General Discussion

bigtree

(86,005 posts) Mon Feb 9, 2015, 10:07 AM Feb 2015

President Obama makes a good argument for government role in redistribution of wealth

excerpt from an excellent interview with President Obama (from Part 1, domestic policy) :

Ezra Klein:

To focus a bit on that long-term question, does that put us in a place where redistribution becomes, in a sense, a positive good in and of itself? Do we need the government playing the role not of powering the growth engine — which is a lot of what had to be done after the financial crisis — but of making sure that while that growth engine is running, it is ensuring that enough of the gains and prosperity is shared so that the political support for that fundamental economic model remains strong?

Barack Obama:

That's always been the case. I don't think that's entirely new. The fact of the matter is that relative to our post-war history, taxes now are not particularly high or particularly progressive compared to what they were, say, in the late '50s or the '60s. 5 And there's always been this notion that for a country to thrive there are some things, as Lincoln says, that we can do better together than we can do for ourselves. And whether that's building roads, or setting up effective power grids, or making sure that we've got high-quality public education — that teachers are paid enough — the market will not cover those things. And we've got to do them together. Basic research falls in that category. So that's always been true.

I think that part of what's changed is that a lot of that burden for making sure that the pie was broadly shared took place before government even got involved. If you had stronger unions, you had higher wages. If you had a corporate culture that felt a sense of place and commitment so that the CEO was in Pittsburgh or was in Detroit and felt obliged, partly because of social pressure but partly because they felt a real affinity toward the community, to re-invest in that community and to be seen as a good corporate citizen. Today what you have is quarterly earning reports, compensation levels for CEOs that are tied directly to those quarterly earnings. You've got international capital that is demanding maximizing short-term profits. And so what happens is that a lot of the distributional questions that used to be handled in the marketplace through decent wages or health care or defined benefit pension plans — those things all are eliminated. And the average employee, the average worker, doesn't feel any benefit.

So part of our job is, what can government do directly through tax policy? What we've proposed, for example, in terms of capital gains — that would make a big difference in our capacity to give a tax break to a working mom for child care. And that's smart policy, and there's no evidence that would hurt the incentives of folks at Google or Microsoft or Uber not to invent what they invent or not to provide services they provide. It just means that instead of $20 billion, maybe they've got 18, right? But it does mean that Mom can go to work without worrying that her kid's not in a safe place.

We also still have to focus on the front end. Which is even before taxes are paid, are there ways that we can increase the bargaining power: making sure that an employee has some measurable increases in their incomes and their wealth and their security as a consequence of an economy that's improving. And that's where issues like labor laws make a difference. That's where say in shareholder meetings and trying to change the culture in terms of compensation at the corporate level could make a difference. And there's been some interesting conversations globally around issues like inclusive capitalism and how we can make it work for everybody.