All Your Labor Are Belong to Us
Jim Lindgren over at the Volokh Conspiracy posts Rahm Emanuel’s, Obama’s reported choice for his Chief of Staff, vision of America.
Excerpt from Emanuel and Reed’s The Plan/Big Ideas for America:
America has plenty of unfinished business, and all of the reforms we’d like to see — some of which appear in this book — would make for a very long list. But if we’re going to turn the country around, we need a bold agenda that can be counted off on one hand:
1. A new social contract — universal citizen service, universal college access, universal retirement savings, and universal children’s health care — that makes clear what you can do for your country and what your country can do for you.
2. A return to fiscal responsibility and an end to corporate welfare as we know it.
3. Tax reform to help those who aren’t wealthy build wealth.
4. A new strategy to use all America’s strengths to win the war on terror.
5. A Hybrid Economy that cuts America’s gasoline consumption in half over the next decade.
A new social contract, or what you can do for your country and what your country can do for you
The economy of the twenty-first century demands new skills and will require all of us to live up to new responsibilities. We believe that four mutual obligations that follow should represent the first terms of a new contract between the people and their country.
Universal Citizen Service
If you forget everything else you read in these pages, please remember this: The Plan starts with you. If your leaders aren’t challenging you to do your part, they aren’t doing theirs. We need a real Patriot Act that brings out the patriot in all of us by establishing, for the first time, an ethic of universal citizen service.
Universal College Access
We must make a college degree as universal as a high school diploma. More than ever, America’s success depends on what we can learn. We have an education system built in the last century, with a school year left over from the century before that. In this new era, college will be the greatest engine of opportunity for our society and our economy. Just as Abraham Lincoln gave land grants to endow our great public universities, we will give the states tuition grants to make college free for those willing to work, serve, and excel.
Universal Retirement Savings
From now on, every job ought to come with a 401(k). An aging society cannot afford to keep saving less and risking more. We need new means to create wealth, based on the needs and responsibilities of twenty-first-century employees and employers. Employers should be required to offer 401(k)s, and workers will be enrolled unless they choose otherwise. If they switch jobs, they can take these accounts with them. When their paycheck goes up, so will their savings. Instead of a work force in which only half the workers have retirement savings plans, every American will have one.
Universal Children’s Health Care . . .
A return to fiscal responsibility and an end to corporate welfare as we know it . . .
Tax reform to help those who aren’t wealthy build wealth . . .
A new strategy to win the war on terror . . .
A hybrid economy that cuts America’s gasoline use in half . . .
Ask what you can do for your country
The premier component of the new social contract The Plan promotes between citizens and their government is universal citizen service. . . .
John Kennedy was right: A nation is defined not by what it does for its citizens but by what it asks of them. If your leaders aren’t challenging you to do your part, they aren’t doing theirs. We need a real Patriot Act that brings out the patriot in all of us by establishing for the first time an ethic of universal citizen service. All Americans between the ages of 18 and 25 should be asked to serve their country by going through three months of basic civil defense training and community service. This is not a draft, nor is it military. Young people will be trained not as soldiers, but simply as citizens who understand their responsibilities in the event of a natural disaster, an epidemic or a terrorist attack. Universal citizen service will bring Americans of every background together to make America safer and more united in common purpose.
Kind of…well scary. The idea of making college access as universal as a high school diploma…and just as worthless in terms of finding a job. Great. Universal–i.e. mandandtory service to one’s country. We can’t pay you for it, at least not enough to get you to do it without the gun to your head, so we’ll put the gun to your head. Nevermind that you are not bringing out the patriot in me when you push a gun up to my head and demand my labor. And this notion of a social contract…what a load. You can’t have a contract where one side has a loaded gun and is willing to use it and the other side does not. The universal/mandantory savings almost makes me laugh. Here is this guy saying how important it is that people save, but at the same time he fully supports and wants to expand programs that discourage savings.
This whole document is something of a statist/authoritarians wet dream. Demanding service of its citizens, telling them what they can and can’t do (you are saving too much, too little, give your labor to your country at a discounted price at best, etc.). That freedom thing was over-rated anyways.
Steve – try getting a job with a B.A. It already is.
What if the “gun” is access to entitlement benefits? I’m pretty sure the 13th amendment will make it impossible to compel service, but I hardly see that making contribution a condition of participation as a negative (after all, isn’t this basically the idea that the republicans pushed as a method to reform welfare?).
