Soaking the rich

Part of the thing about Yglesias is that he posts so much and has done for so long that people are constantly writing blog posts in response to opinions he has already minorly evolved from. Which is good, in a context-free sense: it’s better that he constantly adapt than that he stick to a rigid set of beliefs. But it can be disconcerting to argue against him, or even worse, argue with others about his positions, because it isn’t hard at all to find two posts separated by mere months or even weeks where he expressed entirely inconsistent views. This is particularly a challenge given that he is so deeply opposed to stating first principles, constantly attacking such a thing as immaterial or irrelevant. The nice thing about principles is that they have a certain consistency to them, whereas the focus on policy above (and to the exclusion of) all else creates a lot of wobbling back and forth as you find new policy positions that you think better achieve the principles you refuse to argue.

I’m struck by the (if you’ll pardon the word) rhetoric of “…cater to the whims of rich businessmen” and “stick it to the rich and dispossess them.” Well, what serious person wouldn’t think both positions to be wrong? Straw men, false either/or…. To tackle just one of these straw men: How about imagining the many people on the left who are more than willing, indeed eager to learn from experienced people in business (and finance — I’d distinguish the two), and who simultaneously believe that the rich should pay much higher taxes in order to promote the flourishing of the society that has provided necessary conditions for their enrichment? (In other words, no one is speaking of “sticking it to” the rich or “dispossessing” them.)

I agree that we need productive discussion.

Yglesias as well as Rogoff has recommended an inflation target–I believe that this is MY’s main policy proposal to reduce unemployment; at his blog Faultlines Raghuram Rajan has raised some concerns about policy aimed to achieve it. I would love to read counter-criticism, but I don’t find engagement. Rajan’s complete fail on the issue of GSE culpability does not mean that everything he writes is wrong.

I have another concern. Given that the top one percent has made much of their fortunes on the basis of the workforces in their foreign operations and by providing financial services to the world’s wealthy, why should their wealth be redistributed only within the nation-state? America’s super-wealthy operates on a global scale.

There is another question I got from DeLong that Quiggin has not addressed. As I understand it from his National Review piece (congratulations by the way), Quiggin blames contractionary fiscal and monetary policy on bondholders. But DeLong has already pointed out that the super-wealthy have diversified portfolios and could suffer major losses in a second downturn. So how do we account for tight money and austerity policies?

FuzzyFace, how do you think a company like Facebook gets created? An entrepreneur alights from heaven and chooses which tax haven to bless with the miracle of firm creation?

In the particular case of Facebook, it was a success because it had people on it that other people wanted to link to, and this is entirely because it started at a place like Harvard.

If the US raised the top income tax rate to 70%-80% nothing would change for the founders of Google and Facebook. Their fortunes are from capital gains, and the tax rate for long term gains is currently capped at 15%.

@hartal, I think what Yglesias is implying is that they really don’t know what is good for them, like the champions of the gold standard in the 1930s, because of their subcultural biases.

An alternative that occurred to me is that the super-rich really care more about relative than absolute wealth; they’ll willingly take large financial hits if it’s needed to keep the rest of us down.

“There’s just two different issues here. One is what needs to be done to return the economy to something resembling its pre-2008 full employment state. The second is what would be optimal tax policy for the long term.” MY
There’s something so forceful about the two-fold claim here that you might almost forget that there might be a third position (or even a fourth, fifth…), and you might fail to notice the assumptions buried in the alternatives presented.
Why choose pre-2008 full employment state as a “return” goal? I assume MY is talking later 1990s’ through the Bush years, not, say, late 1950’s-early 1960’s (when I was still a child, but MY had not yet been born). What is an optimal unemployment rate (besides the unrealizable 0%)? And is employment in a crappy low-wage, no-to-minimal benefits job okay? Why talk a “return” rather than an aspiration to something better than has existed in the (US) past?
Indeed, what would optimal tax policy be? There are endless, honest difficulties to answering that question, but the fundamental one that MY never seems to address: cui bono?

Matt McIrvin @12
“An alternative that occurred to me is that the super-rich really care more about relative than absolute wealth; they’ll willingly take large financial hits if it’s needed to keep the rest of us down.”

It could be – because of the effect that James Kroeger keeps pointing out – that worrying about relative wealth is not irrational. If the things you really care about are in strictly limited supply (the best land, the best food, memberships in the best golf clubs), then increases in absolute wealth just increase the prices of these things.

