Don’t look at the rich?

by John Quiggin on July 30, 2011

My last post, arguing that the share of US income going to the top 1 per cent of households is now so great that any effective policy must be financed by reducing or more effectively taxing the income of this group produced a range of interesting (and some not so interesting responses). First up, it elicited what appears to be new variants on a couple of standard rightwing talking points. More interesting to me is a response from Matt Yglesias arguing (as I read him) that, even if there is no serious prospect of reversing the shift of income to the top 1 per cent[1], there is still plenty of capacity for progressive political actions based on a broadly neoliberal (US sense) agenda.

The new talking point (apparently due to the Heritage Foundation) starts with the observation that while US tax policy has changed radically since the 1950s (particularly with the elimination of high marginal rates from the income tax system), the share of national income collected as revenue by the Federal government has not. This, it is claimed, shows that tax rates are uncorrelated with revenue. The claim, then, is a watered down version of the Laffer hypothesis. Whereas Laffer claimed that the US (as of the late 1970s) was on the descending portion of the Khaldun curve[2], the new talking point suggests that the US has, for the last 50 or 60 years, been on or near the flat part at the top. I haven’t seen the claim supported by any analysis the mix of tax revenues between income taxes and other taxes, and I don’t intend to offer one. I’ll just make the points that
(a) most other developed countries have higher tax rates than the US and collect a larger share of national income in tax revenue than the US
(b) numerous studies of large tax changes such as the Bush tax cuts have confirmed the common-sense expectation that higher tax rates produce more revenue
The Bush senior assessment of Laffer’s work as ‘voodoo economics’ remains as valid now as when he first made it.
The second talking point is that we shouldn’t worry about income inequality, since consumption is what matters. In the absence of any actual data, a lot of the discussion is based on the assumption that the income of the top 1 per cent is not consumed, but saved and invested, and that if the government taxed these investment flows it would have to replace them with more public investment, leaving no revenue to finance transfer payments or public.
Since there is not a lot of data on the consumption patterns of the top percentile of households, it’s unsurprising to see argument based on anecdotes, in this case with people like Bill Gates in mind. It’s amusing though to note that very different anecdotes were being cited only a few months ago when the Bush tax cuts were in danger of expiring. At that time, we were regaled with household budgets showing that those on $250k could barely make ends meet after covering the basic expenses associated with their lifestyle. Admittedly, these budgets usually included some pretty hefty 401(k) contributions, but there was also plenty of consumption expenditure.

It is certainly true that, on standard measures, consumption inequality is lower than income inequality. In part this reflects the fact that a significant component of income inequality reflects transitory variations, which households can smooth over by borrowing and saving.

Although consumption inequality is than income inequality, we would expect the two to move in parallel. In the US, standard measures suggest that income inequality has grown much more than consumption inequality. Some recent research by Aguiar and Bils (full paper paywalled) suggests that the standard measures are misleading in various respects, such as underestimating growth in the luxury expenditure of the wealthy.

Taking the figures at face value though, the big factor driving a divergence between measured income and consumption inequality over the period from the 1970s to the recent past was the increase in household indebtedness over this period. According to the standard measures this enabled middle-income Americans to increase consumption substantially even though median household income was growing only slowly (and has actually dropped in the last decade).

Such a trend couldn’t be sustained and it hasn’t been. As credit has been tightened, consumption has weakened in general, but particularly for credit-constrained households faced with declining incomes. It seems pretty clear now that consumption inequality is growing.
I’ll turn now to the more interesting response from Matt Yglesias

http://thinkprogress.org/yglesias/2011/07/26/278920/beyond-the-top-one-percent-2/

He says:

the median American household has quite a lot of money compared to the median household of almost every other country. And yet, I think there are a lot of other respects in which quality of life in the United States falls short. We spend a lot of time in traffic jams. We have both a frighteningly high murder rate and a frighteningly high level of incarceration. Our health care system is very inefficient. Americans work very long hours and have unusually little vacation time. It’s not clear to me that any of these issues can be usefully tackled primarily by focusing on higher taxation of the very wealthy.

Looking at this list, it’s probably true that that the high murder rate is due to a gun culture that predates the rise of inequality. But traffic jams are, to a large extent, a reflection of inadequate infrastructure and poor public transport. Fixing those things costs money, and the point of my post was that the only place to get that money was out of the 25 per cent of US income going to the top percentile of households.

The same is true of health care: any really effective reform would require more public expenditure, at least in the short run. But high inequality also contributes to US health costs more directly – a substantial part of the cost gap with other countries is due to the high incomes of medical professionals, which in turn reflect both the general inequality of the income structure and the huge costs of medical training, also due to inequality

As regards working hours, the end of the long decline in annual working hours for US workers coincides with the emergence of wage stagnation and growing inequality. Households have supplied more labor in an attempt to maintain living standards. This point has been made for at least 20 years (I can’t find it online, but the first time I saw it in detail was in a Congressional Study: Families on a Treadmill: Work and Income in the 80’s, January, 17, 1992)

fn1. I don’t want to misrepresent Matt. He certainly endorses more progressive taxation and I assume he thinks of the ideas he’s putting forward as complements rather than substitutes for redistribution. But the post still suggests that it’s a waste of time to put too much energy into a fight that’s doomed from the start. My view, on the contrary, is that a challenge to the top 1 per cent is the only political strategy that is likely to produce an effective mass mobilisation, though I admit I have no idea how to get started on this.

fn2. As Laffer himself concedes, the correct idea behind the curve associated with his name was well known as far back as Ibn Khaldun in the 15th century and were certainly familiar to Keynes. Laffer can reasonably claim originality for what I’ve called the Laffer hypothesis, that the US is, or was, on the declining part of the curve. So, as in other cases, Laffer’s napkin presentation contains much that is correct and much that is original. Unfortunately …

{ 79 comments }

1

Stephan 07.30.11 at 11:07 am

The claim by Yglesias is misleading. What matters is how much disposable income is available for consumption. Thus the median per capita income must be corrected for expenditure on healthcare and education to compare the US with for instance some European socialist hellholes. This is done nicely here. Sorry Matt. The US isn’t Number One.

2

Tim Worstall 07.30.11 at 11:10 am

“most other developed countries have higher tax rates than the US and collect a larger share of national income in tax revenue than the US”

True, most other developed countries have a VAT or equivalent. The US does not.

The percentage of the tax take that comes from the personal income tax is, in the US, well above OECD average (37% against 26% weighted average).

I wouldn’t want to have to defend this, just put it forward as a proposition. Raising, significantly, the US tax take as a %ge of GDP would require a broad based consumption tax. Income tax as %ge of Canadian GDP is 12.5% ish, of US GDP 11% ish. Not hugely different?

3

Philip 07.30.11 at 11:29 am

Matt’s point about the level of incarceration seems to be a good one and to that you could add military spending. Money could be moved from both of those to roads and schools without increasing taxes on the richest 1%. Of course those options are not mutually exclusive, and I do not know which ones would be the least politically infeasible in the US.

4

ejh 07.30.11 at 11:31 am

Fixing those things costs money, and the point of my post was that the only place to get that money was out of the 25 per cent of US income going to the top percentile of households.

Not at all, your opponents will say, we can find it by cutting state and federal employees’ salaries and their pension and medical benefits.

5

mw 07.30.11 at 12:07 pm

But traffic jams are, to a large extent, a reflection of inadequate infrastructure and poor public transport. Fixing those things costs money, and the point of my post was that the only place to get that money was out of the 25 per cent of US income going to the top percentile of households.

