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Old 07-12-2010, 11:58 PM  
Taco John Taco John is offline
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The Class War We Need

One of the best op-eds I've read in awhile and right on the money...


The Class War We Need
By ROSS DOUTHAT
Published: July 11, 2010

The rich are different from you and me. They know how to game the system.

That’s one interpretation, at least, of last week’s news that Americans with million-dollar mortgages are defaulting at almost twice the rate of the typical homeowner. It suggests an infuriating scenario in which the average American slaves away to keep Wells Fargo or Bank of America off his back, while fat cats and high fliers cut their losses and sail off to the next investment opportunity.

That isn’t exactly what’s happening, most likely. Just because you have a million-dollar mortgage doesn’t make you a millionaire, and a lot of the fat-cat defaulters probably aren’t that fat anymore. Chances are they’re more like Teresa and Joe Giudice from “The Real Housewives of New Jersey,” tacky reality-TV climbers who recently filed for bankruptcy after their decadent lifestyle turned out to be a debt-enabled fantasy.

Still, watching the Giudices sashay through their onyx-encrusted mansion, and knowing that thousands of similarly profligate homeowners are simply walking away from their debts, it’s easy to succumb to a little class-warrior fantasizing. (Pitchforks, tar, feathers ... that sort of thing.)

The trick is to channel those impulses in a constructive direction. The left-wing instinct, when faced with high-rolling irresponsibility, is usually to call for tax increases on the rich. But the problem, here and elsewhere, isn’t exactly that we tax high rollers’ incomes too lightly. It’s that we subsidize their irresponsibility too heavily — underwriting their bad bets and bailing out their follies. The class warfare we need is a conservative class warfare, which would force the million-dollar defaulters to pay their own way from here on out.

Consider the spread that the Giudices currently occupy (pending potential foreclosure proceedings, of course). The first million of its reported $1.7 million price tag is presumably covered by the federal mortgage-interest tax deduction. Intended to boost middle-class homebuyers, this deduction has gradually turned into a huge tax break for the affluent, with most of the benefits flowing to homeowners with cash income over $100,000. In much of the country, it’s a McMansion subsidy, whose costs to the federal Treasury are covered by the tax dollars of Americans who either rent or own more modest homes.

This policy is typical of the way the federal government does business. In case after case, Washington’s web of subsidies and tax breaks effectively takes money from the middle class and hands it out to speculators and have-mores. We subsidize drug companies, oil companies, agribusinesses disguised as “family farms” and “clean energy” firms that aren’t energy-efficient at all. We give tax breaks to immensely profitable corporations that don’t need the money and boondoggles that wouldn’t exist without government favoritism.

And we do more of it every day. Take Barack Obama’s initiative to double U.S. exports in the next five years. As The Washington Examiner’s Tim Carney points out, it involves the purest sort of corporate welfare: We’re lending money to foreign governments or companies so that they’ll buy from Boeing and Pfizer and Archer Daniels Midland. That’s good news for those companies’ stockholders and C.E.O.’s. But the money to pay for it ultimately comes out of middle-class pocketbooks.

This isn’t just a corporate welfare problem. The same pattern is at work in our entitlement system, which is lurching toward bankruptcy in part because of how much Medicare and Social Security pay to seniors who could get along without assistance. Instead of a safety net that protects the elderly from poverty, we have a system in which the American taxpayer is effectively underwriting cruises and tee times.

All of this ought to be grist for a kind of “small-government egalitarianism,” in the economist Edward Glaeser’s useful phrase, that seeks to shrink government by attacking Washington’s wasteful spending on the well-connected. And sometimes conservative politicians make moves in this direction. President George W. Bush’s Tax Reform Commission proposed sharply reducing the mortgage-interest deduction. House Minority Leader John Boehner, to his great credit, recently floated the possibility of means-testing Social Security. Many Republican senators have been staunch critics of corporate welfare.

In the age of Barack Obama, many rank-and-file conservatives have been more upset about redistribution of a different sort — the kind that takes money from the prosperous and “spreads the wealth” (as Obama put it, in his famous confrontation with Joe the Plumber) down the income ladder.

This kind of spending can be problematic. But conservatives need to recognize that the most pernicious sort of redistribution isn’t from the successful to the poor. It’s from savers to speculators, from outsiders to insiders, and from the industrious middle class to the reckless, unproductive rich.

http://www.nytimes.com/2010/07/12/op...that.html?_r=2
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Old 07-13-2010, 12:00 AM   #2
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I didn't like the way he closed it, calling out conservatives. Yes, they are enablers too, but leftists are horrible at this kind of enablement in the name of do-goodism. He should have called out Washington as a whole...

But this said, it's great to see thinking along the lines the Austrian economic mindset finding their way into the mainsteam. Truth is marching on.
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Old 07-13-2010, 12:46 AM   #3
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Because it's the class war America deserves. But not the one it needs right now. And so we'll reject it. Because it can take it. Because it's not our hero. It's a silent guardian. A watchful protector. A dark class war.
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Old 07-13-2010, 12:56 AM   #4
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Quote:
Originally Posted by Taco John View Post
I didn't like the way he closed it, calling out conservatives. Yes, they are enablers too, but leftists are horrible at this kind of enablement in the name of do-goodism. He should have called out Washington as a whole...

But this said, it's great to see thinking along the lines the Austrian economic mindset finding their way into the mainsteam. Truth is marching on.
How is this a uniquely Austrian mindset?

Basically, he's pointing out that government largess to the political donor class is government waste.