“Restoring the economy requires both a short-run fiscal and monetary policy involving (among other things) large budget deficits and a credible plan for restoring budget balance (indeed surplus) in the long run. I can’t see how the second part can be achieved without a substantial increase in taxes on the top 1 per cent.”

Growth perhaps?

Which, as the OECD points out, can be boosted by changing the tax mix, not the level of taxation.

http://freethinkingeconomist.com/2010/03/25/while-i-do-hate-the-argument-from-authority/

Tax immovable property and consumption more, incomes less and capital and corporations much less.

@12 & 16

Agreed, and the same considerations for intrinsically scarce goods apply to labour-intensive services. Many of the consumption goods that the rich purchase are in this category: fine dining, staying at luxury resorts, hiring ‘help’ (servants). The more equal and wealthy a society the more expensive these things are, as anyone who has holidayed in Switzerland or Sweden will know. So yes, it is perfectly rational for the rich to weigh the value of inequality (living like a medieval king surrounded by flunkies) versus the value of greater absolute wealth (more iphones and other trinkets).

One very good reason for businesses not to relocate is that if they did so they would lose the lobbying and protection (and potential bailouts in some cases) that they get from the government where they are located. When your lobbyist and protector is the most powerful nation on earth, that’s worth quite a bit.

One very good reason for businesses not to relocate…

Surely the problem of business relocation can easily be solved for most industries by simply eliminating multinational businesses. Such companies are either centrally planned (in which case are probably inefficient, and certainly unaccountable), or have internal markets. In which case, why not break them up, and make the internal market an external one, across borders?

The servant problem was actually what I was thinking of.

I’m not sure it even has to take the form of a conscious thought that “we need to keep the economy shrinking so that the people will be desperate to serve us”. The people involved probably do think their favored policies will lead to greater growth. But the moral/aesthetic preference for tight money, low taxes and smaller social safety nets takes precedence over actual growth.

On reading all the comments, suprisingly I agree with Tim that we should put more on property taxes. I’m also going to post a more radical idea: a tax on intellectual property. I’m not going to lay out too much detail, but it should be possible to specifically tax licensing fees (note that these are often used for tax avoidance in intra-company transfers), and it ought to be possible to tax submarine patents and abandonware back into the public domain.

Steve LaBonne @26 wrote,

It always amuses me- well, actually infuriates me- that those singing paens to our Galtian overlords somehow always manage to overlook the fact that a high proportion of their revenue derives from direct government subsidies (there’s a reason why the DC area is recession-proof- there’s never austerity for defense contractors) or from rents (eg. government enforcement of lobbyist-designed intellectual “property” “rights”.)

Exactly right. This should be the point of emphasis. Blithering on about some abstract notion of the rich’s fair share, or their obligation to that society which enabled them to get rich, is weak tea.

The fact is that the majority of the wealth of the rich was accrued via rent-collection. Soaking the rich has nothing to do with class envy or wishy-washy notions about the social contract, and everything to do with clawing back ill-gotten gains.

Not sure why Steve, though, mentions so-called intellectual property rights (which are worthy of mention, of course), and not the biggest source of rents, land ownership.

“Surely the problem of business relocation can easily be solved for most industries by simply eliminating multinational businesses.”

A bit harsh perhaps? To take our very small (3 people) business. An example transaction. We bought some raw material in one of the ‘stans. Refined it in Russia. Converted it (made an alloy from it) in Holland. Supplied the material to Taiwan.

How many companies should this be split up into? And do I need a different company if I use the Chinese or US convertors?

“a fiscal stimulus financed by an inflationary expansion of the money supply would harm bondholders and help cash-constrained households, so it would also have strongly redistributive effects. That is, after all, a large part of the reason why the wealthy are resisting it so vigorously.”

John, do you have any evidence for this at all? Where is the evidence that the wealthy are opposing fiscal stimulus because it would hurt bondholders and therefore have redistributive effects?

“Since a major feature of the last few decades in the USA is that the fruits of growth go increasingly to the top few %, and that neoliberal/neoclassible economic reforms have conclusively failed, perhaps we should file such ideas (‘grow the economy and have a wicked good safety net’) into the trashcan where they should be.”

Right, because the one stretch of time in the last twenty years when the US economy grew exceptionally fast (the late 1990s) also was a time when jobs weren’t created and the incomes of the working and middle classes didn’t grow at all.

