Addressing Income Inequality

From Ross Douthat:

And this is where I think the American left falls short. I agree with Yglesias that most liberals who care about inequality care about immobility as well. But it makes a difference where you start, and where you put your energy — and because the left-wing focus on the sins of the top 1 percent is so strong, and the left-wing identification with existing government programs so intense, there’s an awful lot of Democratic political energy behind the proposition that the very best policy course for 21st century America consists primarily of “higher taxes on the rich to fund generous pay for public sector workers while avoiding any cuts to Social Security and Medicare (or any other existing program, for that matter).”

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132 thoughts on “Addressing Income Inequality

  1. Have to agree, and yet I don’t think the other side of that coin is that the Republicans ARE addressing those issues (e.g. medicare,social security,economic mobility) either.

    As a young person who will spend the next 10-20 years mobilizing upward (with any luck, hardwork, the economy willing), and a liberal one, I can get behind scaling back government transfers in favor of more investment.

    At the same time, there are people in all different parts of the economy, at all different ages, and them doing well will also help me to do better.

    Ergo the proverbial “all of the above” approach. There needs to be more redistribution, both in the government away from spending that doesn’t pay dividends (military, old age entitlements, poor value proposition regulations) and toward things that do, including entitlment spending on younger generations and family support, investment in advanced trade schools as well as universities, and investment in research and infrastructure, whether via the federal government, or through block grants to states (not that I’m a fan of block grants, but enemy of the perfect, good, etc. etc.).

    Because when it comes down to it, there just aren’t jobs to be had for a lot of people, and the economy needs to sort itself out (i.e. in a high tech, digitally based economy: where do people labor in order to be productive?) but we can’t wait for that to happen and expend untold amounts of social capital in the meanwhile by lettting it stay idle.

    Democrats are narrowly focused on the Buffet rule and more stimulus. Republicans are focued on cutting spending, all of it. The former is inadaquate, but so is the latter. And neither side wants to address the main issue: benefits for seniors will have to be cut, rather than only reducing benefits for future retirees, and all of us will have to re-imagine the age we live to and the level of health we’ll enjoy during it.

    Do I want a nice house, a nice car, and have lots of kids? Or do I want to save for retirement and my future medical costs in order to live to a longer and easier old age? That’s only one of the tradeoffs, but it’s the most basic one that seems at the heart of our budgetary woes and which no one will address.

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  2. Douhat uses the common misconception that liberals are focused on the “sins” of the rich. If there are “sins” of the rich its not because they are rich its either specifically at the finance sector for crashing the economy or for things like the rich gaming the rules for their own benefit. Its not being rich that is the issue, its forking things up big time or cheating.

    The belief that D’s won’t cut big programs should have been shredded when O cut a few hundred billion in wasteful Medicare spending. It depends on the cuts which Douhat completely ignores. Cutting SS would  hurt the poorest the mostest. And of course there is no fishing SS crisis that requires hurting much of anybody and certainly not the most vulnerable.

    The D’s wont cut Medi or SS is a convenient debating line for big time columnists but doesn’t really address who gets hurt and who should bear the burden of cuts. We do need to change things, nobody is denying that, but deciding who to bear the burden is the big question which Douhat is completely eliding. He doesn’t want to address the D’s concerns that cutting SS is a bad choice and hurts the most vulnerable or that cutting Medi is also a bad idea for the same reason. He would rather stick to an easy attack without addressing the D’s arguments.

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    • Douhat uses the common misconception that liberals are focused on the “sins” of the rich. If there are “sins” of the rich its not because they are rich its either specifically at the finance sector for crashing the economy or for things like the rich gaming the rules for their own benefit. Its not being rich that is the issue, its forking things up big time or cheating.

      The ‘rich’ that Democrats want to go after aren’t really the ones that screwed up the financial sector. Bill Gates, for example, had nothing to do with that. So it’s confusing when you hear so much talk about the sins of the rich as justification for increased taxation.

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      • The justification for higher taxes on the rich is that we have to pay for stuff and need to get our budget more in order. Taxes aren’t punishment. I don’t want to increase taxes on the rich because i hate them or envy them or they were mean to me as a kid. There are only so many ways to raise the funds for things i think we should do. The rich have benefited from much lower taxes over the last decades so increasing their taxes is one of the obvious ways to get more funds.

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        • Bingo. You need to go where the money is. I’m the first to admit that in the long run, there will be higher taxes on everybody in my perfect world, but at the same time, nobody will be paying student loan fees or health insurance premiums either.

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          • Its funny how in the 1950s and 60s there were adequate levels of tax revenue to provide free college for anyone in the University of California system. It didn’t seem to crush the economy, rich people weren’t sent to gulags, and the end result was California became the center of the nations aerospace egineering.

            Today of course, the Burkean conservatives tell us we “can’t afford” that.

            Could we study previous generations to learn from history and tradition, and maybe emulate from their success?

