Paying Our Way

Complaining about taxes is more American than mom and/or apple pie. People clearly resent having to pay them, work hard at minimizing and/or evading them, and use sayings that yoke their payment to death (“nothing is sure but death and taxes..”)

Dissing taxes is just deeply embedded in the culture. That negativity obscures what would otherwise be obvious; taxes are the “dues” we pay for our membership in society.

I have always wanted to do a cost/benefit analysis, comparing what we get for paying those dues with what we would pay on the open market for the same services. (Garbage collection versus scavenger services, police versus private security, etc. etc.) I lack the data and the expertise to perform that analysis (how do I value paved roads or public parks?), but I look longingly at Scandinavian countries with tax burdens that are not–despite the mythology- much higher than our own combined burden, while relieving citizens from the costs of higher education and health care.

Admittedly, America’s tax system is manifestly unfair–and for the obscenely rich who can afford the very best accountants and lawyers, U.S. taxes are easy to evade.

If taxes are–as I insist–our dues for membership, the assessment of those dues should be equitable–and the system should be transparent enough to persuade taxpayers that everyone is paying a fair share. As economists and pundits never tire of pointing out, the American tax system is both ridiculously complex and wildly tilted in favor of the wealthy.

One of the most vocal of those critics is Robert Reich. Reich was Labor Secretary under President Bill Clinton; he now teaches at Berkeley, and he is among the many economists who have pointed out the folly of those repeated tax cuts for the rich.  Such cuts remain a GOP article of faith, despite the fact that the supposed benefits of such cuts have never materialized.

Last year, Reich penned an essay advocating increased taxes on the rich, and providing 7 ways those taxes might be levied. As he said in his introductory paragraphs

Income and wealth are now more concentrated at the top than at any time over the last 80 years, and our unjust tax system is a big reason why. The tax code is rigged for the rich, enabling a handful of wealthy individuals to exert undue influence over our economy and democracy.

Conservatives fret about budget deficits. Well, then, to pay for what the nation needs—ending poverty, universal health care, infrastructure, reversing climate change, investing in communities, and so much more—the super-wealthy have to pay their fair share.

Reich followed up with “seven necessary ways to tax the rich,” including such items as repealing the Trump tax cuts, imposing a wealth tax on those he designated as the “super wealthy”, raising the top marginal rate, taxing stock transactions (he says a tax of just $1 per $1,000 trade would raise $777 billion over a decade), and closing various loopholes.  (Just closing the carried interest loophole is estimated to raise $14 billion over a decade.)

Biden has already taken one of the seven steps Reich enumerated–giving the IRS sufficient funding to conduct audits and go after the federal income taxes currently being evaded by the rich. He calculates that just going after  the richest 1 percent would generate $1.75 trillion over the decade.

As Elizabeth Warren has long argued, a wealth tax imposed on the super-wealthy should be a no-brainer.

Wealth is even more unequal than income. The richest 0.1% of Americans have almost as much wealth as the bottom 90 percent put together. Just during the pandemic, America’s billionaires added $1.3 trillion to their collective wealth. Elizabeth Warren’s proposed wealth tax would charge 2 percent on wealth over $50 million and 3 percent on wealth over $1 billion. It would only apply to about 75,000 U.S. households, fewer than 0.1% of taxpayers. Under it, Jeff Bezos would owe $5.7 billion out of his $185 billion fortune—less than half what he made in one day last year. The wealth tax would raise $2.75 trillion over a decade, enough to pay for universal childcare and free public college with plenty left over.

I’m not so naive as to think these changes to the tax code would make the rest of us sing happy songs as we paid our taxes, but a system where everyone is obviously paying a fair share would go a long way toward mollifying a lot of us.

I’m also not sufficiently naive to think that these changes have a chance in hell of passing a GOP-majority House.

Eventually–if the culture wars subside, and we elect people actually interested in governing–we might emulate countries with better cost/benefit ratios.

We can hope…


Restraining Power

The growing concerns about social media–especially platforms’ moderation of users’ posts–are just the most recent and visible examples of an older conundrum: how do we define and restrain the misuse of power?

When the U.S. Constitution was drafted, concerns about the infringement of individual rights focused almost entirely on government, because only government entities had the power to prescribe and proscribe individual behaviors and punish those who failed to conform. Accordingly, the Bill of Rights restrained only government (initially, only the federal government, which was seen as a greater threat than the state and local units of government that were included in its prohibitions after passage of the 14th Amendment.)

