I love economics. Always have. Not the type to study Keynes vs. whomever, and I really couldn’t care less about the ideologies per se. Data on which ones work are just too hard to prove, or too easy to prove. There are too many variables that affect real life situations gravely more than they do clean models built with the help of a statistician and excel. Sure, I have my opinions, but not based on hard science, rather on history and intuition. However, the rhetoric that’s often put out there is really mind boggling and I just couldn’t help myself.
When I saw Henry Blodget throw out another article (and he loves putting out these agenda pieces) on Business Insider about how marginal tax rates don’t provide a disincentive for people to earn more money, I laughed. I mean, he pointed to the 1950’s and 1960’s. So was there job mobility back then, country mobility, tech mobility? True competition from other nations at the rate of onslaught we see today? Was anything really the same?
Especially so for the tech industry. If things spin out of control here, move to another country. Heck, even another state. And a lot of people have been doing it. If tax rates are too progressive, the incentive to earn money becomes regressive. Not only do we have to deal with this problem, but we also have to deal with the flip side in the US. Because the system is so progressive as it stands today, the welfare society is eating at the core fabric of innovation especially at lower income levels. If everything is provided for you if you don’t work or put in some marginal hours, the incentive to work diminishes. In the United States, there is a job for everyone. People just don’t want to take it because they don’t have to take it. The marginal return on their work vs. their subsidized living is just too marginal.
Even in the United States. Not just in Europe. Yes.