05 December 2010


Let the Bush-era tax cuts expire.  Create pressure for real, substantive, and economically and socially beneficial tax reform.  This paper is a good explanation of the reasons why this is what's required.  Progressive taxation is a prerequisite for a liberal democratic society.  The last time I checked, that's what the United States Constitution created (although recent Supreme Court rulings seem determined to interpret it somewhat differently).

The United States faced a similar situation after the Gilded Era, and the set of political and social changes (which included an unsustainable 90% rate of taxation on the wealthiest Americans) also produced a physical and social infrastructure that created real productive capacity, human capital, and real wealth creation which lasted roughly from 1946 - 2006.  The radical restructuring of taxation that began with the Reagan Administration and was completed by the Bush Administration has gutted our productive capacity and human capital, and has spawned bubbles and ridiculous schemes to create notional assets (see: derivatives, credit default swaps, mortgage-backed securities) that masquerade as "wealth".  What they failed to do was support an educational system and physical infrastructure that trains people for all types of work, and allows rapid development and implementation of new technologies.  Anyone interview recent graduates recently for positions that require thoughtful analysis?  Notice real gaps in achievement and accomplishment among mid-career professionals due to a lack of ability to manage lifelong learning?  Thought these might strike a chord.  Drive anyplace, and tell me that roads today are better than they were in 1990.  Don't even consider that our water and electric systems have been appropriately maintained.  As for mass transit and rail transit, join me and my fellow commuters on Washington's Metro system to see just how badly that's failed.

And for my affluent and wealthy friends, a gentle reminder: countries with great inequality in wealth and opportunity have a tendency towards violent and uncontrolled change.  See, for example, 18th Century France and 19th Century Russia. 

Finally, a very simple truth:  if you want something good, you have to pay for it.  States are not magical unicorns that poop cupcakes.  They take real individual sacrifices to create common goods that provide individual and collective benefits greater than what can be accomplished individually.

1 comment:

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