To state the glaringly obvious, in the 200+ years since passage of the original Bill of Rights, a lot of things have changed.

Governments aren’t the only entities exercising considerable authority over our lives–major corporations, a number of them global in scope, not only influence government but engage in negative behaviors that directly affect millions of people, from polluting the environment to exploiting third-world labor. Scholars have belatedly come to question whether the Bill of Rights shouldn’t be applied more broadly–to restrain all entities large enough or powerful enough to invade individual rights.

I have absolutely no idea how that might work.( It probably wouldn’t.) /That said, we are at a point where we absolutely must contend with the inordinate power exercised by private, non-governmental organizations, and especially by Facebook, Twitter, et al.

Robert Reich addressed that problem in a recent essay for the Guardian.

Twitter and Instagram just removed antisemitic posts from Kanye West and temporarily banned him from their platforms. It just goes to show … um, what?

How good these tech companies are at content moderation? Or how irresponsible they are for “muzzling” controversial views from the extreme right? (Defenders of West, such as the Indiana attorney general, Todd Rokita, are incensed that he’s been banned.) Or how arbitrary these giant megaphones are in making these decisions? (What would Elon Musk do about Kanye West?)

 Call it the Kayne West paradox: do the social media giants have a duty to take down noxious content or a duty to post it? And who decides?

As Reich quite accurately notes, these platforms, with their huge size and extraordinary power over what’s communicated, exert enormous sway over the American public. And they are utterly unaccountable to that public.

Two cases pending before the Supreme Court illustrate the underlying dilemma:

One case involves Section 230 of Communications Decency Act of 1996. That section gives social media platforms protection from liability for what’s posted on them. In that case, plaintiffs claim that social media ( YouTube in one case,Twitter in the other) led to the deaths of family members at the hands of terrorists. In another case, the plaintiffs are arguing that the First Amendment forbids these platforms from being more vigilant. That case arises from a Texas law that allows Texans and the state’s attorney general to sue  social media giants for “unfairly” banning or censoring them based on political ideology.

It’s an almost impossible quandary – until you realize that these questions arise because of the huge political and social power of these companies, and their lack of accountability.

In reality, they aren’t just for-profit companies. By virtue of their size and power, their decisions have enormous public consequences.

Reich is betting is that the Court will treat them as common carriers, like railroads or telephone lines. Common carriers can’t engage in unreasonable discrimination in who uses them, must charge just and reasonable prices, and must provide reasonable care to the public.

But is there any reason to trust the government to do a better job of content moderation than the giants do on their own? (I hate to imagine what would happen under a Republican FCC.)

So are we inevitably locked into the Kanye West paradox?

Or is there a third and better alternative to the bleak choice between leaving content moderation up to the giant unaccountable firms or to a polarized government?

The answer is yes. It’s to address the underlying problem directly: the monopoly power possessed by the giant social media companies.

The way to do this is apply the antitrust laws – and break them up.

My guess is that this is where we’ll end up, eventually. There’s no other reasonable choice. As Winston Churchill is reputed to have said: “Americans can always be trusted to do the right thing, once all other possibilities have been exhausted.”

It’s hard to disagree. And actually, a far more aggressive approach to anti-trust would solve more problems than those we are experiencing with social media…


Civic Education– One More Time

In a recent essay, Robert Reich asked a supremely important question: how do we educate for the common good? His answer echoed my own belief–reiterated constantly on this blog and elsewhere– that we need to do a much, much better job of civic education.

Reich began

I think about those 19 children who were murdered in their classroom on Tuesday, and feel the need to go back to basics — to the common good. Given the the difficulty of enacting sensible laws to reduce gun violence — which reflects in part the deepening split between Americans who believe in democracy and those who are throwing in their lot with Trump authoritarians — the question I keep coming back to is: what can we can do to rekindle a sense of common good?

One of the most important initiatives would be to restart civic education in our schools.

Reich anticipates the nay-sayers, who will undoubtedly point out that our public schools are under a fierce and unremitting  attack from the Right, putting  school boards, educators, and students “in the crosshairs of culture warriors.” But he suggests that– paradoxically– “this might be exactly the right time to push for civic education.”

Why is the time right? And why does Reich link civic education to the common good? What’s wrong with the status quo?

Among other things, the essay points to what is a hot-button issue for me: the widely-accepted belief that education is basically a consumer good–that it is indistinguishable from job training.

