Tuesday, August 2, 2011

‪The Punk Patriot Fixes The USA's Economy‬‏ - YouTube

‪The Punk Patriot Fixes The USA's Economy‬‏ - YouTube

I like Asher, especially his passion and willingness to take on all comers. He's informed, he's smart, he's honest.

The free market fundamentalist trolls who post on his youtube videos take his radicalism for stupidity, but they are very wrong. Radicals often are [out of Darwinian need?] smarter than their critics, and the Punk Patriot demonstrates more intelligence in this one 9-minute clip than has been aired in 10 years of Fox News broadcasts.

I accept his moral/ethical arguments... clearly, the pendulum has swung waaaaaaay too far in favor of capital & capitalists & corporate executives, and against the median worker. When virtually ALL of the economic gains made in the USA over the last 30 years have gone to the top 10% (and most of that has gone to top 1% alone!), while the median household only manages to tread water [with prospects for worse], then there is something seriously wrong going on here. One man's right to pursue unlimited wealth cannot be allowed to cause the beggaring of his neighbors (or otherwise put us back on the raod to economic serfdom). Ultimately, it is unfair and morally unjust.

Only Ayn Rand [or her proto-hero, William Edward Hickman, a sociopathic serial killer from the 1920s] could fail to grasp this.

But I don't share his modern post-Marxian viewpoint. At least, not fully.

A labor-only theory of value is, IMO, deficient. Labor is a source of value, but not the only source. Capital is another. There are others, depending upon how complicated [read: realistic] your economic model is. [Government can be, e.g., the potentially massive positive externalities from public goods.] 
And truth be told: I'm simply not comfortable wearing a Marxian mantle [of whatever variety]. My central philosophy of Delphian 'balance' bars it: I am constitutionally incapable of being a radical.


One of the commenters asked if Asher would also advocate a maximum value on corporate shares, in addition to his maximum income proposal. I would have thought he would, given his labor-based theory of value and his recognition of the unfairness of a system that has created the worst income & wealth inequality since the Gilded Age (and its frequent financial panics & ensuing economic busts). At the very least, I would have thought he would support something like Steve Keen's proposal to redefine ordinary shares as limited life annuities.

I don't agree with either of the policy prescriptions: his max income or Keen's share redefinition.

First, there's the practical political problem: I prefer policies that actually have a snowball's chance in hell of being implemented.

30+ years of conservative propaganda & grassroots movement organizing have done their job... most of America believes the free market fundamentalist idea - empirical evidence, superhuman foundational assumptions and morality be damned - to one degree or another. Most voters don't/won't get the fairness proposition, at least for the forseeable future.  For better or worse, most voters believe that freedom to pursue unlimited income is axiomatic and, thus, unassailable (much like the Austrian School's praexological tautology).  I don't like it, but it is what it is.

Second, as my econ professors loved to ask, what are the secondary [and tertiary et seq] effects?

Capping executive incomes might produce all sorts of nasty distorted incentives and disincentives that may bode ill for both economic efficiency/growth & allocative justice. For instance: 
  • the diminished work effort of executives towards achieving corporate success [however that be measured]; 
  • excessive enforcement costs as executives and corporations seek to game the system to avoid the intended limit (e.g., by splitting the corporation into two, one for the execs & the other for the peons); 
  • an even greater tilt towards capital forms of executive compensation (again, as the robber barons seek to game the system), conceivably resulting in worse income/wealth inequality (via the preferred tax treatment of capital gains);
  • a flight of brains/talent to foreign shores, where the cap doesn't apply/isn't enforced;
I am sure there are other significant negative effects & externalities that I can't even begin to guess.

Finally, I invoke Occam's Razor to suggest that there is a much simpler & thus more efficacious policy remedy available:  reform the tax code. 

Equalize the tax rate on all forms of income, whether earned from the sweat of labor or investment of capital.  Why is capital income favored over labor income?  Why should my income from salary & wages be taxed more heavily than income earned from [financial] capital investment? 

Make the overalltax burden more progressive.  Flatter is NOT fairer.  Even Adam Smith, the great hero of the literate right, whose Invisible Hand serves as the godhead for conservative mercantilists everywhere, had to admit that the tax system should be progressive, not flat (or worse, regressive):

The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. A tax upon house-rents, therefore, would in general fall heaviest upon the rich; and in this sort of inequality there would not, perhaps, be anything very unreasonable. It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but soething more than in that proportion   (Adam Smith , An Inquiry into the Nature And Causes of the Wealth of Nations (1776). Book Five: Of the Revenue of the Sovereign or Commonwealth. CHAPTER II: Of the Sources of the General or Public Revenue of the Society. ARTICLE I: Taxes upon the Rent of House)...

 This will require adding MORE tax brackets, particularly at the upper income/wealth sprectrum.  Reducing the the number brackets in  the name of tax simplification is a ruse, meant to distract the faithful inhabitants of Oz from looking behind the curtain.  Collapsing tax brackets is simply a scheme to transfer even more income/wealth from the bottom to the top;  it utterly fucks the so-called middle class, and even performs a skilled rimjob on the upper middle -to- merely well-off class.  More tax brackets are required to deal with the order of magnitudes scales of inequality involved (incomes over $250K/$1MM/$10MM/$100MM/$1B, respectively).

Broaden the tax base, eliminate loopholes, and minimize tax beaks.  Tax everything:  consumption, investment, income and wealth.

Progressively tax financial speculation:  a 0.5 ~ 5 basis point tax on every financial transaction [stock/bond/mutual fund trades, credit default swaps, derivatives, commodities, currency trades, yadda, yadda, yadda].  Besides falling primarily on the rich and ultra-rich, this has the added benefit of discouraging the kinds of financial speculation inherent in a modern capitalist society characterized by a credit-based money & monetary institutions (as per Minsky's Instability Hypothesis).  Even if it cannot, in and of itself, completely prevent financial crises, such a tax would at least provide a means for paying some of the cost to clean them up.  See Dean Baker over at CEPR for details & further rationale.

Taxes are far more politically palatable to the real world USA voters than a maximum wage, which could so easily be characterized as contra-freedom.  Taxes are a price of freedom, the price of the benefit of living in a society that enables the pursuit of happiness.  Voters can get that.

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