But Yglesias is wrong about traffic — the U.S. doesn’t rank particularly high in traffic congestion:

http://www.smartplanet.com/blog/smart-takes/top-10-cities-with-the-worst-commute-global-edition/8501

or in commute times:

http://www.worldmapper.org/posters/worldmapper_map141_ver5.pdf

That certainly corresponds with my experience — I’ve spent some time driving around Paris and around L.A., for example, and while neither is fun, Paris is noticeably worse.

He’s absolutely right, though, about the incarceration rates, and ending the tragic, evil, idiotic ‘war on drugs’ would reduce them dramatically. Doing so would also free up enormous sums currently spent on law enforcement and the ‘prison industrial complex’.

But when it comes to overall tax burden, the U.S. is just not much of an outlier compared to other OCED nations — its tax rates are very similar to those in Japan, Switzerland, Canada, and Australia. One of the things often forgotten is the contribution of state and local taxes in the U.S. (which, especially in states like California and New York, is non-trivial).

6

Matt McIrvin 07.30.11 at 12:40 pm

the only place to get that money was out of the 25 per cent of US income going to the top percentile of households.

This is wrong–we could take some of their wealth as well, through expansion of the estate tax. Wealth inequality is far larger than income inequality, and the political trend here is in the wrong direction; if anything, confiscating wealth is getting more unthinkable than it used to be.

7

Down and Out of Sài Gòn 07.30.11 at 1:44 pm

mw: If I were Yglesias, I would be less concerned about the congestion time. Instead, I would be more worried about the cost of petrol used up when driving to and from work, especially when alternatives don’t exist.

Petrol used to be relatively cheap in the United States. In 2006, it was possible to imagine a CISCO engineer commuting 372 miles (600 km) per day. Jawdropping, yes, but possible, He’d been doing it since 1989, or so the article says. But in 2011? With $100+ per barrel of oil? Fuggedaboutit.

8

christian_h 07.30.11 at 2:07 pm

Well Matt’s point as presented here seems to miss that those with extremely high incomes barely suffer from the quality-of-life lowering obstacles he mentions. Their healthcare is the best in the world; they don’t have to stand in a traffic jam unless in the back of a mobile office someone else is driving (or they just take a helicopter); their infrastructure generally is taken care off (while the power is out in the poor/minority neighbourhoods). They may work long hours, but really they do not have to do so.

More importantly, the ultra-rich profit from exactly these problems as they pertain to the other 99%. It is in their interest to keep it so. It is a mistake to believe big capital should be interested in efficient health care, for example. The current system works to undermine the power of workers, by tying their very health to their employment.

And, to come back to JQ’s original point as I understood it (and also to the points Henry was making), their immense wealth gives them the power necessary to prevent change for the better. I personally believe in the end a revolution will be needed, but progressives who don’t think one possible or desirable will have work first and foremost to take the ultra-wealthy people’s wealth away from them.

9

Lee A. Arnold 07.30.11 at 3:05 pm

John Quiggin: “A challenge to the top 1 per cent is the only political strategy that is likely to produce an effective mass mobilisation, though I admit I have no idea how to get started on this.”

The political (but not intellectual) seeds of this are being planted right now in the U.S. debt ceiling debate with Obama’s call for the ultra-rich to share the burden. This is being countered in two ways: it is being countered intellectually by a commentariat campaign that insists that the rich already pay most of the taxes, and countered politically by the Tea Party, which appears to have forced the debate over the passage of the debt ceiling from the issue of more revenue to the issue of the date of the next debt-ceiling debate (the Dems want it after the next election, the Teas want it before). This is not in itself a complete loss. We don’t know the outcome yet, but it already doesn’t look good for the electoral health of the Republican Party, which is finally suffering the fracture it so richly deserves.

(I have been advocating this general strategy for over a year now in these threads and elsewhere, back when many others were insisting that the Teas were meaningless: no, they were going to make big trouble, and the divisions they are going to create within the Republican Party and between the Republican Party and the general voters can be used to an historical advantage.)

Just now the Republican leadership has been publicly undermined in an issue of some salience for the Independent voters, who decide the outcome of Presidential elections in the U.S. almost entirely, and also swing many of the separate House districts.

That’s the political side. Now for the intellectual side, which is about education in all forms. Under it all, the importance of the issue of FAIRNESS to the average American (such as on taxation) should not be underestimated; it is of FIRST importance. It is what made Obama sure he could push this debt-ceiling debate to a political advantage in the near future. But what the intellectual outcome will be is still unspecified and up for grabs.

I think that what has to happen now is massive education of the average voter on three issues: (1) the total rate of taxation (fed + state + local) in the U.S. is nearly FLAT, down to income $20,000 or so a year; (2) government as a % of GDP is going to GROW in the future, not shrink, entirely because of medical costs, which feed into Medicare and Medicaid; and (3) the way to a vibrant economy is to make sure that everyone is getting taken care of.

Each of these takes a short discussion, but they are not beyond the ken of the average person. What is in the way is Reaganomics, or neoliberalism, or whatever is the current name for half-witted economics as it is still currently taught. It has been taught for this way for 40 years in the U.S., with almost all of the professors piled onto the gravy train.

We have totally ignored that fact that institutions can reduce costs, that this cost-reduction is an efficiency like any other economizing that improves life, that non-market institutions have to be paid for out of taxation, and that this gets cycled right back into the economy.

So it is simple to get started: change the way people think.

10

mw 07.30.11 at 3:05 pm

Instead, I would be more worried about the cost of petrol used up when driving to and from work…

Why? The expressway rings around Paris and other European cities are packed with commuters who still pay more than double U.S. prices:

http://www.theaa.com/onlinenews/allaboutcars/fuel/2011/july2011.pdf

(€1.62 liter works out to about $8.50 gallon — current gas prices in the U.S. are around $3.70)

And there’s still a lot of room to trim spending and stay in their cars — most Americans could still cut their gas costs in half by switching to a hybrid (and in half again if they shared a ride with even one other person).

And the guy who drives 370 miles a day? He does it because he wants to live on a horse ranch near Yosemite. It wouldn’t be worth it to me (much more because of the time than the money), but apparently it is to him. The cost of gas? If he drives a Prius or a Golf TDI or something like that (which would make sense given the distance), you’re talking about 8 gallons or ~$30 in gas a day. That’s definitely not going to break a senior Silicon Valley engineer (I’ll bet he spends a lot more keeping his horses).

11

hartal 07.30.11 at 3:59 pm

Asked what he would propose to help turn the ecnomy and the deficit
around, Robert Rubin replied:

*”I would put an estate tax in place right now, immediately, because we have
no estate tax right now. There is no supply side effect in having an estate
tax. And we should fill that void. Number two, I would increase the tax on
the higher brackets, those top two brackets, and bring them back up to the
Clinton rate. I believe there’s no supply side effect there. We did it in
1993 people said we were going to destroy the economy, in fact we had the
longest expansion…in American history. I would leave the middle-class tax
cuts intact for a limited period because I do think that the probability is
higher that we’re going to have slow and bumpy growth than vigorous growth,
and I think that given the vulnerability, the high unemployment rate, one
thing and another, I wouldn’t want to have that contractive effect right
now.”*

12

shah8 07.30.11 at 3:59 pm

Man, the amazing thing, given just how smart this crowd is, is just how untwisty the thinking is. John Quiggen has a slight bit of admiration for John Sutton, but doesn’t take the whole of his career or his motivations in account of his broader point.

