Jeffrey Sachs Saves The World

Jeffrey SachsThe Price of Civilization: Reawakening American Virtue and Prosperity

by

Jeffrey Sachs


 

Says Jeffrey Sachs, economics professor at Columbia, “Economic theory indeed supports the view that high tax rates can actually spur, rather than hinder, work effort.”

Sachs wants government to impose higher taxes, particularly on business. He also wants more regulations on the same. It is his claim that taking more money from business and giving it to government officials to do with it what they will, that increasing the rules that businesses must follow to exist, while simultaneously increasing the size and scope of the bureaucracy to oversee these regulations, that businesses will thrive more so than they do today.

The people must sacrifice, too. Any household making over $50,000, which is to say half of us, “can make do with a little less take-home pay.” That take-home pay must become send-Washington pay, where at least some of it should be used to send abroad, given, Sachs says, our foreign aid policy is “stingy.”

Sachs, incidentally, has made a name for himself by advocating that rich countries redistribute their wealth to poor countries, even those poor countries staffed by dictators. It’s his theory that giving them free money improves the lot of all the citizens of these countries. In their new book, The Dictator’s Handbook, Bruce Bueno de Mesquita and Alastair Smith agree in part: dumping money into the hands of dictators does improve the standard of living of the dictators—but it also increases the length of the rule.

Anyway, follow Sachs and not only will the economic sun begin to shine, chasing away the shadows, but increasing the restrictions on and decreasing the wallets of its people, Americans will, somehow, become more moral, more socially responsible, more mindful. More, that is, like Jeffrey Sachs.

Jeffrey Sachs, yes: he loves us. Because of that love, he says that is “deeply surprised and unnerved” that he must tell us, we lowly citizens, these ridiculously apparent truths. One imagines his heavy heart, the pen shaking in his hand, a tear poised, ever ready to fall, as he took on the deep burden of laying down the principles for achieving economic and social Bliss. No simple task!

Sachs acknowledges that a unilateral action by government to pick the pockets and chain the hands of business and citizens is not possible given our ancient system of government. That darn bicameral Congress, the friction that exists between the legislative and executive, guarantees gridlock. We are being held back from becoming just like Europe, that heaven of academics—places like the nearly bankrupt Greece, Spain, Ireland, Portugal, etc.—because of our darned Constitution.

Solution? Change it. Combine the legislative and executive branches. Grease the wheels of government so that the party in charge of it can pass anything they like without opposition. Just like our Congress did when all Democrats in the House, Senate, and White House, and not one member of the opposition, passed the “You’ll have to pass it to see what’s in it” health care bill.

Wouldn’t it be swell, asks Sachs, if we could have that kind of legislation all the time? Just think how big government could grow! Its halls will be a irresistible magnet, drawing those of Great Brain toward it, where these intelligent, Enlightened, disinterested, beneficent fellows will sit and ponder what is best for us.

This had better be the case, because the $8 to $12 trillion—that’s trillion with a ‘t’—of new taxes Sachs would impose will cause an increase in the size of government not seen since that other great experiment in enforced socialism began a century ago.

An ordinary mind might consider that the torrent of money into government would cause it to grow fat, lazy, crony-istic, and corrupt, a place where Kafka would feel at home; in a word, Greece. Sachs agrees but has a solution, “Yes, the federal government is incompetent and corrupt—but we need more, not less, of it.” How can you argue with that?

Yet consider the alternate view, provided by jurist Antonin Scalia and, incidentally, by those men who wrote and framed the Constitution (transcript from HotAir; listen here).

So, the real key to the distinctiveness of America is the structure of our government…There are very few countries in the world, for example, that have a bicameral legislature. England has a House of Lords, for the time being, but the House of Lords has no substantial power; they can just make the [House of] Commons pass a bill a second time. France has a senate; it’s honorific. Italy has a senate; it’s honorific. Very few countries have two separate bodies in the legislature equally powerful. That’s a lot of trouble, as you gentlemen doubtless know, to get the same language through two different bodies elected in a different fashion…

Unless Americans can appreciate that and learn to love the separation of powers, which means learning to love the gridlock which the Framers believed would be the main protector of minorities, [we lose] the main protection. If a bill is about to pass that really comes down hard on some minority [and] they think it’s terribly unfair, it doesn’t take much to throw a monkey wrench into this complex system. Americans should appreciate that; they should learn to love the gridlock. It’s there so the legislation that does get out is good legislation.

I would amend that last sentence to read that legislation passed is more likely good legislation.

The Framers used history as their guide: they collected example of “a civilization did this, that happened” to design the Constitution. They went with the empirical observation, “Power Corrupts.” Conclusion: keep power from concentrating onto any one group.

On what does Sachs rely for his prescriptions? Look again at the quotation which opened this review: “Economic theory supports the view that high tax rates spur work effort.” That is a true statement: economic theory does indeed say that big government, operating on Enlightened principles and staffed with the sinless, will lead to Utopia.

