The main Progressive argument, and why I think it is wrong

by on June 9, 2017 at 2:08 am in Economics, Philosophy, Political Science | Permalink

That is the topic of my latest Bloomberg column, here is one excerpt:

When we make personal decisions, we usually compare a choice to the best possible alternative, not the worst. Imagine if you suggested to your spouse that you go out to the movies, and your spouse asked why that might be a good idea. It wouldn’t be much of an answer to say that the movie is better than the very worst show on television at home. Rather you should focus on comparing the movie to the next best thing you might do, like watching your favorite TV show or going to a new restaurant you want to try.

The upshot is that we should compare anti-poverty programs to other anti-poverty programs, and favor only the prioritized ones. But just how much of a priority does a program need to be?

One way to proceed is to ask: If we expand some programs, what is the most likely political response? It could be either lower spending in some other program or, in fact, raising taxes on the wealthy. But the evidence on the “fiscal gap” — the space between what the government owes and what it collects — suggests that the opportunity cost of expanding one transfer program is likely some government spending elsewhere, rather than expensive handbags for the wealthy.

Do read the whole thing.

1 prior_test2 June 9, 2017 at 2:22 am

‘Imagine if you suggested to your spouse that you go out to the movies, and your spouse asked why that might be a good idea. It wouldn’t be much of an answer to say that the movie is better than the very worst show on television at home. Rather you should focus on comparing the movie to the next best thing you might do, like watching your favorite TV show or going to a new restaurant you want to try.’

Or, you know, ask your spouse what they want to do.

2 TMC June 9, 2017 at 9:32 am

Don’t worry, she’ll tell you.

3 GoneWithTheWind June 9, 2017 at 10:20 am

“Anti-poverty programs!!” Really!! The government SUCKS at anti-poverty. It creates poverty. What better example do you need to show that less government is better government? A true anti-poverty program is to get a job. Pay attention and do the work in school, act like a responsible adult. Sink or swim. Anti-poverty is up to the individual. Government anti-poverty programs are nothing more than wealth transfer programs that require the “winners” to scrupulously remain in poverty to keep winning. Government anti-poverty programs are impoverishing the middle class. I can absolutely predict the next big move for the government anti-poverty program; raise taxes and give the “poor” more money. I can just as surely predict the results; an increase in the poverty rate. Duh!

4 JonFraz June 9, 2017 at 12:46 pm

No the government does not ‘suck” at anti-poverty programs. Exhibit A is Social Security which has been instrumental in reducing the poverty rate among the elderly.
Additionally if we define poor as the lower X percent of the income spectrum then as Jesus said “the poor we will always have with us” and one might as well expect a government program to make 2+2=3 as change that mathematical reality.

5 Harun June 9, 2017 at 12:50 pm

The government should be pretty good at forcing savings.

They have the guns, and they know how to tax pretty well.

The only part that worries is the politicians promising more to current voters on the backs of future voters.

A Swiss Debt Brake would probably be wise.

6 Floccina June 9, 2017 at 3:01 pm

If SS is your best example that’s bad because most SS money (at least 90%) goes to people who would not be poor without it. That is very inefficient. I would change it to give the same amount of money to all recipients (about $800/month each).

Now just the SSID part is probably pretty efficient but even it discourages work to some extent.

TANF Maybe the best.

7 GoneWithTheWind June 9, 2017 at 5:49 pm

At best SS is a forced retirement program with various “giveaways” added on by politicians. At worst SS is another large tax where all or most of the money was taken by the politicians/government over the years to leave the SS program on the verge of bankruptcy to be “saved” later by other politicians with more taxes and more “giveaways”. It is not part of the anti-poverty program.

Welfare in all it’s many facets is the poverty program. About 2400 different kinds of welfare spread out over 5-6 cabinet level agencies to make it all more confusing. Perhaps $1.2-1.8 trillion a year by the federal government alone with roughly the same amount spent by the 50 states in matching and competing programs. And yet we have a higher rate of poverty today because of it. Government sucks at this.

8 what does progressive mean in 2017? June 9, 2017 at 2:12 pm

It depends on what you mean by anti-poverty program.

The more broad based, equitably distributed and funded programs like Social Security and Medicare have been fairly successful, though not without structural problems (demographic issues in funding model in particular).

The more targeted and more “handout”-like the program is the worse it fares. Welfare checks for extremely impoverished single black mothers does a miserable job of getting them out of poverty, though it does perhaps prevent them from starving to death. Subsidized low rent housing projects have a terrible track record as well. Those seem like they were almost maliciously designed to become islands of despair and crime.

There is an enormous tension in anti-poverty programs in that they are attempting to swim upstream (redistribute income downwards is counter-flow) as well as try to change conditions that lead to poverty (give a man a fish vs. teach a man to fish). You can’t really have it both ways, apparently.

I think that there is just way too much of an emphasis on transfer payments in anti-poverty programs and not nearly enough emphasis on the economic impact of other acts of government. I think the single strongest anti-poverty program you could do in America right now is ending the War on Drugs, amnesty for non-violent drug prisoners, and criminal justice reform with the aim of reducing incarceration rates. What has done more economic harm to the poor than having their working-age men locked away?

9 Floccina June 9, 2017 at 3:09 pm

+1 on you last paragraph.
I would add wiping out the mosquito as an anti-poverty programs http://www.npr.org/sections/health-shots/2016/12/14/504732533/to-fight-malaria-scientists-try-genetic-engineering-to-wipe-out-mosquitoes

And more and better police. http://marginalrevolution.com/marginalrevolution/2013/01/more-police-fewer-prisons-less-crime.html Poor people are too often victims of crime and fraud.

Better to live on a corner of the roof than share a house/neighborhood with crime, violence or biting insects.

10 Jonathan Polacheck June 13, 2017 at 3:26 pm

“Welfare checks for extremely impoverished single black mothers does a miserable job of getting them out of poverty” Can you prove this? I find a lot of assertions in web comment sections are based on assumptions and “common wisdom”. What other factors might be responsible for poverty rates among black single mothers, and how much more poverty would there be without welfare checks? Could the problem be that the checks are too small? Just asking.

11 Dzhaughn June 9, 2017 at 2:45 am

You over-complicate things again. There are only two choices from the Progressive point of view: (1) Let the people who have the money decide what to do with it, and (2) Let us decide what to do with it. (The word “have” is prejudicial; After all, all money is just borrowed from the government.) Clearly, (2) is best, because the utility function is maximized by our being in power to define the utility function.

It’s not about deciding what to watch this evening; it’s who has the car keys and the remote control.

12 mulp June 9, 2017 at 6:06 am

Ok, you have a lot of wealth in patents, factories, server farms, real estate…

Now 90% of you customers can spend a max of $10 buying from you.

You now want to cut costs by cutting labor costs. Now your customers can spend $5 max.

How are you going to stay wealthy?

Deregulation so your cash can be loaned to your customers who can’t pay the loans back?

Or, like Walmart, depend on government to give your customers $20 to spend, say in food stamps?

Cutting food stamps hurts Walmart bottom line.

If you own a hospital or drug company, you probably do not want any cuts to Medicare, Medicaid, or changes to employer benefits, the three pillars of Obamacare. Unless you only serve the billionaire class who expect Trumpian decor of faux gold fixtures.

I do wonder why Trump lives in and does business in liberal high tax and spend places. Why isn’t he doing business in Ohio or Kentucky or Alabama? Might it be that tax and spend creates collective wealth and lots of customers able to spend lots of money. And in a global economy, a lot of goods and services cost the same whether you live in high cost places with $15 an hour a poverty wage or low cost places where $15 makes you upper middle class. One night at a Trump resort is the same for people from either place. And no Trump tax cut is going to put enough money in the pockets of West Virginia coal miners to spend one night with Trump. Nor will cutting regulations that are costly because coal workers must be paid to keep miner from being killed or water from being polluted. Not having a job to cut costs results in a tax cut, but that won’t help you buy a Trump ties.

13 Hazel Meade June 9, 2017 at 1:05 pm

Well, obviously the goal should be to reduce the amount of income that other people’s customers have to spend, while increasing that of your own.
For instance, assuming you sell food, if you can transfer wealth from people who spend money on office equipment to people that spend money on foods, as a food producer you stand to benefit. I mean, who needs office equipment, right? Eating is more important than doing work on stuff that involves computers.

14 ryanL June 9, 2017 at 8:14 am

*

“You over-complicate things again”

well yes, way over-complicate & way way off the mark as being “The main Progressive argument”.

