Bob Lord

Think lower tax rates for corporations and wealthy individuals are the number one driver of policy choices for corporate America? Think again. There is one thing the corporate elite in America despises more than higher tax rates at the top: Higher wages for workers. Indeed, virtually every policy choice of the elite in America serves their desire to suppress wages.

This is readily visible in the resistance of the corporate elite to an increase in the minimum wage or any measure that would strengthen organized labor. But it’s far more pervasive. It is evident in any policy choice that impacts the supply curve or demand curve for labor.

For example, Paul Ryan and the austerity crowd are itching to reduce Social Security and Medicare benefits. They tell us they’re concerned about deficits. But cutting Social Security and Medicare will force workers to lengthen their careers. More workers competing for the same number of jobs would drive wages lower. Could that be the real motivation behind entitlement cuts?

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The austerity strategy of Paul Ryan, the Fix the Debt crowd, and other Very Serious People has failed, but only after doing huge damage. Indeed, Fix the Debt pretty much has been disbanded. Imagine that? A bunch of billionaires telling us we need to stick it to retirees couldn’t get any traction.

Now we’re back to plain old dog whistle politics. On that front, lyin’ Paul Ryan has stepped in it again, talking about how men in inner cities lack of a culture of work. I’m not sure that’s even in dog whistle territory. It sounds a bit closer to outright race baiting. And as the BlueMeanie reported, Ryan’s dog whistle even works in references to eugenists. As Laura Clawson of Daily Kos reported, even when he walked it back, Ryan whistled a bit.

Of course, dog whistle politics is best combined with talk of “poverty traps,” those disincentives our safety net programs create for the poor to work. The upshot? “We don’t need no big government administering programs for minorities so they won’t bother to get jobs.”

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Reductio ad absurdum is latin for “reduction to absurdity.” It’s the form of argument where you assume something is correct, then explore the absurd results that follow. Can reductio ad absurdum be applied to conservative taxation theory? Let’s see.

Under conservative taxation theory, taxes cause people not to work, so we should strive for a flatter tax structure. So argues Amity Shales, the board chair of, get this, the Calvin Coolidge Memorial Foundation, in Make Longer Hours Worthwhile, which appeared in today’s NY Times. Here’s her argument:

People decide to work more (or less) than 40 hours a week because of a variety of factors including family life, education, hobbies and leisure time in general. But the biggest reason may be as simple as one word: taxes.

Americans would willingly work longer hours, earn more and be more productive if their marginal tax rates were lowered.

If Americans had a less progressive tax code that rewarded their hard work, they might be inspired to work longer hours.

Across nations and decades, the Nobel-winning economist Edward Prescott found, tax rates largely determined the hours that workers put in. Heavily taxed workers in Europe put in fewer hours than more lightly taxed workers in the United States, he determined.

Got that? Tax rates “largely” determine the hours workers put in. The threshold problem with that is simply that none of us really have ever met anyone who tailors his or her work hours to tax rates. But it gets worse, way worse, for Amity and Edward Prescott.

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Thomas Edsall discussed the concept of Just Right Inequality in Tuesday’s NY Times. Hence the title for this post.

Edsall explored whether there is a level of inequality that is “just right,” enough to incent hard work and innovation, but not so great as to stifle demand and create social instability.

The concept of an optimal level of inequality seems intuitively obvious to anyone who rejects communism. But Edsall’s piece is valuable, because, without trying to do so, he exposes the hollowness of the arguments against our acting to counteract inequality.

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