Now that the page has been turned, are we really ready for the new ideas?
An excellent opportunity to separate the actual need for new ideas from rhetoric exists in the debate over capital gains taxes: a debate that embodies most of the classic philosophical differences between right and left.
Espousing the saneness of the isolated individual, investors would prefer to pay no taxes at all. Since this is an attitude unlikely to win elections in democratic societies, they have been forced to create a cover story. These fables are explained by progressives (nice capitalists). Realizing that some taxes must be paid, their seductive arguments for low capital gains taxes are couched in “the greater good”. Simply stated, the more money the wealthy retain, the more money will be re-invested in the economy; thus creating more wealth and jobs, and ultimately serving the purposes of the poor because a rising tide raises all boats.
Across the field, the opposing team has a different patriotic idea. Labor, not capital, is what creates wealth. The “profits” to be taxed are nothing more than the sweat stolen off the backs of an exploited working class. In the same way that “progressives” are employed to soften the extreme views of capitalism, liberals employ themselves to soften hard-core leftist ideas. Why should only one form of income be exempt? Society needs that money. If you give more of it to us, they argue, then we will spend it on the people, and they in turn, will buy your products thus creating more wealth for you, and ultimately serving the purposes of the rich because a rising tide raises all boats (and no revolution).
These are the tired, worn-out, and transparently self-serving ideas we wish to turn the page on. How do we get through the flaks on both sides and make this case?
Times have changed. Capitalism has long since entered into an entirely new stage that neither existed nor was anticipated when those old arguments had traction.
Manufacturing is no longer the engine of our economy. We don’t produce, we finance production. Globalization, that descent towards coolie wages, has led much of our industry and capital “offshore”. Arguments that do not take those changes into account are simply moot.
When “American” industry and “American” capital expand and invest, they are often doing so somewhere else. Thus, the argument made in favor of lower taxes to spur investment can no longer be considered viable. Certainly more money will be re-invested in the country, the only problem is it won’t be our country. Where previously it could be argued that starving health, education, culture, and infrastructure would be offset be private investment and wealth creation; the argument is now, absurdly, that we should starve our public sector in order to promote the health, wealth, culture and prosperity of someone else’s country.
Like battleship admirals, these obsolete ideas must be sunk. If we must keep these intellectual hulks around we can, like Billy Mitchell, use them for target practice while we hone our skills in forming the new consensus. That consensus must include the realization that an economic philosophy developed to further the interests of an industrial powerhouse that exported its excess production, is not consistent with the realities of an energy needy import dependent debtor nation. We need new, appropriate, ideas that we can ride into the future like a great thresher separating the wheat from the chaff.
One idea would be graduated capital gains taxes. Taxes based on actual, rather than theoretical, investment in America. When capital gains are earned from investing in American companies that produce demonstrable growth and jobs here, then, and only then, will we say “okay”, you’ve earned a healthy discount. Everybody else pays full fare.
These are the kinds of arguments that put rhetoric to the test. They are of the “put up or shut up” variety. If you really believe that lower capital gains taxes are better for America, you can’t possibly object to creating several classes of investment; those that benefit America, and those that don’t. What worker would object to a tax break for the wealthy if he or she understood that his or her job was created by that tax break?
Just as important, for those of us desperately yearning for the emergence of the “new”, this type of approach will quickly show who is, and who isn’t, really on board.