American Progressives are essentially socialists. Their main argument is that most things in a society should be ruled by experts in the government. Efficient fiscal decision making by those government experts is of no concern… because those experts (by definition) are assumed to make wise fiscal decisions. Progressives take a very simple view of society & government.

15 justinH June 9, 2017 at 8:39 am

“Their main argument is that most things in a society should be ruled by experts in the government. Efficient fiscal decision making by those government experts is of no concern…” You have some huge partisan blinders on my friend. Unless I am mistaken, I don’t believe it is the case that the conservative movement wants simpletons in government. They want experts as well, just not the same experts that a progressive would pick.

Another aspect to look into is that the non-profit organizations serving (what you would most likely call progressive causes) are generally quite good at efficient fiscal decision making, because they have to be out of necessity. Whether or not one agrees with the cause they are serving is another discussion.

“Progressives take a very simple view of society & government.”, again this is no better than dropping in at WaPo or HuffPo and saying “Conservatives take a very simple view of society & government.” Just as the American Conservative is on a spectrum of beliefs so is the American Progressive.

16 TMC June 9, 2017 at 9:43 am

I’ll simplify it more :”Their main argument is that most things in a society should be ruled by experts in the government… and I’m the expert, even though I have a BA in some kind of Studies program.”

Conservatives want experts in positions that are necessary, and nobody in the other 80% of positions. I’ll make my own choices, thanks.

17 Jeremy June 9, 2017 at 11:16 am

“Another aspect to look into is that the non-profit organizations serving (what you would most likely call progressive causes) are generally quite good at efficient fiscal decision making, because they have to be out of necessity. ”

Working in non-profits, that is not at all what I see.

18 what does progressive mean in 2017? June 9, 2017 at 2:20 pm

I don’t think Progressives take a simple view. I think one of the most mainstream forms of progressivism (Sanders style) takes the view that the government has a social responsibility to provide life essentials such as education, healthcare, and transportation as a public good. I think another mainstream form of progressivism (Clinton style) takes the view that technocratic management by highly trained bureaucrats can finesse the economy into a less dysfunctional shape w.r.t outcomes for the bottom quintile.

It’s not simplistic at all. Those are both complicated views and the complication is really a big part of the problem. If anything it’s the Conservative view that is simplistic: the economy is too complex to feel confident about fucking around with, so try to touch it as little as possible.

19 Hazel Meade June 9, 2017 at 4:34 pm

The Sanders style progressive view is pretty simplistic when you get down to it. It assumes that resources are infinite. People have a “right” to healthcare – therefore the healthcare must exist.

What if there’s not enough money to supply education healthcare and transportation for everyone who needs it? Gets right back to Tyler’s column – “the rich” are not a bottomless money pit that can supply everything progressive want if only we got out of the way and let them take it.

20 RohanV June 9, 2017 at 3:10 am

I think you’re wrong in your logic, or at least you didn’t extend it far enough. Given 2 choices, you always increase the higher choice. So in your set of 4 options, you increase #1 and decrease #2. But then if you consider the set of {#2,#3}, you are reducing #2 relative to #3, which you can’t do, so you increase #2 and decrease #3. Same thing happens with {#3, #4}.

So net, you’ve increased #1, and decreased #4, simply by considering adjacent alternatives by priority. This is the progressive case, of increasing the funding of the highest priority and decreasing the funding of the lowest priority, which is money left in the hands of the wealthy.

21 BC June 9, 2017 at 3:32 am

No, that’s not the progressive case. The progressive case is to increase all of 1, 2, and 3 because they are all better than 4. That’s flawed because any dollar that is raised from 4 to increase, say 2, could have been spent instead on 1. Even more precisely, given the fiscal position of the US government, all of the money from 4 has already been allocated to 1, 2, and 3. That’s the best summary of Tyler’s point: “In other words, for better or worse, we’ve already committed to spending that tax increase on the wealthy that you were planning to use for other purposes.”

Thus, it’s highly flawed, for example, to argue that government should offer free college tuition to everyone and “pay for it by taxing the wealthy”. The taxes raised from the wealthy could just as easily be spent on food stamps, Social Security, Obamacare or anything else. If one wants to argue for free college tuition, one has to explain whose food stamps, Social Security, or Medicare should be cut to pay for it.

22 Harun June 9, 2017 at 1:35 pm

“Thus, it’s highly flawed, for example, to argue that government should offer free college tuition to everyone and “pay for it by taxing the wealthy”. The taxes raised from the wealthy could just as easily be spent on food stamps, Social Security, Obamacare or anything else. If one wants to argue for free college tuition, one has to explain whose food stamps, Social Security, or Medicare should be cut to pay for it.”

That’s a great example, because I definitely see this a lot: double or triple spending or more of “increased taxes on the wealthy.”

23 Hazel Meade June 9, 2017 at 4:37 pm

And then there’s the fact that one person’s idea of “wealthy” is different than another’s. Does “wealthy” mean someone who owns a yacht, or someone who owns a house worth more than $500,000 ?

24 Jim Birch June 9, 2017 at 3:33 am

I’m not exactly what you would call a progressive so I may have this wrong, but isn’t “opportunity cost of expanding one transfer program is likely some government spending elsewhere, rather than expensive handbags for the wealthy” exactly what those damn progressives are arguing against? The idea that the expensive handbags can’t go, isn’t a fundamental of economics, it’s just a successful ideology, which happens to be backed by the wealthy and powerful. I have a feeling there’s an element of circularity. Is there’s a set level of taxation that is correct, or that the wealthy will allow, or something? It seems much better to argue appropriate levels of taxation in terms of utility and consequences.

25 dan1111 June 9, 2017 at 5:33 am

Mainstream progressives don’t actually seem that serious about raising taxes to pay for their programs, though. Obama was willing to run big deficits rather than make any real effort to raise taxes. Clinton’s proposed budget would have increased the deficit–and that’s in a proposed budget that should be considered the “ideal” picture unconstrained by what can actually get through Congress.

You can argue that inability to raise taxes is the political reality. This is very true, but it’s also true that progressives don’t seem very willing to push against that reality. No one is willing to expend any political capital on the issue (well, except Bernie Sanders, who had quite a good run despite proposing massive tax increases). To me it looks like Democratic proposals to raise taxes on the wealthy are mainly just paying lip service to the idea that they need to pay for their proposals, rather than a core part of their ideals.

Democrats should either make a serious push to raise taxes, or accept the political reality and evaluate proposals within that reality.

26 Ricardo June 9, 2017 at 6:25 am

“Obama was willing to run big deficits rather than make any real effort to raise taxes.”

Obama’s signature piece of legislation, PPACA, contained a number of tax increases. Naturally, once the Democrats lost the House in the 2010 election, Obama’s ability to push for any more tax increases declined substantially but he did succeed in raising a number of taxes through the American Taxpayer Relief Act of 2012 as a result of intense fiscal cliff negotiations.

27 dan1111 June 9, 2017 at 7:35 am

Small potatoes.

Obama’s budget proposals did not include large tax increases and did not balance the budget. These were aspirational documents with no chance of becoming reality given a Republican Congress. If Obama wanted to take the position “I want large tax increases to pay for social programs, but Republicans are stopping me”, his budgets were a chance to do this, but he was not willing to take such a stand.

28 Ricardo June 9, 2017 at 10:11 am

I responded with actual tax increases Obama signed into law and you respond that Obama didn’t spend enough time on theoretical tax measures that had no chance of passing. That is not a serious metric of a president’s policy priorities.

29 Harun June 9, 2017 at 1:37 pm

The ACA had many tax increases that were postponed by Obama, too. So, that seems like proof-positive that he avoided this.

30 Thomas June 9, 2017 at 3:29 pm

Hundreds of billions in annual deficits and tax increases of what? A few tens of billions, and dishonest Ricardo suggests that Obama wasn’t about unfunded spending?

31 mulp June 9, 2017 at 6:42 am

Obama ran big deficits because Republicans wanted to make the massive deficit from the Bush tax cuts permanent.

Republicans want to kill Obamacare because it was paid for with tax hikes and has reduced the deficit while paying for probably two million new jobs in health care.

Just as Bush and Republicans never cut spending to pay for tax cuts because they didn’t want to kill millions of jobs, many people are going to ensure no cuts in spending in a Republican health bill to avoid millions in job losses. If somehow they pass a bill, it will cut taxes now but delay spending cuts for two years. Then like the doc fix, those cuts will be delay year after year to prevent large job cuts in every community.

TANSTAAFL

Millions of workers want infrastructure spending. The cuts in spending from inflation and actual budget cuts have killed lots of jobs in every community by attrition for the most part.

