August 27, 2007
The Big Con
I tend to find it very hard to finish books. So rather than me using a bunch of nice adjectives for it, let me just say that I finished Jon Chait's book, The Big Con, on the rise of crackpot, rightwing, economics in two days. On the beach. It's a very, very good piece of work, and contains the clearest, most sustained demolition of supply-siderism I've encountered. It's also got a lot of very clear, quick writing on economics in general, including this quote-worthy bit on taxes:
You can look at the federal tax code as a kind of layer cake. At the bottom is the federal payroll tax, used to finance Social Security and Medicare. This tax is a flat rate and covers wage income only to around $100,000 a year, with all income above that level exempt. This is the most regressive tax imposed by Washington. Above the payroll tax sits the income tax. The income tax is more progressive, exempting low wage workers and making high earners pay a higher rate. On top of that are taxes on capital gains and dividends. These taxes are even more concentrated at the top, since they affect only those who receive lots of income from accumulated wealth. The most progressive tax of all is the estate tax, which is paid by a tiny handful of fabulously wealthy heirs.
Compare that layer cake to President Bush's policies. The tax at the bottom, the payroll tax, he has not touched at all. The tax just above that, the income tax, he sliced by about a tenth. The taxes just above that, the capital gains and dividends, he cut in half. And the tax at the very top, the estate tax, he abolished altogether (though he has not mustered enough votes to abolish it permanently). Bush's opposition to any given tax is exactly proportional to the degree that it affects the rich.
The book also has the world's most perfect description of Grover Norquist, about whom it says:
Norquist, like a Bond villain, has an irresistible penchant for spelling out his master plans in their full, nefarious detail.
It's almost impossible to accurately convey how true that is.
> The book also has the world's most perfect
> description of Grover Norquist, about whom it says:
>> Norquist, like a Bond villain, has an irresistible
>> penchant for spelling out his master plans in their
>> full, nefarious detail.
> It's almost impossible to accurately convey how true
Unlike M (and presumably the minister behind M; not sure if that would be the Home Secretary or the War Ministry), however, the Democrats consistently ignore what Norquist and his acolytes say. If pressed on it they chuckle and say "don't be naive; he is just being outrageous. The Republicans won't actually do that."
Well, someone is naive anyway.
Posted by: Cranky Observer | Aug 27, 2007 10:03:33 AM
"The most progressive tax of all is the estate tax, which is paid by a tiny handful of fabulously wealthy heirs."
Err, no. The real problem with the estate tax is that it's far far too easy to not pay it at all: via trusts and so on. The taxman didn't get much of Joe Keneddy's money but none of the extended clan seem short.
"most sustained demolition of supply-siderism"
That's easy enough: if you insist that supply-siderism is only ever about lowering marginal tax rates and the Laffer Curve.
That it's actually about "reforming the supply side" , so that the break of AT&T and the consequent liberalization of the telecoms markets are "supply side" then it's a much more difficult idea to demolish.
Posted by: Tim Worstall | Aug 27, 2007 11:00:34 AM
Also, sorry for the nitpick, but the Medicare portion of FICA applies to all wages; i.e., it isn't capped at $100,000. Only the Social Security portion is capped.
Posted by: Rob | Aug 27, 2007 11:32:42 AM
As you no doubt know, it's worse than that. For one thing, Norquist isn't the only reactionary who spells out his nefarious plans like a Bond villain. For another thing, they don't just accuse you of being naive: you could quote from a PNAC document about Iraq and people, not just "sensible Democrats" but also the so-called "liberal newsmedia" would accuse you of being a paranoiac and of being a sufferer of irrational Bush hatred and of being a closet anti-Semite for making crazy statements about the Iraq war.
If the sensible Democrats really believed what they said, how come they aren't Republicans? And if they are just saying what they say to keep themselves politically safe, where do they get the idea that their political best interests lay with playing along with the GOoPers? Hmmm ... could it be (begin echo they put on the Church Lady's voice) the so-called liberal media?
Madison must be spinning in his grave. Politicians are supposed to view it as in their political best interest to oppose the powers that be. Instead they get grilled over the coals for it by a so-called free-press? Something is rotten here ...
Posted by: DAS | Aug 27, 2007 11:51:43 AM
Is it readable for someone who doesn't know anything about economics?
Posted by: Isabel | Aug 27, 2007 4:29:32 PM
That Norquist comment is terrific. He'd be funny if his villainous schemes weren't able to be carried out so easily.
Posted by: eRobin | Aug 27, 2007 4:51:34 PM
Tim, the IRS says that a whopping 2% of all estates are subject to the tax. You can claim that's not a "tiny handful" if you want, but I'm going to disagree with you.
Posted by: Ginger Yellow | Aug 27, 2007 9:18:37 PM
Isabel -- yes, the book is definitely written for readers without prior economic knowledge. There's very little actual economics in it -- it's mostly history and politics -- and what economics there is is aimed at the lay reader.
Posted by: jonathan chait | Aug 27, 2007 10:24:52 PM
I've been a Chait fan ever since his TNR piece, "Mad About You: The Case for Bush Hatred".
As someone who spends more time with the Kudlows of the world than the Krugmans, I'm looking forward to picking up THE BIG CON.
Posted by: David | Aug 27, 2007 10:42:41 PM
This creates a conflict for me. Rightwing econ crankery is a subject of great interest to me, and I'd love to read this book. But I still nurse a grudge against Chait for his execrable anti-Dean blog during the 2004 race, and it would pain me to make him one cent richer with my money.
Posted by: cerebrocrat | Aug 28, 2007 12:39:37 PM
You're right Cerebrocrat, his anti-Dean jihad was scurrilous and contemptible. But Chait is a really, really smart cookie who deserves your forgiveness; and despite a bad case of Liebermanism on Iraq he's spot on when it comes to domestic economic issues.
Posted by: B-man | Sep 5, 2007 5:53:55 PM
Posted by: judy | Oct 11, 2007 6:58:26 AM
This is the biggest pile of dog squeeze I have ever seen. This is pure left wing drool and complete devoid of facts or reality. Keep taxing and soon enough the Chinese will own America without ever firing a shot.
Posted by: Greg | Oct 22, 2007 2:43:42 PM
Incentive is every thing .. you wouldn't take another breath without incentive. If there was 100% taxes there would be no revenue to the gov't. Example.. I own a sports bar. It is hard enough to make a profit even when I keep the whole profit. If I deposited my sales in a gov't account and got a gov't paycheck each month...how much profit do you think I would make? None nada. No profit no revenue for the gov't. They would be paying more to keep me open that the deposits. This is why USSR is gone. This is why China is more capitalist. This is why France is moving more conservative. Socialism is a slow death. There are so many holes in this book arguments. Example... Reagon tax cuts....reason gov't revenues almost doubled in 8 years. Books reason "inflation and normal growing economy" That is the weakest explanation anyone could come up with. The tax cuts did it. Clinton would have been thrown out of office if it wasn't for the internet boom and the republicans cutting spending...other wise the economy would have been a disaster. Liberals need to understand that taking away incentives and enabling everyone is evil. Ken Eddleman
Posted by: ken eddleman | Nov 20, 2007 10:53:53 PM
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