
And it all thanks to buying products from another countries by borrowing and securing fixed rates of exchange.
So by this car purchase, this person has damaged his own prosperity and prospect. Simples.
By the way, because he and his fellow manufacturers are earning less now, the state gets less taxes, and it must pay more in benefits because many have lost their jobs and/or suffered from so severally reduced income, that they can no longer make ends meet…
Now, in order to survive, the barber must reduce prices himself in his own business and it can be done mostly by reducing the pay of his employees… Again – by doing this he reduces their abilities to buy products and services all around them, and, as you can see, this one car purchase actually has created a vicious circle that keeps shrinking the money around on all levels…, including increasing the expenditure for the state, not only in benefits, but also to tackle criminal activities, that start to flourish when the poverty and misery grows.
Long story short – if the state borrows money in order to satisfy the whims of some of their citizens, they will run into big debts and ruin the prospects of their own manufacturers, which will result in wide-spread poverty at the end of the line… And there will be no way out of this.
More interesting is the fact, that when somebody is buying a car or any product from other country at a cost of borrowing, they do not pay themselves the high price, because they buy the car for fixed rates on currency. It means, they are not paying the true Free Market price for those products. But the true price still must be paid, for there are consequences. And some of those consequences or THE PRICE paid we already looked at previously. It is all those lost jobs and reduced income, increased misery etc.
But not only those previously described things occur, but also the debt, taken by state, is being shared EQUALLY OVER EVERY SINGLE HEAD IN THIS PARTICULAR COUNTRY THAT BORROWED in order to buy products from another country…
It all means, that in order to satisfy desire of some people to own BMW (or whatever), the whole society must pay interest rates and repay the debt of the state by facing lost jobs and income levels etc. So some people enjoy cheap prices for products produced in other countries, while all are paying the high price for that.
Is not it a price to high to pay?
So again – this borrowing for these purposes is like someone is borrowing the money in order to destroy the local manufacturing… Does it look mad to you? It certainly does to me!!!
And this is exactly what the UK is doing right now. It is borrowing to annihilate the principle of Free Market and kill their own manufacturing, or at least weaken it. Do not tell me there are any wise economists or politicians, if they have been able to create anything like that. they all must be paid a good money for this madness or they simply must hater their own people, if they implement anything like this on their own people.
Imagine, that the same barber now not only buys a foreign car, but also uses foreign workers to repair his house. He is damaging his own neighborhood even further…, by damaging the income of theirs, he damages his own. But no person usually thinks two steps in advance, and not even those that are meant to be the guardians of the fairness in the society – media. media are singing the same thing as those blunt politicians and economists. What a shame.
Anyway, no need to blame immigrants about the situation. The EU is build on very unfair principles, and it has damaged some poorer than the UK countries much more. So they understand that they have to give something back to cover the damage. And immigration is one of those things…, to pay back the damage done to ordinary people in poorer countries. They (immigrants) have not done anything wrong. they have been abused, and they still are in those countries they move to.
Still, the immigration must be stopped. The EU must be abandoned, or it will crash sooner or later anyway…
And now, when you know all this, remember – the UK is buying from the EU 800 thousand cars a year more than selling to it… If we can assume that the average price of the car is 20 thousands, than it makes 16 billion a year… On car trade with the EU alone…
The problem is, those are not vital products for the survival of the UK at all. if it was vital to run the economy, these expenses would be normal. But they are not. So I believe the rest of the products bought from the EU are not vital too. And the country does not have currencies of the EU, as we know that the trade deficit with the EU is 68 Billion a year. A mad amount even for the 6th largest economy of the world.
People, you have got no idea what damage this is doing to the UK, to its prosperity with all the consequences on levels…
Funny enough, the EU said, there would be no cherry picking for the UK…
Actually, it is what the EU is going to let the UK to do, or let us put those bloody tariffs from both sides on all products, and the UK should lead in this. In this case the Germans will be the first to agree with anything, first of all with the immigration.
If you have played a club poker (let us say, Texas Hold’m) ever in your life, imagine the situation – the cards on the table suggest, that there is a very big chance that someone has the highest possible combination, Royal Flush. And, of course, he knows that. But so do the rest of the players. And one of those “the rest”, starts to bluff by increasing the bets… It would be mad and stupid to do, unless the holder of the Royal Flush does not understand the game and what powerful cards he has.
And this is just the situation the UK is in. And the UK is having this Royal Flush. And the EU is bluffing, and it seems, that the politicians of the UK are going to subdue to their demands… And this is what I don’t understand. It seems that the UK is willing to pay to the EU those nearly 70 billion again and again. People, wake up!!!
The UK is not buying from the EU anything that is extremely vital for the survival of the economy of the UK, I think. Of course, I have not explored the structure of the products exchanged in this trade. But I can not imagine anything the EU has and the UK can not produce…
So stopping the trade with the EU would mean some job losses connected with this trade with the EU, but it will be wonderful boost for the local manufacturers in the local market, that will result in bigger income for the state and ALL local businesses. Some businesses will close, but opportunities in the local market will be gained much better than those lost ones. Personally I have no doubt about it.
Of course, even those that mentioned here are just a few things, that must be changed, to make it work. What I wanted to say is – the UK do not need the EU. The EU desperately needs the UK, so the UK should be just cherry picking whatever it wants. The EU must be on its knees in front of the UK, but the EU has managed to pretend it is the other way round… What a cheap bluff…
Ideally, I would like to see those tariffs implied… And the monetary policies changed… I am a great supporter of protectionism, and the Free Market. And I believe they both are doing the same job, if applied correctly… We live in complete lack of the Free Market.
And again. Tariffs on their own would only make a mess and solve nothing. Economy is a complex system where every factor contributes to the outcome of the whole. And often only one factor can ruin the whole project in every single case. It is the same as with engines. Every engine has their own sizes and needs and purposes. If one of the components does not fit the rest of the engine or its purpose, the whole engine will fail to work, or at least to achieve its full potential, probably will struggle demanding far too much effort and produce far too few results. For this reason, to make any economy work, a huge variety of things should be changed and adjusted to fit the common purpose, and some of those needed to pay attention I have already mentioned in this article.
So all these factors, including housing policy problems, wrong taxation, immigration, lack of free market because of insane monetary policies etc, are very powerful contributing factors that increase poverty and gap between the rich and poor, and even between rich and poor countries…
Whoever says he is for equality and prosperity for all and dismisses the progressive taxes on all levels, including on properties in general etc., is lying about his determination to tackle it. He is making his promises only to attract the electorate but will fail to deliver anything ever!!!
Interestingly enough, all those mentioned things are policies of Social Democracy, and for that reason Labour party’s policies. Have you ever heard anyone of them addressing those? No! What a shame!
So now you have no excuses anymore, gentlemen!!!
That’s all for now, folks!
Have a nice day!

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