Tuesday, December 30, 2014


The numbers:
From 1947 to 1979, the postwar economic boom more than doubled median family income to $58,573 in 2013 dollars. Had earnings growth kept that pace through the careers of baby boomers, median family income would have topped $124,000 by 2013. Instead, it was $63,815.
Quite likely the postwar boom was a unique event driven by one-time changes in technology and society, so to compare it to more recent times is misleading. Still, it is clear that we are not doing very well by ordinary families.

John Harwood follows this up with a description of the plans various Democrats and Republicans have put forward to get the median income rising again. Some of them strike me as good ideas, viz., Larry Summers wants us to borrow $200 billion a year while interest rates are really low and invest it in infrastructure; other Democrats want big investments in education. The main Republican idea is still tax "simplification," that is, closing "loopholes" so we can reduce overall tax rates, and I think this is a sham. On the other hand I am not sure cutting corporate taxes is a bad idea. If reducing our corporate tax rates would get more companies to locate in America, that would presumably help a little. So I would support that, and in fact I would support eliminating corporate income taxes altogether, provided we make up the shortfall by raising income taxes on the rich.

But none of this will transform our economic situation. I think we are stuck with slow growth for another generation, which to me means we should focus on distributing what we have more equitably (by high taxes on the rich, a higher minimum wage and support for unions) and using it more productively (building trains instead of fighter planes).

1 comment:

G. Verloren said...

To comment merely on one small facet of this larger issue, I've always felt the true problem with corporate taxation is less to do with the degree to which they are taxed and more to do with the degree to which they are held accountable for their actions and driven to contribute positively to the nation on both the local and federal levels.

If asked how much corporations should be taxed, my answer is fairly straightforward - the more they contribute positively to society, the less they get taxed; and the less they contribute, the more they get taxed. Corporations in the modern age are too powerful and too pervasive to be allowed to operate solely for their own interests. If they are unwilling to invest in society at large simply of their own accord, then it falls to the government to make such investments for them using the money the government taxes from them.

Simply put, if artificial legal constructs are allowed to have this level of control over the lives of real people, we need to incentivize symbiotic behavior instead of parasitic. If we're stuck with a system where profit is the prime motivator, we need to make selfishness is less profitable than selflessness, and where long term wellbeing is prioritized over short term wealth amassment.