You know, it’s also amazing just how much people *don’t* refer to the times when people have been successful in raising effective economic burdens on the rich to the betterment of all. Or when people fail to defend the rest of the country from unnecessary super-regressive taxation.

We never actually talk about Roosevelt taking the US off the gold standard, a bunch of decades after many, many, MANY activists wrote reams of tracts demonstrating why adhering to a gold standard is bad. We just talk about the New Deal, or WPA. We never actually talk about the political and economic forces that ended the gold standard–even from a standard milquetoast narrative like the book Lords of Finance. We never examine the set of deals afterwards, not Bretton Woods, and certainly not Basel (at least not outside of blogs like The Baseline Scenario).

We never actually talk about the major post war tax revolutions. Not Kennedy 1962, not Reagan 1986, nor Bush 1990 or Clinton 1993, even though these are sometimes just as highly salient to elite mindset as the ending of the gold standard. We only occasionally, and mostly in passing, talk about the super-regressive 1983? SS tax raise. God help us if we actually had an informed conversation about what the political environment was like around these times, and maybe make guesses which such environment can be replicated to ‘our’ advantage, ‘our’ meaning a class larger than the top 10 or so percent.

There is also the perception that we shouldn’t treat the elite’s machine gun nest as what it is, a fucking machine gun setup that can easily shred us if the operators think we doing wrong. Conflict is never the best way to acquire what you want. We just like it because we dopaminergically trip over feeling of success and conquest, and that’s worth the subjugation by the winners when we lose. In many ways, our need to *feel* successful are the fundamental chains by which a hierarchal system leashes most of society. As such, envisioning and pretending that we can charge up to the machine gun nest and wrest away the tools of oppression through sheer force of will are the thoughts of those reconciled to spending a portion of their small salaries on lubricants so it won’t hurt as much when they’re fucked. Threads like this aren’t quite the thread for winning.

Look, there are lots of ways to devolve power back to the masses and most of them involve elites NOT being able to have a fight. I mentioned Napster, awhile back. We could talk about debter’s unions like what they have in Mexico, or the various public banking services that exist in the far midwest and plains states. We could talk about how they were formed and how they’ve persisted for so long. We could also talk about why people might not want other people to have power, explore the valid and non-valid reasons. For example, IP theft can be crippling, like the problems China is having with building businesses, so perhaps Napster wasn’t beneficial enough in terms of individual people being allowed to select their own noise from the heavenly jukebox. Perhaps the loss of IP benefit is just like a fire, burning up trees of profit and returning nutrients to the soil of common culture. Later societies will build more robust IP as soon as the needs of fire culture wanes, maybe. This sort of twisty, empathetic, and multilevel thinking has to be how a progressive thinks.

I believe that the problems of elite people having too much power (and I think this is tangentially Yglesias’ point as well) is that ordinary people have too few rights. We don’t actually need the power to willfully tax the rich. We simply need a robust version of the 1rst and 4th amendment. We need robust rights to our own property, robust communications to the masses and secure communications to our allies, and robust means of distributing burdens (dealing with NIMBY, for example). The tax rates aren’t the major sign so much as the way mortgage bankers, for example, completely felt uncompelled to follow the letter or the spirit of the law in transferring titles, and felt completely entitled to foreclosures in which they don’t have the note. If the common folk had real rights, they can flee with their feet. They can organize sufficiently to deny profits. They can enter the market with an alternative business plan that doesn’t require so much profit. Do you see where I’m going with this?

But I guess you can call ME a neoliberal, too…heh…

13

Bill Barnes 07.30.11 at 4:14 pm

It is essential that these kinds of discussions take account of the increasing impact of climate change, and of the requirements of adapting to what is now unavoidable while at the same time radically reducing (as well as greening) industrial processes and material consumption in order to avoid the complete destruction of our civilization over the second half of this century. To continue with the existing allocation of wealth, resources, human capital for another quarter century is to commit suicide. The most recent science on how much faster things are moving than was expected even five years ago has those who know that science scared to death. Two new books which would be excellent subjects of discussion on CT are Christian Parenti, Tropic of Chaos: Climate Change and the New Geography of Violence, and Paul Gilding, The Great Disruption: Why the Climate Crisis Will Bring on the End of Shopping and the Birth of a New World.

14

Lee A. Arnold 07.30.11 at 4:34 pm

shah8 #12: “Conflict is never the best way to acquire what you want… The tax rates aren’t the major sign so much as the way mortgage bankers, for example, completely felt uncompelled to follow the letter or the spirit of the law”

These items are simply wrong and indeed untwisty. The conflict isn’t always what it appears to be, and its immediate goal isn’t the primary goal, and that surely confuses many contributors to these threads, but political conflict is the motor-engine to the destination. There are also technological changes which greatly determine the shape of the future — notably, computerization makes institutions faster, more communicative, more transparent and responsive, more cost-effective. I think that, plus a dose of dopamines, will finally cause finance capitalism to be seconded to the ash-heap of once-brilliant ideas, in about 100 years. But if you don’t fight right now, then the “elites” are going to push you out of the way, and eat your lunch.

15

Jim Harrison 07.30.11 at 5:11 pm

Legal and political remedies work where disparities of power are not too great. Where one side has nothing to fear from the other, rights simply don’t exist—600,000 men had to die to make the Declaration of Independence even begin to apply to black people. I doubt if the stratification of our society into rich and non-rich can be countered by friendly persuasion, assuming it can be countered at all. Since the domination of the many by the few is the rule in human history, after all, we may simply be reverting to the mean.

16

shah8 07.30.11 at 5:23 pm

Man, I don’t think you really understand…The attitude is a lot like telling random women various tips on how to prevent or fight-off rapes instead of actually making social changes about de facto permission to rape–unilateral measures like not tolerating rape-y sorts of thoughts by your male friends and family.

I have no trouble understanding your “logic”. I have no trouble understanding contingencies, intermediancies, and greater goals. I just can think well past that sort of stuff people pass off as smart/clever, when it’s just a bit of low cunning with the premise that other people aren’t smart, aren’t cunning, and don’t have the mass of the state apparatus behind them. I think it’s more important to make ourselves unmanageable by that same apparatus without our consent, and I think people neglect all the ways this can be done. Revolutions just wreck shit, and eat their own, and most of the time wind up with New Boss, Same as the Old Boss, with a new elite class that’s even more twitchy-fingered than the old.

17

StevenAttewell 07.30.11 at 5:49 pm

I’d also mention the procedural utility of going after the top 1%, from a classical republican perspective: the less concentrated wealth there is in the hands of the few, the less resources they have to block progressive change through contributions, lobbying, fabian legal tactics, etc.

18

Henri Vieuxtemps 07.30.11 at 6:28 pm

…response from Matt Yglesias arguing (as I read him) that, even if there is no serious prospect of reversing the shift of income to the top 1 per cent[1], there is still plenty of capacity for progressive political actions based on a broadly neoliberal (US sense) agenda.

I’m guessing these progressive/neoliberal actions involve dekulakization of barbers and taxi drivers, ruthlessly exploiting ‘us’, the hard-working DC bloggers?

19

shah8 07.30.11 at 6:50 pm

What part of “How the fuck are you going to take those elite’s resources?” don’t you understand?

20

Henri Vieuxtemps 07.30.11 at 6:53 pm

Yes, it ‘s hard. But all is not lost; ‘we’ can do something about the blood-sucking barbers!

