A Populist Manifesto?

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The recent Occupy Wall Street and the earlier Tea Party have both generated plenty of discussion. In both cases, their aims are less than perfectly clear. This lack of clarity stems from their diffuse nature. Each group contains many sub-groups. However, both represent a certain populist outcry. What would a populist manifesto look like? I will attempt to list elements that might be part of such a manifesto.

A Populist Manifesto
(of sorts)

Replace the Income Tax with a Wealth Tax

Much is made of taxing the wealthy, but this tends to focus on high income. In many parts of the country, a six-figure income is not particularly grand for the proverbial family of four. Even a low seven-figure income does not necessarily produce the great power and advantage that many claim for it. While dramatically above average a one-million-dollars per year income does not necessarily make you a big-time power player. While it certainly buys you comfort and a level of security lacking the average wage earner, it is not clear that it brings vast reservoirs of power. The real power, the real imbalance in security and prestige, comes from accumulated wealth. The influential foundations express their influence through their accumulated wealth, not their high current incomes.

Replacing the income tax with a wealth tax would remove disincentives to productive activity while retaining a “pay their share” aspect. Lest you think I am proposing some kind of free-lunch/tax-the-other-guy scheme, everyone would pay something because bank accounts, brokerage accounts, and real-estate would all be taxed. We all would pay something, and it would remain a progressive system.

Bring Back the Tariff

Government needs to tax to fund its activities. We may disagree on what those activities should be, but most will understand that the government will legitimately need to carry out some activities. I see no reason why a tariff is any worse than any other tax on trade. A gas tax is a tariff on transportation; an income tax is a tariff on labor; while the corporate tax is actually a tariff on trade, except that it is levied only on those corporations generating business within our borders. Lower the corporate tax on businesses within our borders but raise the tariff on those businesses that want access to our markets (pay to play). Lowering, rather than abolishing, the corporate income tax may allow the capture of pass-through income. Even if companies do not produce here, the profits declared here (to fall under the lower rate) can provide needed revenue.

An Immigration Pause

Of all the contradictions in the Occupy Wall Street demands, their open borders seems the worst. With unemployment so high it seems absurd that we need to import even more workers. The massive increase in population (and the labor pool) is a major factor driving the increasing wealth divide. Higher population weakens labor’s bargaining power and drives house price inflation. It also seems absurd to allow the entry of population groups that will immediately (and forever) be eligible for affirmative action programs. The claimed intent of affirmative action was to redress assumed prior harm; increasing the pool of eligible recipients harms the majority population and dilutes the benefits for the existing beneficiaries.

What many consider the golden years for the United States occurred during the post-war years of low immigration. During those “white bread” years the United States, assumed world leadership, put a man on the moon, built the Interstate Highway system, and built a broad middle class. Many ethnic groups (e.g., Italians and Irish) made great strides in integrating and finding stability and prosperity during this immigration lull.

If, as is likely, the cheap labor lobby cries about some shortage a fallback position is that a limited number of H1-B or other “guest worker” visas could be auctioned off. After all, if the shortage, and not wage, of workers is the problem then employers should have no problem bidding for this worthwhile and scarce resource.

End Affirmative Action. . . except for Blacks

Affirmative action was instituted to right wrongs done to earlier populations. The aim was to make up for the injustices of slavery and segregation. I propose that the only eligible recipients for any sort of affirmative action be African Americans. In this case, African American means exactly what it says: Americans of African heritage, whose forbearers were brought here as slaves. No other group should keep eligibility for Affirmative Action programs.

End Corporate Personhood

If corporations were truly persons they would probably be classed as “asshole.” Individuals have rights because individuals can suffer penalties for misuse or abuse of such rights. Corporations cannot be jailed or hanged. While some punishment may fall onto corporate officers, corporations can often avoid the punishments that would befall an individual. By claiming free-speech rights associated with individual persons, corporations can use their influence in elections and public affairs in a way that is more difficult for real (natural) persons. We need to view corporations more like public trusts; while given much freedom, they must also show that they are actually providing public good.

Notes

I realize that each of these brings their own problems. Rather than argue back and forth with myself and water down the ideas with hedged statements, I decided to leave them as basic ideas. In any case, it is a populist manifesto not an academic paper.

Income inequality is an expected, and perhaps required, outcome of a free society. While not subscribing to a “from each according to his means” philosophy I realize that large gaps in wealth and concentrations of power can become harmful to society. Some of these populists suggestions are attempts to narrow that gap in the least vicious way possible.

Many of the problems that the US faces are due to changes in technology and world trade, and not entirely within the control of any country. But, just because there are no easy answers does not mean we should not ask questions. Tariffs and wealth taxes will not necessarily bring the jobs back, but they may alter decisions and outcomes in a way that lessens the pain.

I generally believe that free-trade (within and between countries) is a good thing. However, I will not make it a God, an ideological idol before which we all kneel. Just as Hitler’s revenge gave us multiculturalism, Smoot-Hawley’s revenge gave us the free-trade dogma and the fear of any trade restrictions or taxes (Japan, China, and most of the rest of the World seem less taken with this particular false God). That said, any tariff should focus on raising revenue (so other tax burdens may be lowered) rather than punishing certain countries or activities.

I have mentioned some of these thoughts in earlier posts:
My post: Solutions.
My Post: Into Thin AIR.

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2 Responses to “A Populist Manifesto?”

  1. El Sido Says:

    Income Tax with Wealth Tax – No – Income tax is the fairest tax there is. The problem is the wealthy know how to avoid it. Maybe it is that aspect we should be considering.
    [DU: I really do not see why the income tax is particularly fair, especially compared to a genuine wealth tax. Income taxes along with capital gain taxes act upon dynamic behavior. It encourages and discourages specific behaviors and forces people to make decisions for tax reasons rather than personal or economic. Wealth is more static (if not perfectly so). Taxing, for instance, a $100,000 bank balance the same way as $100,000 of real estate would allow individuals to make better choices about investment (how many investors load up on real estate for the tax benefit, or hold or dump assets solely to reduce capital gains or dividend income?) Wealth is also more difficult (again not perfectly so) to hide: Real estate cannot rush offshore, and banks (even the Swiss) will generally play along with government.]

    Immigration Pause – Makes sense in US and in Europe – however the big problem here is the notion of Political Correctness – the minute you approach the race issue (if you are white/beige) you are accused of being a neo-nazi.
    [DU: That is why a general pause, rather than specific restrictions, might be more palatable. In any case, leaning not to back down upon a “racism” charge is a good exercise.]

    Corporations/Financial Institutions – Have exported manufacturing industry to cheaper Asian producers And governments have colluded with this economic experiment.
    The traditional Keynesian Economics used by the so called Anglo Saxon Economies – have relied on pumping money into the economy – the so called Keynesian Multiplier effect.
    Whilst in the past this stimulated the economies by boosting manufacturing demand. It now boosts the Chinese and Asian economies where the manufacturing capacity has been exported.
    [DU: The other side of the Keynesian model was that governments would reduce expenditure when demand picked up. Governments conveniently forgot about that part. On reason why such Keynesian methods will not work now, if they ever really worked, is that we are tapped out from all the continued “pump priming” that governments engaged in during good and bad times. The only hope for such a model to work would be if we were starting from a base of low debt and modest expenditure. Of course, what you say about imports also holds true.]

  2. The Buffet Tax? « Default User Says:

    […] an earlier post, I suggested a tax on wealth instead of a tax on high income. However, that may not be politically […]

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