David Brooks Bemoans the Low Standards of Living in Australia, Canada, Germany, Holland, Sweden, Norway, Denmark and Finland
In his NYT column today, David Brooks employs his standard column-writing formula of plucking two or more unrelated facts from their context and specifics, putting them into a sequence, and–voila!–suggesting a causal relationship, or at least a relationship of some sort, and therefore some conclusory fact.
This time around, he does it in the service of suggesting that the House Congressional Progressive Caucus’s proposed fiscal plan, written “by people hermetically sealed in the house of government”. Unlike, say, the Ryan plan, written by Paul Ryan, who has spent most of his career in manufacturing.
The CPC plan calls for raising the top income tax rate to 49%, taxing investment income at the same rate as other income, closing a variety of tax loopholes such as the carried-interest gig, taxing estates at their pre-2001 levels, and eliminating the corporate money-laundering-through-foreign-shell-subsidiaries option. It also proposes additional expenditures on such things as infrastructure and education. Brooks says all this means that the CPC members “believe that government is the [economic] horse, the source of growth, job creation and prosperity.” Not a source, but the source. Because this is a zero-sum game.
He first claims that these high tax rates for the top bracket, when coupled with other taxes–state and local taxes, sales taxes, gas taxes–would amount to about 60% of their income. But Brooks being Brooks, he then says, without explanation, that the rates would be “80 percent or 90 percent of somebody’s top marginal earnings.” Somebody’s, maybe, but it’s certainly not clear who’s. Anyway, this would “begin to change behavior and [we would] wind up with a very different country.” Which I don’t doubt.
“Higher taxes,” he says, “will produce long-term changes in social norms, behavior and growth.” Not necessarily bad changes, though, since no one is actually talking about taxing 80% or 90% of anyone’s income. No one serious in this country, anyway. But what would a David Brooks column be without a sleight of hand or two?
Brooks offers an illustration to buttress his argument:
Edward Prescott, a winner of the Nobel Memorial Prize in economics, found that, in the 1950s when their taxes were low, Europeans worked more hours per capita than Americans. Then their taxes went up, reducing the incentives to work and increasing the incentives to relax. Over the next decades, Europe saw a nearly 30 percent decline in work hours.
Yup. Those 40-hour-a-week labor laws here and in Europe sure lowered standards of living. Bring back sweat shops! Foxconn, not Siemens, is what we want our companies to be modeled after.
“A study last year by the economists Michael Keane and Richard Rogerson,” Brooks continues, “found that tax rates can have a surprisingly large influence on how much people invest in education, how likely they are to create businesses and which professions they go into.” No doubt. Get rid of the carried-interest break and start taxing hedge fund managers’ income at the same rate as salaries from working as an engineer, and some people who had planned to go into finance might instead go into engineering. Which would be awful for our society. And raising taxes to the rates they were when state universities received about 70% of their funding from the government rather than most of it from tuition, as they do now, might allow students to borrow–er, invest–far less to go to college.
I myself don’t favor a top tax rate as high as the 49% proposed by the CPC. Nor do I claim that the top tax rates in each of the countries I list in the title of this post has top tax rates that high. But what’s so striking and revealing about Brooks’s column is its utter untethering of actual standards of living from his litany of loose declarations of fact and silly conclusions. There is no apparent recognition in that column that the purpose of fiscal policy isn’t abstractions but personal and societal well-being.
There is, though, on the New York Times’s website today, in the Opinion section, a lengthy, detailed column that actually does exactly that, This one is not by a political pundit but instead by an actual working economist, albeit not one who Brooks would even read, much less cite: Joseph Stiglitz.* And, lo and behold, it demonstrates using relevant, rather than disembodied, facts and statistics, that the government-horse thing isn’t a zero-sum game after all. Unless it’s being ridden backwards by the Tea Party or saddled by a pundit who doesn’t work too hard even though he doesn’t live in Europe.
Raise David Brooks’s taxes a bit and he’ll cut his workweek from 20 hours to 15. Praise the lord.
*Stiglitz also is a Nobel laureate, by the way.