This was a very well- written and thought-provoking article- it’s rational approach has had far more impact on my opinions and causes me to look more deeply into “truths” I have taken for granted. I also loved the literary references.
I have always been proud to pay my taxes. If it helps a drug addict or alcoholic so be it. Almost everyone needs a hand up at least once in their life. I don’t think anyone can be truly Stoic or Spartan in their lives. Thank you for all you do.
Private equity generally is due for a critical examination. The well accepted idea that it makes American business more efficient and is all too the good will be challenged as it goes into customer service oriented businesses like HVAC and plumbing. Two businesses I deal with that were acquired by PE — a condo building manager and a security alarm company — soon had their service deteriorate to the point where they had to be fired.
A valid and important footnote, especially as you include the UK in one of your comparisons, is that the UK government spends far less on its National Health Service than many European countries, and that the current Conservative government is doing all it can to privatise healthcare (in haste before this year's, or January's at the latest, election). It is a fact that a deliberate war is being conducted by the rich Conservatives against the sick and the poor.
I'm not an economist, but, having lived in Norway (2002-2006), I got some insight into that country's taxation regime. It appeared to me to be much more equitable, simpler (less loopholes as a result), and structured in such a way that those struggling with sickness and poverty would be actively supported at all times. Childcare costs, for example, could be deducted from income before tax, up to a threshold. Visits to the doctor, MRI scans etc etc, were mainly paid for by the state, with patients paying (if I remember correctly) a max £200 a year (on top of their taxes) for these essential services. Taxes are also levied on assets (liquidity, property, shares etc minus debt inc mortgage), with 1%ish tax payable on net wealth (currently the tax kicks in on net wealth over 1.7 mil kroner (approx £170k). In my view this type of system is much fairer all round.
Lastly, on philanthropy, there is an argument which says that if the very wealthy were taxed much more heavily, their philanthropy would not be needed. Philanthropy, to an extent, is a voluntary tax, and what's needed are compulsory taxes (I have always argued that any income over £150k should be taxed at at least 50%, and dividends should be categorised as income and taxed at the same rate). I did argue, at a think-tank in France some decades ago, in favour of a global taxation regime and was almost lynched. Personally, I think I was ahead of the times with that thinking, and would still like to see such a regime (it might even help create more co-operation between nations and fewer wars).
Good read. Having lived in Europe, I always thought they tried much harder to level inequality than the in the U.S. I've never heard of a wealthy person who couldn't afford to pay taxes. The U.S. needs to do a better job with it's social safety net and providing necessary services for the benefit of all citizens and families.
Figures like Bernie Sanders and Andrew Yang have drawn significant support for policies that might move the needle. Universal health care would be enormous. I'm not sure I support a universal basic income, but when I look at the boom/bust cycles in industry, and the frequent waves of layoffs, it seems that it either needs to be harder to lay off employees (i.e., some kind of regulation to guarantee more job security, so people and their families don't bear full responsibility for the vagaries of the marketplace) or there needs to be a safety net that doesn't make someone with a pink slip immediately housing insecure.
As you and I have discussed many times, the skyrocketing cost of a college education directly dampens social mobility. It forces young people to make high-stakes financial investments in certain career paths, contributes to the apocalypse we're seeing in the humanities, and is convincing many young people to choose a trade rather than an education. None of this bodes well for democracy.
This is a very thoughtful article that deserves a more thorough response than this, but one part struck me as particularly noteworthy.
“One spending statistic that’s particularly telling is that in America, government spends just 0.7% on supporting families compared to its peer countries who spend three or four times as much.
All the countries mentioned above have capitalist economies. But these countries have on average been far more effective at putting up guardrails to create a more fair and morally sound society. America has not.
The price of meeting people’s basic needs is a higher and more progressive tax code.”
What’s interesting to me as a reactionary is that those countries that heavily subsidize family expenses also all have catastrophically low birth rates. I would theorize that this phenomenon is bound up with a mindset that sees children as an expensive burden that otherwise conflicts with a life of labor in a capitalist(ish) system with the expectation of gaining ready resources for personal consumption. In other words, it a system that says we’ll take care of you if kids happen, much as we would if you got the measles.
Neither that system nor ours (which heavily subsidizes all of those other westernized economies by acting as their de facto military) is conducive to family life and is in fact maladapted to serve any end but individualized consumption. Taking more money from big business and giving it to big government won’t do much if they operate from the same premises and are in fact just the same people. Big everything is the legacy of the Second Industrial Revolution and lingers on into the present in the form of managerialism and the ethos of managerialism is what I described, a system of “expert” rule that legitimizes itself by promising to realize the liberal dream of freedom as the absence of restraint wedded to maximizing economic capacity in the interest of said consumption. In other words, I don’t think taking money from Tweedledee Corporation and handing it to Tweedledum Government Agency will result in it being put to better use.
