The fruits of economic growth

In today’s New York Times Paul Krugman points out that if you run the numbers the plan to privatize Social Security has contains a Catch 22. For it to work you need to have extremely healthy stock returns for 70 years. He’s an economist, he assumes strong economic growth would drive that. He then points out that if we’re having strong economic growth payroll tax revenue will rise too. Opps, wait, how embarrassing. Wouldn’t rising payroll taxes eliminate the “crisis.” Indeed they would.

But is this truly a Catch 22? It assumes that capital and labor will split the fruits of economic growth? That’s an old fashion idea; strong economic growth need not lead to rising payroll taxes. Consistently over the last 25 years the split between capital and labor has shifted sharply toward capital. Shifts in the tax system, shifts in the wealth/income distribution have worked to assure that. That’s what Republicans do. That’s their goal and they have been succeeding. There is no Catch 22 here, just another symptom of a consistent plan. Capital gains is most moral.

0 thoughts on “The fruits of economic growth

  1. Ben Hyde

    Doug suggests I read an article by George Will. Don’t bother. I’ll summarize. Will beats a retreat from the crisis rhetoric. Then he substitutes moral certainty declaring that philosophy ought to guide our actions here. Then he names his philosophy freedom, so as to get a bit of demagoguery in to the column. But wait, he hasn’t dis’d the opposition yet, not to worry he then ties them to Marx. Finally, just to give the column the patina of reasonable discourse he suggests that some of his fellow travelers might suffer from hubris rather than moral clarity. What a waste of my time that was.

  2. Doug

    Ah, the statements of someone who is interested in reasonable discourse… I had a much longer rebuttal, but why bother.

  3. Ben Hyde

    Projection! I didn’t introduce an insistence on moral certainty, an blithe dismissal of future projections, and I didn’t suggest that support for Social Security was a delusion directly derived from Marx. So if you want reasonable discourse you got a mess of back peddling on your plate. Chow down.

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