            No, we should stop clinging to old outmoded systems and embrace the bold icon- busting, sacred cow-slaughtering visionaries like Paul Ryan.

            Today’s Burkeans apparently have developed a liking for economic experimentation and novel radical theories.

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            • If you’d be willing to have the government provide 50’s and 60’s levels of medical care/technology, I’m pretty sure we could solve the budget crisis tomorrow by paring medicare/medicaid down to a much more sustainable level.

              I’d also be interested in seeing what percentage of what degrees were handed out in the 1950’s and 1960’s. What percentage of degrees were, say, journalism? Creative Writing? How many MFAs in the mannequin arts were given out?

              To what extent would you like to roll the clock back? What else would be required on our part to roll the clock back to make it possible for us, as a society, to do what we used to be able to do?

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              • Being a good liberal, I would be happy with a Eisenhower /Truman federal government, and a Pat Brown style California government.

                Massive government infrastructure spending, 30% union rates, and all.

                You know, don’t you, that there are millions of Americans for whom 1950’s style medical treatment is a luxury they can barely dream of, much less afford?

                And do you really think the exploding cost of medical care has been driven by soaring excellence?

                Again, were I a Burkean conservative instead of a dirty hippie, I might advocate studying other nation’s health care systems to see what can be copied here.

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                • And do you really think the exploding cost of medical care has been driven by soaring excellence?

                  Among other things, absolutely. The cost of specialized knowledge, the ability to say “we have the following treatments to prolong life” when, 60 years ago, we’d have said “all we can do is make you comfortable”, our ability to save people from first, second, third heart attacks when, 60 years ago, they would have died… absolutely.

                  Someone who dies at the age of 55 no longer requires health care (there are similar savings for Social Security).

                  The increase in lifespan is responsible for much of the increased cost. The increase in medical knowledge and technology is responsible for much of the increased lifespan. (Additionally, I’m pretty sure that the education required to become a medical doctor today, in 2012, blows away the education required in 1950. I’d say that most Nurse Practitioners today have as much education as General Practitioners in the 1950’s.)

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                  • So, explain the much lower cost of care in the rest of the Western world? Even Switzerland, that has a system closest to ours, pays 30% less. Somehow, the rest of the world have gotten the same advances without the soaring costs.

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                    • Jesse,

                      In large part that’s well understood.

                      First, the U.S. effectively subsidizes pharmaceuticals for the rest of the world, because those countries bargain through their national health care systems for lower prices on drugs. Drug firms don’t want to reduce their profits, so the differential gets paid by us.  In a single payer system the U.S. could also bargain for lower prices, but that’s a risky move because whether we like it or not, big profits are a major driver of R&D investment in the pharma industry.  Crimp profits too much and you’ll get less R&D.

                      Second, Americans spend too damn much on end of life care.  A large proportion of the average person’s lifetime medical costs comes right at the end of their lives.  If we’d go more gracefully and accept hospice end-of-life care we’d cut those costs down a lot.

                      That’s not an argument in favor of the U.S.’s system, mind, just an explanation of where a lot of that cost differential comes from.

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                    • First, the U.S. effectively subsidizes pharmaceuticals for the rest of the world, because those countries bargain through their national health care systems for lower prices on drugs.

                      I really don’t understand why this isn’t a major diplomatic issue. Americans are literally dying so that Europeans can avoid paying their fair share of R&D costs.

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                    • On the first part, there’s evidence out there that the R&D cost claims by the pharmaceutical industry are massaged as a mob bosses “public” books.

                      To the second part, I do agree, but there’s stuff out there that basic medical costs, outside end-of-life care, are much higher than other European countries, when you account for the cost of living and such. So yeah, we need to teach people how to die, but we also need to move away from fee-for-service in a large way.

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                    • On the first part, there’s evidence out there that the R&D cost claims by the pharmaceutical industry are massaged as a mob bosses “public” books.

                      Jesse, I don’t doubt it, but that’s a separate issue.  The issue is that if you reduce the ROI of the pharma industry, money will go elsewhere.  Say they’re greedy fishing bastards, and I’ll happily agree.  But those greedy fishing bastards get to decide where they’re going to put their money–reduce the returns on new pharmaceuticals sufficiently and you will get less R&D.

                      It’s always crucial to distinguish between the normative and the positive, and no matter how strongly our normative disdain for anyone, what really matters for policy analysis is the positive question of “How will the fishing bastards respond if we do X?”

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                    • I’ll happily argue that we shouldn’t be the Western country held hostage by Pfizer and friends because we were the last ones to finally have the sense to negotiate as a country. I’ll take less new drugs over the next twenty years (especially since modern Big Pharma is so focused on basically extending their patents by coming up with slightly different versions of the same drug) if more people have access to the drugs we already have.

                      But, to be honest, we’ve heard the same deal from every industry since time immemorial. “If you do x and make us do y, we’ll slow down research on l.” Most of the time, the threats are hollow or turn out to be not that big a deal.

