Of the many things that are terribly wrong with our current tax debate, one primary offender is the notion that tax cuts will unleash massive growth effects. If facts could kill this mythology, it would be long dead.
…but a great, new paper just landed on my desk that takes a clever approach to this question of the impact of progressive, market interventions on growth and jobs. Ian Perry of the University of California Berkeley Labor Center has a new paper out called “California Is Working” that tests this question in a sort of experimental framework by using California as an example of the conservative, anti-interventionists’ worst nightmare.
Moreover, we don’t need to set the evidentiary bar unnecessarily high in this sort of comparison. While his study is suggestive, Perry’s findings don’t convince me that progressive measures lead to faster growth and jobs. They do, however, in tandem with tons of other research, convince me that these progressive interventions do not hurt growth. The defense of the CPM against the onslaught of predictions of doom need not point to better growth outcomes. It could well be — in fact, I think it is — that these measures have little to do with growth and a lot to do with who benefits from that growth.
That’s why these issues generate so much heat from the affected industries and their lobbies. It’s not growth rates they’re really worried about. It’s who gets the money, the cleaner air, the health coverage and so on.
Remember this in the context of the tax debate, as its advocates assure us that unleashing growth requires tax cuts on behalf of wealthy households and multinational corporations. And keep these findings in mind next time conservatives inveigh against expanding affordable health coverage or raising the minimum wage or the overtime salary threshold. Though their cries will allege the squandering of growth and jobs, the evidence from California reminds us that what they’re really bemoaning is a more equitable distribution of wages, incomes and even power.