21

shah8 07.30.11 at 7:09 pm

Well, “we can” is simply not sufficient to convince a suffering person who still has assets that could be spent towards a struggle, to spend them!

H. O. W.

And arming up and assassinating business leaders and Joe Lieberman and blowing up WalMarts, while psychologically satisfying, is not actually going to do shit but get the state murderously mad and kill a bunch of people they think aided and abetted it. You know, like Iraq. As it is, pretty soon people will start taking apart infrastructure they believe is oppressing them, impoverishing the rest of us and forcing us to fight whatever cockamimie theory that’s popular then.

As for legal means of redistribution, well, you and what army of lobbyists? What judges? What sheriffs?

Leadership on this, is not about how your sweaty balls will overcome all! It’s about providing real opportunities for fustrated people to act in ways that actually increase their power and their control of their own destinies. Even more, it’s a race to provide something like that, likely in alliance with not-as-nasty vampire squids before all hell breaks out and ruins all of our futures.

22

actio 07.30.11 at 7:23 pm

christian_h: Excellent point! The top one percent’s income is doubly causally linked to the items on Yglesias list:
(1) the flipside of their massive income is massive costs in healthcare and other systems.
(2) the massive income makes the top one percent strongly politically motivated to fight against progressive political change in those systems.

23

Henri Vieuxtemps 07.30.11 at 7:25 pm

What assassinations? And what “how”? How to write blog posts about things that matter?

24

shah8 07.30.11 at 7:38 pm

Now, check out that willful obtuseness that pseudo-leftists get when they’ve got nothing.

Ineffectual status quo stuff like calling a Tea Bagger about raising the Debt Ceiling? Or ineffectual but morally abhorrent actions like assassinations? Anything in the middle, between those extremes? The field is pretty wide, and you actually have to describe or sketch out *something* that is reasonably feasible. Pretend that Joe Blow, with the house in the suburbs, who’s underwater but kinda sorta making it, even if still sinking–pretend that he’s your loan officer at the Bank of Public Action. What sort of business plan do you have to show him such that Joe Blow, and his bank will eventually profit by loaning you his potential actions? I think that if you say, “Just Because”, you’ll get shown the door, and things get worse.

25

Harold 07.30.11 at 7:40 pm

“I’m guessing these progressive/neoliberal actions involve dekulakization of barbers and taxi drivers, ruthlessly exploiting ‘us’, the hard-working DC bloggers?”

Very good. Don’t forget schoolteachers and firemen.

26

Bruce Wilder 07.30.11 at 8:00 pm

“Untwisty”, shah8? Bloodless, is how I would describe these dis-embodied function-less abstractions, with which economists like to discuss their ignorance, but maybe I’m just a slave to my dopamine.

I think your allergy to revolutions is wise, but misplaced, when so exaggerated. Society is organic, and the institutional order, like any organism, develops, decays, dies and reproduces. Institutional orders have lifetimes, and the institutional orders born in the New Deal and World War II have passed thru their twilight years into the darkness of night.

The great violent conflagrations of history, in my view, were created not by the bloodlust of revolutionaries, but by the unreasoning resistance of privileged reactionaries. And, like it or not, we live in “revolutionary” times, a time when the old order is exhausted. Like it or not (and I like it not at all), the U.S. has a new political order, in which the interests and welfare of 80% are of absolutely no concern. That much is a done deal. The global financial system, the oil economy, China’s institutional order: these related orders are still teetering on the precipice, awaiting re-ordering.

A great mass of Americans are deathly afraid of finally losing their suburban dream. They may not have an elaborate imaginative “theory” of what is happening to them, but they can feel change at the gas pump. Bush2 was unpopular in the neighborhood of CT because he was an incompetent boob, but in most of the U.S. he was unpopular in exact proportion with the price of gas. They want their world preserved, and they are angrily opposed to anything that hints at the world to come. A bunch of reactionary Republican governors struck angrily at . . . rail transit projects! In amongst the debt-ceiling kabuki, the House tea partiers were railing against . . . regulations that will phase out the energy-inefficient incandescent bulb!

And, yet, these are the same people, who, instinctively it appears, are willing to take the full faith and credit of the United States hostage, and are not sure if they want the ransom more than the chance to shoot the hostage.

Meanwhile, the suburban dream is gone for an increasing number of people: they’ve lost the pension, the job, the home equity or the house. Their kids can go to college, but only at the price of a life of debt peonage. We are not getting “change we can believe in” because very little of this is happening to people in the top 10%, and almost none of to people in the top 1/2 of 1%.

I think Quiggan is right: the income and wealth of the uber-rich have to be attacked. But, I think musing idly about incremental changes in tax rates thoroughly misses the point that the increasingly authoritarian institutional structure of a political economy dominated by rentier drones is both an obstacle to such change and the problem-to-be-solved.

The Left doesn’t have to charge any machine-gun nest. They just have to face the fact that they cannot have their cake and eat it, too. They can not “preserve” the lost New Deal and international economic order, and effect change at the same time, any more than the Right can return to $1/gal gas, by frakking till we’re all drinking bottled water, and vetoing rail transit. If you don’t want an economy dominated by giant, predatory banks, you have to be willing to let the giant predatory banks fail, when they fail. You can call that a machine-gun nest, if you like; I call it reality, necessity.

The benefits of ordered social cooperation continue, while the order continues, but the order cannot continue indefinitely. At some point, the old order collapses or fails. The society can accept stagnation, or it can disengage, and shift gears, change the structure, produce a new order.

27

Henri Vieuxtemps 07.30.11 at 8:03 pm

shah8, I don’t think you need any plans; blogger is not a politician. Bloggers write about things they find important, interesting, funny, whatever the shtick. This particular shtick, I find it absurd, at best.

28

joel hanes 07.30.11 at 8:09 pm

“Power always sincerely, conscientiously, de tres bon foi, believes itself right. Power always thinks it has a great soul, and vast views, beyond the comprehension of the weak; and that it is doing God service, when it is violating all His laws. Our passions, ambition, avarice, love, resentment, etc., possess so much metaphysical subtlety, and so much overpowering eloquence, that they insinuate themselves into the understanding and the conscience, and convert both to their party…”
John Adams

29

TGGP 07.30.11 at 8:18 pm

Less crime and less incarceration can be achieved through policy changes. Please, please, please read Mark Kleiman’s “When Brute Force Fails: How to Have Less Crime and Less Punishment”. America has had periods of lower crime, it’s not infeasible to have that again. And since crime drove people out of cities, reducing it can increase density and reduce commute times.

30

Cahal 07.30.11 at 8:41 pm

I see such little focus on land taxes, despite the fact that everybody agrees it is a great idea, despite complaints about inequality and despite the need for countries to balance their budgets. Why?

31

Myles 07.30.11 at 11:03 pm

I see such little focus on land taxes, despite the fact that everybody agrees it is a great idea,

Because it’s not such a great idea? France implemented wealth taxes, and the effects have been pretty meh. The only thing it actually has seriously achieved over the long run is to turn the French business community into even more of a closed, insular, self-dealing kleptocracy. (Basically, once you tax nominal wealth, nominal wealth numbers stop having meaning, and a bunch of stuff just slither into the shadows.)

32

Lee A. Arnold 07.31.11 at 12:13 am

shah8 #12: “The tax rates aren’t the major sign so much as the way mortgage bankers, for example, completely felt uncompelled to follow the letter or the spirit of the law”

I had another point in pursuit of this, but anyway Bruce Wilder nailed it. They are able to use part of their wealth to buy political influence and evade the law. Now even worse, the world economy is held hostage until the asset values of these rentiers are rebuilt. This is hurting people, and the loss of opportunity will hurt people into the distant future.