                       

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                    • I’ll take less new drugs over the next twenty years … if more people have access to the drugs we already have.

                      You may think that’s helping more people, but the truth is you can’t know that.

                      We do know that patent length is only 20 years from filing (which normally occurs before the drug is actually on the market), so those expensive drugs are generally going to have cheaper generic versions within a generation.  And if we slow down research on new drugs, the people they would benefit won’t be benefited.

                      “If you do x and make us do y, we’ll slow down research on l.” Most of the time, the threats are hollow or turn out to be not that big a deal.

                      Examples?

                      It’s not R&D exactly, but do you happen to remember what happened to the luxury yacht industry when Clinton upped the luxury goods tax?  Not that I give a rat’s ass about luxury yacht owners, but there were a fair number of jobs at stake.

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                    • Int he republicans R Dumb department:

                      Let US tell you how to get new drugs!!!

                      … yeahsure. Come back to me when you can tell me something that doesn’t involve baby Jesus hates stem cell research.

                      DRUGS? Damn foolz ain’t out of the 20th century, are they?

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                    • I’ll take less new drugs over the next twenty years (especially since modern Big Pharma is so focused on basically extending their patents by coming up with slightly different versions of the same drug) if more people have access to the drugs we already have.

                      I find it amusing that someone can explicitly endorse policies that retard progress and still call himself a progressive.

                      Oh, and as someone with a 50% chance of needing a new medical innovation to make it past 60: FOAD.

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            • Its funny how in the 1950s and 60s there were adequate levels of tax revenue to provide free college for anyone in the University of California system. It didn’t seem to crush the economy,

              But…. it costs more per student to run a college/university today. The driving factors are health care, technology investments, and student demand for country club campuses instead of the considerably more spartan facilities and amenities of the ’50s ad ’60s.

              Also, lots more people–as a proportion of the population, not just absolute numbers–are going to college today. And a part (not the whole, but part) of the reason for that was that by making education so cheap (once upon a time), California invited an ever greater proportion of their high school grads to go to college, helping to create an “everyone must to go to college” culture.

              Inviting ever larger proportions of the population to get involved in an ever more expensive system does make it ever harder for the collective to afford.

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              • But isn’t one reason for so many people clamoring for college, the fact that non-college type of jobs have stagnated and pay less now than they did then?

                In 1955 a family could live comfortably on a single income of a non-college educated worker. Not possible today.

                Suppose we had the tax rates of 1965; Suppose we did have better, more effective leadership of state universities, which kept costs in line and avoided unnecesary expenses.

                How many more could afford college then?

                There seems to be a lot of throwing up of hands and declaring the problem unsolvable, most notably by people who don’t really have any desire to see it solved.I don’t hear a lot of talk in conservative/ libertarian circles about finding ways to make higher education universal and available.

                 

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                • That seems, to me, effectively the same as advising picking the nose as a cure for mange.

                  What’s the problem here?
                  In 1955 a family could live comfortably on a single income of a non-college educated worker. Not possible today.

                  And what’s the solution?
                  …finding ways to make higher education universal and available.

                  Right.

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                • But isn’t one reason for so many people clamoring for college, the fact that non-college type of jobs have stagnated and pay less now than they did then?

                  Pipe fitters make twice what a social worker makes. The same for machinists. My dad was a welder and insisted we all go to college and now I could make more doing his job because skilled trades are in high demand. Meanwhile 1 in 2 college grads are unemployed or under-employed.

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                  • Fitters actually make a good bit more than twice of what the avg. social worker makes.
                    Historically, they were the highest paid among the trades, but some improvements in the automation of process allowed the electricians to claim more in earnings.

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              • But isn’t one reason for so many people clamoring for college, the fact that non-college type of jobs have stagnated and pay less now than they did then?

                One reason, perhaps. Not the only reason.

                I don’t hear a lot of talk in conservative/ libertarian circles about finding ways to make higher education universal and available.

                If you want to destroy higher education, making it universal is the best way to go about it.  Unless we’re using a broad definition of higher education to include technical training, etc.  Very simply, not everybody should go to college.  Some kids can barely make it through high school, and the only way they could make it through college is to dumb it down so much that the brighter kids can’t benefit.

                I work with an awful lot of liberal college profs–they all want college to be affordable, but most of them sure as heck don’t want it to be universal.

                Suppose we had the tax rates of 1965; Suppose we did have better, more effective leadership of state universities, which kept costs in line and avoided unnecesary expenses. How many more could afford college then?