Now you’re starting to sound like a welfare queen. “I shoud be free not to contribute but I should still get to reap the benefits of society.” It just doesn’t work that way under a conservative ethos. You should be free – to be homeless, destitute and shunned. Otherwise, a little help isn’t much to ask in exchange for civilization.
ZOMG! Authoritarianism! Let us list the parade of horribles:
An “ethic” of Universal Service! Slavery!
Instead of having to opt-in to a 401k plan, you have to opt-out! Forced savings!
Universal college access! Brainwashing!
Tax reform! Confiscation of wealth!
I’m sure after four years of implementation by loaded gun, people will be wishing for the good old days of freedom under the Bush Administration, with its indefinite detention without trial, illegal spying on American citizens, politicalization of the Justice department….
I think you’re assuming the worst when you read this. None of these items are scary, or even bad, as goals. As long as the use the carrot, and not the stick, to approach those goals, I don’t see an issue.
The problem is simple. What do you do if the carrot doesn’t work? You bring out the stick. This is the essential problem with utopianism.
When you don’t do as your betters instruct you, they punish you with fines, then imprisonment, then death.
Ultimately, it is the false belief that if only people were better, and believed as they are supposed to, everything would work out.
And if they aren’t better, by god we’ll make them better, or shut them up, or force them out of business, and eventually, we’ll have them removed.
Only if you’re unwilling to accept failure.
No, that is the problem with perfectionist utopianism.
For me, this plan is based on the belief that if we ask people to be better, and make it easier for them to be better, than enough of them will be better to make it worth doing. Nowhere in this plan does it say that reaching the goals in mandatory, only that those are the goals we should be trying to reach.
I read this as using the reduction or elimination of entitlements as the stick, not further fines.
Not saying I agree with this particular plan, but I am all for making anyone who receives public funds earn it.
Uhhmmm no. Corporate profits are a positive contribution to society in general. Going about one’s daily life–i.e. working, buying things one needs/wants, not breaking the law, etc. contributes to society. So the allegation of being a welfare queen is just laughable.
And shouldn’t I be the one to decide how much volunteering I do? Once it becomes mandantory it isn’t volunteering anymore.
Okay, how about indentured servitude? Seriously, forcing one to provide a service isn’t usually seen as a good thing. And if it is universal, then it is mandantory–i.e. something you must do.
Ahhh I love that binary thinking. He doesn’t like these ideas proposed by the guy who is likely to be Obama’s Chief of Staff and has some overlap with Obama himself, therefore he must love Bush and the Bush era. WTF, did you fail logic?
Fine, the eliminate the tax on savings. Get rid of social security and medicare and tell people that if they want that kind of stuff they have to save for it. The government is currently using some pretty substantial sticks to discourage savings (for example). If you save and invest and your investments go up, you get to pay a tax on that too. Why not switch to a consumption tax? I don’t see any of that, do you?
Sorry, both parties like using the stick.
The history of government programs is never about earning it. France is running into that now – how do you take away something once people expect it?
If it were just an idea, then you could use nice words to inspire people. That’s the campaign. Putting muscle into your “requests” is the preferred method of bureaucrats.
We’ve already heard Obama say it’s selfish not to pay taxes, and Biden say it’s patriotic to pay more.
That attitude is one that says your leaders know best, and it will lead from “inspiration” to “compulsion,” all in the name of the public good.
After all – if people won’t do what they should, it’s because they only care about themselves. Should is a very scary word from politicians.
… to the exact degree of governmental involvement in it. So, the solution of course? More governmental involvement, right Billy?
You just do it. If you have a “mandate” and it’s something people believe in, you do it.
That being said, I merely said that I believe in it – no mandate for this type of change exists and perhaps more people disagree with me than don’t.
I’d wager that the chances of any REAL change to our entitlement system occurring rank right up there with the chances of a Cleveland Browns/Detroit Lions Superbowl in February.
You’re insane. Hoarding gold is not a contribution to civilization. The taxes one pays out of such profits (and to which you are presumably opposed) are a contribution. It’s arguable that expenses made possible by such profits are a contribution. But the profits themselves? That’s ludicrous, and you should know better.