You don't need to believe in specie backed currency, destruction of the fed, or in boom bust cycles to agree with that proposition.
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Old 07-13-2010, 01:07 AM   #5
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Old 07-13-2010, 02:09 AM   #6
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Originally Posted by JohnnyV13 View Post
How is this a uniquely Austrian mindset?

Basically, he's pointing out that government largess to the political donor class is government waste.

You don't need to believe in specie backed currency, destruction of the fed, or in boom bust cycles to agree with that proposition.

The article wasn't about the political donor class. And Austrian Economics isn't fundamentally about what you apparently think it is. Austrian economics is about how human action is the motive power behind the economy, and subsequently the moral follow-through that government should take to protect individuals due to this fact.

Tu ne cede malis...

Read this book ...
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Old 07-13-2010, 04:41 AM   #7
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Quote:
Originally Posted by JohnnyV13 View Post
How is this a uniquely Austrian mindset?

Basically, he's pointing out that government largess to the political donor class is government waste.

You don't need to believe in specie backed currency, destruction of the fed, or in boom bust cycles to agree with that proposition.
LOL Your understanding of Austrian economics is limited.
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Old 07-13-2010, 05:46 AM   #8
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I've always said that, socially, economically, I have more in common with the average black or hispanic, than I do with whites. But because of identity politics, we are kept divided, which forces me into the republican camp by default ie I simply have nowhere else to go.

I hate race mongers and leftists like Obama because they use the same tactics that prison guards use to keep the whites, blacks and hispanics at each others throats, but it's effective because it keeps them in power.

The working class, the middle class is kept divided in similar fashion.

And this is one reason why I think Republicans have sold their soul, because rather than fight the good fight, they use the leftist tactics to their own advantage, and that too, is to stay in power.
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Old 07-13-2010, 06:36 AM   #9
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Quote:
Originally Posted by Taco John View Post
The article wasn't about the political donor class. And Austrian Economics isn't fundamentally about what you apparently think it is. Austrian economics is about how human action is the motive power behind the economy, and subsequently the moral follow-through that government should take to protect individuals due to this fact.

Tu ne cede malis...

Read this book ...
I understand the basic premises of Austrian economics better than you think.

The basic theory is that government interference in markets create artificial booms which leads consumers to malinvesment which result in economic busts. That's a nutshell version of Austrian boom bust cycle theory.

Specie backed currency and getting rid of the fed are simply ways to eliminate government tools to manipulate the monetary system.

Since free markets are more efficient means of allocating capital to its most efficient users, Austrians believe that government's only role in economics should be to enforce reasonable legal regimes to prevent fraud, enforce contracts, limited regulation of business and tort law to curb market misbehavior.

All of those beliefs aren't necessary to agree with the article that our biggest problem government problem is subsidizing the politically well connected (which is why I characterized them as the political donor class: people who can afford to buy influance in congress, ultimately through helping the congressman raise campaign funds).

I know how you see this as an "Austrian" influenced article in that you're presuming that the author thinks that "financing their follies" led to bad economic behavior which led to our meltdown.

I think you're reading too much between the lines. To me, this author is more concerned with how the rich are taking tax dollars from the middle class to fuel their lifestyles. That's why he calls for a "new conservative class warfare", where the mechanism to rein in the affluent class's unfair ability to "game the system" is to cut off the govt spigot rather than redistribute wealth through tax increases targeted at the rich.

This guy wants to cut off the wealth mechanism of manipulating govt rules and govt subsidies. But his reason is more about "unearned benefits" rather than the economic consequences of malinvestment.
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Old 07-13-2010, 08:25 AM   #10
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Quote:
Originally Posted by JohnnyV13 View Post
I understand the basic premises of Austrian economics better than you think.
You seem to understand a few of the prescriptions, but you don't seem to understand the underlying reason for them.


Quote:
I know how you see this as an "Austrian" influenced article in that you're presuming that the author thinks that "financing their follies" led to bad economic behavior which led to our meltdown.

I'm not presuming anything. The author said it very clearly without the need for any presumtion.

Quote:
I think you're reading too much between the lines. To me, this author is more concerned with how the rich are taking tax dollars from the middle class to fuel their lifestyles. That's why he calls for a "new conservative class warfare", where the mechanism to rein in the affluent class's unfair ability to "game the system" is to cut off the govt spigot rather than redistribute wealth through tax increases targeted at the rich.

This guy wants to cut off the wealth mechanism of manipulating govt rules and govt subsidies. But his reason is more about "unearned benefits" rather than the economic consequences of malinvestment.
Yes, just like Ron Paul calls for. Whatever you want to say, and whether this guy intended it or not, he is advocating some very Austrian ideas in this article. For my part, I don't care if he intended it or not. All I care about is that he's got it right.
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Old 07-13-2010, 09:24 AM   #11
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I agree with the article that we need to end the mortgage interest tax deduction. He makes many other good points as well.
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Old 07-13-2010, 09:49 AM   #12
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I agree with the article that we need to end the mortgage interest tax deduction. He makes many other good points as well.
Yeah, that will spur home buying.
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Old 07-13-2010, 09:52 AM   #13
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I agree with the article that we need to end the mortgage interest tax deduction. He makes many other good points as well.
the ****?
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Old 07-13-2010, 10:46 AM   #14
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Lets see, Obama gave a temporary home buyers credit and housing shot up. The progam ended and housing is now tanking.

That would lead one to the logical conclusion that tax incentives to purchase actually work.
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Old 07-13-2010, 10:56 AM   #15
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Yeah, that will spur home buying.
Yeah, obviously this is not the time to do it. Maybe in 5-10 years though; its a reform that makes a lot of economic sense.
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