                I don’t know. I wish I did.  But I’ll tell you honestly that effective leadership won’t be sufficient to keep costs in line, because competition for students is a driving force behind costs.  My college was dwindling rapidly a few years back, but our current president has increased the student body from about 900 to 1700–it took a hell of a lot of spending, because students shop around and you have to sell 18 year olds on coming to your place for 4 years.  When I started college in the ’80s, I shared a dorm room with another student–30 years previously that dorm room had housed 3 students, and today most students want single rooms because that’s what they’re used to at home.  They want exercise facilities, entertainment facilities, etc. etc.  They don’t quite grasp that the things they want are a big part of what’s driving tuition costs, so if you don’t provide it to them, they’re likely to go to the school that does.  I’m not anti-public education, but there is a question of how much the public should be asked to pay for entertainment as opposed to actual education.

                And while I’m a big fan of R1 research universities, taxpayers can fairly question how much they should be asked to pay for an educational system in which very highly paid people don’t do much educating.

                In 1955 a family could live comfortably on a single income of a non-college educated worker. Not possible today.

                Perhaps not as frequent, but still possible.  My brother-in-law has no college degree, is a mechanic for Continental/United Airlines, and his family is pretty comfortable.  Keep in mind that in the 1950s, a lot of that comfort was due to America being one of the world’s few industrialized countries not recently devastated by war.  We tend to see the 1950s as our ideal time, but in fact it may have been a very unique and unrepeatable time in history. I don’t like thinking so, but it wasn’t so before the 1950s and the conditions that made it so have changed today and aren’t changing back barring another world war, right?

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                • I found some of those claims questionable; the sort of “common knowledge” assumptions that don’t hold up to scrutiny.
                  As a serious skeptic/cynic, I find the moment to be quite gratifying.
                  I went and looked up the stats for the county where I’m at. Granted, I haven’t been here that long, and I don’t really know the place. But of the farmers I’ve met at the barbershop and the bar, I don’t think too many of them hold graduate degrees.
                  The biggest sector of the economy here is the school system. “Education & Health,” they call it on their official reports. Which is kind of odd. There are four school systems that employ 150 people or better. The only hospital I know of is in the next town to the south, which sits half in this county and half in the next county over; and I think that hospital there is in the next county.
                  The biggest single employer in the county is a dairy processing plant. The second biggest is Exxon-Mobil, and I worked for them when I first came here, and after taxes, I was still making a bit over twice the median household income for the county; a little over three times the median household income before taxes.
                  4.7% of the workforce is employed in agriculture and mining. There are several coal mines around here.
                  Here’s the educational breakdown:
                  High School Graduates 86.6%
                  Associate Degree 8.1%
                  Bachelor’s Degree 9.6%
                  Graduate Degree 5.5%

                  There are 133 people employed at an IT firm on the edge of town. That’s the high tech around here.
                  But you can still have a good life out in the county with only a high school diploma.
                  My neighbor works at a steel shop, and his wife doesn’t work. They’re always pressed for money, because they have a little boy that’s always sick. But he doesn’t have to have adult supervision when he plays outside for fear that someone might snatch him out of the yard. He’ll probably never see the type of heroin problem that they’ve got going on in St. Louis right now.

                  They have a four-year college here, but it’s something of a different set-up.
                  I don’t care to go into the matter here, but I’ll happy to e-mail you some information.

                  If you want to make money, you find an industry that pays well.
                  A degree doesn’t do that for you. I know too many teachers and social workers to think that.
                  College is no substitute for thought. It shouldn’t be taken as such.

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                  • WillH – I am increasingly wishing I had gone into a trade for many of the reasons you point out. I think a lot of college graduates are thinking the same way. The problem is transitioning careers when you’re covered up in mortgages, etc. I’m just not sure how one would do that.

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                • And while I’m a big fan of R1 research universities, taxpayers can fairly question how much they should be asked to pay for an educational system in which very highly paid people don’t do much educating.

                  The argument for subsidizing scientific research is actually much stronger than the argument for subsidizing higher education. The benefits of higher education are largely internalized by the student, whereas the benefits of scientific research are much more difficult to externalize. Insofar as higher education is about signalling—and that’s a big part of it, especially for non-STEM majors—the externalities can actually be negative, contraindicating subsidy.

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                  • Brandon, I agree.  But the people can fairly ask, and it’s the duty of those supporting subsidized education to explain it more clearly than they have.  That argument–which is stronger–is not being well-made.  I know people are making it, but they’re not making a dent on the public that’s asking the question, in large part because they’re not making the argument in a way that is effective.  They’re trying to sell the public on continuing to fund them–its the seller’s duty to persuade the purchaser.

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                • “If you want to destroy higher education, making it universal is the best way to go about it. ”

                  Indeed, you won’t find many people who’ll claim that No Child Left Behind resulted in an improvement in the quality of education–whether it be on average, at the high end, or at the low end.

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        • It is a sovereign fact that when economies improve, wealth disparity grows.   Taxing the rich only leads them to find better schemes for hiding and sheltering their income.   Modern economic and taxation theory has lead us to conclude it’s pointless to attempt to tax the rich beyond some arbitrary point:  they only get laws passed to enlarge the loopholes.