Oh, wait, that’s wrong — actually the growth boom of the late nineties saw a huge number of jobs created and the incomes of every quartile rise. But I guess we should still toss the idea of economic growth as beneficial to workers into the trashcan.

@Other Pete about IPR taxes:
The politics of getting it implemented are very hard given how much governments are in thrall to IPR lobbyists on those issues. I think the best way is to point out that there is money in it to be had without increasing income tax.

A straightforward tax on licensing fees is the easiest to implement but doesn’t give you any other policy benefits and would probably result in screaming about destroying the creative industry. The question of location and jurisdiction is fiddly too.

For copyright, a compromise might be workable of short copyright terms for which extension can be bought for specific things. Combine that with a registry and there are real benefits to the abandonware situation: if something’s old, then either it’s in the registry, which makes it easier to talk about licensing, or it’s been definitively abandoned by the creator who believes there’s not enough value left in it to be worth registering.

further to K Williams @35 —

Re the notion that a stimulus financed by an expansion of the money supply would hurt bondholders — how could it hurt them?
1) When the supply of money goes up, the ‘price’ of money — i.e., interest rates — should, ceteris paribus, go down. But interest rates (in the US) are already very low.
2) Or putting basically the same point a bit differently: when the gov’t “prints” more money, it perhaps doesn’t have to borrow as much (sell as many treasury bonds). But I would think this effect would have to be pretty big to hurt bondholders.

IANAE, so possibly the above is wrong.

I don’t think, despite the bubble economy in the late 1990s, “ordinary workers (down to those in the lowest quartile) saw their wages rise sharply” is correct.

http://en.wikipedia.org/wiki/File:United_States_Income_Distribution_1967-2003.svg

There’s seven billion people here and we’re learning it’s a fragile small place. Some two-percent of us imagine they “own” half of what we measure as valuable. That’s a lot of rocking-the-boat potential in the hands of two-percent and we need to adjust that.

At the end of the day, there’s no such thing as “your side of the boat is sinking.” There’s nowhere else for the two-percent to go with the marbles they imagine are theirs. Those with half the capacity on a sinking boat should be doing half the work to fix it. They aren’t. We need to put a gun equivalent to their heads before the lower decks are flooded and there’s no bringing this ship back.

“I don’t think, despite the bubble economy in the late 1990s, “ordinary workers (down to those in the lowest quartile) saw their wages rise sharply” is correct.”

Are you kidding me? Look at the chart that you yourself linked to. Between 1996-2000, here’s gain in household income:

20th percentile: 11%
50th percentile: 8%
80th percentile: 10%
90th percentile: 10%
95th percentile: 11%

That’s about as even a distribution of economic growth as you can imagine, and it happened because the boom created jobs and brought wages up across the board. Extraordinary that you can post a link and then not even look at the numbers in it.

Dear Steve, @46

The problem in my mind is they own all the words.

The whole premise of a free market economy is perfect and liquid information so that investors can invest wisely. What we have now is absolutely antithetical to intelligent investment in democracy, state craft, and world governance itself. We’re in some kind of weird self-destructive race to the bottom, in terms of everything. We all know there’s a Commons and we’re raping it as fast as we can.

I don’t think they’d shoot us if we voted to modify free speech just a little bit. They can buy their ads, but they have to begin and end with the words, “98% of credentialed scientists adamantly disagree with us, but we here at blah-blah-blah corporation think” whatever …

If they speak to economics, they have to actually reference supporting material from the Congressional Budget Office.

They have to include — and prominently at the bottom of the screen for the duration of the ad — a site link to which they publish academically credentialled data and get utterly smashed by some obnoxious Department of Homeland Security if said data doesn’t exist.

I’m sure this can be fleshed out better by political types (I’m an engineer), but validated knowledge widely disseminated has to be part of the solution.

Landru, (@50)

Well spoken. If educated economists can’t suggest improvements that encourage useful production, then what are we paying them for?

If we tax away the bulk of monies not earned via useful production, we’ve met your goal. And we’ve done it the simplest way possible and we’ve encouraged lounging coupon clippers to go do something useful.

JQ @52: Thanks for the link; I’ll have a look. BTW, I enjoyed your book, so you can count yourself among the educated economists whose work is worth paying for!

“Google was founded by two Phd students at Stanford.”

