I say it's a Tom edition as he's always looking for where people who are apparently antagonistic ideologically in fact have a lot more affinity. I'm currently reading Reich's Aftershock-I wrote about recently.
http://diaryofarepublicanhater.blogspot.com/2014/03/on-jobs-morgan-warstler-and-robert.html
In that post I looked at how Reich and Morgan Warstler do kind of agree on the shape of the labor market-the difference being that Morgan thinks it can all be fixed by conservative 'structural reforms.' However, they both seem to understand that the labor market has really been hurting thanks to the data and Internet revolutions.
Of course, Reich is someone not always receiving the full respect of his fellow economists. I seem to remember even Krugman back in the 90s dismissing him as an 'economic stylist'-a withering criticism in economist circles like when Stephen Williamson calls Krugman himself a 'journalist'- though in recent years he's been more friendly.
However, I'm struck by his tax proposals. He actually favors a negative income tax-as does Sumner. He then favors a very low tax rate up to the $160,000 level. He has a wage subsidy of $15,000 for those earning anywhere up to $30,000 at which point it drops to $10,000 and then between $40,000 to $50,000 it's' $5,000. Of course, in practice this sort of thing is tricky to implement-after all if you make $49,999 you get an extra $5,000 where as at $50,000 you don't so this might lead to a lot people wanting to earn just short of $50,000-or $40,000 or $30,000; not saying this couldn't be gotten around, in this kinds of ideas, this is always a challenge. I mean, in our current tax system this is made up for by having marginal rates.
Then those who earn between $50,000 and $90,000 would have just a 10 percent tax rate and those between $90,000 and $160,000 would pay just 20 percent. He calculates the yearly cost to the government of these outlays as $633 billion per year. He calls for making up for the shortfall with two taxes: a carbon tax and a rising tax rate on those in the top 5 percent of income earners.
1). The Carbon tax. Maybe Sumner wouldn't consider him to be a real economist but he agrees with Sumner-as well as Krugman, Mankiw, and most every other economist-by arguing for a carbon tax. Reich calculates that this would bring in $600 billion per year. If so this would basically by itself pay for the cost of all the tax subsidies and tax cuts for those making under $160,000.
https://read.amazon.com/?asin=B003F3PKUE
2). Raising taxes on the 'rich'-which in this case means the top 5 percent. Taxes on those making over $150,000 would pay 40 percent, those over $260,000 would pay 50 percent and those over $410,000-the notorious top 1 percent-would pay 55 percent. He estimates that this would bring in $600 billion dollars per year.
A lot to chew on. I like the idea of cutting taxes for most wage earners, though I do have to admit that I find $260,000 kind of a low threshold to be taxes at a super rate. Even someone making $410,000 per year may not be someone super wealthy. On the other hand, there is the vexing issue of effective vs. nominal rates. The rich usually pay roughly half of the official, nominal rate-even when rates were at 91% in the 50s the real rate was only about 45%-one reason for this is marginal rates. Another is 'loopholes'-credits, exclusions, etc.
One aspect of Reich I particularly like-overall I like his plan a lot-is that he argues for ending the lower rate on capital gains. That's important-all income should be taxed at the same rate. Of course, what also needs to be done is to lower payroll taxes for the nonrich. Anyway, very interesting stuff.
With all the ideas out there it would seem there ought to be a way to bring Left and Right together for a deal but this is much easier said then done. Morgan thinks he has the blueprint with his GI and CYB but the trouble with that is that it requires the liberals to go first. That makes sense for him but not for them. The case hasn't been conclusively made that the real problem is a minimum wage and government workers.
I've said on occasion that sometimes in making political and social policy, the economists are ignored and with good reason-they were against the minimum wage and the end of segregation and in both cases luckily we chose to ignore them. On the issue of the carbon tax, one wonders what's holding it back-can there be any answer but politicians beholden to powerful industries?
UPDATE: I see now that Reich also proposes moving from unemployment insurance to a reemployment system that would have among other things, wage insurance. So it seems that there is a lot of agreement here too: everyone whether liberal or conservative accepts the idea that in some fashion many American workers will need to be subsidized by the government in one way or the other, the argument is what form it will take and the details.