          Sure, the rich ought to bear their fair share of the tax burden:  they already pay a great deal of tax on a dollar basis.  But if our concern is for the poor, let’s avoid casting aspersions on the One Percenters:  they’re already on the books as taxpayers.  Our goal ought to be the creation of more taxpayers.  Soakin’ the Rich just doesn’t work:  it’s been tried.   The confiscatory rates of the Carter and pre-Carter years didn’t improve the situation.

          Fact is, if we want more tax revenue, we need more taxpayers.   Want more taxpayers?   Get more people employed, hopefully self-employed so they can start hiring people, too.   Trying to get folks onto payrolls is very hard going:  we’re better served to get more people flying their own little corporate flags.   From personal experience, I can tell you a sole proprietorship is a mighty engine of prosperity but it’s taxed out the wazoo.   Our government needs to make the process easier, creating a culture of investment and capital creation, not a sorry collection of debtors and tree huggers.

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            • So the ideal tax rates are Clintonian tax rates? That’s the sweet spot that will not only provide the most cosmic justice but also take us to the peakiest peak of the Laffer Curve? Nobody would argue that we’d need to raise taxes on anybody once we have those tax rates enshrined?

              For the record, my suspicion is that we’d see calls for a higher tax rate within, oh, two years of returning to Clinton-level taxes.

               

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              • Let the shortages be divided among the peasants.   Come one, come all, get yer fresh-baked shortages!

                The Bush-era tax cuts were the most naked and egregious rewards for Bush’s Base in the history of taxation.

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                    • The peasants were peasant-ing along.   Most of the pages of their log books read “Steaming as before”, racking up credit card debt, enjoying their lives tilling and weeding in their assigned areas of the Cubicle Farm, buying more house than they could afford.  That sort of thing, you know, back when cash didn’t matter and a line of credit was easy to obtain, backed by paper profits on that McMansion out in Sunny Acres.

                      Which, come to think of the next tier up the economic food chain, the rich were profiting from the peasants via usurious interest rates, making imprudent bets on the mortgages on those McMansions.  They continue to make their fortunes along these lines.   Oh, some of the Asses’ Milk aficionados took a beating on their investments but Bushco Inc. made sure their corporations had working lines of credit.    Never feel sorry for anyone who owns a plane.   They can fly into Ronald Reagan airport, their lobbyists will send the limo around to pick them up and they can all have a nice sit-down with some Senator at Filomena Ristorante and catch up on things.   Things like capital gains taxes and dress-AHHJE horsey topics.

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              • Yup everybody will get a rainbow unicorn if we go back to Clinton’s rates. And no one will ever ask for anything ever again. double pinky swear. Is that a reasonable answer for a “the slippery slope monster is coming to eat us” question?

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                • Well, the first comparison that came to mind was “partial birth abortion bans”.

                  Remember what the argument given against those were? It had little to do with defending the DNE or whatever the “official” medical term for the procedure was… it was all about how this was a foot in the door, how this was an attempt of the Republicans to control the sex lives of women, so on and so forth. Surely you remember.

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                    • Great! I’m glad we agree!

                      Which brings us back to this: “So its a good thing, then, that nobody is proposing we go back to Eisenhower’s tax rates. There are no “soak the rich” tax proposals out there.”

                      There are, in fact, “soak the rich” tax proposals out there. We just need to get to them by way of passing through a return to the Clinton tax rates.

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                    • Can you point me to these plans that have any chance of passing the current Democratic Senate? Bonus points if you explain how Mark Warner or Mark Pryor or Mary Landreiu is going to vote for “soak the rich” tax rates.

                      Yeah, there are “soak the rich” plans (which ya’ know, might get us to the top half of OECD tax levels), but the chances of them being passed in the near future even with a Democratic Congress is slim to none.

                      However, on the other hand, as we’ve seen since 2010, the right-wing is perfectly willing to pass as many anti-abortion laws as possible.

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                    • So long as we’ve moved to “there aren’t any” to “there aren’t any that have any reasonable chance of passing”, I’m pleased with where we’ve ended up.

                      (For the record, I don’t think that there are any laws making serious restrictions on abortion that have any chance of passing.)

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                    • I point you to the actions of Republican legislatures over the past two years and the promises made by every Republican politician to defund PP the moment they get into office. Now, those may not seem like “serious” restrictions to you, but it’s a lot closer to reality than any tax system I’d be largely in favor of.

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                    • No, Koz acts like the GOP of 2002-06 doesn’t exist. I realize they exist, but I also realize that they’re Nelson Rockefeller compared to the group that will be in charge if Romney wins in November and as a result, gets a Republican Congress.

                      If the GOP wins in November, it will become much harder for a woman to get an abortion in this country. Ya’ know why I know this? Because it’s happened in almost every state that the GOP has taken over since 2010.

                      I’m sorry for throwing things like the actions of actual Republicans when talking about what Republican’s might actually do.

