Monthly Archives: February 2009

On Taxation And Culture-War

> Of course you want to blame Republicans for each recession but if you
> actually open up your eyes you will see that …

I don’t blame the Republicans, I blame systemic issues in US politico-economic culture.  My main point was that you cannot attribute them to Democratic policies, and (more importantly) that the periods of greatest economic growth in the U.S. were uniformly periods of higher taxation for the top tax brackets.  Lowering taxes does not automatically drive higher investment; it often undermines it.

> And you are absolutly wrong on taxes and big businesses no matter which
> left wing or Democrat theories you want to quote. Big business has left
> America and set up there plants on foreign soil because of our HIGH tax
> rates. …

This is a myth for the simple reason that the high tax rates on American corporations do not reflect the actual receipts.  Our tax code is a piece of shit, riddled with holes so large you can drive a Mack truck through ’em.  Many huge corporations pay no taxes at all, and some of them routinely get the kind of free money you are complaining about for poor people under the stimulus.  If you’d like, I can dig up some of the files I have from years past, when I cared more about this issue.  It pissed the hell out of me that companies like IBM (an example I remember) would get a million from the Fed. and pay absolutely nothing in taxes for a given year…

So no, our tax rates are not the engine driving the off-shoring of American jobs; that’s the pure logic of globalization, which is nothing but the free trade system doing its thing.  And hell, tax rates alone are far from the main factor driving economic development.  Some of the most competitive economies in the world are routinely the Scandinavian countries, and they have the highest personal and business tax rates.  Economic theory cannot be boiled down into simple slogans and catch-phrases — not for the anti-globalization left nor for the anti-government right.

> It doesn’t matter how much money you pump into schools because the main
> problem is Administration and left wing policies of advancing idiots
> because we don’t want to hurt their feelings. Children got a much better
> education when they were forced to learn and compete and also were not
> coddled. Check up the cost of education back in the 50s compared to
> today. We spend an enormous amount of money to graduate idiots.

Mostly, I agree with this; our school system sucks arse.  But starving it for cash would make the problem worse, not better.  We need systemic reform, of the spending priorities, of the bloated bureaucracies, of the ridiculous testing system (NCLB is a disaster), and even of the unions, which have far too much power for relatively little benefit.  But the crusade to destroy the school system that’s being driven by a small faction on the right will — if they get their way — turn this into a third-world country.  Privatization of the school systems is nothing but a license for people to pass on ignorant superstitions as knowledge.  As an educator, the ultimate fruits of the burgeoning Christian home-schooling movement terrify me…

> The proposed stimulus is 1/3 tax cuts and 2/3 BS spending. I’m not sure
> but I assume a lot of the tax cuts are actually rebates again for people
> that don’t pay and frigging tax to start with.
> I’m not rich but when I was working I made real good money. After taxes,
> SS and my 401K I brought home less then 50% of the money I made. Tax
> codes suck. Everyone should pay a minimum amount, such as the flat tax
> that comes up every few years. Tax only the rich and you become a
> socialist society feeding off the tit of one class. I guess you
> prescribe to the theory that poor people create job opportunities when
> they get tax breaks.

Sure there are rebates for people who don’t pay taxes, but there’re also good tax cuts for the shrinking middle class, who have carried the greatest tax burden for many years now.  If you really want to advocate a flat tax, you need to pay attention to the subtle class war that’s been waged for years by the right, which has seen the burden of paying for this government shifted disproportionately from the top (and bottom) tax brackets, and massively from the corporations, and firmly onto the middle class.

As for “socialism” coming from a progressive tax code, I think a quick glance at the map might be instructive.  Most of the capitalist world uses a far more progressive tax code than we do, and there is no corresponding slip into Soviet-style tyranny…  Maybe it’s time to drop the Cold War propoaganda?  The Stalinist economies are dead, and progressive tax codes and universal health care had nothing to do with creating them in the first place: these things are no threat to American freedom.

> Another thing is that you blame Bush for all the mess regarding the
> borrowing and loan situation. This policy was enacted by Jimmy Carter
> and opened wide open by Clinton in 1995. Bush attempted to regulate it
> in 2003 but the Democrats in Congress refused to make any changes.
> Barney Frank and Chris Dodd, Democrats overseeing this boondoggle told
> Bush to pound sand. Of course you and the other lefty’s want to place
> all the blame on Bush. History will eventually right this misconception.

