What do Milton Friedman, Ronald Reagan, and the current US Congress have in common with Joseph Stalin?
No, it’s not that they are dead.
Recently I appeared on one of those TV shows where a right-wing host interrupts the guest frequently. (Not that I had realized what it was. I had not heard of the guy, Glen Beck, and the producer had only told me they wanted me to talk about Washington’s reaction to new recession fears.) On the show I said I thought it would be a good idea if the recipients of tax rebates this time around included lower-income Americans, at least those workers who did not make enough to pay income taxes, but who did pay payroll (social security) taxes. This would be in contrast to the last 7 years of tax cuts which have left these people out. The TV host’s reaction was “Welcome to the show Mr. Stalin.” A media watch site called Media Matters for America picked this up, as an egregious comment even by the standards of talk show hosts. Of course the Democratic and Republican leadership of Congress, with the encouragement of the White House, have decided to include precisely these lower-income workers in the tax cuts this time. So I guess they are Stalinists. And Milton Friedman originally proposed the negative income tax, which was enacted as the Earned Income Tax Credit, and became highly successful when expanded by Ronald Reagan (1986) and Bill Clinton (1993). Quite a few Stalinists around!
I think the serious point is that conservatives like to think that they are keenly aware of the adverse effect of marginal tax rates on work incentives. Effective marginal tax rates on lower-income Americans trying to lift themselves out of poverty can be higher than on ultra-wealthy Americans. Yet the fixation of the Republican party from 2001 to 2007 was to make sure that the tax cuts went largely to the upper end and that they excluded workers at the bottom. Incentives are a third argument for tax rebates at the lower end, in addition to the two more familiar arguments we have been hearing: (1) income distribution, and (2) lower-income Americans will spend the money, which is supposed to be the point of the new fiscal stimulus.
That is typical Glen Beck…whenever I watch (accidently)his show, he acts as if he knows the whole stuff and interrupts opposing or different views right away…he has no patience to listen to new ideas and he thinks he can give the best ideas…this reminds me of Lou Dobbs, who once used pretty abusive words criticizing free trade economists…these are the two shows I don’t watch on CNN because I feel like watching O’Riley’s show on FOX!
welcome to econ blogging world, Joe.
Great story, after blogging for a while, that one will seem tame.
Jeff - we’re glad you’ve joined the economist blogging community! And as I noted over at Angrybear, your 1st post was absolutely brilliant!
What, pray tell, does the Republican Party have to do with conservatism?
The Republicans are an alliance of convenience: people who view wealth as a zero-sum game of predation, American Talibs, ultranationalists, a few odd libertarians, and those post-Trotskyites called “neocons.” None of these groups likes each other all that much (except maybe the neocons and ultranationalist), and most of them are not particularly conservative in any sense cognizable to a political theorist. (The libertarians take individualism to an extreme; the Talibs are too echatological; the neocons have no respect for continuity; the others have no ideology whatsoever.)
Each part of the alliance is in charge of what it most holds dear: the predators the economy; the Talibs the social structure; the ultranationalists and neocons foreign policy. (The libertarians are there to give the whole enterprise a thin veneer of intellect.) Why should the predators be sensitive to incentives? All they want is more.
Glen who?
While I disagree with conservatives and progressives on the stimulas package as sound economic policy I think that lower income people shouldn’t be left out.First,almost everyone pays taxes in some form.Communication taxes,cable taxes,taxes embedded in rent payments, ect. or just plain income taxes.The problem with our economy is due to an irresponsible fiscal policy that overspends on both ends of the income scale and a monetary policy that debases our currency and helps hide(temporarily)the effects as well as a regulatary system that hinders competition and entry into what is anything but free trade in a free market.
Joe S. @4
Spectacular comment. Concise, intelligent and comprehensive. I’d love to see it at http://www.crooksandliars.com/, if you would be so inclined…?
[...] when expanded by Ronald Reagan (1986) and Bill Clinton (1993). Quite a few Stalinists around! Fiscal Stimulus: What do Ronald Reagan and Joseph Stalin have in common? | Jeff Frankels Weblog | Vi… I don’t hear that level of stridency (or frequency of Nazi-invocation) coming from the left.. Look [...]
Dear Joe S.,
What, pray tell, does the Democratic Party have to do with liberalism?
The Democrats are an alliance of convenience: people who view wealth as manna dropped via government helicopters from the sky, pacifists, quasi-vegetarians and full-bore sentimentalists, blindfolded labor union junkies, America-hating Europhile socialists, minority leaders that pretend nothing has changed since the 60’s, and some nonprofit and government apparachniks that know which social issues keep their bread buttered. None of these groups particularly agrees with any other group, that is if there is in fact any logic to their stands, and most of them are not particularly liberal in any sense cognizable to any educated person who knows history (and that means the history of the world back before Britney Spears and even before the Chicago 7).
The only thing that they could all agree on is that the government should give them more, and take more from someone else; that the cure for failed social policies is always a bigger budget, not a re-examination of the policy; and that somehow whatever happens in the world, America is at fault.
Hi Jeff, congratulations for your new blog and i wish you many more thought-provoking posts.
Also i just wanted to ask your opinion on the proposed fiscal stimulus package. Since most of this package will be spent by the consumers in purchasing goods and most of these goods are going to be imported (from china for example) do you still believe that the package in its present form will be sufficient to reduce the risks of a recession? Wouldn’t it be perhaps more appropriate for the government to employ more workers either in the public sector or indirectly in the construction industry (for example in large scale public works)? The japanese did the same although i am not quite sure how effective they were. In any case the construction sector seems to be one of the worst hit by the current slump and since many of these people are contractors they might not show up in the official unemployment figures.
The Republicans are an alliance of convenience: people who view wealth as a zero-sum game of predation
In my experience, Republicans are much more likely to believe in wealth creation than Democrats. I’ve talked to a number of otherwise very smart people who honestly don’t believe that wealth can be created (or destroyed). If I believed that, I’d be a Democrat too. In a zero-sum world, A’s gain is B’s loss… that’s bad. In a positive-sum world, A can gain and B can remain unchanged… and while some people view that as bad, I’m afraid I just don’t.