Without workers paid to work, infrastructure has decayed and gotten shabby. Trump has promised lots of jobs that pay well that cost no one a dime. TANSTAAFL No wonder it’s going nowhere.

After forcing the first private corporation into bankruptcy by prohibiting toll hikes, and then subsidizing tolls to hike the much higher tolls needed, Indiana has had to let all tolls go up on the Indiana toll way. 126% hike for cars this month. Basically, Republicans buried and delayed the high cost of privatizing the highway to sell it as cost free. The problem a decade ago was simple. The legislature needed to pay more workers to fix the road by hiking taxes and tolls and fees. Privatizing the road didn’t cut the costs, but increased the costs and made the tolls higher. TANSTAAFL

32 TMC June 9, 2017 at 9:48 am

Obama ran big deficits because…. he’s competitive. Bush can do 5, I’ll do 10! He’s just a natural athlete, that’s why.

33 Dan L June 9, 2017 at 4:03 am

My personal finances include electricity bills, sewer bills, insurance premiums, and wine. I can try to be economical in each, use less electricity, fix plumbing leaks, but to assume that there isn’t enough money for all, e.g. ditch insurance because its utility less certain than electricity but to keep buying wine is not a sustainable plan. And if money is so scarce, the marginal $ that gets the power turned on probably unlocks a lot more value than the marginal glass of wine.

Our values inform what kinds and causes of poverty we find unacceptable and so pay to alleviate. The returns to investing in human needs are not marginal, unlike the hypothetical handbag fund.

34 Jan June 9, 2017 at 9:11 am

+1

35 Thomas June 9, 2017 at 3:31 pm

We fund housing, food, energy, education, and most everything else for the poor. To pretend that we don’t is delusional.

36 Alex June 9, 2017 at 6:00 am

For the writer of ‘Marginal’ revolution, this sure lacked much marginal analysis. Yes if someone says food stamps > handbags they might be being disingenuous if they know the money will instead be diverted from lead. This does not in fact mean that higher handbag taxes are some impossibility – if I’m into lead, I can get my food stamp mate to join with me and get more cash to spend overall and split it in some way (I could also join together with the disability person to defund food stamps, but if we all agree what the weakest link is….). Similarly, while the fiscal imbalance might not be met wholly by tax increases, there is still the option to raise (say) half of it this way.

Certainly possible to disagree (though really?) but this certainly isn’t some knockdown argument against the idea of spending stuff.

37 Pearl Y June 9, 2017 at 6:19 am

This article was extremely hard for me to follow conceptually. The crux seemed to be “Progressives want more taxes on the rich, but that is never going to happen. So instead they’d better identify which government programs are most effective.” But that does nothing to answer the question posed by the title of the article.

38 mulp June 9, 2017 at 6:57 am

Tyler thinks the rich got rich by magic beans, not by an economy where government drives spending which is the income of the businesses of the wealthy.

If tax and spend and regulations make everyone poorer, then shouldn’the the south be the region with a long history of high incomes and wealth?

Wouldn’t Texas have had the MIT and Harvard and manufacturing technology and the high tech corridor in 1960 while Massachusetts was getting the big government spending projects for the NASA space center? And Connecticut the contract to build solid rocket boosters on the coast to ship to the Cape, instead of Alabama? And when military spending was cut, the base closing would have been in the South because the rest of the economy dwarfed the defense spending while in New England and California the government spending was most of the economy.

39 TMC June 9, 2017 at 9:52 am

Mulp thinks the rich got rich by magic beans, not by an economy where people work to produce things of value.

40 JonFraz June 9, 2017 at 1:00 pm

Hint: While we can all find wasteful things the government does, there are also a good number of highly valuable things it does. There’s a reason the only human societies on earth with no sort of formal government are very small hunter gatherer bands where every knows everyone.

41 TMC June 9, 2017 at 4:37 pm

Kind of a false set of choices you offer there. Big govt or none. There are things it does well, just because there are public goods out there, not because they do it efficiently. They should stay out of everything else because they do not do anything efficiently.

42 acarraro June 9, 2017 at 8:19 am

It’s even harder to understand I think. The argument seems to be: we already spent the future viable tax increases, so we shouldn’t raise taxes. If we spent them already, doesn’t that mean we should increase taxes right away? How are the 2 statements even connected?

He is just assuming tax pressure cannot go up from present levels at all, even if US is fairly lightly taxed by developed country standard. I mean I am not saying the level of taxation is too low, but to argue that it’s already at the maximum level seems like a very strong statement.

43 yZrs June 9, 2017 at 9:04 am

No, the argument is that we will have to raise taxes by 30% soon anyways just to meet our current (-ly debt financed) spending, so any new program funding cannot be budgeted from that increase, it has to come wither from: (a) a reduction of existing spending on something else; or (b) further tax increases beyond a 30% hike (which Tyler implicitly assumes is not really possible).

44 TMC June 9, 2017 at 9:54 am

“even if US is fairly lightly taxed by developed country standard”

The US is taxed right about at EU rates. Think Federal, State, and local taxes combined.

45 Ricardo June 9, 2017 at 10:20 am

OECD has actual data on this; total tax revenue at the federal, state and local levels in the U.S. as a % of GDP was below the equivalent for every single country in the EU in 2015 except for Ireland. It was 8 points below the OECD average.

46 Jay June 9, 2017 at 1:25 pm

Why is % of GDP any more valid than % of total income? I feel like when someone says “man my country taxes the hell out of me what about yours?” they mean the money going into their pocket, not some number the BLS comes up with annually that includes a whole lot of other things not having to do with taxes and wages.

47 anon June 10, 2017 at 12:23 am

Yes, Europe has much higher taxes on the poor and middle class, but not on the rich. Do you think U.S. progressives want to match them?

48 TMC June 9, 2017 at 4:44 pm

So we tax at 25%, but spend at 42%. Maybe that’s the discrepancy.

49 Daniel Weber June 9, 2017 at 11:30 am

Other countries tax more, but they tax everybody more. The US is the only G20 nation without a VAT.

In other countries, when people vote for increased services and increased taxes, they are voting for increased taxes on themselves. This makes them consider the plan carefully.

In the US, when people vote for increased taxes, they are told the taxes will go up on somebody else. “Don’t tax you, don’t tax me, tax that fellow behind the tree” as Russel Long (D-LA) famously said.

Among many progressives, raising taxes is a good in and of itself, not because it gets better services, but because it puts the screws to people they don’t like. Watch some primary debates or conventions.

A lot of people genuinely believe “the rich” are an infinite piñata of tax money, and the harder you hit them the more comes out. In reality, if we do the “super simple step” of “just” ending the cap on payroll taxes to fix Social Security, we are now taxing our high earners more than most European countries. And that’s to solve what is the easiest budget issue.

Democrat politicians are Republican politicians have united in opposition to a VAT for the US, which is a shame.

50 Ricardo June 9, 2017 at 12:44 pm

“In other countries, when people vote for increased services and increased taxes, they are voting for increased taxes on themselves. This makes them consider the plan carefully.”

Sure, and they mostly vote for far more government spending. America does significantly lag behind other countries in terms of taxing consumption (state and local sales taxes are much lower than VAT collections in other countries), but it also lags others in terms of corporate taxes and payroll taxes.

51 Jay June 9, 2017 at 1:27 pm

U.S. lags in corporate taxes? Hmmm……me thinks someone is pulling things out of thin air.

52 Ricardo June 9, 2017 at 1:50 pm

“U.S. lags in corporate taxes? Hmmm……me thinks someone is pulling things out of thin air.”

Google “oecd tax revenue” and look at corporate taxes as a percentage of GDP. This is well-known among people who have bothered to look.

53 Thomas June 9, 2017 at 3:36 pm

Just reduce GDP and it will be all better said Dishonest Ricardo.

54 JWatts June 9, 2017 at 3:40 pm

“Out of the 34 countries in the OECD, America ranks first with a 39.1 percent corporate tax rate, compared to an OECD average of 24.1 percent. The OECD figure is what’s called the statutory rate, meaning the base rate applied to corporate profits.”

http://www.politifact.com/punditfact/statements/2014/sep/09/eric-bolling/does-us-have-highest-corporate-tax-rate-free-world/

55 Evans_KY June 9, 2017 at 6:45 am

This feels itchy under the surface. An argument of consequences fallacy on both sides. Are we arguing that higher earners should not pay more in taxes or that poor people should not receive more benefits? Are those the only options? Is this what we have been reduced to? If so, complacency is clouding our vision.