In the Comp. Sci. faculty at Stanford. Where the professors drive really, really nice cars and are on first-name terms with the Sand Hill Road VCs and angels.

If the VCs at Sequoia said Google had to be HQ’d in Zug, it’d be headquartered in Zug.

[Awesome Epic Fail I found by googling who first funded Google: Excite’s CEO refusing to buy Page & Brin’s idea for $750K despite the urging of Vinod Khosla.]

Couldn’t find the Whitlam social democratic agenda paper at the given link; did find it at http://www.whitlam.org/__data/assets/pdf_file/0003/82992/whitlam_perspectives_1.pdf

“On the point raised by Hartal and some others, I think that the way politics works here is that, most of the time, interests, rather than people, are represented. So S&P represents bondholders qua bondholders, while say, the Chamber of Commerce (I’m not fully au fait with the US scene in this respect) represents employers qua employers . . .”

But John, that’s not the claim you made. You didn’t say that bondholders had, in theory, an interest in opposing stimulus. You said that “the wealthy are resisting [stimulus] so vigorously” largely because fiscal stimulus financed by money-supply expansion would hurt bondholders’ interests. But you provide no evidence that the wealthy are, in fact, leading the opposition to fiscal stimulus, nor, for that matter, that the American “wealthy” care more about interest rates/low inflation than about economic growth. And this kind of vague, unsourced take on the American political scene by someone who is “not fully au fait with the US scene” is distressingly common here.

You’d think that if the public actually saw some “shared sacrifice” – and particularly the reduction of high visibility but idiotic governmental funding like NASA’s “Space Aliens are going to destroy us because of Global Warming” paper, you might be able to have this conversation.”

Actually, it wasn’t government-funded.

At what point do people demand any sort of efficiency (if you can use the word) from governmental agencies.

It seems that the social contract is that people will pay for good government, and that government has an obligation to show that it’s performing.

(1) If you don’t think state & local governments haven’t made significant cuts since the recession began, then you aren’t paying attention.

(2) Something like 60% of the federal budget goes to Medicare, Medicaid, Social Security & Defense spending. The idea that you could eliminate the deficit just by tackling waste & abuse has no basis in reality.

At what point do people demand any sort of efficiency (if you can use the word) from governmental agencies.

It seems that the social contract is that people will pay for good government, and that government has an obligation to show that it’s performing.

(1) If you don’t think state & local governments haven’t made significant cuts since the recession began, then you aren’t paying attention.

(2) Something like 60% of the federal budget goes to Medicare, Medicaid, Social Security & Defense spending. The idea that you could eliminate the deficit just by tackling waste & abuse has no basis in reality

John – (a) there are quite a lot of people to our left who have interesting and useful things to say about politics, and John speaks to them, as to others. He may not always agree with them, but he does speak to them. Nor is it incorrect to observe that the US left is both small, and that many US leftists are not very interested in practical politics.His notion of who the interesting people to talk to on the left are may differ from yours, but that is not necessarily a fault on his part.

(b) it is rather rich to accuse someone of engaging in “the usual exercise of boundary-patrolling” in a comment which is itself an extended and quite explicit exercise in boundary-patrolling. And the “political viability” bit is complete and utter bollocks, as I think you’d realize if you thought about it for a moment coolly, rather than in anger – why on earth should an Australian social democrat, who rejoices in being attacked by the gutter press of his own country for being a dangerous Marx-tinged radical, _care_ about his ‘political viability’ in US political debates? I don’t want to sound too harsh but this really is a rather arsey comment.

re: false equivalence

I remember reading this left-right nonsense and going to make another mark in the negative side of teh ledger for BM Matt – then I noticed that he elaborated on that point the very next day.

Some people said I was drawing a false equivalence in yesterday’s post on the business attitude toward economic recovery measures, which I don’t mean to do. What I’m saying is that from a left-wing perspective, sometimes people have the mentality that a potential solution to a problem can’t be “real” unless the proponent of the proposed solution successfully identifies who the “bad guys” are who are plotting to strangle the economy for their own enrichment.

See, he didn’t mean to imply some sort of “both sides do it” nonsense, despite that being exactly what he typed. What he meant was there are some unnamed and unspecified kooks on teh Left that hate prosperity and think anyone with a seven figure net worth is some sort of super-villain that hates orphans and kittens.

Well who can argue with that? Certainly seems reasonable to me.

“The whole premise of a free market economy is perfect and liquid information”

It is?

