The 1% Already Won!
It always annoys me when very wealthy people whine and complain that they may have to pay more taxes. Those of us who live paycheck to paycheck say Waa, waa, waa. The GOP and the wealthy threaten that higher corporate taxes will cause productivity to be reduced and therefore people’s wages will be reduced or workers will lose their jobs. Conservative economists argue that taxation reduces economic activity. “When you tax people, you usually cause them to reduce the amount that they do the thing that is subject to the tax.” So if investments are taxed, then rich people reduce their investments. Taxing consumption reduces consumption. “Anyway, the basic message is that the more the government tries to shift income around, the less total income there is to distribute. The more equal you force your society to be, the poorer it gets.” The GOP repeats this threat ad nauseum. They believe if they say something often enough people will begin to believe them.
Economist Arthur Okun described redistribution from wealthy to poor was like using a leaky bucket. This theory was named as Okun’s bucket which states that some people are helped but along the way some money is lost from leaks. So, “Mostly, they focus on trying to quantify the trade-off between equality and efficiency. That may seem a bit heartless, but to many economists, it feels like the most objective way to approach questions of redistribution” These are the views of Noah Smith. https://www.bloomberg.com/view/articles/2015-11-25/leaving-the-justice-out-of-wealth-redistribution.
The question I keep asking is why it is okay for redistribution to go up to the 1% but not down to the 99%. The redistribution of wealth up to the 1% has been happening since Regan. When regulation was reduced, big business won and our citizens lost. When the EPA was hamstrung, big business won and our citizens suffered from poisoned water and air, death on the job, confiscated wages etc. Over and over this happened until finally war and more deregulation catapulted the wealthy into the stratosphere.
In To Raise Productivity, Let’s Raise Wages Brenden V Dukes argues that a slow economy is due to a lack of demand and that “weak demand is the main reason for slow business investment growth in the United States. This suggests that policies that raise demand—such as low interest rates and increased infrastructure spending—will cause companies to raise investment as they expect stronger sales as a result of job and wage growth.” https://www.americanprogress.org/issues/economy/reports/2016/09/02/142040/to-raise-productivity-lets-raise-wages/
As congress begins to grapple with next year’s tax structure let us hope that they can absorb the lessons learned in the 1930’s and 40’s, when policy makers turned “the Great Depression and World War II into the most rapid improvement in living standards ever.” https://www.americanprogress.org/issues/economy/reports/2016/09/02/142040/to-raise-productivity-lets-raise-wages/