56 mulp June 9, 2017 at 7:08 am

Tyler is arguing that buying an imported handbag by cutting spending on Medicaid will have no impact on jobs in the US. You see, the working poor person will simply go to France to work on the $10,000 handbag to pay the doctor to treat her son’s birth defects. After all, in free lunch economics, you can do fine stitch work with gold thread over the internet.

Since Reagan, paying workers is a really bad thing, a cost that must be cut. After all, every dollar paid to workers is like thrown into a black hole, go forever from the economy. The more money not paid to workers, the more money for consumers to spend paying high profits to the rich.

57 chrisare June 9, 2017 at 6:46 am

the fact that programs aren’t all equally effective and that their opportunity costs is not an argument against more progressive taxation.

58 chrisare June 9, 2017 at 6:46 am

*there are opportunity costs

59 chuck martel June 9, 2017 at 6:59 am

There’s no relationship between government spending and tax receipts. The federal government doesn’t balance its budget. Instead it borrows the money or simply enpixelates it and then elected officials use it to buy votes.

60 mulp June 9, 2017 at 7:30 am

That has only been true since Reagan convinced everyone that free lunch economics were sound economics.

Before Reagan, economic was TANSTAAFL

The only difference was in how policies were laid out.

Democrats would say we are going to spend millions to help your kids and tax everyone a little to pay for it.

Republicans would say about the exact same thing, you are going to be burdened will millions in higher taxes and you will get just a few bucks in benefits. Unless it was a military base or warship, in which case it was millions of dollars in jobs and just a small tax increase on everyone.

But everything back then involved debating both the benefits of spending and the impact of taxes.

To cut taxes, you first had to sell the spending cuts and lost jobs and the lost business that resulted.

With Reagan, he promised tax cuts would pay for themselves, so there was no need to cut spending. A free lunch.

Or in the case of spending cuts, he argued that cutting payment to the disabled would have no impact on businesses who cared for or rented to them because their ALS or polio would be cured by the spending cut, or they would get jobs as bricklayers.

61 Thiago Ribeiro June 9, 2017 at 7:13 am

It is hard to understand a country where expensive bags are more important than human lives!

62 Thiago Ribeiro June 9, 2017 at 8:40 am

No. I am a free citizen and I will exercise my rights as much as I feel doing.

63 Todd K June 9, 2017 at 9:53 am

There is no word for freedom in Brazilian.

64 JohnB June 9, 2017 at 7:33 am

You need to re read Kahneman and Tversky on how people choose, why they do not do so using classical economic model.

65 Veobaum June 9, 2017 at 8:27 am

He has written tons on behavioral econ. This article is explicitly about subrational policy selection and why it should be improved.

66 Rich Berger June 9, 2017 at 8:13 am

Progressives don’t think; they emote.

67 Jeremy June 9, 2017 at 8:34 am

Ouch.

68 middyfeek June 9, 2017 at 12:31 pm

There it is folks. In language even progressives can understand.

69 Fred Bush June 9, 2017 at 8:30 am

So, in order for us to balance the budget in perpetuity according to the GAO with current spending habits, we would need to raise tax receipts from their current ~24% of GDP to ~33% of GDP. 33% of GDP is the OECD average. If you want to argue, wait, the US is different than other wealthy big economies because of our history of armed guys resisting taxation — in 2000, prior to the Bush tax cuts, taxes were at 29.5% of GDP, which is ~60% of the way there.

Asking your ideological opponents to concede that more money can’t be raised from taxes in the long run is misguided at best and deceitful at worst.

70 Owen June 9, 2017 at 8:46 am

You cite the OECD average – but fail to note that the average income tax collection between US and the highest tax countries in the OECD is very similar, its the payroll tax that’s different. If you’re adamant about boosting tax receipts to 33% of GDP then you’re talking about substantially raising the payroll tax. And I’m sure you know that payroll taxes are quite broad and regressive, negating the “soaking the rich” goal.

I think Tyler’s point is most salient when you consider recent state-legislative moves to enact Single-Payer health insurance. Not only are states talking about raising income tax rates to pay for certain existing priorities, as Tyler notes, but the progressive wing is saying that it can also pass Single-Payer health insurance – and double tax receipts (yes, check the Vermont, NY and California studies – while not impacting the deficit. This is absolutely hogwash and anyone with a very basic understanding of public accounting can see this. But I think the nail in the coffin will come when progressive voters realize that there own taxes – through payroll tax increases – will have to rise substantially to pay for this progressive agenda. It’s just not financially feasible.

71 eccdogg June 9, 2017 at 11:28 am

Big difference is no VAT.

https://www.oecd.org/tax/revenue-statistics-united-states.pdf.

If progressive want to run on a 10% VAT to fund a European style welfare state give it a shot. But that is not the pitch I here being made.

72 Ricardo June 9, 2017 at 11:33 am

The U.S. (again, looking at federal, state and local levels combined) is behind much of the OECD pack on corporate taxes and consumption taxes in addition to payroll taxes. Even when it comes to personal income tax, Canada, New Zealand and Sweden all manage to collect more as a share of GDP.

73 JWatts June 9, 2017 at 3:43 pm

“is behind much of the OECD pack on corporate taxes”

That’s hogwash.

““Out of the 34 countries in the OECD, America ranks first with a 39.1 percent corporate tax rate, compared to an OECD average of 24.1 percent.”

http://www.politifact.com/punditfact/statements/2014/sep/09/eric-bolling/does-us-have-highest-corporate-tax-rate-free-world/

74 anon June 10, 2017 at 12:28 am

Ironically, the U.S. is behind on corporate tax revenue because its corporate tax rate is too high. So you want them to cut the corporate tax rate to be closer to the EU?

75 Fred Bush June 9, 2017 at 9:15 am

Notably, as I understand it, the Affordable Care Act was paid for almost entirely with new taxes on the wealthy, which seems to undermine the main thesis of this article.

76 TMC June 9, 2017 at 10:09 am

BS, it was paid for by higher premiums, mostly on the middle class, and stiffing insurance companies out of billion (see wave of insurance companies getting out of the markets).

77 JonFraz June 9, 2017 at 1:04 pm

No, it was not paid for by “higher premiums”. Those premiums go straight from the consumer to the insurer; they do not fund the governmental aspects program in any meaningful way; they fund the insurers only, who are NOT government entities. (We are talking about GOVERNMENT programs and taxation here in this blog piece).
The ACA was mainly funded (in terms of government revenues which enable both the subsidies and the Medicaid expansion) by higher taxes on upper income individuals and by cuts to other government programs.

78 Thomas June 9, 2017 at 3:44 pm

If I pay premiums 10x my actuarial cost to provide women, the elderly, and the already sick with cheaper premiums, in what way am I not paying for ACA?

79 TMC June 9, 2017 at 4:49 pm

“No, it was not paid for by “higher premiums”. Those premiums go straight from the consumer to the insurer”

Which subsidises the ACA plans. What does it matter that ACA makes me pay the govt, which pays the insurance company, or just pay the insurance company?

80 A Definite Beta Guy June 9, 2017 at 10:16 am

ACA is paid for with all sorts of business taxes and Medicare reductions. The outyears in particular get paid for with Medicare reductions and Cadillac Taxes.

81 Fred Bush June 9, 2017 at 11:12 am

Upon further review, in terms of funding sources for ACA, taxes on wealthy are slightly less than business/cadillac taxes, and then medicare provider reimbursement cuts are the biggest of them all, so I am indeed wrong.

82 eccdogg June 9, 2017 at 10:03 am

Tyler is not asking his ideological opponents to concede that more money cannot be raised. He is asking them to concede that more money cannot be spent.

If you raise the US to the OECD average, that just balances the budget with current spending. To add even more spending you then have to increase to higher than the OECD average. Maybe you can get that done, but history seems to be against that. I am not seeing where you get your 29.5% number. This data never shows federal tax receipts over 20% https://fred.stlouisfed.org/series/FYFRGDA188S

And in most of those OECD countries they don’t get those high percentages by taxing the rich. They get them by taxing everyone more and perhaps the median person in the US is less tolerant of higher taxes than other OECD citizens.

83 Fred Bush June 9, 2017 at 11:04 am
84 eccdogg June 9, 2017 at 11:21 am

So that number was for Federal State and Local combined and it is 7 years old. But I still can’t match the number. this is directly from the source https://stats.oecd.org/Index.aspx?DataSetCode=REV

Peak I get for the US since 1965 is 28.2 (right before dot com crash) and as of 2015 it is 26.4.