No, I blame (again) an entire culture, not Bush.  Massive deregulation has been pushed by the right since the 1970s, and had great successes beginning with Reagan.  The return of Depression-era banking practices begins with the simple idea that the smaller the government is, the better.  Blind faith in the ability of markets to regulate themselves has dangerous consequences…

> I do agree that the American people have created too much debt on their
> credit cards, but using the stimulus checks to pay it off will not help
> the economy. A study recently done on credit card debt stated something
> like the average was around $10,000. So they put their entire stimulus
> check towards the principle and they still have no disposable income for
> neat shit like TVs etc.

Again, true enough in the main, but not what I’m getting at in the particulars.  No matter where they dump that cheque, it will have a measurable impact on the economy.  It’s not a magic bullet, but it is a bullet nonetheless…

> Just my thoughts. And I did read the entire article you sent me even
> though it was huge. I understood most of it but some of the information
> and names were foreing to me. Never learned it in school.

Do you mean the one in The Economist or the one in The New Republic?  The latter one was, I hope, genuinely useful.  As I said at the beginning of our correspondence, I have great respect for bedrock conservative principles, whether they be economic or social.  But the right in this country has, in the main, abandoned those principles en masse, and embraced a reactionary and destructive war on our culture and civil society.

I wish I knew a way to show you how harmful this has been, and how much damage it is doing to the core institutions of our democracy.  I would urge you to start from the basic principles and inner character that make you conservative, and analyse the specific policy proposals that come up against those principles.  The right in this country has been waging an anarchistic war on society every bit as nihilistic as the radical left did in the 1960s, while the left in this country has mostly abandoned its progressive goals and settled into a moderate strain of capitalist orthodoxies.

As I said, again at the outset of this conversation, we no longer have an active left in American politics: we have a centre-right and a reactionary far-right.  The politics of culture war are just as corrosive from the right as they are from the left, and if you take the chaos of the 1960s as instructive, the anti-government agenda now carried on from the right (as it once was from the left) is undermining social stability and the rule of law.  Taking your conservatism seriously, please look over that article again some time and think about this…

{Articles referred to in the above exchange can be found below.}

Conservatism Is Dead

Big Government Fights Back

Ranting On The Economy

Since I’ve managed completely to forget about posting things here, I’ve decided to do a cheat-post and copy an e-mail I just wrote.  😉  I spend a lot of time ranting about things in private that I really should be posting publically, in order to broaden the discussion…

Anyroad, here it is, with the parts following brackets being the words of my unnamed correspondent.

> Cutting taxes is the best way to get money in the hands of people so
> they can spend it now. If the Government cut taxes immediately for lets
> say a year, then every taxpayer would get a huge boost in their income
> right now. If you started getting a few hundred dollars per paycheck you
> would go out and buy a new TV, car or whatever.  A one time stimulus’s
> check goes into the bank or pays off a credit card.  Is that not easy to
> understand?

First of all, this is why tax cuts are in the fucking stimulus.  You will receive a larger tax cut under this plan than you would have if the plan pitched by McCain during the campaign were followed instead; ditto most of the Republican suggestions in the past few weeks.  If you don’t buy it, get out a calculator and look at the bills.  In other words, turn off the radio and use your own brain…  As for using the money to pay off debts, that is a fabulous way of getting us our of recession, since it increases the disposable income that taxpayer has available every month, and helps to reduce the ridiculous amount of bad debt that keeps getting shuffled around on the markets.

> This Democratic piece of shit of a stimulus bill funds all the left wing
> crap that the Democrats have been unable to fund for years.  Sure we
> keep putting more money into schools and they keep failing.  What do you
> call a party of Democrats that  keep doing the same thing and expecting
> a different result?  (Stupid, perhaps?)

Money spent on schools is the only way this country can stave off long-term economic decline, and our competitiveness internationally has been suffering horrendously in recent years as a direct result.  What happens when you export all of the low-wage, unskilled jobs (following sensible free trade logic), and then fail to educate Americans to play the role of knowledge workers that our economy now depends upon?  See below for more thoughts on this…

> The way I remember it our worst economy and high unemployment rate was
> worse in the Jimmy Carter years then it is now.  All this crap about the
> great depression is Democrat scare tactics.  Carter ran the country into
> the ground and Reagan got it moving again.  He dug us out of Carter’s
> recession and lowered business taxes from 70% to 40%.  This actually
> brought back our economy and continued pretty strong even through the
> Clinton years.  You need to stop hating Reagan and start praising his
> thoughts and direction. You absorbed too much BS from your Left Wing
> Professors that are mostly America haters.

