The era of Everyday Low Taxes
, especially for corporations and the rich, has brought us low.
Why, in a piece on rightwing populism did I open with a line about taxes? It's because we have to get out from under ill-conceived tax policies that have fueled inequality and social unrest now being exploited by rightwing populists.
You can go from Reagan to Trump, from Thatcher to May, from Mulroney to Trudeau, and we're still living under this farcical myth of "trickle down" prosperity for all. We've been waiting for more than three decades for that to happen and it turns out that what we've had instead is a "trickle up" economy facilitated by a political caste in service to narrow interests at the expense of the public interest.
There's an old line about people who know the price of everything and the value of nothing. The political equivalent of that are politicians who fixate on GDP, Gross Domestic Production, as the yardstick to gauge their performance. It's all about growth with little to no regard for where that growth winds up, how it impacts society. Growth can be a double-edged sword, dangerous if it's wielded carelessly as it has been routinely in recent decades. We have deep wounds to our social cohesion to show for it.
Now right wingers - Erdogan, Orban, Wilders, Trump are examples - are exploiting the discontent to ride a wave of faux populism much as some pretty horrible people have in the past. They purport to empathize with Joe Lunchpail's problems, promise to bring back some golden era past, all the while consolidating ever more power.
In Trump's case he promises to bring back the good old days of the 60s, 70s and 80s America when the middle class prospered and flourished. Only he's lying. He's lying because his base of Gullibillies don't know any better. They're Gullibillies who need to believe and don't care if tells the truth.
How do I know Trump's lying about bringing back the good old days? That's easy. Take a look at those good old days and see what he would have to reinstate to bring them back. That would begin with heavy taxation of higher bracket incomes. That would demand taxation of high incomes and taxation of wealth just like America used to have back when the government had funds to pay for infrastructure projects, a social safety net and so on. Trump is not going to do that.
In the postwar era of prosperity, every president, Republican and Democrat alike, managed to reduce America's federal debt as a percentage of GDP until the election of Ronald Reagan. In just 8 years, Reagan transformed America from the world's largest creditor state to the world's largest debtor nation. The U.S. has never been the same since.
Bush/Cheney enacted two massive tax cuts for the rich and launched two protracted foreign wars. There wasn't money in the treasury for any of that. That funding had to be borrowed from foreign lenders. That is the reality of everyday low taxes,
the blood oath of the neoliberal era.
Trump promises the Gullibillies that he'll bring back their offshored jobs. That's nonsense. Those jobs were first outsourced to Mexico and then moved to China. Now China can't compete for the low cost labour. Running shoes are now being produced in Ethiopia.
Nobel laureate economist and former World Bank chief economist, Joe Stiglitz, has written a very insightful piece in the latest Vanity Fair
in which he unpacks Trump's economic fantasies.Trump, it would seem, believes that we can go it alone, that we don’t need the cooperation of China or any other country, or that if we did, we could buy it when we need it. He believes that everything and everybody has a price—that when and if we need cooperation, we can buy it off the shelf. Like the real-estate developer that he is, everything is transactional.
While there is some debate about the extent to which Trump is a “successful businessman,” there is no successful country that is grounded on the principles—or the lack of principles—upon which he has grown his businesses. Economists believe that a successful economy is based on trust, backed up by the rule of law. His standard business practice has been to stiff his suppliers, knowing that recourse to courts is expensive. Of course, over the long term, honest suppliers know this, and refuse to deal. Less scrupulous vendors overcharge and cheat, taking advantage too of the imperfections in our judicial system. But there is no successful economy based on the Trump model.
Trump supporters who eagerly await the return of $40 per hour plus benefits jobs are going to come up empty. Those jobs aren't coming back, not unless America's workers accept Ethiopian wages. That door has been nailed shut not just by Third World wage rates but by automation, robotics. It's simply cheaper and more profitable to rely on expensive robots than to return to the labour market Trump's Gullibillies imagine.
Trump is selling faux populism. There are things he says he'll do but simply can't. The other things - things he can do - he won't. And as he comes up empty handed he'll find someone or something else to vilify. The Gullibillies have an insatiable appetite for vilification. That's why they're Trump's lawful prey.
Does that mean that there's no place for populism? Hardly. There is both a place and an urgent need, just not for right wing, faux populism. Now more than ever. But what is populism, progressive populism? It's more than a chicken in every pot, a car in every garage. It's a formula of principles on which to found a relationship between the state and the individual, the nation and its people. Some of these are ancient principles that trace back to the beginning, Athenian democracy.
