Lagarde Urges Wealth Redistribution To Fight Populism

Tyler Durden's picture

As we scoffed oveernight, who better than a handful of semi, and not so semi, billionaires - perplexed by the populist backlash of the past year - to sit down and discuss among each other how a "squeezed and Angry" middle-class should be fixed. And so it was this morning as IMF Managing Director Christine Lagarde, Italian Finance Minister Pier Carlo Padoan and Founder, Chairman and Co-CIO of Bridgewater Associates, Ray Dalio, espoused on what's needed to restore growth in the middle class and confidence in the future.

The conclusions of the discussion are as farcical as the entire Davos debacle, as three people completely disconnected from the real world, sat down and provided these "answers"...

As Bloomberg reports, while International Monetary Fund chief Christine Lagarde urged a list of policies from programs to retrain workers to more social spending...

Lagarde said policy makers “really have to think it through and see what can be done” given the feedback from voters who say "No.” Among measures that could be implemented are fiscal and structural reforms, she added.

 

“But it needs to be granular, it needs to be regional, it needs to be focused on what will people get out of it and it probably means more redistribution than we have in place at the moment,” Lagarde told the panel.

 

The establishment academics also had plenty of textbook declarations and jabs to make...

“We need to go to a system where we are protecting workers, not jobs, and society will help people retrain or reorient,” Richard Baldwin, professor of international economics at the Graduate Institute of International and Development Studies in Geneva, said in an interview in Davos. “There may just be a need to man up. We have to pay for the social cohesion that we need to keep our societies advancing, and accept that this may be a higher tax burden on people.”

 

The panel saw former U.S. Treasury Secretary Lawrence Summers attacking Donald Trump saying populism is “invariably counter-productive” for those it claims to help.

 

“Our President-elect has made four or five phone calls to four or five companies, largely suspending the rule of law, and extorting them into relocating dozens or perhaps even a few hundred jobs into plants in the United States,” Summers said.

 

Summers’s recipe for dealing with populism twisted Trump’s campaign slogan. “Our broad objective should be to make America greater than ever before,” Summers said. “That’s very different from making it great again.”

 

He suggested three major steps. First, “public investment on an adequate scale starting from infrastructure” also embracing technology and education; second, “making global integration work for ordinary people” and third, “enabling the dreams of every young American” including education, finding work and home purchasing.

And ironically, the wealthiest of all the panel members was perhaps the clearest...

Hedge Fund billionaire Ray Dalio warned on a panel chaired by Bloomberg Television’s Francine Lacqua that “we may be at a point where globalization is ending, and provincialization and nationalization is taking hold.”

 

“I want to be loud and clear: populism scares me,” Dalio said. “The No. 1 issue economically as a market participant is how populism manifests itself over the next year or two.”

So, to sum up - a bunch of rich, disconnected elites in Switzerland believe the world's "middle class" will be better off if policy-makers "man-up" and increase taxes on the "wealthy" in order to redistribute wealth to the masses to "pay for social cohesion." Yeah, that will work... we suspect echoes of "Four more years" will be heard in 2020 if they follow that path.

Full discussion available here.

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ChangeSeeker's picture

No.  What we had before was 'their' socialism.  Now, it is 'ours'!

newworldorder's picture

So what is the bottom like of LeGarde's message?

Europeans must pay in order to keep non working, low skilled Muslim millions from destroying Europe and other places that were once majority Christian and highly educated white.

Her implication to native Europeans is - Pay Up willingly or those that do not assimilate, those that do not work - will come and take it from you anyway and you will be hurt in the process. This is the message from the IMF and every other bully Finance organization on the planet.

Ofay Cat's picture

Getting rid of commie horse shit like this, is why Trump got elected ... it is why Brexit happened. It's only the beginning of the end of wealth distibution. 

 

Everyone has to get their own fucking jelly donut.

 

That is reality.

 

The rest is a castle built on sand. 

