“I don’t read much progressive literature, Curmudge, but I
suspect that progressives believe that inequality is the problem and
redistribution is the solution.”
“It makes a good political cant, Julie. The progressives want the middle class
to feel as if they deserve a bigger share of the good life and the share should
come from somebody else. It’s
called resentment or coveting, as in the Ten Commandments where one is
admonished about coveting his neighbor’s wife or his neighbor’s anything
else. Of course, if the
progressive is also a post-modernist, he’s not bothered by the Ten
Commandments.”
“Fortunately my couch-potato husband is too lazy to look at
the gal next door or to read what a post-modernist can ignore. So how do the progressives convince
middle-class Americans that they have been ripped off?”
“They use misleading data, Julie. They ask, ‘are you worse off now than in (some earlier
date)?’ and then answer their own question, ‘of course you are.’ But often they aren’t.”
“So what’s the straight scoop, Professor?”
“The progressives focus on pretax income inequality and
ignore transfer payments such as unemployment insurance, food stamps, Medicaid,
and other safety-net programs.
According to Hassett and Mathur in The Wall Street Journal (1),
‘Consumption is a more relevant metric of overall welfare than pre-tax cash
income.’ Data in a 2011
Congressional Budget Office report ‘reveal that average disposable household
income increased across all groups since 1979. The average household income grew by 40% for the middle
quintile and by 49% for the bottom quintile.’ (2) And regarding ‘the good life,’ the Department of Energy
reported these increases between 2001 and 2009 for low-income Americans—those
earning less than $20,000 in 2009 dollars: ownership of a computer, from 19.8%
to 47.7%; air-conditioning, 65.8% to 83.5%; a dishwasher, 17.6% to 30.8%; and a
washing machine, 57.2% to 62.4%. (1)”
“Gosh, Curmudge, neither of us had a computer in 2001. But we are certainly better off than
many people in Europe. ‘The
average U.S. family has 38% more disposable income than a family in Italy,
25%more than a family in France, and 20% more than a household in Germany, when
adjusted for purchasing power.’ (2)
So what do the progressives say about that?”
“They persist in wanting to raise taxes in order to achieve
the degree of socialism that countries in Europe have found they can’t
afford. And increasing taxes on
‘the rich’ who already provide most of the government’s revenue won’t be
sufficient. Ultimately the middle
class would have to pay more.
Additionally, the fact that high taxes haven’t helped in the U.S. in the
past is pretty good evidence that they won’t help in the future.”
“Okay, Professor, in case I encounter a progressive at a
picnic, please provide some data.”
“ ‘The Congressional
Budget Office looked at 2007 through 2009 and found the bottom 20% of
American earners paid just 0.3% of the total tax burden, while the richest 20%
paid 67.9% of taxes.’ “
“Wow! And some
say the rich aren’t paying their fair share. And you have more?”
“Apparently some progressives are unacquainted with the ‘Laffer curve.’ Laffer has observed that while revenues
increase as tax rates go up, at some high tax rate the curve bends downward and
revenues decrease. The economy
also turns down as people decide that because of their high marginal tax rate,
the higher income from their extra efforts isn’t worth the trouble. Here are some numbers: During the tax
rate increases of Presidents Johnson, Nixon, Ford and Carter, between 1968 and
1981, the top 1% of income earners reduced their total income tax payments from
1.9% of GDP to 1.5% lf GDP.’ (3)”
“What about the economy during periods of high taxation?”
“President Hoover precipitated the Great Depression with the
Smoot-Hawley Tariff in 1930, and raised the personal income tax rate from 24%
to 63% in 1932. President
Roosevelt raised it to 79% in 1936, and the Depression roared onward with
unemployment at 20% in 1938.
According to Arthur Laffer of Laffer Curve
fame: ‘Whoever heard of a country taxing itself into prosperity?’ ‘Higher tax rates on the rich create
the very poverty and unemployment that is used to justify their presence.’ (3)”
“It’s pretty evident to me, Curmudge, that the progressives
did the wrong thing in the distant past, and that’s what they seem to want to
do now. However, there are some
who were undoubtedly progressives a few years ago who said things that are clearly
at odds with the policies of our current administrative state. For example, here’s a quote from John
F. Kennedy in January 1963: ‘Tax reduction thus sets off a process that can
bring gains for everyone, gains won by marshalling resources that would otherwise
stand idle—workers without jobs and farm and factory capacity without
markets. Yet many taxpayers seemed
prepared to deny the nation the fruits of tax reduction…’ “
“Equally interesting, Julie, is this quote from Al Gore: (4)
‘Capitalism has become the world’s economic ideology of choice primarily
because it demonstrably unlocks a higher fraction of the human potential with
ubiquitous organic incentives that reward hard work, ingenuity and innovation.’
“
“Wow! From Al
Gore? That’s not only surprising;
it’s hopeful.”
“Don’t get your hopes up, Julie. Since exiting from pure politics, he has combined
environmentalism with
capitalism. That’s not unusual
among environmental zealots. In any case, we’ll explore some
potential paths forward for curmudgeonocracy in future postings.”
Kaizen Curmudgeon
(1) Hassett,
K.A., and Mathur, A. Consumption and the Myths of Inequality
The Wall Street Journal 10/25/12.
(2) Gilbert,
Neil The Denial of Middle-Class Prosperity The Wall Street Journal 5/17/14, p. A11.
(3) Laffer,
Arthur The Soak-the-Rich Catch-22
The Wall Street Journal 8/02/10.
(4) Gore,
Al, and Blood, David Toward Sustainable Capitalism The Wall Street Journal 6/24/10.
Link to posting from blog archives: The Robot –11/03/10 http://kaizencurmudgeon.blogspot.com/2010/11/robot.html
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