But I disagree apparently with many people here insofar as I think every possible fight, along every avenue, is necessary, and so the current political fight in Washington can be made important. Not that it necessarily will be made so. I just don’t think there is much leisure time. And far too much bloviation in these threads. I had been away from here for a while, and a number of intellectual bubbles has floated into crooked timber…

shah8 #16: “I think it’s more important to make ourselves unmanageable by that same apparatus”
#24: “Ineffectual status quo stuff like calling a Tea Bagger about raising the Debt Ceiling?”

This seems to me to be incoherent: the Teas made themselves unmanageable in the same way.

If you drive a wedge through the heart of the Republican Party you can regain lots of seats. Last time we had 35-40 so Dem Senators sign a demand for a public option. Republicans, on the other hand, want to get rid of healthcare reform. Why don’t you stand up for what is right? You may have Supreme Court vacancies coming after the next election. Yes it is terribly quotidian and contingent and terribly beneath you (and thankfully unbloody, my own most important requirement).

33

Watson Ladd 07.31.11 at 12:27 am

A single issue campaign lead to mass mobilization in Wisconsin, but it seems to have become just another part of the Democratic party. While 90% tax bracket might be harder to fold in, its not given that it won’t be, and honestly a demand like that has problems. Do that on the current tax code to the current tax bracket, and a lot of people will be very angry, especially those pushed over into that bracket because they are married to people with higher incomes. (The infamous marriage penalty. I don’t have a problem with making married filing jointly an exercise in income averaging then apply the personal bracket, but it would lose some revenue, mostly to higher income two-income families) Calling for a fairer, more progressive tax code, cuts to military spending, better management of social security, and building a new party around that and other issues would do far more. But party building is something a lot try and many fail at, and the odds are pretty bad now with no unions as a natural base of support.

34

Sebastian H 07.31.11 at 1:06 am

“America has had periods of lower crime, it’s not infeasible to have that again. “

America is currently in a period of lower crime. Part of the challenge is going to be demonstrating that it isn’t the current punishment regime that got us there.

35

shah8 07.31.11 at 1:13 am

You know, *Lee*, those Teabaggers were bought by malign money. They can go seize up the government whenever they want, because they have the support of at least a substantial fraction of reactionary rich people. And while the long term cause is wealth inequality, the short term cause is Citizens United, Obama’s election as a signifier of the end of whites as the sole voting block that matters, and the general awareness that people have to take haircuts, with the elites trying to get Joe Blow to absorb as much of that as possible. One thing to emphasis about the end of public campaign finance restraints is that it liberalized bribery abuse for a wider spectrum of vampire squid, including in the process, more of the dumber, extra vicious kind.

If *I* could be elected as a leftist Teabagger and go take the damned government hostage until they give us universal health delivery, I’d be all for it! I’d cheer other politicians to do the same! Oh my, why can’t we do the same?!

No? We’re locked out of influence and in the cold? Oh my, that means we’ll just have to light that fire, Jack London style, won’t we?

You think you are smart *Lee*, but at the very least, you’re poisoned by too much testosterone. Indeed, bubble bouncing around in the decay…

36

shah8 07.31.11 at 1:23 am

Actually, I never responded to Bruce Wilder because I thought his post @26 was more or less self-refuting (and fatalist of the ignorant kind, as well). It struck me as really weird that *Lee* thought Bruce nailed “it”. “It” went against the entire narrative of the thread, talks about a new world order as if it wasn’t unstable, then talks about revolution and drifts back to new world order as if it was unstable.

Should this not be obviously pretentious crankery?

37

Jim Harrison 07.31.11 at 1:27 am

I’m not sure if anybody was responding to what I wrote above; but to make things clear, I’m not a revolutionary, I’m a pessimist. And nothing I wrote implies that we aren’t obliged to try to ameliorate a bad situation as well as we can. It still matters if the profs and experts who serve the rich do what they can to make things better—I expect that stoicism will find many new adherents in our age of chastened bureaucrats and dehorned intellectuals—but short of some sort of god on a machine or revolutionary movement coming from some mysterious location, I don’t see how we avoid settling into a long run of increasing political and economic inequality.

For the record, however, there are ways in which social movements can frighten elites without going in for uncontrollable violence. The labor movement of the 30s didn’t cut off any heads, but it did put fear into the necessary hearts. As for revolutions, though, if there were such a thing in the U.S. or Europe under modern circumstances, I would bet on a radical right revolution, fascism, not socialism.

38

Down and Out of Sài Gòn 07.31.11 at 1:47 am

mw@10: Parisians may more for their petrol, but they have alternatives like the Paris Métro to get them to and from work. Some people drive 70 km route from the Gold Coast to Brisbane every day (at prices similar to the US) but other go via a rail service that links the two cities. In contrast, only two out of the 16 counties of the Atlanta region are served by adequate public transportation. For most other people, it’s driving or nothing. So petrol is like health care – another cost to subtract from the US’s otherwise high average income.

39

TGGP 07.31.11 at 2:01 am

Myles, a land tax is not a wealth tax. Such kooks as Milton Friedman and John Stuart Mill endorsed Henry George’s idea as ideal. And if you follow the link there on Hawaii you’ll find that it was discontinued as a scheme because folks thought it resulted in too much development.

shah8, I’ve yet to see any evidence for a significant causal effect of “Citizens United” on any election. Of course, McCain-Feingold itself presaged a remarkable increase in campaign expenditures.

40

TGGP 07.31.11 at 2:05 am

Part of the reason I’m skeptical about the causal effect of C.U is that there were already 26 states which allowed unlimited independent expenditures for state-level elections, and I’ve never heard anyone claim the politics of those states was systematically distorted as a result.

41

shah8 07.31.11 at 2:09 am

TGGP,

I give you…

Wisconsin!!!!!!!!

Jesus Christ.

42

shah8 07.31.11 at 2:14 am

aaaaaannnnddd…

http://www.governing.com/blogs/sunlight/The-Citizens-United-Effect.html

Also, the primary benefit is about undisclosed cash for a national process towards some desired program.

43

Lee A. Arnold 07.31.11 at 2:22 am

shah8 #35: “seize up the government whenever they want…We’re locked out of influence and in the cold”

I don’t think of myself as smart so let’s establish some schoolyard bull-session basics here: Is it useless, because the world is irredeemably evil, or just the political system? Because we came pretty close to having a single-payer, so I don’t understand why it might not be BETTER the next time: is it because we just hit a debt-ceiling of pessimistic historical inevitability? Malign money just became all-powerful? It’s all over now, baby blue? …And I have never been accused of too much testoterone, though now you make we wonder if an hormonal imbalance could be at the bottom of this. I certainly do NOT get the whole “We need to fight, but no, let’s not fight that way” idea.

44

shah8 07.31.11 at 2:53 am

We came close to single payer? Whu….? Also, I never said we should give up. Lastly, I said we can’t actually win a better share or prevent greater losses by fighting, and I said that we have to organize to reduce the ability for conflict to happen. Aikido, Drunken Monkey, simple avoidance of control… It’s just not always about who’s on top.

This thread really brings into mind the critiques Alan Moore made in Watchmen….

45

Lee A. Arnold 07.31.11 at 3:00 am

shah8 #36 “It struck me as really weird that Lee thought Bruce nailed “it”.