Verniercaliper's picture

Reality is that a world without social programs is more expensive to administer. I was once held up at gunpoint by a drug addict for 20 bucks...after that I'd happily pay a little more in taxes to see drug treatment programs, safe injection sites, legalization, single payer health care, etc. Your strategy will see a lot of people slitting your throat to steal YOUR jelly donut. Think anarchy can't happen in America? Even the Romans discovered that welfare is cheap compared to enforcement.

NAV's picture

The Fed, the IMF, and the World Bank, are one. The entire plan was designed in 1944 at Bretton Woods, New Hampshire.

That’s what globalization is all about, getting the nations addicted and dependent and then managing them for the benefit of the looters.

Lew Rockwell today writes:

The Creature from Jekyll Island is more than a history book. It reveals the intrinsically worthless nature of fiat currency, which can be difficult to accept psychologically because of the deep web of social deception that has been spun since the Bretton Woods Conference in 1944. This false paradigm is a carefully controlled public relations program intended to perpetuate the corrupt sociopolitical order, which critics have characterized

“Fundamentally, the system is a Ponzi scheme that siphons power from the base of society up to the apex of the pyramid to those closest to the printing press. This is why politicians rooted in Washington never seem to leave. Untaxed public spending is the ultimate source of power. It is even greater than the promise of wealth garnered through private enterprise. It operates like a black hole sucking in real material wealth and energy, leaving an inflationary void of death in its wake.”

https://www.lewrockwell.com/2017/01/no_author/siphon-power-people/

Cthonic's picture

Don't forget the institution originally set up to process Germany's WWI reparations, the BIS.

Cthonic's picture

Look bitch, someone borrowed $8 trillion dollars and left me and mine with the tab.  They didn't even show the courtesy of spending a dime of it on anything we produce.  So, we're a little pissed and what exactly are you going to do about it, again?  Throw us some shekels?  Fuck off and die bitch.

UnschooledAustrianEconomist's picture

As nobody posted it before, here some more evidence how fucked up she is:

http://www.telegraph.co.uk/finance/financial-crime/10129356/Christine-La...

 

ZeroPoint's picture

High taxes are part of the reason populism is exploding. We are tired of funding warfare/welfare state.

Mimir's picture

The vicious anger of the comments here, just tells me, that Christine Lagarde and her colleagues in the panel are right.

 

The growing inequalities in Western societies, especially in the US and the UK, is threatening our prosperity, our democracy and future. Increasing redistribution through higher incomes for the poorest families and the lower middle class, and increasing taxes for the richest (income and wealth) are urgently needed. If we don't urgently find a solution to these problems, it will be forced upon us by the people.

 

The biggest joke is, that some believe, that Trump and his government of billionaires and Theresa May's traditional conservatives government in the UK are signs of the change we need. They are both representatives of a world which is dying in front of our eyes.

ChangeSeeker's picture

This is NOT 'populism', as they call it.  It is the 'revolution from below', the anger of all of us, the middle class and the poor.  Enough of them!

Bill Melater's picture

If this (socialist) idea would indeed "fight" the elite, I am all for it.

I am not holding my breath.

Indelible Scars's picture

I have never been against anyone making money and never will. I have always wanted to make as much as I could. However, there are a lot of these billionaires that just are not that smart and in fact, no one is. At some point in time, certainly in some cases currently, there is a significant amount of skullduggery going on for them to have amassed such outrageous sums of money. It's not likely that the average Joe will ever be able to puncture this balloon but if laws are at some point enforced maybe, just maybe, there will be some kind of justice. The problem will be that any penalties will be paid to .gov and not funneled back to the people that were fleeced of it.

Fireman's picture

Christopher Laguard dog really scares me. Am I the only one?

Madcow's picture

So the best way to combat a deflationary economic collapse and destabilizing migration crisis is to ... raise taxes ??

It seems that none in Europe are capable of even imagining a future government that works for all people - and not just bankers, terrorists and pedophiles. 