Sounds slightly strange though. If we had perfect and liquid inflation then getting all the smart guys in a few rooms, heck a few office blocks, and having them direct the economy might just work.

It’s the very fact that we don’t and can’t have perfect and liquid information which means that such planning doesn’t work: thus we have to turn to markets instead.

@76: Time to review some basic economic theory. You can show that under certain conditions of perfect information, etc, that free markets give certain optimal results. Absent these conditions it’s just an open, unproven empirical debate for the most part. Once you give up perfect information, etc, you can’t rest on theory any more. You’re stuck in the mud debating whether in any given case free market distortions will be better or worse than government intervention. To a certain brand of libertarian, this is obstacle, but realistically it is quite a big deal. There is really quite a lot of evidence in favor of government intervention in a wide variety of cases, from the FDA to banking regulations.

Henry @ 72:

Well, Quiggin does definitely “boundary patrol”, especially to his putative left, though that’s scarcely unique to him. (It’s as old as Aristotle, assuming the mean between the extremes to prove your reasonableness: “I’m not a revanchist Trotskyist, nor a infantile Maoist, but an obedient Stalinist!”)

Be that as it may, I offered 2 links. The first one, for any interested readers, dealt with the long term structural issues, backwards, but then, by the same token, forwards. MNC/Wall St. sponsored globalization, combined with technical change, often in synergy, has through successive waves brought about a re-structuring of corporate rents and quasi-rents, arbitraging not just wages, but currencies, taxes, and regulations, which, of course, is behind the wage-suppression and growing inequality, such that we’re no longer in a “Fordist” era, in which unionized semi-skilled workers can leverage to gain participation in those pools of rents, but rather in a “Walmartist” era, in which those rent pools no longer exist, but have been stove-piped to the top. You’d think that such an analysis might be relevant to the topic at hand, but there’s no hint of it from JQ. And I could easily come up with a package of programmatic policy proposals , which yes, would include wage-and-income compression through the tax-and-transfer system, (though arguing over a 90% top income bracket is silly and trivial, rather than instituting a progressive consumption tax, i.e. a high VAT combined with a mostly negative income tax, and directly taxing wealth and not just income, among other reasons to dampen speculative tendencies). But that alone doesn’t answer to the underlying problem of the need to re-structure production (and CA imbalances), from which employment and those taxable incomes would derive. And even the most complete and well-considered such program wouldn’t have the slightest chance of enactment, which just brings up those questions of political-economy that JQ elides and evades: just why are all the worst policy options prevailing and much better policy analysis and knowledge being shunted aside? (JQ says he is against “financialization”. Sure, but when did he discover that? From his analysis of the “equity premium puzzle” or did that go the way of the “great moderation”?)

The other link was a clue to what the actual “left” climate of opinion might be like. And Yves Smith is an elite “insider”, (Harvard B.A. and M.B.A.), and, by her own account, a maybe slightly left-of-center middle-of-the-roader during the Reagan administration, but the political spectrum has since swung way to the right. (Incidently, she did excellent work in the build up to the crisis, which lots of us, though not the mainstream economics profession, foresaw, in explicating actual financial practices and economics, rather than Fama-type theoretical fantasies about them, whereas mainstream economic theory tends to abstract precisely from the realities of actual sectoral business and financial practices). It’s true that the U.S. left is amorphous and vaguely defined, (though one might start with Krugman at one end and gradually shift into further climates-of-opinion). But if you want to engage with it, maybe you should make some actual effort to find it, and not assume it’s not interested in policy or practical politics rather than excluded from it by the available “official” options. A good deal less condescension, please.

So Quiggin is attacked by the Murdoch press down under. Well, maybe that’s because, if I infer right, he has his own column and presence in the Aussie press. (Though I wonder just why he should care or bother with us USonians, since Oz is one of the few developed economies to have escaped recession in the GFC, no doubt from having been swept up into the Greater East Asian Co-Prosperity Sphere 2.0). But he did remark, on an Aussie blog called “Left Flank”, as an off-shoot of the same Marx commentary that he posted at CT, that he felt he wasn’t being sufficiently respected, especially by the commenters at CT. Sheer. Professorial. Superciliousness.