UPDATE 2.0: Another similarity with Sumner is he supports vouchers but with him it's means based.
http://diaryofarepublicanhater.blogspot.com/2014/03/on-jobs-morgan-warstler-and-robert.html
In that post I looked at how Reich and Morgan Warstler do kind of agree on the shape of the labor market-the difference being that Morgan thinks it can all be fixed by conservative 'structural reforms.' However, they both seem to understand that the labor market has really been hurting thanks to the data and Internet revolutions.
Of course, Reich is someone not always receiving the full respect of his fellow economists. I seem to remember even Krugman back in the 90s dismissing him as an 'economic stylist'-a withering criticism in economist circles like when Stephen Williamson calls Krugman himself a 'journalist'- though in recent years he's been more friendly.
However, I'm struck by his tax proposals. He actually favors a negative income tax-as does Sumner. He then favors a very low tax rate up to the $160,000 level. He has a wage subsidy of $15,000 for those earning anywhere up to $30,000 at which point it drops to $10,000 and then between $40,000 to $50,000 it's' $5,000. Of course, in practice this sort of thing is tricky to implement-after all if you make $49,999 you get an extra $5,000 where as at $50,000 you don't so this might lead to a lot people wanting to earn just short of $50,000-or $40,000 or $30,000; not saying this couldn't be gotten around, in this kinds of ideas, this is always a challenge. I mean, in our current tax system this is made up for by having marginal rates.
Then those who earn between $50,000 and $90,000 would have just a 10 percent tax rate and those between $90,000 and $160,000 would pay just 20 percent. He calculates the yearly cost to the government of these outlays as $633 billion per year. He calls for making up for the shortfall with two taxes: a carbon tax and a rising tax rate on those in the top 5 percent of income earners.
1). The Carbon tax. Maybe Sumner wouldn't consider him to be a real economist but he agrees with Sumner-as well as Krugman, Mankiw, and most every other economist-by arguing for a carbon tax. Reich calculates that this would bring in $600 billion per year. If so this would basically by itself pay for the cost of all the tax subsidies and tax cuts for those making under $160,000.
https://read.amazon.com/?asin=B003F3PKUE
2). Raising taxes on the 'rich'-which in this case means the top 5 percent. Taxes on those making over $150,000 would pay 40 percent, those over $260,000 would pay 50 percent and those over $410,000-the notorious top 1 percent-would pay 55 percent. He estimates that this would bring in $600 billion dollars per year.
A lot to chew on. I like the idea of cutting taxes for most wage earners, though I do have to admit that I find $260,000 kind of a low threshold to be taxes at a super rate. Even someone making $410,000 per year may not be someone super wealthy. On the other hand, there is the vexing issue of effective vs. nominal rates. The rich usually pay roughly half of the official, nominal rate-even when rates were at 91% in the 50s the real rate was only about 45%-one reason for this is marginal rates. Another is 'loopholes'-credits, exclusions, etc.
One aspect of Reich I particularly like-overall I like his plan a lot-is that he argues for ending the lower rate on capital gains. That's important-all income should be taxed at the same rate. Of course, what also needs to be done is to lower payroll taxes for the nonrich. Anyway, very interesting stuff.
With all the ideas out there it would seem there ought to be a way to bring Left and Right together for a deal but this is much easier said then done. Morgan thinks he has the blueprint with his GI and CYB but the trouble with that is that it requires the liberals to go first. That makes sense for him but not for them. The case hasn't been conclusively made that the real problem is a minimum wage and government workers.
I've said on occasion that sometimes in making political and social policy, the economists are ignored and with good reason-they were against the minimum wage and the end of segregation and in both cases luckily we chose to ignore them. On the issue of the carbon tax, one wonders what's holding it back-can there be any answer but politicians beholden to powerful industries?
UPDATE: I see now that Reich also proposes moving from unemployment insurance to a reemployment system that would have among other things, wage insurance. So it seems that there is a lot of agreement here too: everyone whether liberal or conservative accepts the idea that in some fashion many American workers will need to be subsidized by the government in one way or the other, the argument is what form it will take and the details.
UPDATE 2.0: Another similarity with Sumner is he supports vouchers but with him it's means based.
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"Tom Brown Edition" ... Ha!
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