That said, how does the derivation of profits and the incidental benefits (i.e., the examples given above) entitle one to the benefits of civilization? Without some other contribution it is a zero-sum equation – you are only entitled to those goods and services you can purchase from the profits you derive. You cannot convincingly make a case that the purchase of goods and services in a vacuum is net a positive contribution to society when balanced with the value of those goods and services provided in exchange therefor. There needs to be another part of the equation – the historic answer has been taxes.
I see no conceptual difference between service to the country and sweat equity in a partnership. If you have the capital to avoid the sweat, more power to you. But to argue that those who don’t should be disenfranchised from the benefits of civilization is unadulterated greed.
The taxes on the interest, or the taxes on the income that gets put into savings? On the former I’m with you, the latter I don’t think is financially viable.
And what happens when some people don’t save for it? The society either saves them, or abandons them. Libertarians will says abandon them, but I don’t think they’d like how our society will look if that were to actually happen. Our only realistic option is to reduce the number of people that need saving, and pool funds to save the rest. That is what Social Security & Medicare are supposed to be.
For a consumption tax to be socially acceptable, it would have to contain so many exceptions for “necessary” consumption, that it would become more of a mess than the progressive income tax rules we currently have. Is Milk exempt? How about skim-milk? Chocolate milk? Soy milk? Good luck figuring that out.
If you don’t have exceptions, you’re effectively taxing 100% of the income of the poor, and a very small percentage of the income of the rich, at the same rate. The poor would be paying more taxes per-dollar earned than the rich.
The only way I can see a consumption tax working is to only tax consumption above a certain “cost of living” dollar value, which would keep the poor paying nothing or almost nothing in taxes, but would shift the burden from the wealthy to just the middle class, so their taxes would increase by even more.
You’ll notice that nowhere in that definition does it say “mandatory” either. “Universal” is the goal, “mandatory” is just a means of getting there.
Like I already said, if we’re willing to accept that the goal is unreachable, but worthy of the attempt anyway, then “mandatory” is unnecessary.
Like how letting a temporary tax cut expire is called voting to raise taxes? Yes, giving somebody something more than once creates an expectation. How do you propose to run a government that avoids that situation?
Nice words have an amazing ability to inspire people, and they are so much cheaper than other means.
Taxes are something you give up for the good of your country. Paying them is patriotic.
Tell us, Billy, where do goods, and jobs come from? Are these creations of government?
Without corporate profits, everybody would have to be self-employed.
I think you’re confusing “revenue” with “profit.” The latter is calculated after expenses, like payroll. Last time I checked there are lots of people employed by not-for-profit organizations.
Yes, but without “profit”, there’d be little reason to incorporate and compete in the first place.
An economy based purely on charity? Yeah, I can see that lasting about 2 seconds.
Michael – you’re arguing against a straw man. I never said profits were bad.
You called Steve “insane” for saying that profits were a positive contribution to society, how else were we supposed to interpret that?
Read the rest of my post – I think it acknowledges all the points you are trying to make.
Profits are not a contribution to society, just as they do not detract therefrom. They simply are. They may perform an essential function in the system as it exists, but they don’t build roads or fund the military. Even if we harness them to get those things done (as we do, utilizing the system of taxation), profits do not enact the rule of law or protect the rights of the people.
It takes a combination of capital and service to run a civilization, and the act of private parties amassing wealth, in a vacuum, does nothing to further this objective. I’ll say it again: it takes another piece of the puzzle to make naked profits into a net positive for society.
Steve, I think I have a copyright on that “freedom is overrated” thing. Been using it for years.
The scariest thing is that so many, as evidenced by some of the commentors here, want the Year Zero approach our new Lords and Masters want.
Okay, I get your point. But isn’t that a bit like saying you get no benefit from your blood, even if you do happen to use it to circulate oxygen to your cells? For that matter, you could say that roads and a military don’t benefit society, we just happen to use them for things that do.
So the “insane” comment was really just an over-reaction to a lack of specificity or totality is Steve’s comment? I liked you better when you sounded like a communist.
See the difference between revenue and profit. Blood is more analogous to cash flow and credit availability than to profit.
See the actual context of what Steve said, to which I was reacting. He’s insane for stating that profit alone is enough of a contribution to society to entitle the recipient thereof to benefits, particularly in the context of bashing a movement toward universal public service.
Right, you’re an analogy perfectionist, I get it. That doesn’t make the rest of us wrong, or “insane”, it just makes you pedantic (nothing wrong with that). Now that we’re both on the same page in that regard, we’re cool.