I don’t want this to be about me at all because I really hate that, but I will have to make an observation, because he is a good writer. What Bruce nailed was precisely that “the U.S. has a new political order, in which the interests and welfare of 80% are of absolutely no concern. … A great mass of Americans are deathly afraid of finally losing their suburban dream.” (#26) Bruce and I have also disagreed at times, but usually I, upon reflection, realize that we are going toward the same center from different ends, and so I always learn something. I agree that there is a revolution in thought coming, because analytical science can’t predict complex systems precisely or deterministically, and this will change the relationship of scientific knowledge to policy, and even to beliefs. Essentially we have to re-learn that things crash, without prediction. It’s not just the climate. And I might disagree I am not entirely sure about the question of letting banks crash, because that respects the role of money a little two much. I think money is the most misunderstood thing of all. I think money should be like Star Trek: nobody worries about a thing because they are not egotistical grabbers, and over in the corner the Ferengis are gambling. You don’t hear Captain Kirk and Captain Picard going on about a bank crash. So when I dream, that’s what I would it be like, for a few thousand years.

46

Andrew F. 07.31.11 at 3:02 am

We can certainly get more revenue by raising taxes on the top 1%. And I’d be in favor of that, but the number has to be politically reasonable – in your last post you proposed 90%, which I don’t think has a chance.

Moreover, while there is no doubt that higher tax rates -> higher revenues, it’s also certainly true that an increase in the marginal rate can negatively impact economic growth.

Whatever the higher rate is, it should be framed as a millionaire’s tax – no dabbling with 250k – and there should be some very sharp facts and figures as to why it will not negatively impact economic growth. The right will say what they always do, but putting a persuasive label on the policy, and sticking persuasive facts and figures into the heads of the media, can go a long way.

And the millionaire’s tax needs to be tied – really, truly, tied – to a jobs program, to a public infrastructure program, to something that will credibly create jobs or make American lives easier. JOBS are the number one concern of the American voter right now – which is another way of saying economic security is the number one concern – and it is dangerous to sink political capital into a fight on tax if it cannot be linked – and linked credibly – in the public’s mind (to the extent there is such a thing) to JOBS.

Incidentally, I don’t buy all this crap about the last institutional order falling away or 80% of Americans meaning nothing to the government. If many on the left really believe that, then I’m beginning to understand why the left seems so absurdly bad at politics. Composing a viable political strategy begins with understanding that the concerns of those 80% matter enormously – but you have to speak to their priorities, in their language, to build political pressure to win.*

*if it’s a special interest push, and the public doesn’t care enough, and the special interest is loaded for elephant, then of course there’s no need to worry about the 80%. But this doesn’t fall into that category.

47

shah8 07.31.11 at 3:09 am

*Andrew F*, not that I’m really disagreeing, but I think there is a better chance all around, public optics, sound policy (raise more money and force standby cash back into economy), some degree of elite support, if we talk about capital gains taxes. How many people stand to benefit from housing speculation anymore? It has all the benefits of class warfare, with more rhetorical wiggle-room to beat off any devil’s plea for sympathy.

48

Joey 07.31.11 at 3:54 am

I think the basic idea is right — the top 1% need to be taxed somehow because they (increasingly) have such a high proportion of the wealth. But I also agree that what’s most important here is really wealth, not income.

How about an inheritance tax? Unlike the dreaded “death tax” (the estate tax), inheritance taxes are owed by recipients, not deceased givers. From a political perspective, it seems much more palatable to make people pay a bit of tax on their totally unearned windfall gains than it does to force people who have “worked hard” all their lives et cetera to pay a “tax on death.” (This rhetoric is silly, but you see what I mean.)

An inheritance tax with an exemption or some progressivity would give rich people writing wills an incentive to spread their generosity around to a larger number of individuals (each of whom could claim the exemption), but it’s hard to see what’s wrong with that.

So how about an inheritance tax?

49

andthenyoufall 07.31.11 at 5:29 am

The way I originally took Yglesias’s point was this:

In the last thirty years, progressives and liberals have been extremely cowardly about pursuing two things that they believe in quite strongly, (i) that society needs to be more equal, and (ii) that people can benefit a huge amount from the centralized provision of public goods at a high level. In particular, we’ve been afraid to argue flat out for -i-, out of a fear that race-baiting tactics (imaginary welfare queens in Cadillacs) and flat out selfishness from the middle classes will erode support for any government programs designed to combat inequality. Instead, we try to limit ourselves to pushing for -ii-, with the aim of achieving goal -i- as well, when public goods are provisioned at a high level to the rich and to the poor. By the same logic, left-wing politicians are always positioning themselves as champions of the middle-class, and as a result of middle-class tax-cuts (which always mysteriously end up extending well into the top quintile of income), presumably the belief being that no one will ever vote for a party that asks him to pay higher taxes, much less for one that thinks the worst-off people in America are less fortunate than himself.

But instead of the result being that we win the public debate about public goods and solve the inequality problem without mentioning it, we are now losing the battle in ways never before imagined.

So why not split the two goals in half again? After all, if we lived in a highly egalitarian society where the median income was 35k, we would still support the provision of a high level of public goods based on the taxation of the middle classes. Even if the wealthy will do everything they can to torpedo public goods funded by progressive taxation, they’ll be far less energetic about public goods funded by regressive taxation.

Then we can still fight for an equitable society, but the issues will be more clear cut. There will no longer be asinine editorials about whether trains are for Europeans or for faggots, and whether we should privatize recess to unleash the private market in hopscotch. The energies of the rich and their hangers-on will be focused on the question of how much their own power and material comfort should be decreased to increase the power and comfort of other Americans, and people (and politicians) can decide where they stand in that fight without committing themselves to a specific level of provision of public goods.

50

nyongesa 07.31.11 at 6:49 am

Bruce Wilder did nail it!

51

Alex 07.31.11 at 10:55 am

The Right’s achievements since the 1970s weren’t, actually, founded on brute force. They were founded on a) organising Friedmanite conservatives as a block whose demands were a factor, b) pushing their intellectual line at every opportunity.

For example, why the fuck isn’t there a 501(3)c called Economic Majority stamping this stuff out every day of the week? Of course, there’s EPI and Mike Konczal etc. etc. but why not some more?

Ideological hacks are actually quite cheap to run. How much, do we think, did right-wing donors actually spend on their ideas every year in the period 1970-2010?

52

Uncle Kvetch 07.31.11 at 12:28 pm

The only thing it actually has seriously achieved over the long run is to turn the French business community into even more of a closed, insular, self-dealing kleptocracy.

How fortunate we are to not have that problem here in the US.

53

Alex 07.31.11 at 12:39 pm

TGGP, you might want to add this fella to your list of LVT advocates:

http://en.wikipedia.org/wiki/Thomas_Spence

54

Cahal 07.31.11 at 4:32 pm

Might want to add Adam Smith, Ricardo, and erm, basically every economist who ever lived.

Apart from Murray Rothbard, whose attempt to refute it was fairly embarrassing (as with many of his works).

55

Watson Ladd 07.31.11 at 4:38 pm

Because a land tax on a country that is very empty is kind of pointless. Yes, it is independent of economic choices. No, the federal government cannot charge itself tax on its national parks and land holdings! It would also hurt owners of agricultural land far more then people in dense urban areas.

56

andthenyoufall 07.31.11 at 4:54 pm

“It would hurt owners of agricultural land far more then [sic] people in dense urban areas.”

