Turned up to eleven: Fair and Balanced

Tuesday, July 29, 2003


Politics, Politics, Politics
"When you die at the palace, you really die at the palace" Mel Brooks
I have been reading Kevin Phillips fascinating Wealth and Democracy, which is an important lesson in the role of government in creating wealth, and the cycles of private v. public interest in American and world politics. The analogies between post-Civil War America, present day America, 18-19th Britain, 16th century Spain, and 17th century Holland are very compelling, if often loose. The overall notion is that economic powers come and go, and new ones take their place. Within those leading economic powers, societal and economic changes follow similar patterns- the rise of manufacturing or production, followed by the rise of financialization, followed by the decay of production infrastructure and total financialization of the economy. This emphasis on capital asset protection and growth of non-productive wealth leads to the fall of the economic power from past glory.
What is interesting about this to me is not just the historical pattern, but the pattern of wealth accruing within a nation, and finally the public opinion on wealth. First, let's be clear-there is not, never has been, and never will be laissez-faire capitalism. Government has always, always, always intervened on behalf of growing wealth. Whether it is the first colonial and American revolutionary fortunes built on war profiteering, to the later government backing of railroad development by use of eminent domain land acquisition, to later government support of research in technological development, government funding, support, and defense of capital is a constant of economic power. It's just that economic elites do not like the downside of government, which is to regulate the capital that it helped form. As a person with an interest in the economy and the polity, however, you should know that all of those great fortunes were dependent on government largesse, and therefore, on you.
Within the polity, in addition, there are waves of public sentiment in support of, and later against, the wealthiest few. It usually goes like this; at first, the public celebrates the fortunes of brave, risk-taking entrepeneurs and their rise to wealth. Inevitably, however, the quest for ever greater wealth leads to corruption, as the great fortunes buy influence in Washington (or London, or Amsterdam), and attempt to secure their own dominion. In the past, this has lead to sharp backlashes. Will it happen again?

Finally, my modest backlash proposal- A new tax bracket of 50% on income over 300k per year (essentially, the top 1%). Easy to explain, most people won't think they make over 300k if they don't (unlike the infamous 20% in the top 1% of 2000). It will scare off some big donors, although I expect wealthy Dems in Hollywood and Omaha will still support it. Additionally, the payroll taxes should be cut in half, on a percentage basis, but the cap should be removed. For the vast majority of people, this is a tax cut, but for the wealthy, it is a tax increase. Finally, my free advice to political animals is stop listening to analysts; the problem with Gore was not his populism (he won the popular vote) or his demeanor (he won the popular vote!) but rather his anemic sidekick (what state did Lieberman bring), his opponent on the left (thanks Ralph!), and some bad luck against some ruthless operators.

UPDATE: Coincidentally, Ruy Teixeira on his blog Donkey Rising essentially proposes the same thing as I did (he don't know from permalinks, so scroll down to July 28 "tax reform"). He has a lot more influence than I do, so maybe there is hope!

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