Dark star's picture

Lagarde is completely wrong; wealth redistribution disincentivises the wealth creators and causes an imploding economy.

Dismantle all the mechanisms which rip off consumers, e.g. drug prices and Obamacare. Pass laws which say quite simply, that wherever you trade, you pay taxes; close the loopholes which have allowed the rich to become obscenely rich.

Remove money from politics to prevent the rich buying the Legislation which favours them against their customers.

Verniercaliper's picture

You can't remove money from politics when there are multi-billionaires. The uber wealth drives the corruption.

Mena Arkansas's picture

Larry Samuelson aka Summers has lots of experience helping redistribute wealth.

https://en.wikipedia.org/wiki/Lawrence_Summers#Family_and_education

He helped redistribute a large portion of assets belonging to the Russian people into the hands of about eight of his fellow gangster tribalites after the fall of the USSR.

http://cepr.net/blogs/beat-the-press/can-we-blame-larry-summers-for-the-...

https://www.theguardian.com/world/2007/jul/02/russia.lukeharding1

silverer's picture

Yes. I agree. We need to take all the money from the top 5% on earth and redistribute it. Leave them with $25,000 and a job application.

Verniercaliper's picture

How about leave them with 5 million each and a job at a community college teaching entrepreneurial skills to young people? Doesn't sound like a harsh punishment to me....

AgentScruffy's picture

George Soros recently sounded this same note. It's as if they think down-and-out rural white folks were the reason Trump won (stereotyping, over-simplication) and we just need to bring those folks into the redistribution fold and they'll be happy. 

This doesn't account for the fervent dislike of Hillary/Obama among those voters, over specific things, like blaming Benghazi on the videographer ('fake news'); the rise in assaults on police officers (and the perceived/alleged slowness of POTUS to address); etc.

For what it's worth: Among the handful of Trump voters that I know - none are poor or unemployed; all are successful and well-educated. 

Economy-X's picture

It makes me laugh (cry) when artilces such as this completely miss the CIRCULAR nature of economy, such that if one point in the circle (say the wealthy in crony capitalism) captures and holds huge amounts of wealth that it cannot possible spend, say the few trillion currently sloshing around in offshore accounts then the system breaks down.

 

Consequently there is a point where reducing taxes on the wealthy, which can spur growth, in fact becomes negative on growth, since a millionaire or billionaire won't own a million or a billion cars, whereas a million workers with living wages will. This is called the Keynesian revolution for economic illiterates and sectarians, and it added an important aspect to our understanding of the economic system.

 

Second, redistribution is a misnomer. Actually what is happening with progressive taxes and provision of public services is that the majority of workers who do not get paid the full value of their commodity, their labour power, get some of what was taken from them back. A great example here is the well-known fact that while most low wages have stagnated since the 1980s even as productivity has increases, the wages of CEO's and higher managers have increases massively, as ZH has recently written on. See http://www.zerohedge.com/news/2017-01-09/why-morgan-stanley-threw-all-ov...

 

This REDISTRIBUTION is actually theft, so a new REDISTRIBUTION through taxes is a return of some of the booty.

 

Tyler please join your own dots!!! And remeber Piketty's warning, its taxes or war, only a gobshite, to use a felicitous Irish term, would prefer the latter.

crosey's picture

Shucking and jiving while the music...slowly....comes.....to......a.......stop.

robobbob's picture

"We have to pay for the social cohesion ......accept that this may be a higher tax burden on people"

WTF?

I'm not a poli-sci type, but I'm more than a little sure that higher taxes being poorly spent, and more regulations, are feeding into why people are pissed.

We were clearly promised a hamburger tomorrow if we paid a dollar today. Well tomorrow is here and the elites are serving up shit sandwitches instead and cant figure out why the proles want to hang them from lamp posts.


brianshell's picture

“We need to go to a system where we are protecting workers, not jobs.

They already solved the problem with the lower class via EBT, welfare, disability and no tax so why not just raise the handout limit to 150 thousand or so. Win win. After all, they print money out of thin air. What's the problem? They can keep doing that until the end of organized crime.

