From AVC Trickle Up Economics
I would like to propose another approach that I call “trickle up economics” in which we lower the tax and other burdens on the lower and middle class, we invest in educating their children (and them), we make sure they have the skills to get good jobs in the economy of the future, and we make sure they have access to things like good transportation, safe neighborhoods, healthy food, quality health care services, etc that are required for them to be fully functioning citizens in our society.
Fred is ignoring how the effective tax rate for the lower and middle class has actually been declining for the past few decades due to growing entitlement spending, tax credits, and other benefits that are paid for by higher-income earners. The lowest of income earners actually have a negative effective tax rate:
If anything, we’re spoiling the underclass. The top 5% deserve more, as they the individuals who create jobs, businesses, economic value, and wealth – too much of which is redistributed to those on the bottom who do not contribute to the economy or to technological progress in any meaningful way.
But it’s not that I want the government completely out of the picture – I’m not a libertarian anarchist – but resource optimization is needed. In much the same way that a company restructures to become more efficient and productive, America needs a similar restructuring. Silicon Valley has proven again and again adept at weathering all macroeconomic storms – from recessions, to financial crisis, emerging markets busts, to oil crashes – while other regions struggle with chronic stagnation. Maybe this is a testament to the efficacy of high-IQ and ingenuity of Silicon Valley, combined with a free market and meritocracy, and if the ethos of this technology subculture is applied to broader governance, maybe America will reach its full potential.
But then why do I read AVC if Fred is wrong many times? Because he still gets a few things right, and his optimism about technology and markets sets him apart from welfare liberals, the worst kind of all, like Stiglitz, midget Robert Reich, Krugman, and, of course, Bernie Sanders. There are perspectives from across the political aisle that are congruent to some of my views, particularly some aspects of macroeconomics. The ‘neo left’, which includes Larry Summers and Steven Levitt, to their credit, understand the importance of property rights and the ownership society within a meritocracy, and they are more receptive to science that runs counter to the egalitarian/’blank slate’ worldview, whereas welfare liberals try to censor HBD-based science while promoting dubious global warming science. The welfare left attacks creationism, yet they become creationists when confronted with the science of IQ as it pertains to socioeconomic achievement.
The american dream has always been about opportunity. You start out with nothing and through hard work and a good body and mind, you make it and lead yourself and your family to a better life. That, by the way, is the story of the Gotham Gal and me. We arrived in NYC in 1983 with not a penny to our names. Nada. Nothing. I am not even sure how we came up with the security deposit for our first apartment. But we had good educations and had secured good jobs. And we worked for everything we have. We made it.
The welfare left wants to believe that capitalism and the ‘American Dream’ is dead due to too much wealth inequality, yet hard-working, high-IQ people like Fred keep proving the left wrong.