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Monday, November 9, 2015

Sumner vs. Bernie on the Scandinavian Model

There's an old adage that the enemy of my enemy is my friend. This is far from always the case, of course.

But in the case of say Bill O'Reilly vs. George Will on the sainted memory of Ronald Reagan, I'm on O'Reilly's side all the way here.

http://lastmenandovermen.blogspot.com/2015/11/a-hilarious-no-spin-zone-between-bill.html?showComment=1446924864933#c7822218492154761488

http://www.mediaite.com/tv/before-interview-aired-george-will-went-off-on-unhinged-oreilly-segment/

How about Bernie Sanders vs. Scott Sumner? Which one is my enemy and which is the enemy of my enemy?

Ok, surely some would urge me to not see Bernie as the enemy. I will stop as soon as he stops running against my main girl Hillary Clinton.

Certainly I don''t think Bernie will do himself any favors with Democrats if he listens to Chris Cilliza and goes after HRC on emails after taking it off the table.

"But it didn’t go to plan. When the Clinton-Sanders back-and-forth happened, I wondered aloud (I talk to myself a lot) whether he had been misunderstood, whether accidentally or, more likely, on purpose, by Clinton. What I took Sanders to mean was that Clinton’s e-mail issue was a major distraction in the race and that she was to blame for it."

"The way it played out, with Clinton thanking Sanders and reaching over to shake his hand in a gesture of goodwill, made it look as though the senator from Vermont was saying that the e-mail issue didn’t matter at all and that no one should be talking about it. The crowd’s going bananas with applause in response seemed to confirm the sense that Sanders was offering Clinton a helping hand on her toughest issue."

https://www.washingtonpost.com/politics/sanders-is-trying-to-correct-record-on-debate-exchange-over-clintons-e-mails/2015/11/08/ef6ff3a4-862c-11e5-9a07-453018f9a0ec_story.html

I think many will find this a rather revisionist history. Bernie going back now and saying they do matter because they go to her character just like Keystone just makes him look bad.

The crowd's response ought to tell you that Democrats don't want any attacks on her email. Bernie is having a tough enough time convincing us he's really a Democrat as he always had said the opposite. Finally an issue he's evolved on.

If he comes out now like Trey Gowdy this will kill whatever slim chances he still has.

If he does I won't feel bad calling him my enemy. Then you have Sumner who has always been something of an enemy too-this is tough. LOL.

I do read Sumner's critique here with some interest in any case.

"Progressives like to point out (correctly) that the GOP tax plans are sheer fantasy. But as I often point out, talking politics immediately lowers your IQ by 25 points. And I’m afraid that when progressives start talking about Bernie Sanders they completely lose touch with reality. They say, “He’s not really a socialist, he just favors the Scandinavian economic model.” But they don’t seem to know any thing about that model."

http://www.themoneyillusion.com/?p=31156

1. First of all I'm one progressive not in love with Bernie Sanders. Though I like the term liberal better than progressive.

2. I do agree with Sumner up to a point that politics lowers your IQ. It can. Like much too much was made over the Keystone pipeline either pro or con.

It was always a nothingbruger either economically or for the environment.

http://fivethirtyeight.com/features/keystone-xl-wasnt-about-jobs-or-the-climate-it-was-all-politics/

It's rather absurd that Bernie is still using Keystone to attack HRC now as it's done with anyway.

On the other hand, Sumner like most Neoclassical economists tends to go too far in believing that economics is totally innocent of political calculations and interests. Economics and politics are distinct but overlapping fields.

3. Sumner's point is simply that the 'Scandinavian model' requires much higher taxes not just on the rich but on the middle class-which is accurate.

The question of whether or not liberals support raising taxes not just on the rich but the larger electorate is one that liberals have not had yet.

Sumner then raises the bloody shirt that the American tax code is more progressive than the Nordic countries.

"In Denmark the top rate kicks in at 1.2 times average income. In the US that would be around $60,000."

"And then there are the VATs:"

"Denmark collects about 9.6 percent of GDP through the VAT, Norway collects about 7.8 percent, and Sweden collections about 9 percent of GDP. All three countries have VAT rates of 25 percent. The United States does not have a national sales tax or VAT. Instead, states levy sales taxes. The average rate across the country is about 7 percent. The much lower rate only collects about 2 percent of U.S. GDP in revenue."

"Bernie Sanders says he doesn’t want to raise taxes on the middle class, rather he wants the rich to pay more. Later he grudgingly concedes the middle class would pay a higher payroll tax for the nationalized heath care, but still doesn’t mention the 25% VAT. Nor does Bernie mention that the Scandinavian countries have far lower corporate tax rates than America"

But then again, if corporate taxes are higher in US then we wouldn't have to raise tax rates as much for the more generous welfare state. This would even argue that lowering the corporate rate would be a mistake-as it would require raising taxes on the nonrich. 

Sumner acts like to achieve the bigger social welfare state we have to also raise the corporate tax rate.

"And I haven’t even mentioned that the Nordic countries are really big on privatization and deregulation. How often do you hear progressives calling for those things? When was the last time you heard a progressive advocating Sweden’s 100% nationawide school voucher program?"

But why would we have to adopt a voucher program or privatization to have a bigger safety net? Even if Nordic countries have both a bigger welfare state and more privatization doesn't mean the two necessarily have to always go together.

No doubt, though it would require higher taxes on everyone.

"Seriously? Sanders says he wants a Scandinavian style welfare state, without raising taxes on the middle class? And we are supposed to treat that seriously? Then the left wonders why working class blacks and Hispanics are not flocking to Sanders. Maybe those minorities are smarter than then these puzzled pundits assume. Maybe a Hispanic family with two people each making $30,000 to $35,000 doesn’t want to face a 60% income tax, plus a 25% VAT. Maybe they moved from some place like Brazil, and know what happens to all that money once a non-Nordic government gets their hands on it. Maybe they’d rather spend their own money. Someone should go into working class black and Hispanic neighborhoods, with all the data on income and sales tax rates in Denmark, and ask people if they also want to pay those rates. You might be surprised by what you find."

http://www.themoneyillusion.com/?p=31156

Someone in the comments section mentioned Vermont's own failed single payer system. That's something Bernie could be asked.

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