My thought is that real change will come from the bottom up, people forming meaningful communities bound together by organic relationships, with localized political control and social welfare programs sufficient for their needs. Real change will come when the organizing idea of the economy becomes putting a man into productive labor remunerative enough for him to own a home a support a family in reasonable comfort. Anything else will just get us back where we are now.
I would remind them that business ownership and employing people is a form of undemocratic power, as is high-dollar philanthropy. I’d remind them that the problem with their wealth isn’t so much that they have more and nicer things than the rest of us but that they have louder voices, and the choices they make affect other people’s lives, dreams and even freedom. Like when they donate to a school district but premise it on the schools pivoting towards STEM, what does that do to the kid who wants to be an artist?
Your former Senator from New York, the esteemed Daniel Patrick Moynihan is reported to have said,
"You are entitled to your own opinion, sir. You are not entitled to your own facts." What we have to deal with are many people who do not do their own research nor believe the hard evidence when presented. My opinion is they either don't want to believe the truth or they listen only to others who say what they want to hear. There are no alternative facts as far as I can tell. There are different interpretations of what those facts may mean and how they may affect the lives of people who are impacted by them. Some of our systems in the U.S. are in need of reform, the tax system being one Health care is another. As for politics, we'll see what happens in November. Thanks, David, for this thoughtful, well-written Spark!
I applaud you David and hope many of the 1% gain the shift that you have. I am not American, yet as I read your excellent essay I initially felt sick, a literal knot in my stomach, at the reality of the pervasive belief system causing the dichotomy. Then I felt hope. If someone like you, with your knowledge and background far different than mine, feels there can be positive change coming it allows me a sense of okayness (made that word up!) I haven't had in a while.
David - I agree with the seriousness of income inequality as an issue, but see little connection between your prescriptions, which risk seeming symbolic and sentimental, and the actual challenge. Jailing Dick Fuld would be gratifying, but changes nothing. Neither are Schwartzman's unfortunate comments relevant (incidentally, he is a billionaire because he delivered superior returns to pension funds who would otherwise be underfunded; he is, from that perspective, a mitigator of income inequality). Carried interest is also irrelevant. You take it for granted that the government would spend additional funds wisely. That is 1) ahistorical, and B) not "income". The statistics you site do not reflect transfer payments anyway. Government interventions have a long history of increasing income inequality. One example from today's news: a large number of college educated people will have their debts vacated at the expense of people without advanced degrees, and with debts (often medical) of their own.
It may be time to revisit the actual thesis of the Bell Curve, whose central point was lost in controversy. Murray's point was that a technology-based service economy like our own rewards IQ disproportionately. There was less income inequality when everyone was a farmer. If that's true, we should remove all barriers to upward mobility. Sample solution #1: school choice.
David, another well-written thought provoking piece. As Richard Pierce succinctly puts below, some in the UK cannot wait for the current Conservative government to finally run out of road because of its attitude and deliberate underfunding of the NHS, plus a catalogue of many others. The taxation system in the UK is not fair and neither is the current political system. We need to grow up and behave like many parts of Europe with higher taxation, proportional representation and actively develop policies to change consumer behaviour, especially our right to cheap air travel and fossil fuels to heat our homes and propel our vehicles.
What I find even more bewildering is the state of US politics and the behaviour of the Republican party. If you ever feel the urge, a piece from your perspective as to why there still remains significant doubt to the outcome of your next presidential election, I for one would be really interested and grateful. It's self-interest really, because the outcome will effect us all.
Are rich Republican US citizens really so stupid, so selfish, so indulgent, so insular in their outlook to believe that the future of your country is safer with the current GOP regime in charge? As you advocate, reform is a much safer way to change than to revolt. You appear to be on an extremely dangerous path at the moment.
Faith in the law’s ability to take on the rich and powerful took another tumble in the last four years. I’d add to your 2008 history Trump’s infamous - and seemingly true - remark that he could shoot someone in the middle of a public street and get away with it. Plus the open corruption of some on the Supreme Court. The lack of swift and adequate consequences has undermined faith in the law.
This was a very well- written and thought-provoking article- it’s rational approach has had far more impact on my opinions and causes me to look more deeply into “truths” I have taken for granted. I also loved the literary references.
