Your solution is…
Lifted from comments at Naked Capitalism
MC
So your solution includes taking money from those who saved and invested, and re-distribute it to those who spent everything they earned? As someone in the “saved and invested” category, I find that plan to be a non-starter.
When I was setting aside 15% of my income for savings and investments, paying extra on my mortgage, and driving older cars, I have friends who (at the same income level as my wife and I) literally spent everything they earned. They had lots of fun, and lots of new stuff that I didn’t.
Fast forward 30+ years, and now – in my late 50’s – I’m planning my retirement (before my 60th birthday). My friends? None of them are even thinking of retiring, and one couple has said they will need to work into their 70’s.
We made different choices, and ended up in different places – but that doesn’t obligate me to hand them what I have.Yves
What a bunch of total nonsense.
If you’ve been able to work on a consistent basis at decent enough paying jobs that you could save, it is substantially due to luck: being born into a stable middle to upper middle class family, being white and male, being born at a time when there was enough growth in the economy that you could land good jobs early in your career, which is critical for your lifetime earnings trajectory. Oh, and not having you or a spouse or a child get a costly medical ailment that drained your savings. And not winding up in a job where you were being ethically compromised and stood up against it, resulting in career and earnings damage.
Did you miss that college grads had a worse time that high school grads and even dropouts in landing jobs in 2008-2010? And getting no or crap jobs then set them back permanently? And this includes graduates in the supposedly more “serious” STEM fields, where contrary to DC urban legend, there aren’t a lot of entry level jobs. You do well if you find employment, but save in a few niches like petroleum engineering, the unemployment rate is actually worse for STEM college grads overall than liberal arts grads.
……………..
…inflation is created in the real economy due to any of commodities inflation (cost-push inflation), wage-pull inflation (created by too much demand, or in MMT terms, too much net government spending) and more recently and not sufficiently acknowledged, by monopolies and oligopolies (see pricing of cable services and drugs, which have monopolies via patents) . Interest rates are a different matter and are controlled by the central bank. We’ve had risk-free interest rates below the inflation rate for years now thanks to the ministrations of the Fed.
Central banks have the power to kill the economy (raising interest rates so high that it induces inflation) but not much/any power to stimulate (save goosing asset prices, which only trickles down a bit to the real economy). The cliche is “pushing on a string”.
Me, my big proposition for America is to re-distribute core economic and political power — from it’s current concentrated ever more at the top state to the fairly distributed condition we had in the 1950s-60s (if you were white).
Cannot anybody argue with that, can they?
Easy path: what percentage of US employees earn less than $15/hr and would line up around the block to sign a ballot initiative (in applicable states) to make union busting a felony (or any other power restoring measure like mandating sector wide labor agreements or banning replacement workers)? Don’t answer yet.
What percentage of US employees have lost 5% of overall income share (33% of what would otherwise be their current share) since 1968 — and would line up around the block to restore their 5% (33%). Now answer.
Both same: 45% — desperate enough.
That is really 33% less of twice as much due to economic growth over decades — but — people judge their well being as compared to others — and besides — very bottom 10-15% income are incomprehensibly down in absolute terms (!) (compare today’s $7.25/hr federal minimum wage to 1968’s federal $11.45/hr).
https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=1.60&year1=196802&year2=201705
15% super desperate enough to line up around the block.
What percentage of the number who voted in the last gubernatorial election are needed to put an anti-union busting initiative on the ballot — which in California goes straight on the law books if it wins?
5% — of registered voters (365,000 out of a state population of 38,000,000).
Lining up around the block: should be our preferred form of political demonstration. Everyone will want to join the fun (go to the front of the line, we signed already). We might get 1% of the population out collecting signatures of registered voters.
Synergy: campaign should encourage minority voters who usually over stay home to get out and vote.
After tax profits are at a record share of GDP and income of the saver class — top quintile of income — is at record levels. Moreover, this just reflects the trend since 1980.
The republicans and supply-siders have been claiming that giving these groups more tax cuts would lead to greater investments and stronger economic growth.
But we now have almost 40 years of economic experience directly contradicting their theory. Every advocate of tax cuts should be required to explain why their theory ha failed.
As much as I try, libertarians gross me out. What kind of people can stand to be around them other than libertarians?
actually, the cliche is “pushing up a rope.
Yves us right enough in her analysis, as are the three commenters so far. But you’ll never convince that guy who, lucky or not, worked at a job for forty years, made some money, saved it, and thinks it’s his… you”ll never convince him he should give it to someone less fortunate than he is, especially if he has seen people who can’t find or hold a job and don’t save what they do make, especially if he has heard some political people “demanding” “the rich” “pay their fair share.”
I understand about the luck. I think most workers understand that too. thing is, even they don’t want to be forced to give their money to someone with even less “luck.”
i think you’d do better if instead of emphasizing the need to make everyone equal, you concentrated on the unfair practices of some of the rich and the politicians who enable them. even “the rich” don’t like to be cheated.
it’s a tough sell either way, but you got the war on poverty votes in the sixties. you lost them when the war on poverty made more enemies than friends. might be worth honestly looking at why… no doubt that would include the lies of the right.. but for some reason those lies were believable enough even to those voters who “vote against their own interests.”
It’s 90% luck of the draw from birth to death.
The only thing I did different was drive my new vehicles until they were at least 20 years old or were totaled. Of course other than my 1965 Chevy pick-up ($700 cash purchase in 1976 with bed rails caved in, doors and huge dents, brakes hardly working, 3-speed tranny going on the blitz every other drive, original split rims with tires showing more thread than rubber), I never bought a US made vehicle either so European and Japanese vehicles lasted almost forever with one engine change or major redo…. I don’t think I ever sold a vehicle with less than 300k miles on it…. and they all worked perfectly even then.
