Wednesday, November 15, 2006
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I, for one, welcome our protectionist overlords
The most important--and unfortunately the least debated--issue in politics today is our society's steady drift toward a class-based system, the likes of which we have not seen since the 19th century. America's top tier has grown infinitely richer and more removed over the past 25 years. It is not unfair to say that they are literally living in a different country. Few among them send their children to public schools; fewer still send their loved ones to fight our wars. They own most of our stocks, making the stock market an unreliable indicator of the economic health of working people. The top 1% now takes in an astounding 16% of national income, up from 8% in 1980. The tax codes protect them, just as they protect corporate America, through a vast system of loopholes....The op-ed consists mostly of a critique of the existing situation -- not a lot of suggested solutions. For that, we have to go to his campaign web site, where we find:
This country is splitting into three pieces. As a result of the internationalization of the economy, the people at the top have never had it so good. The middle class is continuing to get squeezed by stagnant wages and rising cost of living. And we are in danger of creating a permanent underclass. We must reexamine our tax and trade policies and reinstitute notions of fairness, and also enforce our existing trade laws so that free trade becomes fair trade."Fair trade" is a vague term, but given Webb's rhetoric, it's safe to say that he kind of policies that Webb favors will:
a) Have little effect on the income of the richest Americans -- though their capital gains will fall dramatically;Combine that with reduced overall growth, and, well, it's gonna be a scary Senate for international economic policy.
[L]et's suppose for a moment that a free-market economist were hired by the Dems to offer policy advice. If the boss's goal is to reduce income inequality, what is the best way to do that?
posted by Dan on 11.15.06 at 04:23 PM
The conventional wisdom:
"Trade will make us more prosperous."
What actually happens:
Trade makes some much more prosperous and other much less prosperous.
Do you really expect the "much less prosperous" to just sit back and take it?
Take a look at the Ohio elections and especially the firebrand Sherrod Brown.
There will always be inequality. The degree is what deterrmines the debate.posted by: save_the_rustbelt on 11.15.06 at 04:23 PM [permalink]
Webb is a prototypical Perot voter, what someone called the "radical middle," which is very different from the "sensible center." These people are economically nationalist, and thus inclined to protectionism, socially conservative, and unilateralist but not interventionist in global matters. Their distrust of both economic elites and the federal government makes them extremely erratic on redistributionist measures. A total nightmare for someone like Mr. Drezner.posted by: y81 on 11.15.06 at 04:23 PM [permalink]
Question here: When Dan talks about the "efficiency costs" and "deadweight losses" of shifting taxes to higher income people, what does he mean? Could you give some examples?posted by: amorphous on 11.15.06 at 04:23 PM [permalink]
What Mankiw wants is for the democrats to continue his policy of making the problem worse.
Mankiw keeps arguing that higher incomes for the top few leads to increased savings and investments. But the evidence it overwhelming that the policy has not worked as lower marginal tax rates have been accompanied by lower savings and weaker investments.
So why should we pay any attention to him?posted by: spencer on 11.15.06 at 04:23 PM [permalink]
This is eloquent testimony to James Webb's conservatism.
This is conservatism as behavior, practice, and respect -- not slavish devotion to unproven economic theories.posted by: Mitchell Young on 11.15.06 at 04:23 PM [permalink]
Just for the record, Sen.-elect Webb has made a beeline for three Senate committees -- Armed Services, Foreign Relations and Veterans Affairs -- on which he is unlikely to work on trade issues at all.posted by: Zathras on 11.15.06 at 04:23 PM [permalink]
Dan, you always confuse libertarianism with conservatism with right-wingism[?].
posted by: NeoDude on 11.15.06 at 04:23 PM [permalink]
A recent survey in the Economist warned that globalization was affecting the U.S. differently than other "First World" nations, and that white-collar jobs were in as much danger as the blue-collar positions which have thus far been ravaged by outsourcing and illegal immigration
Because, of course - sorry if this is really obvious - there's a huge pool of cheap Anglophone office labour in e.g. India ready to do a lot of whitecollar work for US (and UK) companies. The key here is "Anglophone". If you are a Danish bank administrator, you probably don't have to worry quite so much about your job being outsourced, because no one else really speaks Danish. Similarly Swedish, German, Finnish, Italian, Greek...
(It's the Revenge of Empire!)posted by: ajay on 11.15.06 at 04:23 PM [permalink]
Unfortunately, y81 is correct. That said, Dan was warned before the election about this alarming trend but instead preferred "congressional oversight" which will at most last two years, while the economic beliefs of Webb and Sherrod Brown will have a bigger platform for at least the next six years.
I also found it humorous the National Review columnists that believed Webb was fooling Kos and was much more conservative than the netroots believed. Unfortunately, the joke was on them as Webb was pretty clear about his positions and people chose to ignore them based solely on his past hatred of John Kerry and Bill Clinton.
For some reason it never occurred to them that being a Clinton-hater didn't translate into having a sensible economic policy. In fact, as many Conservatives now acknowledge Clinton economic policies were fairly decent.posted by: Ian on 11.15.06 at 04:23 PM [permalink]
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