I have always been proud to pay my taxes. If it helps a drug addict or alcoholic so be it. Almost everyone needs a hand up at least once in their life. I don’t think anyone can be truly Stoic or Spartan in their lives. Thank you for all you do.
Private equity generally is due for a critical examination. The well accepted idea that it makes American business more efficient and is all too the good will be challenged as it goes into customer service oriented businesses like HVAC and plumbing. Two businesses I deal with that were acquired by PE — a condo building manager and a security alarm company — soon had their service deteriorate to the point where they had to be fired.
Very interesting.
A valid and important footnote, especially as you include the UK in one of your comparisons, is that the UK government spends far less on its National Health Service than many European countries, and that the current Conservative government is doing all it can to privatise healthcare (in haste before this year's, or January's at the latest, election). It is a fact that a deliberate war is being conducted by the rich Conservatives against the sick and the poor.
I'm not an economist, but, having lived in Norway (2002-2006), I got some insight into that country's taxation regime. It appeared to me to be much more equitable, simpler (less loopholes as a result), and structured in such a way that those struggling with sickness and poverty would be actively supported at all times. Childcare costs, for example, could be deducted from income before tax, up to a threshold. Visits to the doctor, MRI scans etc etc, were mainly paid for by the state, with patients paying (if I remember correctly) a max £200 a year (on top of their taxes) for these essential services. Taxes are also levied on assets (liquidity, property, shares etc minus debt inc mortgage), with 1%ish tax payable on net wealth (currently the tax kicks in on net wealth over 1.7 mil kroner (approx £170k). In my view this type of system is much fairer all round.
Lastly, on philanthropy, there is an argument which says that if the very wealthy were taxed much more heavily, their philanthropy would not be needed. Philanthropy, to an extent, is a voluntary tax, and what's needed are compulsory taxes (I have always argued that any income over £150k should be taxed at at least 50%, and dividends should be categorised as income and taxed at the same rate). I did argue, at a think-tank in France some decades ago, in favour of a global taxation regime and was almost lynched. Personally, I think I was ahead of the times with that thinking, and would still like to see such a regime (it might even help create more co-operation between nations and fewer wars).
Good read. Having lived in Europe, I always thought they tried much harder to level inequality than the in the U.S. I've never heard of a wealthy person who couldn't afford to pay taxes. The U.S. needs to do a better job with it's social safety net and providing necessary services for the benefit of all citizens and families.
Figures like Bernie Sanders and Andrew Yang have drawn significant support for policies that might move the needle. Universal health care would be enormous. I'm not sure I support a universal basic income, but when I look at the boom/bust cycles in industry, and the frequent waves of layoffs, it seems that it either needs to be harder to lay off employees (i.e., some kind of regulation to guarantee more job security, so people and their families don't bear full responsibility for the vagaries of the marketplace) or there needs to be a safety net that doesn't make someone with a pink slip immediately housing insecure.
As you and I have discussed many times, the skyrocketing cost of a college education directly dampens social mobility. It forces young people to make high-stakes financial investments in certain career paths, contributes to the apocalypse we're seeing in the humanities, and is convincing many young people to choose a trade rather than an education. None of this bodes well for democracy.
This is a very thoughtful article that deserves a more thorough response than this, but one part struck me as particularly noteworthy.
“One spending statistic that’s particularly telling is that in America, government spends just 0.7% on supporting families compared to its peer countries who spend three or four times as much.
All the countries mentioned above have capitalist economies. But these countries have on average been far more effective at putting up guardrails to create a more fair and morally sound society. America has not.
The price of meeting people’s basic needs is a higher and more progressive tax code.”
What’s interesting to me as a reactionary is that those countries that heavily subsidize family expenses also all have catastrophically low birth rates. I would theorize that this phenomenon is bound up with a mindset that sees children as an expensive burden that otherwise conflicts with a life of labor in a capitalist(ish) system with the expectation of gaining ready resources for personal consumption. In other words, it a system that says we’ll take care of you if kids happen, much as we would if you got the measles.
Neither that system nor ours (which heavily subsidizes all of those other westernized economies by acting as their de facto military) is conducive to family life and is in fact maladapted to serve any end but individualized consumption. Taking more money from big business and giving it to big government won’t do much if they operate from the same premises and are in fact just the same people. Big everything is the legacy of the Second Industrial Revolution and lingers on into the present in the form of managerialism and the ethos of managerialism is what I described, a system of “expert” rule that legitimizes itself by promising to realize the liberal dream of freedom as the absence of restraint wedded to maximizing economic capacity in the interest of said consumption. In other words, I don’t think taking money from Tweedledee Corporation and handing it to Tweedledum Government Agency will result in it being put to better use.
