August 13, 2004

#164: Poster boy for the redistributionist Democrats...

P. Krugman

In April of this year John Kerry declared famously that he was "not a redistribution Democrat." "Fear not," he went on, "I am not somebody who wants to go back and make the mistakes of the Democratic Party of 20, 25 years ago. Nor am I somebody who believes that Washington has all the answers."

Well, apparently Paul Krugman did not get that memo. In Bush's Own Goal (08/13/04) he launches a broadside against President Bush's "ownership society" campaign theme largely on grounds that it would conflict with measures to promote more equality. So if you want a poster boy for the "mistaken" redistributionist Democrats of 25 years ago, look no further.

But let's back up. First of all, the ownership society has been around and growing for many years and is likely to continue to progress regardless. That's the way capitalist societies evolve. Bush may be a little ahead of the curve in pressing ownership as a campaign theme, but there is little doubt that in another 10 years or so neither party can win without the "investor vote."
Second, with regard to taxes, most economists would prefer taxes on consumption only. Or, put another way, they would ask, why on earth would one want to tax capital income? Investments in innovative capital goods are the growth engines of a free economy. Taxing capital is the modern day equivalent of eating the golden goose and reducing or elimination such taxes is a key element of Bush's ownership initiative. (By the way, a consumption tax does not have to be a sales tax. It can as well be an income tax that exempts capital income from taxation. It can even be progressive).

Krugman, of course, is having none of this. A redistributionist to the end, he's a divider, not a creator. He would rather split the pie more evenly than have it grow more rapidly. In addition, like most lefties, the thought of people owning and controlling more of their wherewithal and being less dependent on government for retirement, health care, education, etc., is like a shot to the solar plexus. It really hits them where they live. Here's how Krugman whistles past this particular graveyard:

"Conservatives like to point out that a majority of American families now own stock, but that's a misleading statistic because most of those "investors" have only a small stake in the market." "If the "ownership society" means anything, it means spreading investment income more widely - a laudable goal, if achievable."
Open your eyes, PK, it's happening! Right under your nose.

[The Truth Squad is a group of economists who have long marveled at the writings of Paul Krugman. The Squad Reports are synopses of their discussions. ]

Posted by John Weidner at August 13, 2004 7:42 AM
Weblog by John Weidner