Towards A Good Samaritan World

Wednesday, December 06, 2006


While I'm skeptical about whether liberal-libertarian fusionism can really happen, it would be great if liberals would follow some of Brink's policy advice.

Allow me to hazard a few more specific suggestions about what a liberal-libertarian entente on economics might look like. Let's start with the comparatively easy stuff: farm subsidies and other corporate welfare. Progressive organizations like Oxfam and the Environmental Working Group have already joined with free-market groups in pushing for ag-policy reform. And it's no wonder, since the current subsidy programs act as a regressive tax on low-income families here at home while depressing prices for exporters in poor countries abroad--and, to top it off, the lion's share of the loot goes to big agribusiness, not family farmers.

Bravo! But how are you going to get that past the farmers' lobby?

Tax reform also offers the possibility of win-win bargains. The basic idea is simple: Shift taxes away from things we want more of and onto things we want less of. Specifically, cut taxes on savings and investment, cut payroll taxes on labor, and make up the shortfall with increased taxation of consumption.

Economists have long tended to favor a move to consumption taxes.

Go ahead, tax the rich, but don't do it when they're being productive.

But it's against the populist-Democrat ideology to believe that the rich are rich because they're productive.

Tax them instead when they're splurging--by capping the deductibility of home-mortgage interest and tax incentives for purchasing health insurance.

YES! The deductability of home-mortgage interest is a bizarre distortion in the tax code, which creates perverse incentives for sprawl and investing in gigantic homes. It also benefits the middle class and the affluent, while people who can't muster the funds to buy a home don't get access to the benefit. But getting rid of this is a political non-starter.

And tax everybody's energy consumption. All taxes impose costs on the economy, but at least energy taxes carry the silver lining of encouraging conservation--plus, because such taxes exert downward pressure on world oil prices, foreign oil monopolies would wind up getting stuck with part of the bill. Here again, fusionism is already in the air. Gore has proposed a straight-up swap of payroll taxes for carbon taxes, while Harvard economist (and former chairman of George W. Bush's Council of Economic Advisers) Greg Mankiw has been pushing for an increase in the gasoline tax.

Another good idea! But gasoline taxes are the paradigm case of good policy, bad politics.

Brink Lindsey is trying to make a pact with a type of responsible, conscientious liberal that hasn't been too visible on the political landscape lately. I wish him luck, but I'm afraid the Kossack populist-opportunists will have other ideas.


  • Well, if Democrats want to find an identity, I think Brink has given them a good one to shoot for. I agree, it seems a bit pie-in-the-sky to expect Democrats to jump on board with these ideas, but one can always hope. In particular, I think getting rid of corporate welfare and agricultural subsidies would do a tremendous amount of good, both here in the states and around the world.

    By Blogger Thomas Reasoner, at 2:29 PM  

  • It's like all those eco-warriors who want to live out in the woods and hug trees, ignoring the fact that some heartless executive in a Manhattan penthouse impacts the environment about 95% less. It's astonishing when I have a conversation with these people talking about the reduced impact of high-density living and they're suddenly all about individual rights: "Oh, I couldn't live in all that concrete." Ah, so you don't care about the environment that much. The priority is to blame problems on others.

    If Democrats want to really forge ahead, they have to resume what the DLC once did: synthesise ideas based on what seems likely to get the job done, not by what throws blame on the other guys while defending one's own history. It has the advantage of being politically promising, but the disadvantage of not settling old scores. Fortunately Murtha's not in leadership - it's clear where his thoughts lie. Pelosi, on the other hand...

    By Blogger Nato, at 2:43 PM  

  • Then there's also the possibility that Pelosi really believes in the zero-sum model of capital allocation that afflicts most anti-capitalists. But who in power really believes that horse dookie any more?

    By Blogger Nato, at 2:46 PM  

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