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Friday, July 13, 2012

Paul Krugman: Who’s Very Important?

The wealthy aren't anywhere near as important as they think they are:

Who’s Very Important?, by Paul Krugman, Commentary, NY Times: “Is there a V.I.P. entrance? We are V.I.P.” That remark, by a donor waiting to get in to one of Mitt Romney’s recent fund-raisers in the Hamptons, pretty much sums up the attitude of America’s wealthy elite. Mr. Romney’s base — never mind the top 1 percent, we’re talking about the top 0.01 percent or higher — is composed of very self-important people.
Specifically, these are people who believe that they are, as another Romney donor put it, “the engine of the economy”; they should be cherished, and the taxes they pay, which are already at an 80-year low, should be cut even further. Unfortunately, said yet another donor, the “common person” — for example, the “nails ladies” — just doesn’t get it.
O.K., it’s easy to mock these people, but the joke’s really on us. For the “we are V.I.P.” crowd has fully captured the modern Republican Party.. And there is, of course, a good chance that Republicans will control both Congress and the White House next year.
If that happens, we’ll see a sharp turn toward economic policies ... especially solicitous toward the superrich — I’m sorry, I mean the “job creators.” So it’s important to understand why that’s wrong.
The first thing you need to know is that America wasn’t always like this. When John F. Kennedy was elected president, the top 0.01 percent was only about a quarter as rich ... and ... paid much higher taxes... Yet somehow we managed to have a dynamic, innovative economy that was the envy of the world. ...
What about the argument that we must keep taxes on the rich low lest we remove their incentive to create wealth? The answer is that we have a lot of historical evidence ... and none of it supports the view that ... tax-rate changes ... currently on the table ... would have any major effect on incentives. Remember when all the usual suspects claimed that the economy would crash when Bill Clinton raised taxes in 1993?
Furthermore, if you’re really concerned about the incentive effects of public policy, you should be focused ... on workers making $20,000 to $30,000 a year, who are often penalized for any gain in income because they end up losing means-tested benefits like Medicaid and food stamps. ...
So, are the very rich V.I.P.? No, they aren’t — at least no more so than other working Americans. And the “common person” will be hurt, not helped, if we end up with government of the 0.01 percent, by the 0.01 percent, for the 0.01 percent.

    Posted by on Friday, July 13, 2012 at 12:24 AM in Economics, Politics | Permalink  Comments (126)


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