A leading international economist says that South Africa should introduce a national minimum wage and additional taxes on wealth to combat inequality.<\/p>\n
This is according to a report by the Sunday Times, quoting “rockstar” economist Thomas Piketty, speaking at the 13th Nelson Mandela annual lecture this week.<\/p>\n
Piketty is an economist with celebrity status, after his best-selling book, ‘Capital in the Twenty-First Century<\/em>‘ sparked global debate over the relationship between growth and inequality.<\/p>\n Piketty suggested that South Africa has a long way to go to reversing inequality in post-apartheid South Africa, likening the country’s situation – and the massive divide between rich and poor – as similar to 1792 France after the revolution.<\/p>\n “The French elite refused to address the situation, saying that inequality was so high that economic growth would resolve the situation,” he was quoted saying.<\/p>\n However, this was not the case, according to the economist, as unlimited faith in the economy as a self-regulating system was misplaced.<\/p>\n Piketty, and his supporters, believe that, while a small degree of inequality is needed to promote growth, at high levels growth is actually stunted.\u00a0The economist promotes\u00a0wealth redistribution as\u00a0key to development.<\/p>\n He suggested South Africa introduce a “progressive wealth tax” – which would start of small and gradually reach the needed levels – as a “peaceful solution” to fighting inequality.<\/p>\n According to the Business Times, while many economists agree with the view that capitalism doesn’t auto-correct to equality, a tax on capital isn’t the way to go, suggesting a tax on consumption would be better.<\/p>\n It’s\u00a0argued that a tax on wealth would transfer money into the hands of the state, which has historically shown to be less effective than the private sector at using capital for development.<\/p>\n The full story can be found in the Business Times from 4 October.<\/em><\/p>\n Is South Africa the most unequal country in the world?<\/a><\/strong><\/p>\n South Africa: the good, the bad and the ugly<\/a><\/strong><\/p>\nMore on inequality<\/h3>\n