Category Archives: Social policy

High Marginal Tax Rates on the Top 1%

Optimal tax rates for the rich are a perennial source of controversy. This column argues that high marginal tax rates on the top 1% of earners can make society as a whole better off. Not knowing whether they would ever make it into the top 1%, but understanding it is very unlikely, households especially at younger ages would happily accept a life that is somewhat better most of the time and significantly worse in the rare event they rise to the top 1%.

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Wisconsin as a Frontier of School Privatization: Will Anyone Notice the Looting?

I never dreamed that a class I took in college, The Politics of Popular Education, which covered the nineteenth century in France and England, would prove to be germane in America. I didn’t have any particular interest in the topic; the reason for selecting the course was that the more serious students picked their classes based on the caliber of the instructor, and this professor, Kate Auspitz, got particularly high marks. The course framed both the policy fights and the broader debate over public education in terms of class, regional, and ideological interests.

The participants in these struggles were acutely aware that the struggle over schooling was to influence the future of society: what sort of citizens would these institutions help create?

As the post below on the march of school privatization in Wisconsin demonstrates, those concerns are remarkably absent from current debates. The training of children is simply another looting opportunity, like privatizing parking meters and roads.

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University of Southern Maine Becomes “Administration of Southern Maine” as Students Protest Faculty Firings

Earlier this year, it looked as if the University of Southern Maine might become one of the rare places where students and faculty would be able to hold the line against the yet more looting by the bureaucratic classes. The woes besetting the USM are a microcosm of how higher education expenses are escalating as a result of administration feather-bedding and vanity projects. When those prove to be too costly, it’s the faculty and students that bear the brunt of the expense-shedding. As Lambert wrote in March:

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Are Immigrants Bad for Government Budgets?

Yves here. One of the major charges leveled at immigrants in the US is that they use public services (the stereotype is that they show up in emergency rooms, which are not a taxpayer expense,* as well as send children to school) and don’t provide anywhere near the contribution to the economy in terms of tax contributions relative to what they extract.

Notice that that charge is implicitly made of illegal immigrants, who presumably don’t pay income taxes (although I personally know one who does, by virtue of being in an immigration Schrodinger’s cat uncertainty state and having a Social Security card and meticulously paying taxes for 15 years while no longer having a visa and not having become a citizen. Will not bore you whit his shaggy dog story). But their incomes are often so low that it’s not clear they’d pay much even if their taxes were reported, save regressive FICA taxes. Yet they do pay other taxes: sales taxes, gasoline taxes, and property taxes embedded in their rents.

There is a separate public policy argument about immigration and foreign guest workers on H1-B visas, which is that at least the way it is conducted in America, that in combination with an anti-labor-bargaining policies, cheap immigrant labor gives employers even more leverage against workers. This post focuses narrowly on the “are they worse than natives in terms of impact on the public purse?” The study focuses on the UK. One of the striking revelations is how little decent data there is on this topic, particularly in a country that has no where near the number of unofficial immigrants as the US.

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Government, Not the Private Sector, Leads Innovation

This video, in which economist Mariana Mazzucato discusses her book The Entrepreneurial State, explains how most of what you think you know about innovation is wrong. Innovation is not led by the private sector; it lacks the long term horizons and risk appetite to do so. Instead, the most innovative countries and regions have the state playing a very active role, not just in funding basic research or making sure markets work properly, as in limiting anti-competitive practices that can stymie new entrants. Instead, the state plays an active role along the entire value chain. One result of the wide-spread misperception that the private sectors deserves most of the credit is that businesses are able to skim a disproportionate level of the returns for themselves.

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Chris Hedges and Sheldon Wolin on Inverted Totalitarianism as a Threat to Democracy

Yves here. We’ve been featuring what we consider to be standout segments in an important Real News Network series, an extended discussion between Chris Hedges and Sheldon Wolin on capitalism and democracy. This offering focuses on what Wolin calls “inverted totalirianism,” or how corporations and government are working together to keep the general public in thrall. Wolin discusses how propaganda and the suppression of critical thinking serve to a promote pro-growth, pro-business ideology which sees democracy as dispensable, and potentially an obstacle to what they consider to be progress. They also discuss how America is governed by two pro-corproate parties and how nay “popular” as in populist, candidate gets stomped on.

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Can Capitalism and Democracy Co-Exist?

Yves here. Real News Network is running an eight-part series on capitalism and democracy, with Chris Hedges and Sheldon Wolin as interlocutors. I thought the second segment in the series, which is historically focused, to be particularly strong. It seeks to trace the evolution of what they call corporate capitalism, or what we’ve sometimes called Mussolini-style corporatism.

