Needless to say, it wasn’t really innocent. But the ’50s — the Twinkie Era — do offer lessons that remain relevant in the 21st century. Above all, the success of the postwar American economy demonstrates that, contrary to today’s conservative orthodoxy, you can have prosperity without demeaning workers and coddling the rich.
Consider the question of tax rates on the wealthy. The modern American right, and much of the alleged center, is obsessed with the notion that low tax rates at the top are essential to growth. Remember that Erskine Bowles and Alan Simpson, charged with producing a plan to curb deficits, nonetheless somehow ended up listing “lower tax rates” as a “guiding principle.”
Exactly what percentage of the economy do you think redistribution should be? Let's be real here: The US Economy is ~$15 trillion, but government spending at all levels is about $6.4 trillion, or about 43% of the whole.
Roughly $4 trillion of that, or more than 25% of the economy, is pure redistribution -- it is "spent" on Pensions, Health Care, Education and Welfare. $900 billion, approximately all-in, is spent on various forms of "defense."
Now we can argue about exactly how much defense we need, and $900 billion sure sounds excessive to me.
But perhaps you can explain to me why we should be redistributing education -- instead of expecting those who screw and make children by doing so to buck up and educate their kids.
After all, we do proceed from the assumption that parents love their children, right? The left's argument isn't that a woman is simply a life-support system for a vagina, and a man is simply a means of producing sperm, right?
When it comes to Health Care, we do proceed from the assumption that people want to be healthy, right? The left's argument isn't that nobody gives a good damn about whether they live a good, long, healthy and happy life or are confined to being poked, prodded and tubed with this and that by the medical industry, suffering on a daily basis until they finally expire, right?
As for Welfare, we do proceed from the assumption that people do want to get off their ass in the morning and go to work, not sit at home, do the aforementioned screwing, and add to it stuffing their face in the idiot box while stuffing their face with bags of potato chips and 12 packs of beer, right?
So when it comes to 91% tax rates, go ahead Paul. Talk the government into it.
You may think this will result in utopia but you'll be wrong (again.)
Indeed, let's look at your utopian 1955. GDP was $426 billion. Total Government spending at all levels was $110.7 billion, or 26% of the economy, and redistribution, defined as Pensions + Health Care + Education + Welfare, was $27.7 billion or about 6.5% of the economy.
(Federal spending was $73.4 billion, or 17% of the economy! Oh to live that day once again!)
If I can have the 1955 percentage of redistribution, or about 1/4 of what it is now, I'll be happy to also have 91% marginal tax rates.
Of course I won't pay them because I'll stop working long before I reach that threshold -- and so will basically everyone else.
Somehow I suspect that what Paul ("I like to lie by omission") is arguing for, however, is that he can have both confiscatory taxes and increase the redistribution that government performs.
Unfortunately for Paul there's no evidence that this will actually come about; what will instead happen is that the amount of money paid to the government as a percentage of the economy will shrink dramatically, and with it so will the welfare state -- whether Krugman likes it or not.
With that in mind, go right ahead and bring it on.
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