My thought is that real change will come from the bottom up, people forming meaningful communities bound together by organic relationships, with localized political control and social welfare programs sufficient for their needs. Real change will come when the organizing idea of the economy becomes putting a man into productive labor remunerative enough for him to own a home a support a family in reasonable comfort. Anything else will just get us back where we are now.
I would remind them that business ownership and employing people is a form of undemocratic power, as is high-dollar philanthropy. I’d remind them that the problem with their wealth isn’t so much that they have more and nicer things than the rest of us but that they have louder voices, and the choices they make affect other people’s lives, dreams and even freedom. Like when they donate to a school district but premise it on the schools pivoting towards STEM, what does that do to the kid who wants to be an artist?
“It’s a war. It’s like when Hitler invaded Poland in 1939.” This is deranged.
Your former Senator from New York, the esteemed Daniel Patrick Moynihan is reported to have said,
"You are entitled to your own opinion, sir. You are not entitled to your own facts." What we have to deal with are many people who do not do their own research nor believe the hard evidence when presented. My opinion is they either don't want to believe the truth or they listen only to others who say what they want to hear. There are no alternative facts as far as I can tell. There are different interpretations of what those facts may mean and how they may affect the lives of people who are impacted by them. Some of our systems in the U.S. are in need of reform, the tax system being one Health care is another. As for politics, we'll see what happens in November. Thanks, David, for this thoughtful, well-written Spark!
Thank you for a cogent and important piece. There’s a lot on the line.
This is one of the best and most well written articles on economics that I’ve read in a long while. Thanks 🙏🏾
I applaud you David and hope many of the 1% gain the shift that you have. I am not American, yet as I read your excellent essay I initially felt sick, a literal knot in my stomach, at the reality of the pervasive belief system causing the dichotomy. Then I felt hope. If someone like you, with your knowledge and background far different than mine, feels there can be positive change coming it allows me a sense of okayness (made that word up!) I haven't had in a while.
David - I agree with the seriousness of income inequality as an issue, but see little connection between your prescriptions, which risk seeming symbolic and sentimental, and the actual challenge. Jailing Dick Fuld would be gratifying, but changes nothing. Neither are Schwartzman's unfortunate comments relevant (incidentally, he is a billionaire because he delivered superior returns to pension funds who would otherwise be underfunded; he is, from that perspective, a mitigator of income inequality). Carried interest is also irrelevant. You take it for granted that the government would spend additional funds wisely. That is 1) ahistorical, and B) not "income". The statistics you site do not reflect transfer payments anyway. Government interventions have a long history of increasing income inequality. One example from today's news: a large number of college educated people will have their debts vacated at the expense of people without advanced degrees, and with debts (often medical) of their own.
It may be time to revisit the actual thesis of the Bell Curve, whose central point was lost in controversy. Murray's point was that a technology-based service economy like our own rewards IQ disproportionately. There was less income inequality when everyone was a farmer. If that's true, we should remove all barriers to upward mobility. Sample solution #1: school choice.
David, another well-written thought provoking piece. As Richard Pierce succinctly puts below, some in the UK cannot wait for the current Conservative government to finally run out of road because of its attitude and deliberate underfunding of the NHS, plus a catalogue of many others. The taxation system in the UK is not fair and neither is the current political system. We need to grow up and behave like many parts of Europe with higher taxation, proportional representation and actively develop policies to change consumer behaviour, especially our right to cheap air travel and fossil fuels to heat our homes and propel our vehicles.
What I find even more bewildering is the state of US politics and the behaviour of the Republican party. If you ever feel the urge, a piece from your perspective as to why there still remains significant doubt to the outcome of your next presidential election, I for one would be really interested and grateful. It's self-interest really, because the outcome will effect us all.
Are rich Republican US citizens really so stupid, so selfish, so indulgent, so insular in their outlook to believe that the future of your country is safer with the current GOP regime in charge? As you advocate, reform is a much safer way to change than to revolt. You appear to be on an extremely dangerous path at the moment.
Faith in the law’s ability to take on the rich and powerful took another tumble in the last four years. I’d add to your 2008 history Trump’s infamous - and seemingly true - remark that he could shoot someone in the middle of a public street and get away with it. Plus the open corruption of some on the Supreme Court. The lack of swift and adequate consequences has undermined faith in the law.