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                    • Romney may not be personally that far to the right (even though I think he’s more far to the right than his persona has been previously to 2012), but he’s not the problem. The problem is the Republican Congress that will be in charge in 2012.

                      Yeah, a Mitt Romney Presidency w/ a Democratic Senate or House would probably be like Bush on domestic policy – exploding deficits, but not horrible on the social welfare front. On the other hand, Romney has all but endorsed the Ryan plan, promised to defund Planned Parenthood, and will be led by conservative Senators and Congressman who have all promised to pass Human Life Amendment’s and such.

                      So yeah, you’re giving the Republican Congress the benefit of the doubt because many of their crazy ideas have gone and died in the Senate.

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                    • Also because I remember the post 9/11 Republican Congress and Senate and what they had license to do… and how their numbers grew after the 2004 elections… and how, even then, at the height of Doctor Dobson’s grip on the White House…

                      Nothing of note happened.

                      Yeah, yeah. This time it’s different.

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                    • Well, I’d point out the post-9/11 Republican’s did do a whole hell of a lot on the issues they were elected (ie. bombing some Muslims). If the GOP wins in 2012, they’ll believe they were elected on the issues of cutting spending that goes to poor minorities and making sure those sluts can’t use tax money to get abortions.

                      Now, again, maybe I’m just crazy, and the actions of Republican legislatures and the promises of Republican congressman and Presidential candidates are disconnected from what will actually happen in the GOP comes to power in Washington.

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                    • There are proposals among libertarians to model our government after Somalia.

                      Its true!

                      “Ayn-no-librul”, a commenter at RonPaulisGod.blogspot  made that very proposal a few months ago.

                      So long as we’ve moved to “there aren’t any” to “there aren’t any that have any reasonable chance of passing”, I’m pleased with where we’ve ended up.

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                    • Maybe not Romney, but ya’ know, the golden wonderboy of the 2012 GOP sure loves him some Rand. And it’s his budget that will be passed if Romney wins the election.

                      Again, the policies of a Mitt Romney Administration will be to the right of the Bush Administration. Not necessarily because Dubya is more liberal than Romney, but because Romney will have a much more conservative Congress than Dubya did. Tom DeLay and Bill Frist were worried about grifting for their campaign contributors and placating the base with some anti-gay marriage measures. The Tea Partiers that will likely make up a majority of the House caucus actually believe what they’re selling.

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                    • Again: I don’t believe that the Republican Congress is appreciably more conservative than the one we had from 2002-2006.

                      I also suspect that Rand Paul’s budget ought to be compared to Obama’s budget and we can hammer out the particulars of who will be hurt most by the 12 vs 10 billion for this particular sub-office argument.

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                    • And I believe they are. Hopefully, we never find out.

                      There are actually plenty of papers and articles out there about the differences between Obama’s and Ryan’s budget (Paul Ryan, not Rand Paul. If you’re going to make pithy above-the-fray statements, do try to get the names right), but I’m sure you’d just toss it off as  propaganda.

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              • I want to clarify, since there’s a lot of confusion around this point, that the peak of the Laffer curve is not at all where we want to be. The peak of the Laffer curve is where you can’t raise any additional tax revenues by raising tax rates, but maximizing tax revenues at all costs is a terrible idea. To get to that point, you have to pass through the part of the curve where you’re destroying several dollars worth of private wealth to get one extra dollar of tax revenue. We don’t want to be anywhere near the peak.

                There’s also the issue of the short-term versus long-term Laffer curve. There’s a portion of the curve where raising tax rates will increase revenues in the current year, but will destroy enough private wealth to impede growth of the tax base, resulting in lower tax yields along all points of the curve in future years.

                The right side of the Laffer curve was interesting in the pre-Reagan era, when it was relevant, but there are a lot of underappreciated subtleties to the left side, as well.

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                • From what I’ve seen, the studies from the ECB, the US could go up to around a 50% tax rate before there would be any appreciable Laffer curve effect.
                  They identified three or four European nations that were on the bad side of that curve, and iirc, they were those Scandinavian nations that Leftists tell us they want to be just like; ie all-white, anti-Muslim.

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                  • The Trabandt and Uhlig piece you refer to has some problems with the modeling (specifically with substantial overweighting of labor taxation).

                    There was a better NBER piece that did something similar and tried to account for some additional variables like monopolistic competition and different (more accurate according to data) weightings to capital, labor and consumption. I’ll try to dig it up.

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                  • Also, if we’re talking public finances…

                    Well, Sweden’s run a budget surplus for the last 8 years, including during the peak of the financial crisis. It’s also reduced its public debt load from 60% of GDP to 35% of GDP while maintaining a growth rate in the order of ~4%.

                    Denmark too has recorded budget surpluses in the 2% of GDP range and has substantially reduced its debt to GDP ratio over the past two decades from a height of 80% down to something in the order of 10-15% today.

