Re: [RC] Radical Centrism featured in latest edition of The Economist

[David R. Block]

Title: ORourke1 Signature

Seriously, outcome based equality really isn't equality. If someone invents a new product for a company, I think that maybe he should get more money than the bureaucratic paper pusher down the hall. In 2000, the Greens proposed a maximum salary of $120,000 per year. Great, but who could then afford to live in San Francisco, Los Angeles, or New York City? Probably no one. Even parts of Dallas and Houston would be tough sledding. And we all know what rapid decreases in home values does to people. (If we don't know, then we spent the last 5 years with recto-cranial inversion.) Who is making this decision that the gulf is now too great? In real terms, the gulf was probably greater in the Rockefeller/Carnegie era in the hey-day of all of the "trusts" and before the "trust-busting" that went on. One needs a tax rate structure that doesn't suddenly jump to 75 % (way too high) or those that barely make it into that bracket could wind up financially "killed." That will create a big gulf in and of itself. And I'm no where near the top, but I'm not extremely receptive to all of the sudden disability claims occurring after unemployment runs out (how convenient), nor the explosion in Food Stamp recipients (Obama should be honored by having his picture on the Food Stamps). All the while this administration shafts coal, oil, and natural gas driving energy costs through the roof-poor and minorities hardest hit, and also costing thousands of jobs in those industries. Contrary to Democratic Agit-Prop they don't appear to really give a rodents rear about the working class, only their buddies the union bosses. If you want to start with monopolies, start with the Airlines. As American tries to stem off a merger, bear in mind that Delta is now a merged airline, and a smaller one. United swallowed Continental and US Airways is trying to swallow American. But most folks are unflummoxed by all of these changes, unless you are in the  losers company headquarters market (like Houston for Continental and DFW for American). Then we may need to break-up the baby bells again, now that Southwestern Bell here in Texas has repurchased the mothership, A T & T. Of course, there is the other side of the coin: Since that didn't work so well, why would we want to do that again??  I totally disagree with the too big to fail banks. Any thing that is too big to fail should be too big to exist. I see with interest some of the ideas for countries outside of our own, but I'm not sure that those reforms can be reasonably forced upon their targets. I would agree to the disbanding of ALL government employee unions. They should not be shafting the tax payer in such an enormous fashion. The article brings up cronyism, but largely disregards this administrations record setting cronyism, instead focusing on Wall Street alone. That's only half the problem, so what is presented is only half of the solution. So this "True Progressivism" is still largely skewed left. A lot more balance is needed. No one appears to be watching the sleeping watchdogs in the media, who are little more than Democratic Party stooges passing themselves off as so-called "journalists." The article points out tax avoidance in developing countries, but mostly ignores the same things here. As long as I can put money in Tax Exempt bonds, that seems like a good idea (except that right now the yields rather suck). Elimination of the Mortgage Interest Deduction comes down into the middle class and bites it rather hard, so I don't really understand the desire to do away with it. Maybe an increasing limit on detectability as income rises, but a straight out repeal will be felt rather deeply, even among the "99 %." I'm sorry, but I only see Obama's intent as punishing the rich and shifting money to the have nots, whether or not they really know how to responsibly invest it or spend it. And, of course, all for his political gain. David   "The principal villain in rising health care costs is the government.  Not pharmaceutical companies, not doctors,  but government."--Neal Boortz On 10/12/2012 4:07 PM, bil...@aol.com wrote:       The Economist Inequality and the world economy True Progressivism A new form of radical centrist politics is needed to tackle inequality without hurting economic growth Oct 13th 2012   BY THE end of the 19th century, the first age of globalisation and a spate of new inventions had transformed the world economy. But the “Gilded Age” was also a famously unequal one, with America’s robber barons and Europe’s “Downton Abbey” classes amassing huge wealth: the concept of “conspicuous consumption” dates back to 1899. The rising gap between rich and poor (and the fear of socialist revolution) spawned a wave of reforms, from Theodore Roosevelt’s trust-busting to Lloyd George’s People’s Budget. Governments promoted competition, introduced progressive taxation and wove the first threads of a social safety net. The aim of this new “Progressive era”, as it was known in America, was to make society fairer without reducing its entrepreneurial vim. Modern politics needs to undergo a similar reinvention—to come up with ways of mitigating inequality without hurting economic growth. That dilemma is already at the centre of political debate, but it mostly produces heat, not light. Thus, on America’s campaign trail, the left attacks Mitt Romney as a robber baron and the right derides Barack Obama as a class warrior. In some European countries politicians have simply given in to the mob: witness François Hollande’s proposed 75% income-tax rate. In much of the emerging world leaders would rather sweep the issue of inequality under the carpet: witness China’s nervous embarrassment about the excesses of Ferrari-driving princelings, or India’s refusal to tackle corruption. At the core, there is a failure of ideas. The right is still not convinced that inequality matters. The left’s default position is to raise income-tax rates for the wealthy and to increase spending still further—unwise when sluggish economies need to attract entrepreneurs and when governments, already far bigger than Roosevelt or Lloyd George could have imagined, are overburdened with promises of future largesse. A far more dramatic rethink is needed: call it True Progressivism. To have or to have not Does inequality really need to be tackled? The twin forces of globalisation and technical innovation have actually narrowed inequality globally, as poorer countries catch up with richer ones. But within many countries income gaps have widened. More than two-thirds of the world’s people live in countries where income disparities have risen since 1980, often