“The bad economist sees only what the effect of a given policy has been or will be on one particular group; the good economist inquires also what the effect of the policy will be on all groups.” Henry Hazlitt
Here’s economist Paul Krugman this morning:
Now, just to be clear, the very rich, and those on Wall Street in particular, are in fact doing worse under Mr. Obama than they would have if Mitt Romney had won in 2012. Between the partial rollback of the Bush tax cuts and the tax hike that partly pays for health reform, tax rates on the 1 percent have gone more or less back to pre-Reagan levels. Also, financial reformers have won some surprising victories over the past year, and this is bad news for wheeler-dealers whose wealth comes largely from exploiting weak regulation. So you can make the case that the 1 percent have lost some important policy battles.
Let’s inquire into what the effect of those “important” policy battles has been on other groups:
The partial rollback of the Bush tax cuts, the health reform tax hike, and the threat of yet more tax increases have induced what you would call tax policy uncertainty. Add in regulatory uncertainty and you have a recipe for a serious lack of job-creating capital investment, which, like (go figure) job growth, has been anemic of late. So perhaps the 1 percent aren’t the only ones who’ve lost some “important” policy battles. I wonder how the whole inequality narrative would play against a healthier employment backdrop?
Now, if you read Krugman’s article, and happen to consider yourself a “progressive”, you’ll take issue with my issue. You’ll chastise me for not pointing out that Krugman is mainly targeting Wall Street “wheeler-dealers”. And while you’d be right (mainly), I’d chastise you back for not acknowledging that, per the above excerpt, the scope of his disdain indeed encompasses “the very rich” beyond Wall Street as well.
And, besides, the tax hikes were not targeted at merely the Wall Street rich—and the financial industry is clearly not the only one suffering from regulatory anxiety. In fact I’d argue that of all the industries dealing with a stricter regulatory regime, the financial industry is by far the coziest with the regulators.
The funny thing is, as I’ve stated here before, Krugman often makes legitimate points with regard to the pernicious concentration of power wielded by “organized money”, but his insistence that some solution lies in placing yet more power in the hands of the very individuals (politicians) who empower those power-wielders is the definition of ludicrous.
Krugman demonstrates time and again his unwillingness to look beneath the surface of his many assertions (I suspect he fears that what he’d find wouldn’t sit well with his fans). And while this propensity secures his popularity, it, sadly, makes him …. well, read again my opening quote.