That’s not at all how I read his comment, but I’ll leave it to you and him to work that out.
With all the bickering above I notice that nobody has taken note of something really interesting in Rahm Emmanuel’s list:
Members of the progressive wing of the Democratic Party (of which Rep. Emmanuel is not a part), have spent significant energy over the last six or so years denying that there was a war on terror. Either it’s suddenly become non-controversial or, more likely, his plan will meet with substantial opposition among Congressional Democrats, not exactly a formula for success.
Then nobody will save (much) because it is a suckers game. Today I would be better off spending all my income and saving little or nothing for retirement and having the government bail me out when I retire. I know, sounds not quite right, but that is what Finn Kydland and Edward Prescott won a Nobel Prize for, they called it time inconsistency.
Most consumption tax plans come with a very large exemption on income, something like $24,000 for a family of 4. So you don’t need specific exemptions for differnt products.
Well yeah it is the goal, but it doesn’t preclude mandantory either.
Profits are not hoarded. They are either spent by the corporation, given to shareholders, or put in the bank and lended back out to other borrowers.
I don’t need to bother with the rest of your comment as the initial premise is so badly flawed.
Trade is not a zero-sum game. Oh and rocks, “just are” too, but they can be used for a variety of usefull purposes that make people better off. So your argument fails yet again.
The check is in the mail.
Billy has no point. Profits are part of the gains from trade. To accept that profits are not a net positive you have to accept that trade does not make people better off (or that profits are zero, in which case there are no profits and Billy has in underwear in a not over nothing). Since this is not the case, Billy is wrong. His analogy with blood and other nonsense is just that, nonsense.
Well I personally object to the notion of a “War on Terror” in that it is open ended and can be used, like the “War on Drugs” to further erode our personal freedoms and liberties. But I don’t expect many people on either Right nor Left to agree with me on this one.
Only if the government bailout is equal or greater than the retirement you could enjoy by saving minus the cost of saving for it. All we have to do is keep the balance tilted in favor of personal saving enough that most reasonable people will choose that rather than a government-sponsored retirement.
Again, though, any tax savings the wealth would enjoy now have to be picked up solely by the middle class.
A family of 4 making $48,000 is probably spending close to all of their income, which means they will be taxed on nearly 50% of the dollars they earn. Someone making $240,000 can spend twice as much, $100,000 per year, and still only get taxed on about 32% of the money they earn. So someone making 5x the income only pays 3x the taxes.
It gets even more disproportionate for someone making $2.4 million annually, who can again spend twice as much as the guy making $240k, and be taxed on only 9% of their income. In perspective of the first guy, our millionaire is making 50x the salary, and paying 9x the taxes.
Hell, Steve, neither did you suggestion that everyone save for their own retirement.
You’ve got my agreement.
Nice job of ducking the substantive points. When you can’t engage the substance of an argument (namely that without the taxes you rail against or the service programs you’re hysterically bashing, the profits you hail as the end-all solution do nothing to further society) talk down to your opponent. Truly the refuge of the intellectually impotent. I can see why there are no M’s or D’s in your letters.
Next time try reading the words people write. As for me, I’ll stop bothering with yours.
Uhhmmm no. Except in rare situations, i.e. the future is not discounted at all, consumption today is preferred to consumption tomorrow. The only reason why I might forgoe consumption today is if I expect to have more consumption in the future that offsets the discounting of said future consumption back to the current period–e.g. pursuing a college degree.
The problem is that while in economic models the discount rate is held fixed, in reality we don’t know what it will be over time and hence this kind of fine tuning wont work. And what is to stop a political scoundrel from borrowing to curry favor with current retirees? Once this happens other workers might start to see something like that in their future thus reducing current savings. No, this kind of discretionary policy is ruined by the problem of time inconsistency. You’d have to set up some sort of automatic/rule based system that politicians could not really touch except perhaps in the most extreme cases. For example, put it in the Constitution or require a super majority such as 75% or 80%. Of course what politician is going to be willing give up such ability to try and win elections?
Actually the lower half of the income distribution pays almost no taxes. And the wealthy do spend, this is why they have bigger houses, nicer cars, jewelry, vacation homes, and so forth. It isn’t like millionaire and billionaires are suddenly going to live like someone make $50,000 a year.
And how much of it do you think they are being taxed on right now? With two kids a mortgage deduction I wouldn’t be surprised if it is 50%.
