Inequality and Carbon Emissions

April 7, 2015

There is a likely correlation between these two, but that’s not what this is about. This is a plea for Conservatives (economists and politicians) to take a risk and state clearly their answers to three questions, and then back it up with solid research that everyone can comb through and evaluate.

Here are the three questions:

1.  Is it a problem? (and if not, why not?)

2. If it is, should we do anything about it? (and if not, why not?)

3. If we should, just what do you recommend we do?

Isn’t it infuriating when people criticize one who steps out and takes a position on one of these hot topics, but never even chooses to admit it is a problem and offer another solution to it? Critics are abundant. People who have figured out better solutions and can explain and defend them are few. Those are the ones I am looking for when voting time rolls around.

I watched two recognized economists on youtube yesterday, attacking Piketty’s Capital in the Twenty-First Century. I read the book, and I know that Piketty did not suggest specifics to his wealth tax, except in an illustrative manner. And, in doing even that, he suggested the rate of such tax could be very low (low single digits) and still be quite valuable. So, when one of yesterday’s critics used a 20% tax on grandma’s silver collections (when grandma was assumed to have no income), I was infuriated. Then, he went on to suggest Piketty would tax jobs creating capital investments. Piketty never suggested that. These liberties taken may not be caught by those who haven’t read the book.

Then, there was a long diatribe about how capital and wealth are not the same, that capital cannot be measured, but wealth can, and that it’s not appropriate to substitute wealth for capital. In economics terms, that may be true, but in the real world, that doesn’t really matter. Wealth is a reflection of capital. This is an example of obfuscation–attempting to take advantage of the average reader’s lack of an economics degree, when the particular argument doesn’t even matter.

The names of these economists don’t matter either, because you can google “criticisms of Piketty” and see dozens of them. I think much of the criticism is either professional jealousy against a young French economist who did years of painstaking research and provides it to whoever wants to question it; and to bias on the conservative side. For deep seated bias against doing anything about the rising wealth of the 1% while wages are stagnant for the middle class and below, facts don’t really matter.

So to those two and others of similar mentality: Have a field day with any criticisms you feel–that can be healthy; but, before you leave, answer these three questions.

My own opinion:

1.  It is a problem. Many of us DO care that some make 10’s of millions without giving back. We don’t need to take the majority of their income or wealth, but we should take a larger portion than we are now, not a lesser portion as many Conservatives argue.

2. While some may actually feel the gradual slide toward an oligarchic nation is not a problem, and others may feel it will somehow correct itself without government action, I feel we need action. If somehow economic forces begin to move in the other direction, we can reverse direction in taxation. But if they don’t, we are experiencing increasing social pain that is becoming enormous. This is no longer the egalitarian nation our forefathers envisioned.

3. Redistribution is the only answer. Even Conservatives will not cut major programs to fund measure to help resolve our impending crisis. Unless we can take from existing programs, such as health care (move to single payer system), defense, or social security, we have to have income to rectify our imbalance, and in that case, it can then only come from more taxes. While the US and other developed countries are similar in income distribution before government redistribution, we are among the most unequal when the amount of government redistribution is entered into the calculation–we simply do not provide as well as other developed countries, for health care, education and various social support programs. We can debate how to spend the new money (infrastructure and education would top my list), but we desperately need to get moving.

First, a modest increase in taxes will not dis-incent the super-wealthy. Second, we need the money to start to close the growing divide. Some of the uses can benefit both the wealthy and the poor–e.g., infrastructure.

If any of my readers can direct me to Conservative arguments which address these three questions on either Inequality or carbon emissions, I commit to reading carefully with an open mind. I can’t find them!

It’s so easy to say Piketty’s “wealth tax” won’t work. It’s not so easy to answer the three questions.

Let’s put it this way: If you don’t like my proposal, exactly what would you do?