                    That is to say, if we’re using public finances and economies of these countries as a baseline, then there’s worse things you can do. Laffer curve space isn’t destiny.

                    As for your fling about “Leftists”, how do you get the demography point out of an economic one?

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              • There is no level of taxation where a sizable portion of the population would not be complaining about tax rates, either that they want to pay less or others to pay more. It’s not really a valid lens through which to view what an ideal tax policy would be.

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                • You simply haven’t lived until you’ve wallowed in thirty gallons of the finest Syrian asses’ milk, or defecated in rose-scented cellophane baggies.   How I ever got along without either is beyond me.

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                  • Depending on how big those baggies are, I might not care too much for trying my aim.
                    I’ve done a lot worse on better odds, mind you.

                    30 gallons of asses’ milk sounds like a waste of good ice cream to me.
                    And you think the prevailing climate around Syria parts would be just about ripe for a big bowl of ice cream.
                    If there’s any place that would riot over ice cream, … well, Morocco would be tops on my list… but Syria rates right on up there.

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                • That’s the big outlier in terms of billionaires per capita. The US is next at about a quarter as many, Russia and Germany at about half of that, and Turkey(!) and the UK lagging just a bit behind. Oddly, Singapore doesn’t have many, which is surprising, given that it’s one of the richest countries in the world, with policies that generally seem conducive to the accumulation of large sums of wealth. Maybe Murali can shed some light there.

                  I’m just not seeing the pattern E.C. is alleging, other than Russia and Turkey. Insofar as it’s a real thing, I would attribute it to natural resources and/or corruption. Where vast fortunes are earned through making stuff, they’re correlated with economic growth. Where they’re earned through graft or digging stuff out of the ground, probably not so much. That fits for Russia, but I have no idea why Turkey has so many billionaires.

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                  • It’s an outlier with an extremely obvious cause – it’s part of China, not an independent nation.

                    If the U.S. annexed a the Cayman Islands and allowed them to set their own tax policy I bet they’d leave Hong Kong in the dust within a year.

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                  • If you’re looking for billionaires per capita, you won’t find Singapore. But if you’re looking for millionaires per capita, that is an entirely different issue. Singapore clocks in first place at 15.5% of households having millionaire staus or above. Switzerland comes in second at 9.9% and the US comes in at 7th place at 4.5%.

                    I’ll give two things. Firstly, we just recently industrialised. i.e. most of the post war generation’s parents weren’t very rich and the school system was quite merit based. What this meant was that there was less in the way of inherited- wealth-conferring advantages. This has changed somewhat over the past 30 odd years. So you might see more billionaires in the future. Also, most of our upper class consists of the professional class and owners of small and medium enterprises. None of these are exactly billionaire level stuff. We might be getting a few more financial secotr types in coming years, but that would be a more recent development. We have very few home grown brands that has access to and can dominate such large markets for them to acquire billions. In fact, I think our billionaires are more likely to be politicians. My PM’s salary is about 3 million a year (2.4 million USD). Even at such levels, it is not enough to net him billions. In order to net billions, you are going to need to inherit it or get lots of profit from a very big company (or conglomerate) or some mixture of the two. Singapore is not that old a country and it is not that long ago that most of us we dirt poor.

                     

                     

                     

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          • meh. don’t mind taxing the middle class more… but it will increase the number of bankruptcies and other stupidity that is probably a drain on the economy.

            “not the live north, but the dead south has won”…
            America’s business model increasingly points towards “lowest, cheapest, poorest”

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          • The middle class will be next. A plumber should have to pay higher taxes than his helper. Then the helper should have to pay more taxes than a burger flipper, and burger flipper should have to pay more than a blind person on disability and the blind person on disability should have to pay more than — they will come after kids’ piggy banks which they aren’t disclosing. Taxes are now the Left’s crack.

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      • Taxes aren’t justified based on an assertion that someone sinned (even so-called “sin taxes” aren’t!).  The claim is just that it’s just to tax you at a higher rate if you have more.  Not because you’re bad for having the money or that you’re bad or have done something else wrong.  Just that you’re still doing pretty great even if more of what you have is taken.

        Even the 99% versus 1% rhetoric isnt a claim that all of the 1% have done something wrong.  The rhetoric just asks whether we find it desirable or acceptable that the very highest earners have realized the percentage of all the income gains in the economy over the past X years as they have.  They’re not demons for having done so; the question is just whether, since that’s what happened, we want to consider some structural changes to our economy, or in any case our governance of it.

        (Caveats relating to the fact that the 1% rhetoric doesn’t fully reflect actual income mobility, and acknowledging that just because you may want to consider changes that would ameliorate a particular problem, that doesn’t mean there are any that actually would.)

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  3. Douhat is such a useless ninny.   Depending on him to present an honest discussion about Liberals is pointless.  He’s such a habitual liar, completely beyond redemption.   It’s like the Pilgrim to Jerusalem at the crossroads where the XOR Twins stand.   One brother will always lie, the other will always tell the truth but the pilgrim isn’t told which is the liar.   What one question can he ask to take the right road to Jerusalem?