As Stiglitz observes, Trump's farcical promise is grounded on a freewheeling, lack of principles which, by itself, dooms it to fail. Principles guide policy. Without essential principles policy becomes incoherent, contradictory, even self-defeating.
Progressive populism is founded on principles that where and as possible should be expressed in policy. There is no magic bullet. Policy has to reflect limits and changing circumstances just as it reflects opportunities. Policy should be the practical embodiment of principle.
There can be no exhaustive compendium of progressive principles. But there are a number of core principles, tested and proven over generations, even centuries. A number of them are restated in Teddy Roosevelt's "Square Deal" speech of 1910 and I think you will find them suitable to our world today.
1. Balancing the rights of Labour and Capital.Of that generation of men to whom we owe so much, the man to whom we owe most is, of course, Lincoln. Part of our debt to him is because he forecast our present struggle and saw the way out. He said: —“I hold that while man exists it is his duty to improve not only his own condition, but to assist in ameliorating mankind.”And again: —“Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration.”...
2. Restraint of Special Interests and the Inequality These Interests CreateIn every wise struggle for human betterment one of the main objects, and often the only object, has been to achieve in large measure equality of opportunity. In the struggle for this great end, nations rise from barbarism to civilization, and through it people press forward from one stage of enlightenment to the next. One of the chief factors in progress is the destruction of special privilege. The essence of any struggle for healthy liberty has always been, and must always be, to take from some one man or class of men the right to enjoy power, or wealth, or position, or immunity, which has not been earned by service to his or their fellows.
At many stages in the advance of humanity, this conflict between the men who possess more than they have earned and the men who have earned more than they possess is the central condition of progress. In our day it appears as the struggle of freemen to gain and hold the right of self-government as against the special interests, who twist the methods of free government into machinery for defeating the popular will. At every stage, and under all circumstances, the essence of the struggle is to equalize opportunity, destroy privilege, and give to the life and citizenship of every individual the highest possible value both to himself and to the commonwealth....Practical equality of opportunity for all citizens, when we achieve it, will have two great results. First, every man will have a fair chance to make of himself all that in him lies; to reach the highest point to which his capacities, unassisted by special privilege of his own and unhampered by the special privilege of others, can carry him, and to get for himself and his family substantially what he has earned. Second, equality of opportunity means that the commonwealth will get from every citizen the highest service of which he is capable. No man who carries the burden of the special privileges of another can give to the commonwealth that service to which it is fairly entitled....Now, this means that our government, national and state, must be freed from the sinister influence or control of special interests. ...We must drive the special interests out of politics. That is one of our tasks to-day. Every special interest is entitled to justice — full, fair, and complete — For every special interest is entitled to justice, but not one is entitled to a vote in Congress, to a voice on the bench, or to representation in any public office. The Constitution guarantees protection to property, and we must make that promise good. But it does not give the right of suffrage to any corporation....There can be no effective control of corporations while their political activity remains. To put an end to it will be neither a short nor an easy task, but it can be done.We must have complete and effective publicity of corporate affairs, so that the people may know beyond peradventure whether the corporations obey the law and whether their management entitles them to the confidence of the public. It is necessary that laws should be passed to prohibit the use of corporate funds directly or indirectly for political purposes; it is still more necessary that such laws should be thoroughly enforced. Corporate expenditures for political purposes, and especially such expenditures by public service corporations, have supplied one of the principal sources of corruption in our political affairs....
3. Corporate Accountability and RegulationWe have come to recognize that franchises should never be granted except for a limited time, and never without proper provision for compensation to the public. It is my personal belief that the same kind and degree of control and supervision which should be exercised over public-service corporations should be extended also to combinations which control necessaries of life, such as meat, oil, or coal, or which deal in them on an important scale. I have no doubt that the ordinary man who has control of them is much like ourselves. I have no doubt he would like to do well, but I want to have enough supervision to help him realize that desire to do well.I believe that the officers, and, especially, the directors, of corporations should be held personally responsible when any corporation breaks the law....
