Econ 101 for progressives
I would urge everyone to read this book — it’s not all directly related to environmental causes, but some of it is. More broadly, there’s an obvious moral: The system we live in is, to an enormous extent, determined by government policies. Understanding that, and understanding how the apparatus of the state is tilted towards the already-wealthy, is crucial to any progressive cause.
Some specific examples below the fold.
One of the most sacred cows Baker gores is the myth of “small business” being the engine of the economy, and therefore deserving special treatment:
For example, in his first State of the Union address, President Clinton touted the importance of small business as he announced his plans for a special small business investment tax credit. He cited a true but misleading fact: small businesses are responsible for the vast majority of job creation in the United States…. The fact is misleading because small businesses are also responsible for the vast majority of job destruction in the United States….
The most obvious example of this sort of bogus deduction is a business owner who writes off a car as a business expense, even though it might have been bought primarily for personal use. This subsidy can be quite substantial. If a small business owner buys a $36,000 SUV, and is in the 33 percent tax bracket, he gets $12,000 off of his taxes under the investment tax credit for small businesses. This is more than twice as large as what a typical family would receive under TANF, the governments core welfare program.
Baker also warns about the growing conservative movement to have any government action redefined as a “taking” under the Constitution.
In fact, the idea of involving the courts every time that a government action lowers or increases the value of property is antithetical to the idea of leaving things to the market. If this approach were applied literally, the courts would be involved in almost any action the government took. When the government builds a highway in one area, it may increase property value for nearby land, but it reduces property values in other towns that might have hoped to be the site for the highway. Even reducing crime in one neighborhood, by having the effect of making other areas relatively more crime prone (if the crime rate in one neighborhood falls, and it stays constant in other neighborhoods, then the other neighborhoods have seen a rise in their relative crime rate) can be seen as having a negative impact on property values for some people. Taken to an extreme, the takings doctrine is not a free market doctrine. It would have the courts deciding almost everything.
The overall message of Baker’s book might make him sound like a Marxist — “The government is the tool of the capitalist oppressor!” — but he’s been right about most of the major economic stories of the last decade. (Not the only clear-headed voice, but one of them.)