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Political Economist Jeffrey Sommers: on Baltic Inflation, Protecting Rich Grannies and Bending EU Fiscal Rules

Political Economist Jeffrey Sommers: on Baltic Inflation, Protecting Rich Grannies and Bending EU Fiscal Rules

But the other thing that property taxes do is take housing prices down. Every family, every household has a certain amount of money for housing – that’s the money they have for it and they won’t have more. And somebody is going to get that money. It’s either going to the state, in part through taxation, and will be used for kindergartens, healthcare, national defense, paving roads, all these things that are actually productive and help people and the economy. Or it can go to banks. As the property tax goes down, the housing price goes up because there’s more money available for the purchase of a property. Banks love that, because that means larger mortgages, larger fees, larger commissions and more debt service payments. The argument that you’ll get from the banks and the real estate sector as to why this is a bad idea is that they’re protecting grandma.

Cost-of-Living Crisis in Central and Eastern Europe: an Overview

Cost-of-Living Crisis in Central and Eastern Europe: an Overview

Reaction to the cost-of-living crisis runs into cultural, political and economic specificities of CEE: low levels of trust between people, lack of organising tradition, and difficult relationships with trade unions (which are always on the defensive). However, recently, there have been unprecedented successes in linking environmental issues to demands of trade unions. Public discourse is slowly shifting from anti-communist rhetoric to blaming oligarchs, although any major change is yet to come. On the other hand, trade unions are weak and are used to very low demands. Meanwhile, the far-right raises more ambitious demands (e.g., energy to everyone and good relations with Russia to secure the gas supply) and hijacks the left/progressive agenda.