85 JonFraz June 9, 2017 at 1:07 pm

Assume for a moment that some great and terrible catastrophe threatened civilization and maybe even the human species. Would anyone argue that we would not do everything we could to meet the threat, even if it required raising taxes to unheard of levels?
We did something like that in WWII and before that in the Civil War.
Given sufficient need we can indeed find the money if we have to. What stands in the way is not any abstract economic law, but political opposition only.

86 eccdogg June 9, 2017 at 1:50 pm

Sure. There is no economic law

But I think saying “it takes a looming existential catastrophe or civil/global war to move federal taxes much higher than 20%” is kind of admitting it is really hard.

I am not sure free university tuition has the same motivating force.

87 msgkings June 9, 2017 at 2:51 pm

+1

88 Fred Bush June 9, 2017 at 9:03 am

Again, the Bush tax cuts, which seem to have taken us from 29% to 25% tax receipts, hit income tax, capital gains tax, and estate tax, making our tax code significantly more regressive as a result. So, no, I do not agree that fixing our tax code needs to be regressive.

I also think you underestimate progressives’ willingness to pay higher taxes when they fund what seem to be clear social goods like health care. Why do you think people tend to vote for school district bonds?

89 Jan June 9, 2017 at 9:30 am

No, no, no. Progressives will only tax rich people . That’s how Medicare and food stamps are funded, doncha know. Taxes on the $1million+ earners.

90 Harun June 9, 2017 at 5:13 pm

What if I told you $100,000+ = rich people and not $1,000,000+?

91 A Definite Beta Guy June 9, 2017 at 10:04 am

Conservatives also vote for school district funding, as school district funding tends to be local. That’s a big difference from health-care spending that most likely won’t benefit you, especially since spending is means-tested.

92 TMC June 9, 2017 at 10:06 am

https://fred.stlouisfed.org/series/FYFRGDA188S

Tax receipts were going down When Bush took office as we were in a recession. They plateaued in 2003-4 and rose until 2007 until the great recession.
Seems to be opposite of the argument you are making.

93 Fred Bush June 9, 2017 at 10:57 am

I was referring to this: http://ctj.org/ctjreports/2013/04/the_us_continues_to_be_one_of_the_least_taxed_of_the_developed_countries.php#.WTq3AjOZMqo, which says that US tax revenue peaked in 2000.

Not sure why the two datasets are different.

94 TMC June 9, 2017 at 4:54 pm

They don’t differ. I’m just countering your statement about the tax cut. It’s unsupported by either of the links.

95 Fred Bush June 10, 2017 at 1:12 pm

According to the set I posted, tax receipts dropped sharply after 2001, which is when the Bush tax cuts were enacted. You blame this on the recession, yet the OECD rates did not show a corresponding drop, and the recession was global.

96 Daniel Weber June 9, 2017 at 11:37 am

On a federal revenue basis, about 1/3 to 1/4 Bush tax cuts went to people making over $250,000.

If that makes our tax code “significantly more regressive” we must be huffing paint.

97 Fred Bush June 9, 2017 at 2:53 pm

How many people do you think are making over $250k? If you give 1% of the population 1/3 of the benefits, of course that’s regressive.

98 Daniel Weber June 9, 2017 at 3:21 pm

If the US reduced tax revenue 10% across the board, most of it would go to the rich, because the rich pay the most taxes. This doesn’t mean the tax cut is regressive. As described being across the board, the tax cut is neither progressive nor regressive, yet you would describe it that way.

Since people paying over 250K pay over half of income taxes, and only got 1/3 the benefit, it pretty clearly made the tax more progressive.

Are you a clown?

99 Fred Bush June 10, 2017 at 1:08 pm

I was using “regressive” as shorthand for “increases inequality”/”benefits the wealthy in comparison to the less wealthy”, which apparently is not the proper meaning of the term. It’s true that cutting, say, the estate tax by 50% across the board would not be considered “regressive”, but it would certainly increase inequality and benefit the wealthy, given that they’re the only ones who pay the tax. That’s what I’m trying to say here.

100 Gil June 9, 2017 at 9:20 am

The article was interesting. It inspired a lot of thought, in the end it didn’t seem very convincing as other have mentioned.

Tyler didn’t distinguish between consumption and investment. For example, if Flint had spent a little more on lead “pre-abatement”, they would have saved themselves a billion dollars or more.

The problem in general seems to be budgeting. Deep down Tyler seems to make (hidden) linearity assumptions. The claim is if we put the budget items in list, ordered by priority, then we can find the optimal budget with pairwise comparisons between things adjacent in the list, at their current funding levels. This seems obviously false for any real budget. The cases where it is true aren’t very interesting.

101 Daniel Weber June 9, 2017 at 11:41 am

1. Everyone wants their consumption classified as investment.

2. A lot of honest-to-god investment is poorly applied. Using Flint as an example, it would be cheaper to buy a new house elsewhere in the country for every person in Flint and give Flint back to nature than trying to fix all those pipes.

102 Cooper June 9, 2017 at 2:29 pm

It would also be better for the people of Flint to be forced to move elsewhere.

They might be unhappy for a few years in their new homes in Orlando or Phoenix but their kids and grandkids will thank them for getting them out of that dead city.

103 Jan June 9, 2017 at 9:24 am

In addition to some of the good criticisms above, the article starts with a strawman that progressives believe the only way to advance important causes is through more/new social programs that are paid for by taxes, and taxes which are levied exclusively on the rich. Rich is not defined in the piece. (Did you know almost nobody in America thinks they are rich?)

Of course many if not most progressive causes in US history didn’t involve taxing rich people. And most causes today also don’t involve taxing people at all, or at least not taxing only rich people (e.g. BLM, minimum wage, etc). I was even told by Paul Ryan that the ACA was a tax on the middle class. He didn’t say rich people, hmm. Of course, it’s possible he wasn’t being totally honest there.

104 A Definite Beta Guy June 9, 2017 at 9:45 am

This is indeed an important point. Myself and Mrs. ADBG (at the time a lukewarm Obama supporter, being a Millennial and all) attended a local town hall meeting for our State Senator. She was surprised to discover that SHE was one of the horribly rich people ruining America and needed to have her taxes dramatically raised….and not even to finance any important fixes, like storm sewers, or roads, or putting electric lines below ground, but so retired teachers who produced the beautiful Chicago Public School system can live in relative opulence.

105 Hazel Meade June 9, 2017 at 1:15 pm

The ACA acts like a tax on the middle class because the community rating provisions, combined with the subsidy cut-offs, combine to effectively raise premiums on middle-class families. The premium increases essentially work to make the middle class subsidize the health-care needs of the lower class. This is why the essential benefits list mandates coverage of substance abuse treatment and mental-health care. It’s meant to force the middle-class to cross-subsidize healthcare services that are mainly used by the lower class.

106 Cooper June 9, 2017 at 2:28 pm

Hazel is correct.

The net effect of the ACA was a transfer of money to the poorest 20% of households, paid for by stealth taxes on everyone else.

https://www.brookings.edu/research/potential-effects-of-the-affordable-care-act-on-income-inequality/

107 Hazel Meade June 9, 2017 at 2:42 pm

Also, as shown in your chart, the effect is regressive – the biggest loss of income is imposed on those just above the subsidy threshold. So it’s even more of a tax on the lower middle class than on the upper-middle class.

108 Cooper June 9, 2017 at 2:54 pm

The distributional effect also helps explain the politics of it.

The people who were most viciously opposed were often in the cohort who were too rich for the subsidies but too poor to actually afford the coverage on offer that they were forced to buy.

A 1% drop for an entire decile doesn’t mean that everyone lost 1% of their income. It could mean that 90% of people were uneffected and 10% of the people suffered a 10% drop.

109 Jan June 9, 2017 at 4:17 pm

Dems introduced a bill to eliminate the subsidy cliff, which exists because the thoughr was that states would expand Medicaid up to allowable ACA thresholds.

110 Hazel Meade June 9, 2017 at 4:27 pm

Dude, The medicaid expansion phases out *before* the subsidies do. Medicaid expansion has no effect on where the subsidy cliff is.

The thing is that the law established this limit of something like 8% of your annual income as what you should expect to spend on health insurance. If you’re spending less than that, you don’t qualify for subsidies. 8% of one’s annual income is a LOT of money for a middle class person, especially considering they are likely spending a significant amount on taxes and mortgage. And the regulations drove insurance premiums right up to and beyond that percentage. The law basically says “we’re going to tax you up to 8% of your income to pay for your health care”. It’s effectively an 8% income tax. How many spent 8% of their income on insurance premiums before the ACA?