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Class Traitors: How Ideological Brainwashing Gets Rich and Ordinary Americans to Undermine Their Economic Interest

Linda Beale, of ataxingmatter, has written forcefully and persuasively about some of the propagandizing-accepted-as-gospel that the well-heeled use to advocate policies that advance their economic interests. For instance, as most Naked Capitalism readers appreciate, but a remarkably large swathe of the US population does not, tax cuts for big corporations are simply a transfer to the rich. From a post last year:

I’ve argued frequently in the past that there is no there there–i.e., that lowering corporate tax rates will do nothing to create jobs. Instead, I’ve said, it will simply deliver an even higher profit margin to be skimmed off by the highest paid executives and, possibly, shareholders. The higher profit margins are unlikely even to be used to increase workers’ shares of the corporate revenues through higher wages, a place where they could most help the economy other than new jobs created. Thus, the drive for “revenue neutral” corporate tax reform (cut corporate taxes, cut expenditures elsewhere to make up for the decreased corporate tax revenues) is just another example of corporatism as an engine of the modern form of US class warfare

Beale takes up a different theme today: how the rich and poor act against their economic interest. For many in middle and lower income strata in red states, hostility to the government is an article of faith even though those states (and many of those same govement-hating citizens) are significant beneficiaries of Federal programs.

But less well recognized are the ways that the wealthy are undermining themselves. They’ve taken the “increase our distance from everyone else” experiment well beyond its point of maximum advantage, not just to the society around them but also in terms of the costs to the class warriors.

As we’ve pointed out, highly unequal societies have lower lifespans, even among the rich; the shallower social networks of stratified societies and the high cost of losing one’s perch, in terms of loss of friends and status, creates an ongoing level of stress that has a longevity cost. Beale points out something we’ve mentioned occasionally in the past, that creating an underclass with inadequate access to medical services is a great breeding ground for public health problems. The fact that many low income Americans can’t afford to take sick days and health plans generally have high deductibles, which discourage individuals from getting treated until they are sure they are really sick, isn’t a great program design if you want to reduce the spread of infectious diseases.

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Uber Economics: There is No Such Thing as Bad Publicity

Yves here. This post on Uber raises a sobering point about activism and human cognition. How do you opposed a cause you regard as dubious without unwittingly legitimating it? For instance, remember when one of the many justifications offered for the Iraq War was that Saddam Hussein was in cahoots with Osama bin Laden? Even though that idea was patently false, efforts to debunk it actually reinforced the connection between Hussein and Bin Laden simply by featuring their names in close proximity.

If readers, particularly activists, have ideas for how to steer clear of effectively promoting ideas and causes you are challenging, please let us know in comments.

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The Financialization of Life

Yves here. One of the efforts the Naked Capitalism community has been engaged in is trying to understand and map our emerging political and economic order. Over the last four decades, massive changes have taken place in social values, in job security, in the importance of communities relative to other networks, like professional associations, and in the role of the state. Economists, social scientists, and laypeople have used various frameworks for describing this period. Understanding the driving process is important not merely for the purposes of description, but also for analysis, since a major question remains open: is this a last gasp of large-scale industrial capitalism, or is this the starting phase of a new economic order? We’ve tended to see this period as a self-limiting finance-led counter-revolution against the New Deal, but that may prove to be too optimistic a reading.

This Real News Network interview with Costas Lapavitsas, a professor in economics at the University of London School of Oriental and African Studies, takes a different perspective. Lapavitsas contends that financialization itself constitutes a new form of capitalism, which is supported by neoliberal ideology.

Independent of whether you fully agree with Lapavitsas’ framing, this talk gives a good overview of the major economic and political changes since 1970. His summary would be useful for those who could use a historical perspective on these shifts, or want a high-level understanding of the restructuring of modern economies without having to get too deep into the weeds. But even though this interview is designed to go down easily, it offers a lot of grist for thought.

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The Biocultural Origins of Human Capital Formation and Economic Growth

The substitution from child quantity to quality has been credited for mankind’s escape from the Malthusian trap and the advent of sustained economic growth. This column argues that biocultural preferences for quality faced positive selection pressure in the pre-growth era, presenting evidence from the founding population of Quebec. Individuals with moderate levels of fecundity had fewer children than those with high fecundity, but produced more descendants in the long run because their children enjoyed higher reproductive success.

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