Brain strain:
A recent ECONOMIST article (True Progressivism ECNOMIST vol. 405 no. 8806 October 13, 2012 page 13) lists twenty four ways in which to improve the economy. Most will seem familiar to readers of the journal but are not particularly mentioned in current political campaigns.
Some, such as making sure that the European common market makes a common market of almost everything might invite demur, but by and large they seem like good ideas. The amazing thing is that there is so much unfinished business in public life. These things should mostly have been done years ago.
And thereby hangs the real crisis. The problem is not that there are no ideas. The problem is that too few people take any interest in ideas at all.
Just for instance, in the United States the money you make sweating over a machine in the hot sun is taxed as ordinary income. The money you make buying and selling stocks or currency is taxed the same way. But if you buy a piece of a business and hold it for more than five years it is taxed less heavily because you can call it long term capital gains.
The logic of that is that it is to society’s benefit that investments be made in and value given to long term success. Moving money around means moving people around by and large and disrupting people’s lives is a bad thing. So far so good.
On the other hand over the last thirty years there has been a dramatic shift in who has the money. In the 1980’s the top .01%, the ludicrously rich, had 1% of the wealth. They now have 5%. Just multiply your current income and assets by five and you can get a feel for how well they’ve done. (Yes, I know. Lots of people have more debt than assets, but you get my drift.)
So investments have done well. Reducing the difference between capital gains taxes and regular income makes eminently good sense. The concentration of wealth is now greater than the concentration that triggered the Great Depression. If there were not more important issues, basically demographics, there would be cause for concern.
Of course demographics lies at the heart of the issue. Those ludicrously rich may be having more babies than others, maybe not, but it is unquestionable that they do not have the enormous families that rich people had say in the nineteenth century. So the pool of talent that should keep them productive is not there. Even being rather unproductive of course, they keep on getting richer. Education is part of it. According to the journal the teachers’ unions have done more damage to America, have contributed more to inequality, than all the plutocrats combined. My own mother saw that coming in the 1950’s and made a small career of trying to assure that teachers knew what they were teaching rather than simply being cogs in the academo-administrative machine. It was all in vain, of course. You see I come by the tendency honestly.
Too few bright and educated people with backgrounds of generations in crucial fields equals too few good ideas put into practice while dozens of arguably good ideas lie fallow.
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