111 Jan June 9, 2017 at 4:16 pm

So I think we agree that progressive policies aren’t about taxing rich people and only rich people?

112 Hazel Meade June 9, 2017 at 4:21 pm

Of course not. They’re about taxing everyone and spending a lot more money, on everything.

113 glasnost June 9, 2017 at 9:26 am

It’s hard to imagine a more deeply confused, unrealistic, and flawed set of arguments than this. Sure, if you start from a set of absurd, incorrect assumptions about fixed constraints, like we have to balance the budget in the next 20 years, than gee, it’s going to be hard to spend more on social welfare.

Tyler Cowen isn’t dumb; he’s an economics professor. He understands fiat currency. He knows that no country in the world with its own floating sovereign currency runs a balanced budget. He knows that there’s not even any particular need to stabilize debt-to-GDP ratios. So, if we decide arbitrarily that we must repeatedly jump out of airplanes, than it’s hard to design a good policy around improving airline food that will really pay off for us. But who said we’re going to adopt the “let’s all jump out of airplanes” policy?

So, try abandoning the imaginary need for massive austerity that you don’t even bother to construct an argument for (GAO link is not an argument, “closing this fiscal gap that we provide neither evidence nor argument for closing, but simply assume it must be closed in the face of all political and empirical reality, will be hard, woaaaaah), and then start over.

114 A Definite Beta Guy June 9, 2017 at 9:41 am

All budgets balance in the end. “Issuing debts in your own currency” is another word for “inflation,” and financing a modern government through money printing is impossible. Good luck printing $1+ trillion every single year to cover the government deficit.

115 Todd K June 9, 2017 at 10:03 am

Hasn’t anyone told you about the coming technological Singularity?

All budgets will be balanced by April 1st, 2045.

116 glasnost June 9, 2017 at 6:54 pm

“Issuing debts in your own currency” is another word for “inflation,”

and inflation is a vastly superior policy (within certain bounds) than forced austerity. Inflation punishes savers, and we’re in an era of stagnant and uncirculating capital, where the worlds largest companies build gigantic cash pools and… sit on them, while we suffer through crappy economic growth due to massive shortfalls in demand.

You want a return of demand and economic growth; order me some fucking inflation, please.

“Good luck printing $1+ trillion every single year to cover the government deficit.”

We had some trillion dollar deficits in the last decade. I don’t recall problems finding buyers. You’re living in an alternate universe.

117 anonymous June 10, 2017 at 12:36 am

Selling bonds and printing money are not the same thing. The vast majority of government debt is short term so inflation is simply not a viable option for dealing with it.

118 House June 9, 2017 at 10:12 am

Glasnost,

As the debt / GDP ratio expands and the budget deficit widens, more and more of our tax dollars will be spent on interest expense. The more tax revenue that is spent on just paying interest on the outstanding debt, the less money available for different programs. Hence, austerity is needed to continue funding liberal policies that make up today’s welfare state.

On the flip side, we can raise taxes on the rich and drive business overseas (i.e., Medtronic), which will lower GDP and tax revenue; all while interest expense consumes the federal budget. Maybe if we tell our creditors we tried to offer universal healthcare and reduce our carbon footprint they will forgive our debts?

119 glasnost June 9, 2017 at 6:56 pm

“As the debt / GDP ratio expands and the budget deficit widens, more and more of our tax dollars will be spent on interest expense”

When you expand spending by $500 billion dollars and must pay back $100 billion a year in increased interest costs, this is called… a net gain.

“On the flip side, we can raise taxes on the rich and drive business overseas (i.e., Medtronic), which will lower GDP and tax revenue”;

You’d sure like to believe this. The only nagging problem is that empirical evidence suggests that this doesn’t actually happen. Can I introduce you to California?

120 anonymous June 10, 2017 at 12:38 am

Can you please point me to that empirical evidence?

And no, a $500B loan with $100B/yr payments in perpetuity is not a net gain

121 Hazel Meade June 9, 2017 at 10:39 am

The people we’re borrowing money from aren’t stupid either. If we keep devaluing the currency, eventually they will catch on and stop lending us money, or our interest rates will go up. If we don’t pay the interest on our loans they will go up further, or people will stop lending us money. Ask Greece what happens when you attempt to keep running a budget deficit forever.

122 The Anti-Gnostic June 9, 2017 at 10:53 am

I am deeply sympathetic to this viewpoint. I’m one of those who thought the chips should have been allowed to fall where they wouldest in 2008. But we are quite blatantly printing money and buying our own debt with it, which is when I would have thought the jig would be up. Creditors seem happy with the arrangement, so something else is going on.

123 Cptain Obvious June 9, 2017 at 10:55 am

Lool, you should rather ask Greece why they choose to enter in Eurozone duh…

124 Hazel Meade June 9, 2017 at 1:19 pm

So they could make other people do their borrowing for them.

125 Cptain Obvious June 9, 2017 at 2:11 pm

I think you got your causality wrong…

126 Hazel Meade June 9, 2017 at 2:46 pm

maybe we should ask Europe why they let Greece into the Eurozone.

127 glasnost June 9, 2017 at 7:03 pm

The people we’re borrowing money from aren’t stupid either. If we keep devaluing the currency, eventually they will catch on and stop lending us money, or our interest rates will go up.

This is a useless argument at the level of abstraction in which you’re making it. There’s *some* level of currency devaluation that would lead to a raise in interest rates, no doubt. There’s also a lot of currency devaluation that *won’t* lead to increased interest rates, or rather, a lot of additional spending that will lead to a rise in interest costs that is far, far smaller than the increased expenditure.

When you increase spending by $500 billion and are forced to pay a whole entire 0.1% in increased interest rates, thus say an extra $100 billion in interest costs, this is called… a net gain.

People buying our debts will charge us more only to the extent to which there are other debtors making better offers, and making them in sufficient size as to provide genuine alternatives to the US bond market. I can think of exactly one other country that could even possibly do that – China. And their currency isn’t convertible.

This kind of idealized rule of thumb is of no help in assessing the actual situation available to this actual country in this actual era. We could spend another $ 1 trillion a year with no corresponding tax raise and our creditors would keep buying our debt at current rates. Our currency could fall by, oh, 50% in relative value and they’d still buy it. You have no idea how hard it is to even stop buying US debt in anything like the current quantities at which it is being bought. To a great extent, there’s actually nowhere else to go, nowhere that wouldn’t be utterly destabilized by the act of trying to transfer over significant chunks of the current demand for US debt.

128 Pappy June 10, 2017 at 12:41 am

There is literally nobody in the world who would continue buying U.S. debt if the U.S. dollar was falling by 50% in relative value year after year

129 glasnost June 9, 2017 at 7:04 pm

Ask Greece what happens when you attempt to keep running a budget deficit forever.

I’d rather ask … the US. When was the last time we had a balanced budget? I have no idea, but I’m pretty sure it hasn’t been in the last 100 years. I count a grand total of zero consequences. Greece, of course, incurred debt in a currency it can’t print. So, utterly different constraints, and utterly different consequences. Thanks anyway.

130 anon June 10, 2017 at 12:42 am

Try 2001

131 Borjigid June 9, 2017 at 10:54 am

A quick Google search tells me that a number of countries with floating, sovereign currencies run surpluses, including Norway, Switzerland, New Zealand, Singapore, and Iceland. So, its possible.

That said, I agree with your broader argument that Tyler’s argument rests on a series of bad assumptions.

132 Cptn Obvious June 9, 2017 at 11:02 am

Yeah, but but but those countries have a government that…. works.

133 Jeff Fisher June 9, 2017 at 11:49 am

And with the possible exception of Singapore, which I know less about, they are all by US standards run by far left progressives and run massive welfare states.

134 Borjigid June 9, 2017 at 12:23 pm

Sort of, I guess?

Norway runs a big welfare state, because they have to do something with all that oil money. Iceland runs a big welfare state because their private sector disappeared a few years ago (not coincidentally, they couldn’t run a deficit until recently because they couldn’t borrow). New Zealand and Switzerland have modest welfare states and are not usually considered particularly progressive. Singapore is poster child for low government spending, although I believe that they do a lot of forced saving and state ownership of land.

Btw I loved your work with the Rams.

135 Jay June 9, 2017 at 1:35 pm

…and they’re also very tiny.

136 Ron June 9, 2017 at 9:38 am

I had the “pleasure” of hearing a group of close advisors to President Obama discuss various issues. One made the following comment:

“If Americans would just get out of our way and let us do what we want their lives would be so much better.”

