Soaking the rich

Matt Yglesias says

Many on the right and center indicate that in order to restore the economy, President Obama needs to do more to cater to the whims of rich businessmen. Many on the left feel that this is exactly wrong and that in order to restore the economy, President Obama needs to do more to stick it to the rich and dispossess them. History suggests that both are wrong.

He goes on to give plenty of evidence for the wrongness of the first proposition, and none at all for the second.

As has been pointed out many times, the Great Compression in income distribution during the 1950s and 1960s, driven in part by policies designed quite explicitly to “stick it to the rich”, was also a time of full employment and steadily growing economic growth. And, while the success of those policies made it sensible to focus on other issues, such as civil rights[1], rather than seeking to push economic redistribution even further, the situation is exactly the opposite today.

When the top 1 per cent have 25 per cent of all income and this share is steadily growing, a government that doesn’t soak the rich can’t do much more than spread the pain a bit more evenly, whether this means cutting services to balance the budget without higher taxes on the bottom 99 per cent, or squeezing out a bit of extra revenue to preserve essential parts of the welfare state.

There doesn’t seem to be much in the way of substantive disagreement here. In this recent post, Yglesias (if I read him correctly) endorses a top marginal tax rate of 80 per cent, close enough to the 90 per cent rate I advocated not long ago (this was really a rhetorical flourish, not an actual policy proposal).

So the problem seems to be one of strategy, but I’m not sure what it is. I admit that I can’t see a promising way forward at present (the revolts in Wisconsin and Ohio are the best signs), but I can see that reversing the flow of income to the top 1 per cent is a crucial precondition. I also can’t work out whether Yglesias is proposing to shelve the issue of income distribution and try to make progress on other fronts (a strategy I regard as doomed to failure) or has something else in mind.

fn1. In this context, let me point out the absurdity of the inevitable claim that the benefits of the Great Compression were only for white males. It was, of course true that, in 1950, Jim Crow ruled and women were subject to all kinds of economic and other discrimination, but these things were products of the highly unequal society in which they emerged. Racial and gender inequality reinforced, and was supported by, economic inequality. During the Great Compression, Jim Crow was swept away, the Voting Rights Act was passed, women gained the right to equal pay and protection against various kinds of discrimination. The Congress even passed the Equal Rights Amendment, which would have been another big step forward if the ratification effort had not been caught up in the rightwing reaction of the 1970s. The fact is that the Great Contraction produced more progress in civil rights, in the US, Australia and elsewhere, than any comparable period before or since.

29 thoughts on “Soaking the rich

  1. @Davi Allen

    The usefulness of this depends on the rate. With all these things – the devil is in the detail – some reports have this as a once-only contribution. So this could just be a typical act of ‘conspicuous charity’ by gin-soaked billionaires. No doubt Oprah, and Madonna will get into the act if their publicity agents can guarantee sufficient exposure.

    If the payment is structured as a ‘contribution’, then will they will seek a tax deduction in future years for this years ‘contribution’ (or some such trick).

    The French government was already working on taxing incomes over 1 million euros. This is more useful.

    Those companies and individuals with regular incomes over a million $A should be hit with greater tax scales than those on 55,000.

    We don’t need them to offer-up some other ploy in parallel.

  2. The ‘Great Contraction’ only occurred because the US was scared of Communism. The Soviet Union was powerful, China went Red, etc, and memories of the Great Depression (the latest of many) were fresh, so the rulers allowed a little social advance. They even allowed it in the de-colonising Third World, where socialist policies led to great advance.
    However, by the 1970s the Right could no longer tolerate seeing the rabble, who they hate with visceral intensity, doing so well. So the reaction set in, as did heightened belligerence against the USSR and China. And the poor world was flung back into penury by the contrived ‘Debt Crises’. Then, when the USSR disappeared, everything went into overdrive. What we have now, unprecedented global inequality and gigantic debt, deliberately incurred in the USA by tax cuts to the rich and gargantuan military expenditure, was all carefully planned and executed, precisely to provide the excuse for massive social retrenchment. This is the culmination of a neo-feudal project carefully planned and executed over decades. It has, unfortunately, run into ecological collapse and resource depletion, which the Right cannot acknowledge as it gives the lie to their huge, ego-driven, delusions of omnipotence and omniscience. They have, I believe, decided to ‘ride out’ these crises while facilitating and promoting Malthusian solutions in the poor world.
    We will not even properly understand what is destroying humanity, let alone reverse it, unless we truly recognise the forces at work. This goes beyond economics, politics and geo-strategy. This is a battle between Good and Evil, between Life and Death, ie a spiritual fight, being fought in the hearts and minds of humanity. Some human beings fear and despise others, and reject co-operation and collectivism because they do not wish others to enjoy a decent sufficiency of life’s goods. They prefer to pile up more and more of the common wealth in their own hands, and, the motivation being pathopsychological and insatiable (someone else will always have MORE)they will never stop, no matter how many others they impoverish in the process. The continued global dominance of the Rightwing dead souls, the fearful hence hateful hence destructive force that seeks comfort in riches and dominance over others, spells the end for humanity. This type had centuries of fun grinding the peasantry into the mire, invading the neighbours, conquering the New World and slaughtering the indigenous with genocidal relish, felling the great forests, exterminating or decimating the buffalo and passenger pigeons, the great whales and the various other ‘profitable’ species and mining and burning hydrocarbons, but that’s all over. We need a different type to lead humanity, and we need ’em fast. But how do we remove the incubus of the Right? Even today, as the environmental calamity reaches a frightful crescendo, they absolutely refuse to even acknowledge that it is happening, and are moving heaven and earth to stop the sane fraction of humanity from acting.

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