“Political viability” is just another way of saying “political strategy”(JQ) or “political theory”(HF). The flaw is in the assumption that there is some sort of “good” intentionality that policy analysis and proposals can appeal to, without any consideration of the power-relations in which they must needs be embedded. Which is to say, that such a concern severely constricts the available options and analysis. Which is why the likes of MY appear to be so sexy and appealing as interlocutors, despite their ignorance and inanity, as a result of both gate-keeping and network effects. (I actually waited for some other commenter to pick up on JQ’s implicit sneer, before finally posting a comment). Of course, CT has its own interests in such effects, and I do understand the academic dulce et decorum style, by which one can produce a stream of comments from vaguely liberal masters of the obvious and earnest rationalizers of the status quo. But,- and I think I’ve made such a remark here before,- setting up posts to argue with the center-right (or worse) blogosphere leads to a perversely self-affirming style of argument, rather than allowing for a perhaps more incisive discussion.

So maybe, in the properly pronounced language, I’m an arsehole. But at least it’s a conscientiously, even,-dare I say,- “authentically”, achieved status.

I think there are two fallacies here
1) people are motivated by money. this is one of those commensense ideas that is wrong; in particular, I have spent the last 20years working in biotech startups, and most of the successfull people I have met (some 7 or 8 figure) are not motivated by money (although they themselves might deny it) what makes them succesfull is precisely that they are motivated by something else, like building their business.
2) there is a shortage of capital.
in fact, the opposite is true: there is an excess of capital

add to this the “i earned it, it is my money” and you can explain most of why taxing the rich is a good idea

@78 “There is really quite a lot of evidence in favor of government intervention in a wide variety of cases, from the FDA to banking regulations.”

I don’t doubt at all that there’s evidence favouring intervention in certain cases. I’m not sure I’d use the current FDA as one of them though.

I’ve long argued, for example, in favour of intervention over climate change. Just a different intervention than the one that’s actually being tried. Which is where my real problem with government intervention arises: not that at times intervention isn’t needde, rather that the actual intervention we get is so appallingly counter-productive.

@85: Hey, I almost didn’t check back in on this thread again…

Somehow we are talking about the same issue with quite a few points of agreement not on the big picture. I understand your position on the need to maintain a stable ratio of public debt/GDP over the long run and I agree with the desirability of promoting a tax structure that will make this feasible (w/o leaving the elderly to starve or millions without decent health care).

But what I would like to see are more voices clearly distinguishing between the long term picture on fiscal stability and policy actions that can improve the economy in the short to medium term. And I think this is particularly important because the elites in the United States are trying very hard to push the false narrative (for their own anti-egalitarian motives) that budget balance is a necessary component of short term economic health.

There is a rough division here between tactical political issues and the underlying economics. I don’t see any real need to raise taxes on the wealthy right now (unless this can be paired with a tax cut on the middle class) because, in my view, budget balance is about balancing resources produced with claims on those resources. Since most real resources cannot be saved, whether the government of the US generates more or less debt during a time of underutilization is not particularly relevant to achieving that balance at a future date of greater resource utilization. So I don’t see any underlying economic motivation to require deficit reducing tax cuts on the wealthy in the short term. On the political side, I can see some reason to believe this is a good opportunity to ‘soak the rich’, but the negative implications of talking up deficit-hawkery right now seem far more relevant and dangerous. What is your thinking on the matter? Is this just a political issue, as you suggest with your comment on the Bush tax cuts? Is it a short term economic one?

You also published an article recently describing your ‘hard keynesian’ position. And here again, you appeared to describe how your preferred policy would involve up front commitments by governments to run stable long term fiscal balances before short term stimulus could be discussed. The other rhetorical approach would be to emphasize the need for short term stimulus but follow by saying -‘okay, we still need long term fiscal balance of course’. And I think the latter approach would be more appropriate.

You may have the view that in the short term, yes, we really need to raise taxes on the wealthy for economic reasons. I don’t think you have this view, though I’m not 100% sure. But assuming you don’t, the primary objection I have here is your choice of emphasis and coupling of long term problems with short term ones. I don’t think it makes prudent policy-making more likely.

Yeah, I guess I agree with your point on Northern Europe. That’s a much different political environment than the US. One take-away for me on Yglesias’ point though is that if US liberals get a grand bargain where spending is cut and taxes on the top 2% increased, this will most likely result in economic contraction, a Republican government and then a reduction in those top tax rates. I think we probably agree on this point, my position is that under those circumstances, it doesn’t make much since to criticize Yglesias here (since I think his argument was close enough in spirit to this point).