Athens: The view that global prosperity and the fight against the climate crisis can coexist only through reducing inequalities, a radical transformation of the production model, and the creation of new international redistribution mechanisms was highlighted during the discussion entitled 'Progressive Economic Policy in an International Environment of Crises', which took place as part of the 3rd International Conference of the Alexis Tsipras Institute and the Prometheus Research Institute.
According to Cyprus News Agency, at the centre of the discussion was the presentation of the Global Justice Report, a new international report prepared by the World Inequality Lab and presented by Thomas Piketty, Professor of Economics at the Paris School of Economics. Presenting the report's main conclusions, Piketty raised the central question of whether it is possible for all countries around the world to achieve high levels of prosperity without undermining the sustainability of the planet.
As he noted, the report examines a scenario in which, by the end of the century, all countries could converge towards income levels similar to those of today's most advanced economies, approaching pound 60,000 in annual per capita income in purchasing power parity terms. According to him, this is achievable, but only under three key conditions: rapid decarbonisation of the economy, a shift of economic activity towards less material-intensive and more socially productive goods and services, and a significant reduction in income and wealth inequalities.
Piketty argued that the current model of growth is not compatible with climate targets, particularly if developing economies follow the same model of resource and energy consumption historically pursued by wealthy countries. He also made particular reference to the need to change the way progress is defined. As he explained, the objective is not simply to increase GDP but to restructure the economy towards activities with a smaller environmental footprint and greater social value, such as education, healthcare and public services.
He placed particular emphasis on the need to finance the enormous investments required for the green transition, education and healthcare. As he noted, this financing cannot rely exclusively on middle- and low-income groups but requires a substantial contribution from the highest income and wealth brackets. Within this framework, he presented the proposal for the creation of a Global Justice Fund, an international fund that would be financed through a global tax on large fortunes and very high incomes.
According to the proposal, the Fund's resources would be directed towards investments in climate transition, healthcare and education, while also serving as a tool for reducing global inequalities. Responding to a question on how realistic proposals for global wealth taxation are, Piketty argued that change can begin even at the national level, without initially requiring a global agreement.
As he noted, the current reality allows individuals who have accumulated wealth by making use of a country's infrastructure, institutions and education system to simply transfer their tax residence to another jurisdiction and effectively avoid taxation. 'Someone cannot benefit for decades from a country's education system, public infrastructure, legal framework and institutions in order to build wealth and then simply move their residence to another country to avoid paying taxes,' he said.
The French economist proposed a taxation system linked to the number of years an individual has lived in a country, arguing that tax obligations should not automatically disappear when tax residence is transferred. At the same time, he stressed that the objective of a wealth tax is not primarily to increase government revenues but to redistribute economic power and create new forms of collective ownership.
As he noted, the debate on wealth taxation is not only about public finances but mainly about ownership structures, the distribution of economic power and the way societies choose to finance the transition towards a more sustainable and socially just economic model. In his intervention, former Greek Minister of Finance and former Alternate Minister of Finance George Chouliarakis approached the issue from the perspective of the real constraints governments face today when implementing progressive economic policies.
As he noted, progressive policy is based on empowering citizens through investment in education and human capital, reducing poverty and social exclusion, redistributing income, and creating the conditions for sustainable growth. He stressed, however, that these objectives entail significant fiscal costs, which are becoming increasingly greater in an environment of geopolitical uncertainty, demographic pressures and climate change.
According to him, governments are now required to operate within a stricter framework of fiscal discipline, particularly within the European Union, where rules on debt and deficits remain a key element of economic governance. Chouliarakis underlined that redistribution cannot be effective without fiscal credibility and sustainable public finances.
The former Finance Minister described the key dilemma facing governments as a 'trilemma' between three objectives: redistribution, fiscal sustainability and low taxation. As he explained, a government can achieve two of the three objectives, but not all three simultaneously. 'You can have redistribution and sound public finances, but that requires higher taxes. You can have redistribution and low taxation, but this will lead to fiscal imbalances. Or you can have low taxes and fiscal stability without meaningful redistribution.'
At the same time, he argued that economic growth and the credibility of economic policy can create additional fiscal space for social policies, without fully eliminating the problem of how to finance them. Mr Chouliarakis described the proposals contained in the Global Justice Report for international taxation of large fortunes as particularly interesting, noting that they could make a substantial contribution to financing the green transition and social investment.
At the same time, he argued that discussion should also begin at the national level on generating additional public revenues, particularly through a more balanced distribution of the tax burden between labour and corporate profits. 'There is no free lunch,' he remarked, noting that financing an ambitious progressive agenda requires new resources and political decisions.