Yes, that’s the point. When you tax resources without regard to how efficiently they’re being used, you don’t discourage people from using them efficiently.

57

Watson Ladd 07.31.11 at 5:19 pm

So in the United States Senate every state gets a seat. Some are very empty states. Sorry, but a land tax is not going to pass.

58

Cahal 07.31.11 at 6:10 pm

‘Because a land tax on a country that is very empty is kind of pointless. Yes, it is independent of economic choices. No, the federal government cannot charge itself tax on its national parks and land holdings! It would also hurt owners of agricultural land far more then people in dense urban areas.’

Of course public land would be exempt.

The farmer thing is a common objection, but it will actually help farmers:

Won’t the LVT hurt farmers?

No, it will help farmers. In the first place, the LVT will fall primarily on urban land, not rural land, since land values are concentrated primarily in urban areas. In the second place, the increased cost of paying a higher tax on land values will be more than offset by (a) the savings incurred from paying lower taxes on everything else, (b) the reversal of urban sprawl (and thus of the inflationary pressure that sprawl has long imposed on the value of farmland), and (c) the increase in income that will result from both a higher margin of production and the resultant surge in overall economic activity.

For supportive empirical evidence, see the following:

http://www.earthrights.net/docs/pa-farmers.html
http://www.wealthandwant.com/docs/Gaffney_RBPTatCFLO.html

For a more exhaustive treatment of the underlying principles, see:

http://schalkenbach.org/library/henry-george/p+p/pp093.html
http://schalkenbach.org/library/henry-george/social-problems/sp20.html

From http://forum.prisonplanet.com/index.php?topic=160421.0 < ignore the fact that his avatar has 9/11 was an inside job on it, it's a good piece.

59

bh 07.31.11 at 6:55 pm

This comment section, which has been one of the best on the Internet, has developed some serious quality control issues.

There are a handful of posters who, given the right topic, insist on pinching out a half-dozen long-winded, often hostile, never interesting comments within hours of a new posting. One of these guys I can just scroll past. But 3 or 4 of them make a comment section unusable.

60

shah8 07.31.11 at 6:57 pm

Yeah, the neighborhood’s kinda gone, ain’t it?

61

Substance McGravitas 07.31.11 at 7:47 pm

Users of Chrome and Firefox plus Greasemonkey can customize their comment sections.

62

Watson Ladd 08.01.11 at 1:59 am

So there seems to be some confusion amongst the Georgites about land area vs. land value. I’ll leave that to others to puzzle out. But they haven’t addressed the question of political action, the one thing that Quiggin seems to be hoping for. How do we revitalize the Left? I think we have to rethink the history of the Left as something important. Quiggin thinks we start by mobilization, ala the ISO or the RCP. But neither of these groups is able to do more then tail events.

63

KRG 08.01.11 at 2:46 am

Seems to me that the critical flaw in the new right-wing talking point, per the article, is that it takes for granted that income growth is independent of tax rate distribution.

If higher upper bracket tax rates lead to faster overall income growth across the board, then it would be perfectly accurate to say that the higher rates didn’t lead to more revenue relative to overall income, but that would be because of the equally beneficial effect that it had on total income. (This is a very reasonable possibility, since higher taxes would increase pressure to move from taking taxable profits to put into financial investments to putting them into tax deductible investments, like salaries)

64

Random lurker 08.01.11 at 1:24 pm

This is an interesting thread, although since I’m not from the USA I am not sure I can judge the arguments very well. However there are 3 points that I think should have been addressed but didn’t:

1) middle class VS the poor: I always thought that “lefties” were on the side of the poor, not of the middle class. For example, higer taxes could be used to employ people in disadvantaged areas as public workers; this would also help the middle class indirectly (by reducing downward pressures on wages).

2) the lesser proportion of consumption of the richest part of the population relative to the average guy is a direct cause of economic crises: since the richest guys do not consume all their income, they save the rest, which means that they either buy some financial asset or lend the money to someone, since we no more keep banknotes under our mattress. But this means that the demand for consumption goods falls, unless: a) the government deficit-spends thus filling the hole, or b) the hole in demand is filled by debt-fueled consumption. In both cases the consumption is subsidized by an increase of the overall level of debt, that is the other side of the credit owned by the “rich”.

3) I think that an argument could be made, that even those expenses of the government that seem advantage the middle class, in case of a very umbalanced economy accrue to the top: for example, public schooling at the level of high school is supposed to be an expense in favor of the poor or the middle classes. But, if I need a worker with some basic skills that are acquired at high school, I would have to pay a premium wage if high school education was not provided by the state. Thus as long as the bargaining power of workers VS employers is low, a big part of the economic “subsidies” of the state ultimately accrue to the “rich” guys.

65

Watson Ladd 08.01.11 at 2:56 pm

Random Lurker: good points. Its worth noting that the labor movement in the US took a lot of unskilled and semiskilled workers off the ranks of the poor, and now they might be heading back into those ranks. Your also missing the screwy tax structure of the US: a working stiff pays 25% plus 12% FICA, for 37% tax rate, while a rich person pays marginal 35% percent because FICA stops. If they can get payed in carried interest its 15%, and again no FICA on investments. I would have expected someone to point out the unfairness of the Tax Code during the deficit talks but no, it just became accommodation to a few crazies.

66

gman 08.01.11 at 4:44 pm

Now we are on to somthing…the 15% capital gains tax rate for oligarchs and 30-50% all in for working slobs..even highly paid working slobs..

67

Paras 08.01.11 at 7:31 pm

I never saw a poor person give a job to anyone.

68

piglet 08.01.11 at 8:11 pm

Wilder 27 nailed it: “If you don’t want an economy dominated by giant, predatory banks, you have to be willing to let the giant predatory banks fail, when they fail.”

Obama became politically irrelevant the moment he supported the bank bailout (even before he was elected). Democrats became politically irrelevant the moment they agreed to to the dirty work for Bush and Paulson and push the bailout through Congress. From then on any momentum for progressive reform was lost and was absorbed by the TP fascists.

69

piglet 08.01.11 at 8:16 pm

“So petrol is like health care – another cost to subtract from the US’s otherwise high average income.”

This is even understating it because the cost of gas is currently still hardly significant compared to the cost of maintaining at least two vehicles per household. Many suburban middle class households can’t – but think they have to – afford this even when gas is low.
The cost of vehicle maintenance is usually estimated around $9000 a year.

70

piglet 08.01.11 at 8:32 pm

“middle class VS the poor: I always thought that “lefties” were on the side of the poor, not of the middle class.”

It is hard to imagine a successful reform movement in the US that posits itself “on the side of the poor, not of the middle class”. But that question may become moot because there soon may not be a middle class any more to speak of. Both the poor and the middle class are badly squeezed by the “Winner-take-all economy” (Hacker /Pierson).

71

mw 08.01.11 at 10:12 pm

This is even understating it because the cost of gas is currently still hardly significant compared to the cost of maintaining at least two vehicles per household…The cost of vehicle maintenance is usually estimated around $9000 a year.