4. Effective Progressive Taxation of Income and WealthThe absence of effective State, and, especially, national, restraint upon unfair money-getting has tended to create a small class of enormously wealthy and economically powerful men, whose chief object is to hold and increase their power. The prime need to is to change the conditions which enable these men to accumulate power which it is not for the general welfare that they should hold or exercise. We grudge no man a fortune which represents his own power and sagacity, when exercised with entire regard to the welfare of his fellows. ...It is not even enough that it should have been gained without doing damage to the community. We should permit it to be gained only so long as the gaining represents benefit to the community. This, I know, implies a policy of a far more active governmental interference with social and economic conditions in this country than we have yet had, but I think we have got to face the fact that such an increase in governmental control is now necessary. No man should receive a dollar unless that dollar has been fairly earned. Every dollar received should represent a dollar’s worth of service rendered — not gambling in stocks, but service rendered. The really big fortune, the swollen fortune, by the mere fact of its size acquires qualities which differentiate it in kind as well as in degree from what is possessed by men of relatively small means. Therefore, I believe in a graduated income tax on big fortunes, and in another tax which is far more easily collected and far more effective — a graduated inheritance tax on big fortunes, properly safeguarded against evasion, and increasing rapidly in amount with the size of the estate....
5. Conservation and Securing PosterityOf conservation I shall speak more at length elsewhere. Conservation means development as much as it does protection. I recognize the right and duty of this generation to develop and use the natural resources of our land; but I do not recognize the right to waste them, or to rob, by wasteful use, the generations that come after us. I ask nothing of the nation except that it so behave as each farmer here behaves with reference to his own children. That farmer is a poor creature who skins the land and leaves it worthless to his children. The farmer is a good farmer who, having enabled the land to support himself and to provide for the education of his children, leaves it to them a little better than he found it himself. I believe the same thing of a nation. ...Of all the questions which can come before this nation, short of the actual preservation of its existence in a great war, there is none which compares in importance with the great central task of leaving this land even a better land for our descendants than it is for us, and training them into a better race to inhabit the land and pass it on. Conservation is a great moral issue, for it involves the patriotic duty of insuring the safety and continuance of the nation....We are face to face with new conceptions of the relations of property to human welfare, chiefly because certain advocates of the rights of property as against the rights of men have been pushing their claims too far. The man who wrongly holds that every human right is secondary to his profit must now give way to the advocate of human welfare, who rightly maintains that every man holds his property subject to the general right of the community to regulate its use to whatever degree the public welfare may require it....
6. Upholding and Advancing Labour and the Public InterestThe right to regulate the use of wealth in the public interest is universally admitted. Let us admit also the right to regulate the terms and conditions of labor, which is the chief element of wealth, directly in the interest of the common good. The fundamental thing to do for every man is to give him a chance to reach a place in which he will make the greatest possible contribution to the public welfare. ...No man can be a good citizen unless he has a wage more than sufficient to cover the bare cost of living, and hours of labor short enough so after his day’s work is done he will have time and energy to bear his share in the management of the community, to help in carrying the general load. We keep countless men from being good citizens by the conditions of life by which we surround them....This New Nationalism regards the executive power as the steward of the public welfare. It demands of the judiciary that it shall be interested primarily in human welfare rather than in property, just as it demands that the representative body shall represent all the people rather than any one class or section of the people.I believe in shaping the ends of government to protect property as well as human welfare. Normally, and in the long run, the ends are the same; but whenever the alternative must be faced, I am for men and not for property, as you were in the Civil War. I am far from underestimating the importance of dividends; but I rank dividends below human character. Again, I do not have any sympathy with the reformer who says he does not care for dividends. Of course, economic welfare is necessary, for a man must pull his own weight and be able to support his family. I know well that the reformers must not bring upon the people economic ruin, or the reforms themselves will go down in the ruin....
7. Upholding the Moral and Material Welfare of all Citizens.One of the fundamental necessities in a representative government such as ours is to make certain that the men to whom the people delegate their power shall serve the people by whom they are elected, and not the special interests. I believe that every national officer, elected or appointed, should be forbidden to perform any service or receive any compensation, directly or indirectly, from interstate corporations; and a similar provision could not fail to be useful within the States.The object of government is the welfare of the people. The material progress and prosperity of a nation are desirable chiefly so long as they lead to the moral and material welfare of all good citizens. Just in proportion as the average man and woman are honest, capable of sound judgment and high ideals, active in public affairs, — but, first of all, sound in their home, and the father and mother of healthy children whom they bring up well, — just so far, and no farther, we may count our civilization a success.
To Roosevelt's maxims of progressive populism I would add the "precautionary principle
." In another time there might have been less need for it but that is not the era in which we now live.
I'm convinced that progressive populism is the only form that can work to the benefit of the public interest rather than the special interest. It seems radical only in contrast to the unquestionably radical neoliberal order that has already failed us but persists as our political caste's default operating system. Something will replace the neoliberal order. At the moment that includes this evolving autocracy and a form of neo-feudalism.