Billionaire Howard Marks says “there are no easy answers” to America’s debt crisis, but he leaves little doubt as to what answer is unacceptable.
The Ultimate Worry: Tyranny of the Majority
The elements that contributed importantly to America’s success included economic aspiration, upward mobility and a tax system that encouraged labour and risk-taking. In short, we all could get rich. As a result, both those with money and those hoping to make money were attracted to the idea of low taxes. This made tax reduction a very popular theme over the last few decades.
But when people without money start to believe they can’t make money, there’s little to keep them from taking it from those who have it. This represents a threat to our way of life.
Here’s how he sees the crisis resolving
Whatever action is taken now, it will not be pain-free. The unpayable debts run up in the past will have to be dealt with. And as for the future, there are only three possibilities: the promises will have to be scaled back, the tax burden will have to grow, and/or the deficits will have to be permitted to increase. If nations are to limit deficits—and it seems they may be forced to—there is no alternative to the first two of these. This fundamental truth will constitute a major portion of the public debate in coming years.
Tax policy consists of deciding who to take from (and how much) and who to give it to. There are no easy answers. We should all throw our support behind the common good and not just our individual interests.