Sunday, March 18, 2012

Romer: Ends Justify Means. Period.

In an extensive and detailed piece in the New York Times, former chair of Obama's Council of Economic Advisers Christina Romer attempts to prove that there are no real economic benefits--or at best, very small ones--to lowering marginal tax rates. To do so, she flexes her intellectual muscles by pulling together some studies--including one she did with her husband--and looking back at the history of income rates and economic performance.

There's a lot to criticize here, a great number of faulty assumptions she makes (though ones common to many economists in academia these days). But rather than doing that, let's instead focus on the last paragraph of the piece where we will learn a deep-seated truth about ideology and how it often controls one's point if view. Romer writes:
Finally, income inequality has surged in recent decades. Raising marginal rates on the wealthy is a straightforward, effective way to counter this trend, while helping to solve our looming deficit problem. Given the strong evidence that the incentive effects of marginal rates are small, opponents of such a move will need a new argument. Invoking the myth of terrible supply-side consequences just won’t cut it.
First, note the laughable assumption about "strong evidence" and the incentive effects of marginal rates. She thinks--in this one piece--that she has actually provided this evidence, that it's settled and there are no legitimate issues or counter opinions. But again, we're not going to get into that; it's enough to see her absolute certainty with regard to her own opinion on the matter (a certainty which--we should remember--once led her to declare that the Stimulus bill would keep unemployment below 8%).

Now with that said, look at the ideology informing this paragraph. It's an ideology which sees "income inequality" as a problem that needs to be fixed, not by delving into the real "why" behind it, or even by investigating exactly what the nature of the problem is, but simply by finding a way--through government policy--to "counter" it.

In Romer's worldview, right and wrong, good and bad, justice and injustice are just words to be appended on to whatever is desired or opposed. Reality is measured only by numbers. Thus, income inequality--meaning the disparity of incomes between the top and the bottom--is wrong simply because of the numbers. The more it increases, the more wrong it is. So if there is a way to decrease it, that's the yardstick. Decreasing income inequality is--by definition--good. The means are actually inconsequential.

In this particular case, Romer is advocating increasing income tax rates on the rich as the means. And raising those rates is good--and fair, and right, and just--simply because of her predicted result (nevermind if it actually achieves the result). Ends justify means. Period. End of story. A better encapsulation of the modern liberal/progressive worldview would be hard to find.

And note the corollary of this assumption: personal property--in this case income--ultimately belongs to the government, first and foremost, and it can be taken freely by the government to solve whatever society-wide problem its agents might perceive. For nowhere is there any attempt to justify why a given rate should be raised to a new number, no attempt to show why it's currently too low.

To make it personal, suppose you have an income of $500k. Assume you pay $175k in income taxes a year (an overall rate of 35%; this is just an example).  Let's be clear on that. $175,000 per year. This is what you owe the government. For what? Well, under the social compact (or social contract) theory of government--the theory that informs our Constitution--you owe the money for services (or potential services) rendered by the government. As I noted in a previous piece:
Taxation has a simple goal: to fund the government. And it is based--in nations founded on a social compact theory--on a simple standard: pay for service rendered. Taxation is not tribute. Taxation is not punishment. Citizens pay taxes because the government serves their interests, provides security, and manages the laws and rules of society. That's all there is, there isn't anymore.
So, if rates are increased and your theoretical tax burden--for the same $500k--goes up to $200k, a legitimate question would be...why? Romer's answer--along with Obama's and others' of their ilk--is "because you have too much money...oh, and also because the federal government can't control its spending." Obviously, the second part is significant too, but we're not even discussing it here. Just the first part, the idea that you have too much and should have less. As I noted in the "social contract" piece linked to above:
The Social Contract provides security and a basic structure of society to allow citizens to live their lives, to take the risks they want to take, to earn a living, to accumulate or not accumulate wealth as they see fit, within the rules established and enforced by government. It's nothing more than that. It's not a mandate to level society, to redistribute wealth, or the like. Exactly the opposite. It's an agreement that--per the Constitution--this won't happen, that property is the individual's and cannot be arbitrarily confiscated.
For Romer--and again Obama, by association--this is not the case; the premise underlying the Constitution is freely ignored. The fundamental protections of the Constitution are things to be overcome, not enshrined, in the name of serving an ideology that sees society as something to be "fixed." You can be "asked" to pay more taxes--unlike other citizens with lower incomes--simply because the government has decided that you can pay more taxes.

Romer--in the quoted bit--says that her ideological opponents "need a new argument." She doesn't understand the one they're making now. At all. She is tragically clueless.

Cheers, all.


  1. I have to comment, because I'm Australian and honestly don't follow American politics at all - not in the slightest. But I loved this post! Haha I don't know what it was but I was sucked in to reading the whole thing :D Good work!

  2. :)

    As I began reading that comment, I feared there would be links to some unrelated product at the end. Thanks for reading and commenting.