What you “remember” is not accurate.  Here’s a short run-down on the economic situation during this period…
Post-war recessionary periods of peak unemployment and poverty (up to 2001) look like this:  November 1948 –    October    1949; July 1953 – May 1954; August 1957 – April 1958; April 1960 – February 1961; December 1969 – November 1970; November 1973 – March 1975; January 1980 – July 1980; July 1981 – November 1982; July 1990 – March 1991; March 2001 – November 2001.
Note the conspicuous absence of Democractic presidencies in these periods; not the Kennedy-Johnson era, nor Carter or Clinton.  Not all of that is tied up in their policies, of course.  (In fact, much of the reason is not, as Democratic presidents have seldom deviated from the same orthodox economic theories prior to Reagan.)  But there’s simply no correlation between Democratic spending agendas and periods of economic downturn in post-war America.  Quite the opposite, in many cases.

As for tax rates, here’s a breakdown of the tax rate paid by the highest income brackets during the longest period of sustained economic growth in American history (the post-war era).  For taxable wages over 400,000:  1951, 91%; 1952 – 1953, 92%; 1954 – 1963, 87%; 1964, 77%.  And for taxable wages over 200,000: 1965 – 1967, 70%.  Now, tell me again why cutting taxes on the highest earners is necessary for economic growth..?  Oh, wait: you can’t.  Taxing the wealthy has not led to any statistic drop in economic growth, and the periods of highest taxation for the wealthiest have usually been in periods of rapid overall economic growth.

The ideological orthodoxy is that lower taxes encourages the wealthy to invest more, when in actual fact every significant tax decrease (including the one Bush passed in 2001) has been followed by a marked decline in investment.  Conversely, when a smaller slice of the profit will reach their own wallets, the wealthy have usually been driven to greater investment, since rapid growth in overall income is the only way to increase the size of their share.  Conpare that logic with the historical record of actual investment and economic growth, and the bullshit pedaled by the anti-government think-tanks is effectively dispelled.

Now, here’s a short-short look at some of the impacts of economic policy on our overall growth.  The first big crash of this past century followed the 1920s, which were characterized by the same sort of lending practices we’ve seen under Bush (buying on margin, lending without sensible restrictions, etc.).  Economic growth was spectacular but unsustainable, as it was built on speculation.  The fall was a result of classical economics not being fully understood; Hoover’s attempts to turn it around followed all of the textbooks, and made things far, far worse.  In essence, Hoover did nothing wrong; he simply followed the classical laissez-faire doctrines.  This should be a warning to those spreading a neoclassical economics to-day, but it isn’t…

The next big crash was in the 1970s, which you _should_ be able to remember.  Several years of Nixon cutting into the Bretton Woods consensus contributed to an eventual 9% national unemployment rate and inflation over 12%.  And the next big recession began with Reagan (not Carter), and was driven by unaffordable tax cuts in 1981, extremely bloated spending (Reagan massively increased the size of the federal bureaucracy), and a determination to beat inflation by raising interest rates; they eventually hit 20%, and our industrial capacity dwindled as a result.  We were able to beat this downward spiral following Reagan’s 1984 tax increase, which reversed many of the 1981 cuts.  And incidentally, the largest single-day drop in the markets occurred on Reagan’s watch, in 1987.  Hmm…

My criticism of people like Reagan is based on their actual policies, not the media or “liberal” academics.  To argue otherwise requires you to discount history in favour of ideology, which makes you no wiser than the Stalinists of the 1950s, who were so eager to ignore Soviet atrocities for ideological reasons…  So long as you keep reading fairytales about Reagan, you’re open to the same critique.

And hey now, calling academics “America haters” is nothing but ignorant bullshit.  The rightwing propaganda machine has done an excellent job of breeding generations of idiots with no interest in their actual history, and an irrational fear of journalism to boot.  I haven’t been “absorbing” anything from wingnut professors; I’ve been reading serious histories for more than twenty years and doing research in the primary documents myself.  You’re free to stick your fingers in your ears and believe in conspiracy theories about the media and academia, but don’t expect me to call it anything but asinine, ignorant drivel from dishonest pundits and uneducated ideologues.  I’ll take the real fucking world and verifiable facts over wishful think