Pfft. The average passenger car in the U.S. is almost 10 years old (and growing older as cars become more reliable):

In March 2009, RL Polk released a study conducted between 2007 to 2008 which indicated that the median age of passenger cars in operation in the US increased to 9.4 years, and that the median age for light trucks increased from 7.1 years in 2007 to 7.5 years in 2008.

http://en.wikipedia.org/wiki/Passenger_vehicles_in_the_United_States#Age_of_vehicles_in_operation

I guarantee you, it does not cost anything close to $9000 to operate a 10-year-old vehicle. In fact, it would only cost you about $3-5000 to *buy* a 10-year-old midsize sedan. Do you think it really costs, on average, $9000/yr to operate a vehicle that has a resale value of half that much? And does anybody really think Americans would rather be on the bus than behind the wheel? Seriously? No, the Onion understands how most Americans feel about public transport:

http://www.theonion.com/articles/report-98-percent-of-us-commuters-favor-public-tra,1434/

And the same is true in Europe where, over recent decades, transit use is flat and auto use is way up even though Europeans have ‘alternatives’. Obviously it’s true in ‘communist’ China as well. Why would anybody who can afford it want to avoid public transit? Belle provided a graphic explanation a while back:

Especially considering that Megan grew up in New York City in the 70s and 80s, which means I am morally certain some dude has flashed her, or masturbated next to her on the subway, or done something equally unwelcome. How not? (I have experienced all these things, and more! Ask me about the time the cops told me the man hassling me was a convicted sex offender who had forcibly raped at least 6 women, and I was “an idiot” because I returned idle pleasantries, in a deflecting way, on the BART. It was apparently my duty to remain silent at all times.)

When did it become a central tenet of progressivism to favor herding everybody onto trains and buses, where, with some frequency, they’re bound to find themselves riding alongside creepy, masturbating sex-offenders?

72

Davis X. Machina 08.01.11 at 10:30 pm

When did it become a central tenet of progressivism to favor herding everybody onto trains and buses, where, with some frequency, they’re bound to find themselves riding alongside creepy, masturbating sex-offenders?

Hear, hear. Let them, as of old, run for Parliament if they crave that experience.

73

Harold 08.02.11 at 4:39 am

Excuse me. That is just as likely to happen to a young girl in a university library as on the subway, unfortunately. Welcome to the real world.

74

reason 08.02.11 at 7:31 am

Harold,
I have ridden public transport virtually all my life, and such experiences have eluded me (not however in public parks or lavatories). Read Jane Jacobs – public is safe. I wonder what the ratio of rapes in public transport to rapes in private cars is!

75

Cian 08.02.11 at 8:19 am

And the same is true in Europe where, over recent decades, transit use is flat and auto use is way up even though Europeans have ‘alternatives’. Obviously it’s true in ‘communist’ China as well. Why would anybody who can afford it want to avoid public transit?

Its the certainty with which people state these kinds of things that always gets me.

For the record. I would much, much, much, much prefer commuting by train for an hour, than driving for an hour. Like most people in the UK, I would not choose to drive into London. I also don’t like searching for a parking space, and would prefer to work/sleep/read on the train, than get stressed by fellow drivers in the rush hour.

I also prefer the bus into town because its quicker than driving. I know, crazy, huh.

Crazy people on the subway… As opposed to what, the totally sane people on the streets of NY.

76

mw 08.02.11 at 2:11 pm

Harold: Excuse me. That is just as likely to happen to a young girl in a university library as on the subway, unfortunately. Welcome to the real world.

I’ve spent time in both university libraries and subways and, if the people in your university library seem indistinguishable from those on the subway, then you went to a very different sort of university than I did. But then, with electronic access, who goes to university libraries anymore anyway?

Cian: For the record. I would much, much, much, much prefer commuting by train for an hour, than driving for an hour.

Of course there are individuals who prefer that — but the pattern seen across all of the developed and developing world is that most people don’t share your tastes. And, BTW, at least in the U.S., people who commute by public transport much more time commuting, on average (with connections and waiting and travel to and from stations at the ends), than those who commute by car.

Crazy people on the subway… As opposed to what, the totally sane people on the streets of NY.

Exactly. Which could be one of the reasons why core cities account for a steadily declining fraction of the population in most metro areas. Obviously individual tastes differ, but given the choice, most people prefer to live where they’ve got a bit of breathing space and don’t have to learn to wear the protective New York “street face”:

http://opinionator.blogs.nytimes.com/2009/06/29/the-parade/#more-85

I think this video would also be excellent remixed with the ‘Shaun of the Dead’ theme:

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Cian 08.02.11 at 2:48 pm

Yes it has been quite noticeable how nobody wants to live in downtown New York, central London, or Paris. Muppet.

Of course there are individuals who prefer that—but the pattern seen across all of the developed and developing world is that most people don’t share your tastes.

Does it now. Or perhaps, and this is just a thought, perhaps it reflects a whole bunch of things. Such as good transport links not being universal, and that people use public transport where it makes sense for them, and other transport where it doesn’t. You know, possibly its, I dunno, not reducible to Friedemanesque bite size analyses.

Where I live, incidentally, people do generally share my tastes. Which is why proximity to the train station is strongly linked to house prices.

And, BTW, at least in the U.S., people who commute by public transport much more time commuting, on average (with connections and waiting and travel to and from stations at the ends), than those who commute by car.

The US has rubbish public transport, so this hardly proves what you want to prove.

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Misaki 08.05.11 at 6:40 am

The share of income going to the top 1% is really not important, because in the long run either it will balance out (assuming that welfare counts as “income” for this purpose) or there will be unpopular inflation.

Neither case says anything about jobs, and there is also nothing to suggest that reducing the share of income going to the rich would, by itself, fix the current problem of unemployment. (Adding lots of inefficient government paperwork in the course of distributing welfare would ‘fix’ unemployment but, again, in an unpopular way according to the majority of the public.)

As an extreme example, suppose everyone in the world was 100 times more productive than they are now. With the way the economy currently is, this would cause about 99% of the workforce to be unemployed, since you can only drive one car at a time and only need a few thousand calories of food each day. And inequality would still exist among the 1% of the population that was employed, assuming that welfare does not give the unemployed the same standard of living as the employed, because (again under the current system) most of the non-taxed excess income of the employed would go to products like iPods that provide a signalling effect that similar products do not have; the profit extracted from this process is what drives inequality.

Therefore, to reduce inequality, you must convince people that they should stop buying iPods. Taxes have nothing to do with it, and are about as unpopular as Communism and inflation anyway, but of course you are free to argue that the government should give welfare to people so they can buy iPods without actually doing anything about unemployment.

After all, clearly the rich are to blame for the rise in people being overworked despite the wide availability of cheap labour, and just as clearly the rich are forcing people to buy goods from corporations at a price level that allows them to make a nice profit off of overseas labour instead of at a lower price that would give consumers enough money to buy… twice as much food. Just as clearly, the rich must be taxed before they can give their money away to charity! The government knows much more about how to spend money wisely than any philanthropic organization, such as the best way to bail out Wall Street to prevent catastrophic financial collapse and decreased profits.

*The important link is this one: http://pastebin.com/Wy8B0hK9

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Misaki 08.05.11 at 6:51 am

Also quickly skimmed the above comments, re: “$9000 per year for cars”

Consumer expenditures for 2009, previous years are roughly the same:
http://www.bls.gov/cex/2009/standard/quintile.pdf

‘Only’ 67% of the lowest quintile in the US owns at least one vehicle, compared to 87% for the second etc… so it would seem the following costs would have to be adjusted up for households that do have a vehicle in the lowest quintile but
Transportation: lowest 2,855 (average 1.0 vehicles), highest quintile 14,105 (2.8 vehicles)
Gasoline and motor oil: lowest 926, highest 3,067 (down slightly from ~3500)
Public transportation: lowest 167, highest 1,211

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