Open Left

I Believe tjfxh Mentioned This Somewhere (4.00 / 2)

I don't think anyone doubts the capacity of taxation to alter spending & consumption patterns.  Which is why some folks want to make sure that no one thinks very clearly about the subject.

I remember raising the issue with an economist back in the 70s that it was intuitively obvious that $1 meant a lot less to a millionaire than it did to someone working for poverty wages, and thus it clearly increased net human welfare to redistribute wealth.  He objected that we had no empirical evidence for it.  I pointed out that millionaires gain and lose thousands of dollars, if not more, in the stock market every day without even noticing--something no one working for minimum wage could ignore, and that sure looked like empirical evidence to me.

Nearly 40 years later, I'm still waiting for a come-back reply.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

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by: Paul Rosenberg @ Tue Jan 26, 2010 at 15:45:30 PM CST

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Excellent (0.00 / 0)

I'll have to remember your argument. It's brilliant and obvious.

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by: TSlavin @ Tue Jan 26, 2010 at 16:26:03 PM CST

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i can come up with some arguments against it (0.00 / 0)

they're generally stupid in a wealthy economy imo, but some run as follows:

taxation on the wealthy reduces savings = reduces investment
excessive consumption --> inflation in wage goods --> cycle of increasing wages, progressive taxation, and inflation
etc etc etc
taxation on wealth --> disincentive to grow wealthy --> reduced overall risktaking / entrepreneurship / investment --> lower aggregate production

in a nonwealthy economy (i.e. where scarcity of capital is a more serious issue) you have similar arguments but the stakes are upped.  not clear whether or not they're any less stupid but you do have an additional dimension to contend with (societies attached to nonwealthy economies tend to get dominated in global capitalism)

anyway, all of these arguments depend on looking at the actual social context and defining policy accordingly (and in accord with your own beliefs about what makes the most sense - there are certain presumptions that go into all of these things about how people behave and what kinds of social organisation work).  for example, if you have a fairly equal society and demand as a whole is outstripping supply and you're interested in pursuing capitalist growth (this is one of thsoe presumptions) then it would make sense for you to policywise divert some money towards accumulation (whether through the state or the private sector or individuals).

but that is not the situation we're in - we have demand that is too low, excessive inequality (economically - not just politically), failing infrastructure, relative (if slight for now) decline globally, etc - which is why all the policies pursued by the u.s. elite today are so incredibly moronic when taken as a whole if they are interested in the welfare of the united states.  

of course, i come to that conclusion partly because i can't bring myself to believe that they in some sense the financial class is seceding and is just waiting for another market to plow their money into and don't give a f"£k about anyone else.  even though they keep saying that's what they're doing.

and of course, no one seems to notice that their 'choice' leads to public spending in the only area that's politically palatable besides benefits for old people- what's euphemistically called 'defense' - in order to keep society going...and hence we get wars.  because what point are toys, armies, and miliatary bases and entire communities built around them if they're not going to be used?  they have to justify themselves somehow.

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by: dr anonymous @ Tue Jan 26, 2010 at 21:15:28 PM CST

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First Off, Those Aren't Counter-Arguments (0.00 / 0)

Those are entirely different arguments about the macroeconomic performance of economies with different sorts of tax structures.  They are related arguments in terms of a range of potential policy implications, but they don't address the same fundamental issue that I brought up, which is a foundational challenge to the assumption that the value of a dollar in the economy is the same, no matter who has that dollar.

In fact, none of the arguments you present would restore that presumption, they would only, at best, show some sort of countervailing effect--although that is highly doubtful in light of a 2005 study by the Center for Economic Policy Research that I plan to blog about this weekend, which shows that the neoliberal era (1981-onward) has produced lower growth rates in developing nations than the previous quarter century, when more egalitarian policies dominated.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

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by: Paul Rosenberg @ Tue Jan 26, 2010 at 21:58:24 PM CST

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oh don't get me wrong (0.00 / 0)

i agreed totally with your basic point - the idea that a dollar has equal value to someone who makes $5.80 an hour as someone who makes $580 an hour is idiotic.  i don't actually see how anyone could disagree with that.

neoliberalism is a complicated thing - i don't think you can understand it in a developing country context without combining it with something like world systems theory or dependency theory.  also, the specifics are very different from the media-related stories in some cases (e.g. the level of state involvement in india's 'post-liberalisation' economy would make most american policymakers scared).

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by: dr anonymous @ Tue Jan 26, 2010 at 22:05:48 PM CST

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India and China Both (4.00 / 1)

are HUGE economies, and are clear exceptions to how the neoliberal development order has played out.

And I wasn't getting you wrong.  I just wanted to make sure that others didn't lose the distinction that I know you understand.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

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by: Paul Rosenberg @ Wed Jan 27, 2010 at 08:14:21 AM CST

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