    “Which road will your brother say is the way to Jerusalem.”

    The pilgrim then takes the other road.   Thus it is anyone may safely ask “What would Ross Douhat say about Liberals?”  and safely presume it is wrong.

    Since when did Liberals get upset about anyone getting rich?   That’s not the point.   We care about the poor making any progress at all.   The poor just aren’t making progress.   If the rich are making progress, well — at least someone is.    Some might conclude the current conditions are producing wealth, just not for the poor and that’s a problem.

    Fact is, for the poor to advance, the rich might become astronomically wealthy.   What a thought, eh?   Enough wealth for everyone!    It’s as simple as an op-amp circuit, turn up the volume and watch the waveform.

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  4. Douthat  wants to find a way to produce mobility and equality, but only on the premise that the tax structure stay the same. And please stop saying such mean things about the 1%. Lets all work as a team here, people.

    He notes that medical care is costing more and more of our income; yet on solutions for this, um, opinions vary, but he is very sure that whatever solution there is won’t be found by increased taxation. The idea that a single payer system financed by progressive taxes? LALALALALA. The dog ate that page of his essay.

    Really, Douthat tells us, the only solution for mobility and equality is found in better families and addressing the “deeper more challenging problems in institutions” such as Medicare. Solutions which involve not more revenue, but…whatever the opposite of more revenue is. You know. C’mon, does Ross have to spell it out? Address the problems of Medicare, but don’t raise taxes….

    Which, when you boil it down, is a fine job of concern trolling by someone who wants to embrace the Republican economic agenda without having to be so gauche as to say so.

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  5. I doubt there are very many liberals who think of taxes as punishment. The idea is that as long as it takes money to get things done, you should tax people who have more of it. It’s even economically rational to have progressive tax rates, due to the diminishing utility of each additional dollar: for most middle class families, an additional $10,000 per year is a major lifestyle upgrade, at least at the lower end (120k to 130k may not be huge, but 30k to 40 k will be). To Bill Gates, 10k is a rounding error.

    Another reason to increase rates as income goes up is that the wealthy already have undue influence on the political process: Wall Streeters lobby for tax breaks that make them even richer, which gives them still more political influence.

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      • Sure. It’s called “elections”.

        And what have you got right now? No guaruntees tax cuts will be coupled with spending decreases. As the 8 years of Bush showed. We got two wars and a fancy entitlement program AND massive tax cuts.

        So really, what have you got to lose?

        Doesn’t matter anyways — the Bush tax cuts will roll back automatically at the end of the year and I can’t see Congress managing to prevent it, which takes a giant chunk of our deficit problems away.

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      • Yes there is. The “mechanism” is called Congress.

        And it has been very stalwart about resisting spending, on things which it considers to be undesireable.

        Things like social welfare programs are starved, while defense spending explodes.

        Weird conicidence here; very few Fortune 500 corporations and the 1%ers who run them,  benefit from things like Head Start and TANF; but a lot of them do benefit from defense spending.

        Bizarre, no?

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        • but a lot of them do benefit from defense spending.

          How?

          very few Fortune 500 corporations and the 1%ers who run them,  benefit from things like Head Start

          As a self identified 1%er (or 5%-er anyway) it seems that I would benefit by having a lower porverty rate and an education system that benefits the lower classes (yes I’m that crass) For example, I would want the most talented people managing my companies or my hedge funds etc etc. I certainly dont want people too stupid/uneducated to work a factory. If I could get 1 smart guy doing the work of 5 unskilled dudes, I would make a killing even by just paying him twice as much.

          Of ocurse, I don’t run companies, I’m just a grad student so…

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        • Things like social welfare programs are starved, while defense spending explodes.

          This comment is grossly ahistorical. Except for a brief blip during the late ’90s, defense spending has never been lower as a percentage of total federal spending than it is now.

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  6. because the left-wing focus on the sins of the top 1 percent is so strong

    Is that true?  Just because Douthat, a conservative, says it, doesn’t mean it’s true.

    Actually, the fact that a conservative says it makes me suspect it’s not true.

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  7. Get me a shovel and build a Hooverville.

    Give me a rich man I can respect again.

    Do the rich live in ghettos too?

    Do the police work anywhere anymore?

     

    That road ain’t been built for 50 years

    This road ain’t been fixed for 20

    That road over yonder heads to the rich

    Now you and me both guess which one gets done.

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  8. Um…I half-nodded to that quote in agreement… Who is this impostor, and what has he done with Ross Douthat?!?

    Anyway, what he refers to is example of how deeply conservative the American “left” is: no more structural critiques, no considerations of whether the financial elite consists of turtles on fence posts. No real questions, just maintenance, mere tinkering within acceptance of the system as is.

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