The others agreed. I got the sense that they really wanted things to be better for Americans but that we’re not smart enough to make it happen.

137 Cock Piss Partridge June 9, 2017 at 10:42 am

I’m sure it happened just like that lol.

138 Ron June 9, 2017 at 11:09 am

I found it enlightening, but not funny.

139 wd40 June 9, 2017 at 9:45 am

I do not understand why Tyler is picking on progressives when their opposites face a similar problem. Republicans argue for lower taxes but only modestly if at all lower spending (claiming that incomes and tax receipts will increase), while Democrats argue for increased spending while only modestly increasing taxes. Of course, Democrats and Republicans have different spending priorities.

140 chuck martel June 9, 2017 at 11:19 am

” Democrats and Republicans have different spending priorities.”

Big deal. They’re different teams in the same league. The New England Patriots vs. the Dallas Cowboys. When the season/election is over they all end up with the same benefits, no matter who wins the Super Bowl. The combat between the Progressives-Conservatives is strictly theatre. That’s why an outlier like Trump has created such a farcical fire drill, he doesn’t know or follow all the rules of etiquette of big-time politics. The political class and their toadies in the media can’t stand that. There’s nothing in the constitution that requires binary politics but that’s evidently what some people want. The others voted for Trump.

141 Victoria Wilson June 9, 2017 at 9:49 am

The other factor not mentioned is that by continually externalizing the perceived benefits of government poverty programs on the rich, you disengage the need for this industry -if you will- to economically engage; make and evaluate trade-offs. What it has become is a piracy of the best grant writers, the most agile social guilters, and other assorted party muscle.

142 Stevie Welles June 9, 2017 at 9:50 am

Yet another convoluted way of saying “human suffering doesn’t move me”.

143 Jesus C. June 9, 2017 at 10:56 am

Bless you!

144 The Anti-Gnostic June 9, 2017 at 10:58 am

I like this pithy saying too: liberals love humanity and hate humans; conservatives love humans and hate humanity.

145 Jesus C. June 9, 2017 at 11:00 am

Correction: conservatives love greed, liberals hate greed

146 The Anti-Gnostic June 9, 2017 at 11:33 am

Yeah that’s it all right.

How come the government can never be “greedy?”

147 Art Deco June 9, 2017 at 12:23 pm

The government’s an abstraction. Its clientele are not.

148 JFA June 9, 2017 at 10:00 am

“The main [insert political ideology] argument, and why I think it is wrong”:

“Their positions are not feasible/realistic due to political constraints.”

Thanks for the enlightening article. Of course, of all the progressive positions, taxing the rich to increase spending is actually politically feasible (though maybe not politically stable). Remember the ACA: not perfect (from a progressive view (or from any view for that matter)) and certainly involved some prioritization of spending, but it increased taxes on the wealthy and increased spending on particular programs. Counterexample proves Tyler wrong.

149 Harun June 9, 2017 at 5:24 pm

What happened afterwards to the progressives who voted for that?

Not so popular, huh.

150 Sean June 9, 2017 at 10:02 am

This is probably a question with few good answers and many bad ones (great to ask in the MR comments section then…) what’s the outcome we seek then? Is it a more gentle landing into the reality of gov’t only able to deliver on entitlements? That seems like one approach. The math is too hard for anything els.

151 edgar June 9, 2017 at 10:08 am

Fantastic piece. Any article in a US publication that acknowledges the existence of trade-offs is better than 99.9% of the public policy articles out there. Nevertheless, Tyler does perpetuate the error that taxes are on “the wealthy.” No, no, no. The US taxes income, not wealth. Rich people who relax and do not earn anything do not pay income taxes. Working class people who sell a major asset or have an especially good year have their chance at savings accumulation and increased stability stripped from them by already rapacious tax rates. Moreover, although Tyler explicitly dismisses concerns about trade-offs associated with increasing income tax rates, one really should consider whether it is Gucci bags or whether it is other billionaire hobby activities like Space X, the Washington Post, or the Bill and Melinda Gates Foundation that would take the hit.

152 Harun June 9, 2017 at 5:26 pm

Amen.

Sen. Kerry can collect his tax-free muni bond income and park his yacht anywhere he wants. His wealth is secure and safe.

Funny how so many progressives never look to cut out the tax dodges the idle rich use.

153 Ricardo June 10, 2017 at 2:01 am

“Funny how so many progressives never look to cut out the tax dodges the idle rich use.”

Yes, this is why we never, ever see progressives advocating estate taxes, higher capital gains rates or elimination of the carried interest loophole, or arguing to preserve the AMT.

Thomas Piketty goes even further and advocates for a direct tax on wealth.

154 AL June 9, 2017 at 10:15 am

The Bolshevik Revolution pretty clearly showed we’re nowhere near the limits of what can be taken from the rich

155 Li Zhi June 9, 2017 at 10:28 am

The “main” Progressive argument is, was, and always will be: “We can afford it.”

156 Li Zhi June 9, 2017 at 10:50 am

Although, jest aside, unless TC is a Progressive, he should refrain from speaking for them. But I guess if he hasn’t learned that by now, he never will. I suggest that he knows better, that Democrats aren’t the best spokespeople for the Republican agenda, and vice versa, that libertarians aren’t the best spokespeople either for conservatives or progressives, and that anyone with a sense of “fairness” wouldn’t need to be told that.

157 Anonymous June 9, 2017 at 10:41 am

Obviously this was a Straussian argument for social spending .. for the most important things.

And Mulp was the only one above to connect this to Trump’s infrastructure plan?

158 FUBAR007 June 9, 2017 at 10:50 am

The progressive argument is that, in complex, high-consequence, and/or long-term economic decision-making, we are wiser collectively than we are individually. To put it bluntly, most people are foolish, ignorant, and short-sighted when it comes to managing their economic affairs on their own. Moreover, that foolishness leaves them vulnerable to unscrupulous market predators who seek to take advantage of them for profit. (The thought being that most people aren’t informed enough or wise enough to reliably distinguish between the predators and vendors operating in good faith.) Therefore, sustainment of a stable, prosperous, and just society requires policy-makers to proceed from presumptions of vendor bad faith and customer incompetence when regulating markets in complex, high-consequence, and/or long-term goods and services (i.e. financial planning, health care, real estate, etc.).

The key problem with this argument is corruption: the policy-makers are often themselves predatory rent-seekers or paid agents thereof.

159 Jesus C. June 9, 2017 at 10:59 am

Bless you!

160 Anonymous June 9, 2017 at 10:58 am

Tyler’s original piece was not terrible. It was an attempt to fault the good in comparison to the perfect. It flies a bit, but I’m sure Tyler knows it wobbles. That is, there are realms of taxation-and-spending that have been popular for literally centuries in America. “Progressives” are much younger than that pattern. They have endorsed it of course, but they were not the ones who actually called themselves the

https://en.wikipedia.org/wiki/Socialist_Party_of_America

or

https://en.wikipedia.org/wiki/Communist_Party_USA

Those were something else again. I’m sure Tyler knows this, but he has picked up a flock of pigeons who can’t distinguish. Or think it is their morning fun to pretend they are all one thing. Should I just cay “carry on” to that game of pretend?

161 Anonymous June 9, 2017 at 11:15 am

I found the actual Progressives and what they actually believed recently, in 2016. I don’t agree with many of their views, on problems or solutions. I guess I am not a modern Progressive, but there is quite a bit of light between them and the Communists or Socialists. Adjust your rhetoric accordingly.

http://pdamerica.org/our-issues/

162 A Definite Beta Guy June 9, 2017 at 1:13 pm

Not really, they are only a few steps away from actual communism. “Private competition has unneeded costs and is wasteful” is literally the first thing on their website. For health-care.
It’s not really a big logical leap to go from that to all other sectors.

163 Anonymous June 9, 2017 at 2:41 pm

But it is for health care. Even if they want a single provider, it is in that domain, and not for the economy overall. It would have to be for the whole economy to be “actual communism.”

But that’s the problem with anti-progressives. They think “government schools” are “actual communism.”

164 A Definite Beta Guy June 9, 2017 at 3:03 pm

Government schools aren’t necessary either.

165 Anonymous June 9, 2017 at 3:57 pm

Sure, but in terms of what is more ancient than “progressive politics” ..

“The first American schools in the thirteen original colonies opened in the 17th century. Boston Latin School was founded in 1635 and is both the first public school and oldest existing school in the United States.”

