Wednesday, February 11, 2009

Progressive Redistribution Stimulus

Matthew Yglesias, commenting on Brink Lindsey's new policy paper, "Paul Krugman's Nostalgianomics: Economic Policies, Social Norms, and Income Inequality," reveals the underlying redistributionist goals of Democratic fiscal and social policy:

... the generic “progressive” idea is that we should have a more progressive tax code that spends more money on egalitarian social welfare programs. That’s not a return to the 1950s. It’s an effort to ensure that the gains of the past 30 years worth of policy shifts are spread more equitably ... In principle, the pie could be redistributed (through tax-and-transfer or tax-and-service) such that everyone winds up with more pie than they had before ... rather than giving huge additional pie slices to the richest people.
While Yglesias' analysis focuses on the income gaps resulting from information-driven technological change, it's interesting how this idea of "more money on egalitarian social welfare programs" is essentially the foundation for the Obama administration's $800-plus billion stimulus plan.

As Michael Hiltzik notes at today's Los Angeles Times, " the federal government moved forward Tuesday on the most ambitious economic recovery plan since the Great Depression." Whereas Hiltzik's point of departure is Franklin Roosevelt (who was regulatory and stimulatory) the left's is Lyndon Johnson (who was paternalistic and redistributionist). A quick perusal of the House Appropriations Committee's press release, "
Summary: American Recovery and Reinvestment," clearly indicates that economic stimulus and market rebuilding are side notes underlying the big government rationale at the heart of the program. The legislation is loaded with social spending on child development, health care appropriations, Indian affairs, education (including Head Start), not to mention energy and the environment and a range of other expenditures of varying degrees of logical relation to the immediate goal of "budgetary stimulus."

All of these things are ostensibly good and needed initiatives. But for Democrats to continually use the economic crisis and catastrophic fearmongering to justify movement toward the party's larger state-socialist redistributionist agenda is fundamentally dishonest and it violates the trust of the American people.

We know what the Democrats want from government. It's be nice if they'd have a little more integrity in selling their economic program for what it really is.


Rich Casebolt said...
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Rich Casebolt said...

What Yglesias misses, of course, is that the relative lack of effective corrective feedback inherent in a command economy vs. a free-market economy, leads to a lot of pie in the landfill -- and a smaller pie for all afterwards -- instead of maximizing the sustenance for the making of more and bigger pies.

As usual, those like him do not understand how the rich got that way ... they assume their wealth is unjustified, when in fact -- for the vast majority of wealthy people, at least -- it is justified by their productivity.

Demanding a larger slice, when you haven't earned it, can lead to an empty plate instead.

Case in point ... the owner of the firm I work for has made a profit every year for over three decades. He also engages in extensive profit-sharing with EVERYONE, from the factory floor to the execs, who have worked with him to make that profit. This includes cash bonuses and retirement contributions.

Raise his taxes, or increase the burden of government mandates upon his business ... and you will be cutting down the size of the slices for 200 people.

And don't tell me that we will get back what is taken from us in the form of government services ... for when our money is taken and spent by the unaccountable, the results too often lack cost-effectiveness, as we have seen again and again. If that was the case, to cite one example, our schools would be putting out Einstein after Einstein instead of having the problems they have.

Government has its place ... a relative few, and not as the answer for every place.