Prof. Oren M. Levin-Waldman will discuss his most recent article: “Misusing the Language of the Public Interest <br> By Dr. OREN M. LEVIN-WALDMAN, Ph.D.”, on the Wednesday, December 6, 2017th of the Westchester On the Level radio broadcast. A total 10am EDT. Listen “Live” or “On Demand” by calling 347.205.9201. Participants are asked to stay on topic. Listen “live” or “on demand” using the hyperlink access code … http://tobtr.com/s/10369907
“Misusing the Language of the Public Interest” <br> By Oren M. Levin-Waldman
It isn’t uncommon for politicians to mask naked self-interests in the language of the public good. We are now being told that if either of the GOP tax bills are signed into law it will be good for the economy, resulting in both economic growth and higher wages. After all, who could possibly argue with that? This is despite the fact most tax cuts will go to corporations and the super wealthy. Of course, it would be impolitic to speak the truth, which is that these bills are nothing more than supply-side tax cuts masquerading as tax reform.
Why go to all the trouble of dressing it up as something it is not? Because it sounds so much better to couch it as a matter of the larger public interest that allegedly benefits all than it does to justify it on the grounds that the wealthy ought to get tax cuts and that the middle class ought to in fact pay for them. But this isn’t the only issue where politicians justify selfish interests in the language of the public good.
Opposition to increases in the minimum wage have long been presented as a matter of the larger public interest. Raising the minimum wage, it is claimed, will result in lower employment. It may, but the argument is disingenuous at best because it will impact different groups differently. And yet, to the extent that there will be lower employment, it is more likely the case that fewer low-wage jobs will be created in the future than actual jobs eliminated.
Still, it sounds so much better in opposition to appear to be concerned with minimizing unemployment than to be concerned with maximizing profit at the expense of low-wage workers. Unfortunately both opposition to the minimum wage and support for essentially supply-side tax cuts suffer from a similar problem. Both sets of arguments assume economics to be dispositive — that public policy is driven by economics models and data.
Public policy, however, is driven by ideology and interest groups, and these groups conveniently put economics models in the service of their ideologies. To cloak self-interests in economic models and social science methodology is to give them an imprimatur of legitimacy. It lends the ideological objective some authority because now the argument is perceived as coming from experts. And yet, it is also inherently undemocratic.
Let’s consider the tax proposal for a moment. In some neoclassical economics circles it is a fundamental tenet of welfare economics that if tax cuts are to be given they should preferably be given to the wealthy before the poor. Because as rational actors, the wealthy are presumed to be more rational and will spend their money more responsibly. The wealthy, it is alleged, will invest the new savings from these tax into enterprises which will create jobs. The poor, it is assumed will simply waste their savings and not use their new savings responsibly.
If we take this argument to its logical conclusion, the wealthy, and even the only affluent, are more responsible than the poor and maybe even some in the middle class. Therefore, when it comes to policymaking their voice should carry more weight. So if members of Congress are responsive to the affluent and wealthy over the poor and even some of the middle class, they can then be said to be acting rationally too.
Ironically, this is a view consistent with progressivism. While current progressive politics is aligned with policies supporting the poor, progressives in history were very much elitists who believed that the public should defer to the authority of the experts. But if only there was data to support these assumptions.
Yes, in theory corporate tax cuts should result in new investment because firms will have more money to invest and create jobs. But what evidence is there that these savings in corporate taxes will be invested into serious economic development rather than growth that benefits investors and shareholders? Out of 42 so-called top economists polled by the University of Chicago’s Booth School of Business, only one said that either of the GOP tax bills will benefit the economy.
The reality is that the argument that these tax bills will benefit the economy is based on assumption; not evidence. What is clear is that the triggers in the Senate version, at least, will eliminate tax cuts to individuals, particularly in the middle class, by 2027, but the corporate tax cuts will be permanent. Well as Abraham Lincoln famously said: You can fool some of the people some of the time, but you cannot fool all the people all of the time.
One would like to think that alone would have sufficed to defeat these bills. Perhaps H.L. Mencken was right when he observed that nobody ever lost money underestimating the intelligence of the American public. Only by banking on it could Trump win the presidency. And yet, the subterfuge we see with these tax bills is really no different from the assumptions regularly made by the Federal Reserve Board.
The Fed regularly assumes that if money is pumped into the economy through lower interest rates and reserve requirements, then firms will invest and create jobs. What monetary policy misses, along with the more respected neoclassical assumptions behind these bills, is that investors having more money, whether through cheaper money or tax cuts, don’t necessarily create jobs. They certainly won’t if there is no reason to do so, and the principal reason to do so would be an increase in aggregate demand for goods and services.
More money in the hands of consumers will create jobs because consumers will be able to demand more goods and services in the aggregates. Job creation comes from the grassroots; not from corporations. A tax reform that would lower individual rates, even with absolutely no deductions, might generate growth because consumers would have greater purchasing power. A high minimum wage would also give consumers greater purchasing power.
It is possible that a corporate tax cut would generate growth if properly targeted. Simply giving to all corporations isn’t targeting. Giving a 15 percent cut in the corporate only to those who agree to invest that money in serious economic development would be an example of targeting and perhaps in the service of the public good. Of course, nobody is talking about that because policy isn’t driven by the public good; but self-interests. Until that happens, different groups will continue to put one over on the public by cloaking their naked self-interests in the language of the public good. Regrettably, it is the middle class who will suffer.
Dr. Oren M. Levin-Waldman, Ph.D., Professor at the Graduate School for Public Affairs and Administration at Metropolitan College of New York, Research Scholar at the Binzagr Institute for Sustainable Prosperity, as well as faculty member in the Milano School for International Affairs, Management, and Urban Policy at the New School. Direct email to: email@example.com