166 Greg June 9, 2017 at 11:04 am

The lead abatement item seems like a red herring. It’s tiny, and constructed so that no one can argue with it. The argument from political constraints is valid but also assumes a lot of status quo, which doesn’t seem like a good premise for policy innovation. Things are politically impossible, until they’re possible. I also don’t see a consumption tax as being particularly out of bounds, compared to income tax and other political footballs. Does any politician want to get up at a town hall and defend Birkin bags?

More broadly, I wonder which parts of the federal budget are actually the most likely to marginally expand/contract? It seems like the answers based on recent history are taxation, healthcare (ACA, Medicare Part D, demographics, reimbursement rules, etc.), military spending, and Social Security/disability (demographics again, maybe means testing at some point). All the lead abatements of the world are rounding errors.

So, you could make room for marginal spending with marginal consumption taxation, Medicare reimbursement changes, canceling a single stupid defense program (https://www.forbes.com/sites/charlestiefer/2016/01/01/the-10-most-blatantly-wasteful-defense-items-in-the-recent-1-8-trillion-spending-bill/print/), tweaking Social Security means testing, etc. Granted, many of these are still hard political problems.

Overall, I guess I don’t believe we’re really in political stasis as much as Tyler argues.

167 Daniel Weber June 9, 2017 at 11:14 am

See also:

“I don’t think this social program is worth it.”

“Oh, but we could afford to spend ELEVENTY TRILLION DOLLARS KILLING MUSLIMS IN IRAQ!?!!?”

168 AlanG June 9, 2017 at 11:29 am

Finally a comment about all the wasted money being spent on the Iraq war. Add on top of this what has been spent in Afghanistan and you have a clue as to why we don’t have a balanced budget. It’s not the welfare state that is the entire culprit here but also the military state.

169 Jeff Fisher June 9, 2017 at 11:53 am

And that we keep nearly 1% of the population in prison (.91%).

170 Art Deco June 9, 2017 at 12:21 pm

Who belong in prison.

171 JonFraz June 9, 2017 at 1:10 pm

Some of them do. But all of them? That’s open for debate.

172 Daniel Weber June 9, 2017 at 1:43 pm

Clearly not all, as in 100%. But not so low as 30% either.

We also should consider things like flogging over imprisonment, at least somewhat, since it destroys less human capital. Take your licks, then go back to your life. But we somehow view the more destructive alternative as more humane.

173 Anonymous June 9, 2017 at 4:42 pm

I was surprised to hear that some places charge you rent for your ankle monitor, and people without the cash go to prison instead. That’s crazy. They must save the state tremendously, and should be used as widely as possible.

174 TMC June 9, 2017 at 5:07 pm

Anonymous, that’s exactly what I was thinking on the bail post here several days ago.

175 Jay June 9, 2017 at 1:37 pm

So we were running all kinds of balances before then? Please…

176 Cptain Obvious June 9, 2017 at 2:14 pm

Yes we were, remember end of Clinton era?

177 Daniel Weber June 9, 2017 at 2:18 pm

Depends how you count SS surplus. It’s fine to count is as part of general revenue, but you have to be consistent and count spending it down (which was the point of having it) as a big general spending plan.

178 TMC June 9, 2017 at 5:08 pm

We added 10x the cost of the Iraq war to the debt in the past 8 years.

179 Massimo Heitor June 9, 2017 at 2:31 pm

The classic example of bussing school children from bad school districts to good school districts is a form of government redistribution that doesn’t directly involve raising taxes.

The Obama administration usually chose hidden cross-subsidy mechanisms, over transparent redistribution mechanisms that they would get politically hammered on.

As Obamacare architect Jonathan Gruber famously admitted, “Lack of transparency is a huge political advantage,”.

180 A Definite Beta Guy June 9, 2017 at 3:55 pm

In all fairness: progressives think there’s a lot of free money out there. But so do conservatives, and practically all other ideologies. There’s nothing really unique about Progressives thinking they’ll get a free lunch.

Foundational rot exists in all ideologies and has to do with cause-effect relationships with the world, not denying trade-offs per se. From my POV, Modern Progressives foundationally believe markets are BAD vehicles for delivering value to consumers. Health-care is where they go most far, but you need only listen to a Progressive talk about any industry to realize they deeply distrust essentially all companies (especially big companies, where “big” is entirely arbitrary). They also seem to have little understanding of how supply/demand should work, so my Brother-In-Law thinks it is a horrible crime that bars around Wrigleyville charge such high cover charges when the Cubs were in the World Series.

Their disgust with income inequality is a separate issue, which is also foundational rot, and little more than wealth envy along with a misunderstanding of how markets operate.

Modern Progressives also seem to have a foundational belief that anything that even slightly whiffs of discrimination is the moral equivalent of Jim Crow. This if further damaged by a total belief in Equalitarianism, where any difference in outcomes among protected classes MUST be the result of systemic discrimination which requires immediate redress. That’s utterly ridiculous for obvious reasons.

But free lunch thinking and an inability to consider trade-offs? That’s ALL ideological groups

181 byomtov June 9, 2017 at 7:53 pm

The upshot is that we should compare anti-poverty programs to other anti-poverty programs, and favor only the prioritized ones.

But the evidence on the “fiscal gap” — the space between what the government owes and what it collects — suggests that the opportunity cost of expanding one transfer program is likely some government spending elsewhere, rather than expensive handbags for the wealthy.

These are two different arguments. The second says that we will likely not raise taxes to fund more anti-poverty programs – or presumably any other new spending, but will simply move money around. OK. But even if true, it doesn’t say what the first quote says – that the money will come out of other anti-poverty programs.

If you buy the first claim you are saying that there is, or should be, a fixed amount of money to be spent on anti-poverty programs, and that expanding one means shrinking another. That’s not a ridiculous idea, but what it has to with “the main progressive argument” is not clear. In fact, it doesn’t have anything to do with it.

Progressives who want to expand anti-poverty programs generally don’t want the money moved from other such programs. They want it to come form higher taxes, possibly, or from government programs that have nothing to do with poverty. Taking money from defense, say, and expanding food stamps, is a perfectly ordinary progressive position. It doesn’t even involve a tax increase. What is there in the OP that is an argument against this?

182 Jack June 10, 2017 at 4:56 pm

Thought provoking article.

183 Joisey_Mike June 12, 2017 at 3:47 am

The mixture of apples, oranges, and the occasional kiwi and seedless purple thing are making my head spin.

I am a retired “lab rat” who has been rejected by a neighbor since my vocabulary allows me to “get over” on people of the Red Middle West. I held my tongue since any relevant reply in the technical jargon of New Joisey would have required edged weapons and side arms.

Tax as percentage of GMP vs percent of tax on annual “take” (profit, extortion, “income above cost”, etc) is absolutely a huige heap of high nitrogen, high phosphate, slow release fertilizer produced as a by-product of the yougurt industry.

It is belief, limited by my view through the rarely trimmed crab-grass in front og my abode (which is always a cause for discussion with the City Fathers (an Mutha______), that European industries and commercial and financial participants were obliged to pay a significant portion of income towards salaries and benefits of those who did the actual “work” of industry and commerce. Thus the widespread taxation fell upon most levels of income. In Del Norte, the profit (Income – Costs) of industry and commerce fell to a very narrow upper band of the population as a result of off-shoring (Delaware?), H1B and H2B visa indentured servants, the use of illegal alien jab and benefit theives, and hinky trade treaties (Hink-Kay, a collaborator with Sun Tzu and Master Machiavelli, notable graduates of Seton Hall Institute od Technology[those were fine college jerseys]). This was, I am reliably told, was the source of the long-suppressed mannly “hockey stick” graph.

The outcome, clearly, is that the modest GMP burden of the “civilized” economies of the West, leads to the “horrific” annual tax rate of the “hockey stick” elite, viewed as the annual tax percentage on those “poor” managers, investors, and financiers of North America, who, as a percentage of GMP, get a “free ride”.

Do any of y’all (My late beloved was from the Old Dominion) ever speak Standard English? That usage must be some sort of “Mortal Sin” amongst the “elite”. As in the managers/banksters(an enjoyable term)/financiers/leg-breakers are getting off easy by whining about the annual tax rate on the profit that they are stripping from the American economy. The cost of financing the Congressional “Uni-Party” is a trivial business expense equivalent to the purchase of an extra fancy name-brand hand-bag. (Are those imports cheap labor or cheap votes?)

**** (Fill in the blanks; you would not understand the Dutch/English/Indian(so they are called in the Fatherland)/English/American/Slovak) dialect of the Mills and Woods.

I’m just sayin’.

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