to a startling degree. In America the share of national income going to the top 0.01% (some 16,000 families) has risen from just over 1% in 1980 to almost 5% now—an even bigger slice than the top 0.01% got in the Gilded Age. It is also true that some measure of inequality is good for an economy. It sharpens incentives to work hard and take risks; it rewards the talented innovators who drive economic progress. Free-traders have always accepted that the more global a market, the greater the rewards will be for the winners. But as our special report this week argues, inequality has reached a stage where it can be inefficient and bad for growth. That is most obvious in the emerging world. In China credit is siphoned to state-owned enterprises and well-connected insiders; the elite also gain from a string of monopolies. In Russia the oligarchs’ wealth has even less to do with entrepreneurialism. In India, too often, the same is true. In the rich world the cronyism is better-hidden. One reason why Wall Street accounts for a disproportionate share of the wealthy is the implicit subsidy given to too-big-to-fail banks. From doctors to lawyers, many high-paying professions are full of unnecessary restrictive practices. And then there is the most unfair transfer of all—misdirected welfare spending. Social spending is often less about helping the poor than giving goodies to the relatively wealthy. In America the housing subsidy to the richest fifth (through mortgage-interest relief) is four times the amount spent on public housing for the poorest fifth. Even the sort of inequality produced by meritocracy can hurt growth. If income gaps get wide enough, they can lead to less equality of opportunity, especially in education. Social mobility in America, contrary to conventional wisdom, is lower than in most European countries. The gap in test scores between rich and poor American children is roughly 30-40% wider than it was 25 years ago. And by some measures class mobility is even stickier in China than in America. Some of those at the top of the pile will remain sceptical that inequality is a problem in itself. But even they have an interest in mitigating it, for if it continues to rise, momentum for change will build and may lead to a political outcome that serves nobody’s interests. Communism may be past reviving, but there are plenty of other bad ideas out there. Hence the need for a True Progressive agenda. Here is our suggestion, which steals ideas from both left and right to tackle inequality in three ways that do not harm growth. Compete, target and reform The priority should be a Rooseveltian attack on monopolies and vested interests, be they state-owned enterprises in China or big banks on Wall Street. The emerging world, in particular, needs to introduce greater transparency in government contracts and effective anti-trust law. It is no coincidence that the world’s richest man, Carlos Slim, made his money in Mexican telecoms, an industry where competitive pressures were low and prices were sky-high. In the rich world there is also plenty of opening up to do. Only a fraction of the European Union’s economy is a genuine single market. School reform and introducing choice is crucial: no Wall Street financier has done as much damage to American social mobility as the teachers’ unions have. Getting rid of distortions, such as labour laws in Europe or the remnants of China’s hukou system of household registration, would also make a huge difference. Next, target government spending on the poor and the young. In the emerging world too much cash goes to universal fuel subsidies that disproportionately favour the wealthy (in Asia) and unaffordable pensions that favour the relatively affluent (in Latin America). But the biggest target for reform is the welfare states of the rich world. Given their ageing societies, governments cannot hope to spend less on the elderly, but they can reduce the pace of increase—for instance, by raising retirement ages more dramatically and means-testing the goodies on offer. Some of the cash could go into education. The first Progressive era led to the introduction of publicly financed secondary schools; this time round the target should be pre-school education, as well as more retraining for the jobless. Last, reform taxes: not to punish the rich but to raise money more efficiently and progressively. In poorer economies, where tax avoidance is rife, the focus should be on lower rates and better enforcement. In rich ones the main gains should come from eliminating deductions that particularly benefit the wealthy (such as America’s mortgage-interest deduction); narrowing the gap between tax rates on wages and capital income; and relying more on efficient taxes that are paid disproportionately by the rich, such as some property taxes. Different parts of this agenda are already being embraced in different countries. Latin America has invested in schools and pioneered conditional cash transfers for the very poor; it is the only region where inequality in most countries has been falling. India and Indonesia are considering scaling back fuel subsidies. More generally, as they build their welfare states, Asian countries are determined to avoid the West’s extravagance. In the rich world Scandinavia is the most inventive region. Sweden has overhauled its admittedly huge welfare state and has a universal school-voucher system. Britain too is reforming schools and simplifying welfare. In America Mr Romney says he wants to means-test Medicare and cut tax deductions, though he is short on details. Meanwhile, Mr Obama, a Democrat, has invoked Theodore Roosevelt, and Ed Miliband, leader of Britain’s Labour Party, is now trying to wrap himself in Benjamin Disraeli’s “One Nation” Tory cloak. Such cross-dressing is a sign of change, but politicians have a long way to go. The right’s instinct is too often to make government smaller, rather than better. The supposedly egalitarian left’s failure is more fundamental. Across the rich world, welfare states are running out of money, growth is slowing and inequality is rising—and yet the left’s only answer is higher tax rates on wealth-creators. Messrs Obama, Miliband and Hollande need to come up with something that promises both fairness and progress. Otherwise, everyone will pay. -- Centroids: The Center of the Radical Centrist Community <RadicalCentrism@googlegroups.com> Google Group: http://groups.google.com/group/RadicalCentrism Radical Centrism website and blog: http://RadicalCentrism.org -- Centroids: The Center of the Radical Centrist Community <RadicalCentrism@googlegroups.com> Google Group: http://groups.google.com/group/RadicalCentrism Radical Centrism website and blog: http://RadicalCentrism.org