Today, most people view education as a personal (or family) investment in future earnings. That’s one reason so much of the cost of college is now put on students and their families, and why so many young people graduate with crippling college loans. (When education is seen as a personal investment yielding private returns, there’s no reason why anyone other than the “investor” should pay for it.)

As regular readers of this blog know, that equation of education with an investment in future earnings drives me absolutely up the wall. Not only is genuine education a far broader benefit to the individual, it is–as Reich writes–a public good that builds the capacity of the nation to govern itself.

Franklin and America’s other founders knew how easily emperors and kings could mislead the public. The survival of the new republic required citizens imbued, in the language of the time, with civic virtue. “Ignorance and despotism seem made for each other,” Jefferson warned. But if the new nation could “enlighten the people generally . . . tyranny and the oppressions of mind and body will vanish, like evil spirits at the dawn of day.”

Reich traced the history of public education, and the civic motivations of those who insisted upon its importance:

The person most credited with founding American public schooling, Massachusetts educator Horace Mann, directly linked public education to democracy. “A republican form of government, without intelligence in the people,” he wrote, “must be, on a vast scale, what a mad-house, without superintendent or keepers, would be on a small one.” Mann believed it important that public schools educate all children together, “in common.” The mix of ethnicities, races, and social classes in the same schools would help children learn the habits and attitudes of citizenship. The goal extended through higher education as well. Charles W. Eliot, who became president of Harvard in 1869, believed “the best solution to the problem of national order lay in the education of individuals to the ideals of service, stewardship, and cooperation.”

The essay concludes with what Reich calls the six elements of civics education. I particularly liked numbers 5 and 6:

Such an education must encourage civic virtue. It should explain and illustrate the profound differences between doing whatever it takes to win, and acting for the common good; between getting as much as one can get for oneself, and giving back to society; between seeking personal celebrity, wealth, or power, and helping build a better society for all. And why the latter choices are morally necessary.

Finally, civic virtue must be practiced. Two years of required public service would give young people an opportunity to learn civic responsibility by serving the common good directly. It should be a duty of citizenship.

A concerted emphasis on civic virtue might eventually change the nature of America’s social incentives, which now are disproportionately weighted toward rewarding greed and celebrity. And–again, as regular readers know, I have long been an advocate for a year or two of mandatory public service.

As Reich concedes, there’s no guarantee that improving and focusing on civic education will lead to more civil and informed discourse, or make us more able to enact sensible legislation.

But it sure couldn’t hurt.


Blue City, Red State, Home Rule

In the wake of Amazon’s choice of location for headquarters #2 (and the announcement that it was breaking the choice into two, one to be located in Queens and one in Crystal City–essentially, Washington, D.C.), Robert Reich wrote a provocative essay for Newsweek.

What does Amazon’s decision have to do with America’s political tumult? Turns out, quite a lot.

Amazon’s main headquarters is in Seattle, one of the bluest cities in the bluest of states. New York and metropolitan Washington are true-blue, too.

Amazon could have decided to locate its second headquarters in, say,  Indianapolis, Indiana. Indianapolis vigorously courted the firm. It’s also a Republican city in a bright red state.

Actually, Indianapolis–like every other sizable city in the country–is unambiguously blue. But we are located in a very, very red state.

Reich’s main point was that technology is a process of “group learning,” and it advances best in geographical clusters. Those clusters are primarily found along the coasts, where the digital economy has been a real boon. But Reich says that economy has left behind much of the rest of the country, with the result that we are facing what he calls “the widening inequalities of place.”

As money pours into these hubs, so do service jobs that cater to the new wealth—pricey lawyers, wealth managers, and management consultants, as well as cooks, baristas, and pilates instructors.

Between 2010 and 2017, according to Brookings, nearly half of the America’s employment growth centered in just 20 large metro areas, now home to about a third of the U.S. population.

Relative to these booming hubs, America’s heartland is becoming older, less well-educated, and poorer.

I think the reality of “America’s heartland” is more complicated than Reich recognizes. And that takes me back to his mistaken assumption that Indianapolis is a Republican city.

Cities in even the brightest red states have been blue for some time. We form what has been dubbed an “urban archipelago.” Furthermore, the inhabitants of these cities are engaged in a multitude of creative place-making, job-creating and poverty-reducing efforts.

Here in Indianapolis, for example, Community Development Corporations partner with the City, the Chamber of Commerce and a variety of nonprofit organizations to improve transit, health, education and job training, and to remove barriers to self-sufficiency. People may disagree about the likely efficacy or unintended consequences of this or that initiative, but the range of activity–and the good will motivating it–is impressive.