My only other economic philosophy was save when everybody else was spending and spend when everybody else couldn’t. But without the luck of a steady high paying, high benefits job that philosophy wouldn’t work. And my steady as a rock high paying and high benefits job was pure unadulterated absolute luck.
Much of the luck was that Vn war and draft kept me in college long enough fo graduate.. with holes in my shoes most of the time.. working my way through The VN war option was economically appealing in a relative sense at the time, but getting dead wasn’t one of my preferences in life. It’s all luck.
And then we can go back to why I was smart enough to get into college at all… which came from a) my parents genes, b) my father was a teacher and thus education was important above all else for kids and especially girl chasing teen-age boys, and c) we moved to Europe so I got one of the best high-school educations by any US standards.. on the taxpayer’s dime (e.g. public education).
@EMichael–I live in the Virginia suburbs of DC. A couple of years ago, Virginia started issuing Don’t Tread on Me specialty license plates that have absolutely taken off like wildfire among the libertarian crowd. I would estimate that already around 1 out of every 20 vehicles around here now have those plates, their drivers completely clueless as to the fact that without the federal government the economy here would completely collapse and they would be destitute.
Libertarians are selfish, childish individuals with the emotional IQ of a 7-year old. Their utter lack of comprehension that if 100% of the population suddenly adopted their beliefs civilization would quickly crash and burn makes them utterly hopeless and quite contemptible.
I never understand people who talk about “my money”. Unless your name is on it, you only get to use it. Queen Elizabeth can talk about “my money” when it has her name and face on it. Just about all of the money I have says “Uncle Sam” on it in one form or another, so I figure Uncle Sam gets to take a cut when he does right by me and gives me even more money. Way to go Uncle Sam. People who talk about “my money” are either very naive or extremely ungrateful, usually the latter.
Kaleberg
Of course, when Jesus said “Render unto Caesar that which is Caesar’s, and render unto God that which is God’s,” they crucified him.
And while I agree about Libertarians being somewhere between two years old (the terrible twos), and fourteen (it’s not fair that Dad won’t let me drive his car)…
what most people mean when they say “my money” is that they did something to “earn” that money, even if what they did was at least borderline criminal, that’s not the way they see it. I am sure you already know this, but it might be worth thinking about when you choose a campaign slogan.
I have sympathy for both sides in this dispute. The key issue is that a certain amount of saved wealth should be respected as personal property. There is a difference between taxing income (which for instance will in turn affect real estate prices and government services and taxing wealth – which is hard to measure and can end up seeming like theft). I am all for the idea that wealth should only be taxed when it changes hands – in particular I think inheritance taxes are necessary and importance for wealth above a certain threshold. But if you think about people like sportsmen, who have short uncertain career and sometimes highly rewarding careers, or people who move countries a lot, being able to take their wealth with them may be a simple question of comfortable survival.
Redistribution is necessary, how you do it matters, a lot.
Reason
I agree with you. Not sure which side of the “dispute” I am supposed to be on.
I think taxing wealth is “theft.” It is taking away something you already have. Taxing transactions (income) is not theft. It is introducing a factor into the transaction which you are free to agree to or not. You accept a price for your services, or agree to pay a price for someone else’s services, knowing that part of that price includes money that you both accept (in theory) as the easiest way to pay for government services hard to measure or pay for on an individual basis.
Trouble with my theory is that there are people, many people, who think of their wages, or their profit, as “their” money, all of it. So if, for example, I get X% profit, or interest, on some stocks or bonds, I cry all the way to the bank about having to pay a “double” tax… even though I knew what the tax would be when I bought the bond or the stock or made the sale and weighed (one way or another) that into the bargain.
and while redistribution is necessary, there are better ways to do it than “demand the rich pay their fair share.” The rich should, and mostly do, but that “demand” angers them and de-moralizes those to whom it is redistributed. Better to let the government find useful work and pay a living wage to those who are not good at finding it for themselves.
The problem as I see the issue is that those who believe it’s there money being take have fallen for the “theft” meme.
The meme sets government up as a person or entity that is actually pocketing a piece of the action. Like a middle man.
And this gets to my issue with the framing and meme’s the dems come up with.
Every dollar the government collects comes back to us in some form. The question and issue thus becomes, what forms of government returning our money (government spending) benefits us the most.
Thus, it’s not that government is “taking our money” and “giving it to others”. It’s not that taxes are bad. It is that the way we have been putting that money back into the peoples hands has not benefited the most people.
We have not actually invested in ourselves since Reagan. I can not think of one thing we have done large that resulted in a greater net worth like the highway system, the space program. Before that the railroad and canals. Education, water and sewer systems.
Becker
I think most people think of taxes as theft. I tried to make a distinction between the government coming into your house and taking away things you think you bought with your own hard-earned money… and the government putting a tax on transactions in order to collect the money that “we as a people” need to spend on things we cannot reasonably buy as individuals (defence, highways, courts, and, apparently, retirement and health insurance).
The people being taxed at the time of transaction (sale of goods and services, including bargaining for a wage) are to a first approximation free to take or leave the transaction at the bargain price plus tax. You factor in the tax to arrive at a bargain price you are willing to accept.
I thought this was a pretty clever answer to those who complain about “double taxation” or otherwise “unfair” taxation. But apparently I can’t get anyone to buy it.
I don’t think your “taxes come back to us” argument will work for most people. They don’t think the taxes come back to them, and they always think someone else is getting the biggest piece of the burfday cake.