 

alfbell's picture

Ugly Elitist Communist Globalist idiot. You'll soon be hanging from a lamp post too.

insanelysane's picture

Where it all falls apart is that after the government takes the tax money, the redistribution goes something like 1 for you, 2 for me, 1 for you, 3 for me, 1 for you, 4 for me....  See French Socialist party where leaders fly first class, stay in presidential suites, and dine at 5-star restaurants.  See China Communist Party leaders assets.

dark pools of soros's picture

Yes Chrissy, give EVERYONE a million bucks so they can pay off their debt and get the ball rolling... who cares about inflation, that's nothing compared to usury

radbug's picture

Keep printing money and Lagarde will keep running up the down escalator.

konadog's picture

"Our President-elect has made four or five phone calls to four or five companies, largely suspending the rule of law, and extorting them into relocating dozens or perhaps even a few hundred jobs into plants in the United States," Summers said.

Let me get this straight Larry. It was ok for Obama to kill Americans overseas without due process, indefinitely detain and torture others in secret prisons, run secret dragnet surveillance of every American, and drone kill innocent people in every corner of the globe, but Trump threatening a level playing field in international trade is "suspending the rule of law". 

Geezus. I'm out of words to describe these mf'ers. Despots that are beyond delusional.

JoJoJo's picture

Dont forget Obamas promise to kill American coal jobs and to carbon tax any American company for not using solar and wind.

JoJoJo's picture

Oh Dont you think that whoever redistributes the wealth will be more popular (Obama) ie "Populist?" Fighting Populism merely means we dont like your populist guy, we like OUR popular guy. Besides, wasnt Hillary the populist choice?

timf008's picture

Lawrence Summers attacking Donald Trump saying populism is “invariably counter-productive"

Right now, globalism and fiat is counter productive.  Just look at the United States economy...

https://millennialblueprint.wordpress.com/2017/01/18/golds-lustrous-rise...

ali-ali-al-qomfri's picture

then donate your $400k tax-free salary, beeyotch

Hammer of Light's picture

RANT OF THE DAY ~

Here's an idea.... one that will absolutely have lasting effects on the well being of the middle class.... you all ready?

Round every one of these people up at Davos, as in we all need the complete list of attendee's, find every single one of them, no matter where on earth, apprehend each one of them, put them up against the wall and pull the trigger.

They have started a war upon the faces of humanities children of human financial slavery and waged upon the faces of every man woman and child of which said they are waging from cradle to grave of the whole of humanities children. This is an intended perpetual hamster wheel of intended consequences.

Each one of these 38 dollar for a single hot dog while eating 1,500 per ounce caviar as a garnish while slurping 20k per bottle champagne maggots...

You f(8ckers are the enemy of humanity and require you to be exterminated by all means required to save us all from YOU.

It's time we collectively as the little piss - ants they treat us like and lord over us, all begin to take them out in a very harsh and unrelenting way. They're working their asses off to murder us all while enslaving us to their bidding.

Satanist pedophile nation destroying creatures is what they are. Gut these f(*ckers out.

Killem all and let God sortem out. Then we can get on with our lives and day... without them.

Mediocritas's picture

When this shit of a woman talks about redistributing wealth she means redistributing OTHER peoples' wealth.

The richest of the rich, the 0.01% will not be touched.

Don in Odessa's picture

OK Lagarde, here's how you do it: Make the banks non profit enterprises and cap the bankster officer salaries to a couple hundred thousand a year. Hand out a Jubilee decree to Joe Average who's hand to mouth salary has been going down because of the deteriorating dollar since 1913. This is just a start, but it would serve to keep the pitchforks and rocks at bay. Otherwise old guys like me will be  offering refreshments, pitchfork repair and caches of nice rounded smooth rocks to the hordes coming after you and your bankster buddies on that fateful day when enough have finally had enough. God willing, it will happen in my lifetime.