Also don’t forget that with the additional savings this would lower interest rates as well.
So, he is also saving far more which would end up being re-invested in the economy. Trade is a positive sum game. This benefits not just the guy doing the saving.
And the idea of a consumption tax is to tax consumption. As such if a person wants to limit their consumption spending and thus their well being and save why punish them? So actually in your example, the second guy is paying 2x the first guy in taxes, and is helping with things like lower interest rates, increased capital formation as well. Under the current system there is reduced incentive to save and thus an incentive to spend. Further, any savings is reduced since it has to come out of post-tax income, and the associated distortions caused by taxes which reduce the total amount of money everyone can save.
One of the more developed consumption/flat tax proposals is that of Hall and Rabushka.
Yeah, I don’t like telling people what to do, generally speaking, and even less do I like forcing them to do something.
All your points rest on a faulty premise and as such are not relevant. I did read them, I just saw no reason to address them as the initial faulty premise rendered them void. See I’ll demonstrate it, you wrote,
This is wrong because taxes do nothing to create wealth they merely redistribute it. Further, the deadweight loss associated with taxes produces a net loss for society that irrevocably lost. So your faulty premise has lead you to misunderstand the nature of taxes and how they actually can reduce output not increase it.
Now, you might read that and think that I am implying that the ideal is no taxes at all. That is not the case. If there are say public goods and externalities for example, a government will most likely want to implement taxes. In this case, the issue becomes one of selecting taxes on all commodities (and labor is but one commodity in such an economy) so that the negative impact due to the deadweight loss is minimized. In the public finance literature it is called the Optimal Tax problem.
Of course, this places us into what economists like to call the world of the Second Best. In this case, simple arm chair reasoning can be seriously flawed. Further, solutions that might work in the “first best world” may actually exacerbate the situation.
As for the rest of your comment where you called me insane, I really can’t be bothered writing up a detailed reason as to why it is hogwash.
Now, if you decide to re-work your initial premise and see where that leads you in terms of your resulting conclusions, please feel free to post them.
As a college prof, I can attest that the only way you can achieve universal B.A.s is by dumbing down the curriculum to the point where no one gets a decent education.
There are students who simply are not competent to do college level work, and there’s no way they could earn a college degree unless college-level work becomes merely high-school+ level work. That’s not acceptable, as it doesn’t enhance the real educational attained by the American work force.
And for those who think mandatory service isn’t problematic, please note that the 13th Amendment says there shall be no “involuntary servitude” except as punishment for crime. So unless there’s something criminal about being an American citizen, mandatory service is something we should all reject.
I think that’s pretty much where I was going, make sure you the future “bailout” you are offering will allow less total (resent + future) consumption than what one can achieve my avoiding consumption now in favor of saving.
(present consumption + future bailout) < (future consumption – present saving)
It doesn’t have to work, it just has to be probable enough that it will work that most people will still feel it worth while to save now.
That’s pretty much going to be a problem in any implementation of social security, isn’t it? I don’t like the idea of putting it in the Constitution, it really has no place there. A super majority might prevent necessary changes from happening, not prevent highly-visible major changes from happening, or both. It makes it harder, but doesn’t make it less desirable.
Ideally we’d find a way to keep changes to the law from being something that would curry favors with seniors, thus removing the incentive. I have no idea on how to do that, though.
Yes, but because the rate they are being taxed is progressive, they end up paying significantly less per dollar than those wealthier than themselves. Under a flat tax, the per-dollar tax rate on that 50% would likely be higher, unless I am seriously underestimating the amount of consumption we can expect by the wealthy under a system that discourages consumption by the wealthy.
But if we’re not taxing savings, we have to make up for that lost revenue by increasing the tax rate on consumption, which will hurt those middle-class people that would be helped by that money being re-invested in the economy. Will the break even? That depends on what the flat rate would have to be in order to match current tax revenues.
I don’t want to punish them for saving, but again their savings reduces government revenue, which has to be balanced by an increase in taxation on consumption, which again disproportionally punishes those who, because of their lower total income, devote a larger percentage of their income to consumption. Every dollar that the frugal millionaire saves under a flat tax must be paid by someone else. Yes, investment is positive-sum, but will it be enough to offset the redistribution of the tax burden? Only if we can expect a high enough level of discretionary consumption in a system that discourages discretionary consumption.
Nobody is promoting the idea of mandatory service. “Universal” != “Mandatory”.