Indianapolis’ problem (which is not shared by every blue island swimming in a rural sea of red) can be found in Reich’s second descriptor: our red state. It isn’t Republican control of Indiana that’s the problem; it’s the fact that we are a state in which there is no meaningful home rule. Public officials in Indiana cities must go hat-in-hand to the state legislature (currently governed by an unimaginative GOP super-majority) to pursue many of the policy initiatives that other cities have authority to pursue as a matter of course.

Want to charge extra for plastic bags? No can do, sayeth our legislative overlords. In just the last few years, the Indiana legislature has also prevented cities from setting local minimum wages, and  from regulating housing, agricultural operations and worker schedules, among other things.

Perhaps the most egregious example of legislative arrogance involved Indianapolis’ proposal to tax ourselves to upgrade our inadequate transit system. It took three years just to get the legislature’s permission to hold a vote on the matter, and even then, the enabling legislation prohibited us from considering light rail. Why? Who knows?

As a column in the Indianapolis Star noted,  

A move to preempt local rules for services like Airbnb failed to get out of the Indiana House, but it was a rare setback for the never-ending march to scale back home rule. This year legislators successfully banned local zoning rules for certain utility poles and undermined so-called “good neighbor ordinances.”

(“Good neighbor” ordinances hold tenants accountable when they repeatedly inflict crimes and nuisances on their neighbors.)

The attorney who authored the column shared a number of other examples, and made a compelling case for giving greater authority to the people elected to govern municipalities.

The lack of ability to make our own decisions, based on the needs of our own residents, isn’t just making us less competitive for Amazon-sized sweepstakes.It is preventing us from improving everything from education to infrastructure to the quality of life in our city. Legislators who mostly represent the Indiana hinterlands consistently prevent us from reaching our full potential as a thriving urban oasis in a rural state that isn’t doing so well.

Urban residents of Indianapolis suspect that’s intentional.


Conspiracy Theories

I’m not much for conspiracy theories.

In my long-ago days in City Hall,   we often encountered folks–sometimes they were neighborhood activists, sometimes representatives of organizations aggrieved about some action–who were absolutely convinced that city officials had cleverly and surreptiously implemented a plan to screw them. What they didn’t understand was that we lacked the cunning and imagination needed to carry out the nefarious plots they attributed to us. As a former co-worker used to say,  incompetence explained so much more than conspiracy.

But just because most accusations of intentional conspiracies tend to come from paranoid folks doesn’t mean that  bad behavior is never intentional.  (As the old saying goes, even paranoids have enemies.)

Which brings me to an unsettling theory advanced by Robert Reich in a recent blog post.

Robert Reich, as most readers know,  was Secretary of Labor in the Clinton Administration. He now teaches at Berkeley. His politics tend to be considerably to the left of mine; that said, however, his is a credible and very respectable voice, and he is not given to conspiracy theories.

Reich writes about persistently high unemployment, and the unwillingness of Congressional Republicans to do anything about it. These are facts. Unemployment remains high, and the House GOP remains stubbornly opposed to even the most reasonable measures to address that problem. The question is, why? Reich dismisses the notion that Republican obstinacy is entirely due to hatred of President Obama (aka the black guy in the White House).

First, high unemployment keeps wages down. Workers who are worried about losing their jobs settle for whatever they can get — which is why hourly earnings keep dropping. The median wage is now 4 percent lower than it was at the start of the recovery. Low wages help boost corporate profits, thereby keeping the regressives’ corporate sponsors happy.

Second, high unemployment fuels the bull market on Wall Street. That’s because the Fed is committed to buying long-term bonds as long as unemployment remains high. This keeps bond yields low and pushes investors into equities — which helps boosts executive pay and Wall Street commissions, thereby keeping regressives’ financial sponsors happy.

Third, high unemployment keeps most Americans economically fearful and financially insecure. This sets them up to believe regressive lies — that their biggest worry should be that “big government” will tax away the little they have and give it to “undeserving” minorities; that they should support low taxes on corporations and wealthy “job creators;” and that new immigrants threaten their jobs.

I suppose this theory doesn’t really amount to a conspiracy, but it does suggest that the GOPs blocking maneuvers are prompted by actual reasons, no matter how much their behavior resembles a two-year-old’s tantrum.

If Reich is correct–and I’m still dubious–members of the House GOP are both smarter and much more despicable than I had previously imagined.