But Sachs in his glow has forgotten the old, sad, now bloodstained joke: it works in theory, but not in practice.

16 Comments

  1. Milosz, a poet, coined the term “Hegelian bite”, a term referring to those hopeless cases of western academicians.
    “But Sachs in his glow has forgotten the old, sad, now bloodstained joke: it works in theory, but not in practice.” Well said! But we continue to drift towards that “historical necessity”.

  2. Let’s start with a new mantra: No money for art while there are children starving. Anywhere.

    We could start by re-distributing funds already flowing from taxpayers to what marketers would call, Optional Extras. The National Endowment for the Arts, ” … an independent federal agency supporting artists and arts organizations and bringing the arts to all Americans … ” in FY 2009 had $128 million in “appropriated program funds” plus $50 million of “One Time Funding Under the American Recovery and Reinvestment Act of 2009.”
    http://www.nea.gov/about/09Annual/2009-NEA-Annual-Report.pdf

    Prominent in the NEA’s 2009 annual report is a photograph captioned, “The 2009 Piccolo Spoleto Festival, supported by the NEA, opened with Sunset Serenade, a free outdoor pops concert by the Charleston Symphony Orchestra at the U.S. Custom House overlooking the harbor.”

    On the other hand …
    Malnutrition is … devastating. It plays a part in more than a third of all child deaths in developing countries. It blunts the intellect, saps the productivity of everyone it touches and perpetuates poverty.
    http://www.unicef.org/nutrition/index_4050.html

  3. Why worry about converting US into European Utopia, would it not be easier to induce Prof Sachs to relocate. This way birds of a feather, and all that stuff, on either side of the pond.

  4. In theory, there’s no difference between theory and practice. But in practice, there is.

    (I have no idea where I stole that from!)

  5. My latest theory to explain some of the wacky pronouncements of some economists is that economics must surely lack a ‘sanity check’. In engineering (my field) the most powerful sanity check is conservation of energy (aka, you can’t get something for nothing).

  6. “Sachs wants government to impose higher taxes, particularly on business.” But the burden of business taxes never falls on business, since a business is an abstraction not a consumer. The burden falls elsewhere: perhaps on employees, or shareholders, or customers, or suppliers. What on earth is the rationale of introducing a tax, the incidence of which is unknown? It can only be because the tax is disguised from the taxpayers. To which I cry “crook!”.

  7. Does Sachs suggest any optimum taxation rate? I had thought it was now accepted that the deadening effect of taxation showed up at a particular rate and that if the rate rose beyond a certain percent, the amount collected would diminish – Laffer is it?

    There is some discussion of this topic in Hume’s History of England. As fundraising to support the prince evolved away from payments in lieu of feudal service, and become more taxlike, pernicious effects of various rates were discovered and a rate identified beyond which the taxed would be truly troubled. They then tended to limit the soak to lesser percentages.

    Unfortunately, I can’t identify the percentage because of the way it was applied – tax on moveables. I guess moribund cars weren’t subject to it.

    Sachs’ ideas must have gotten loose in public early in the summer because they were presented as fact to us during an otherwise pleasant evening in upstate New York. I asked our hostess who had surfaced this bizarre view to demonstrate that “higher taxation had been found to increase economic activity” with examples. she couldn’t. Can Sachs?

  8. People argue that taxes on business don’t hurt business, they’re passed on to the consumer.
    In fact, both business and the consumer are hurt. True, business tries to pass on the cost to consumers by raising prices, but unless demand is completely inelastic, they don’t succeed in passing along ALL of the cost. The net result is the business is poorer, getting reduced profits, the consumer is poorer, with prices going up and income not going up. In many cases even the government loses money because the higher tax rates are more than offset by higher unemployment , businesses going under, and fewer people paying those higher rates.

  9. The most inexplicable feature of these guys is their inability to learn from history, instead retaining their narratives and theories in the face of all empirical experience. It must be hard wired by evolution, and especially dominant in people like Sachs

  10. My last post reminds me of a story by Raymond Smullyan.

    A fellow walks into a bar and says, ” Drinks for everyone, when I drink EVERYBODY drinks!”
    He orders a second, and says, “When I have another, EVERyBODY has another!”
    Finally he pulls out his wallet and says, And when I pay, EVERYBODY pays!”,

    Sometimes, when the government raises taxes EVERYBODY pays- the corporation with lower profits, the consumer wihth relatively higher prices and lower income, and the government with lower revenues.

  11. So much uproar! The thing is, people are not idiots. Changing the US system for one like in the UK will not make electors accept higher taxes. If by mistake they elect a government that taxes beyond what they believe acceptable, they will gladly replace them by another group that will bring tax levels to a equilibrium they can accept. So what happens if the US changes to a British system? Something like Canada. And please don`t bring up the clichés about socialism. Canadians elect the government they want. No reason for Americans to do any different. Sachs would indeed be surprised by the outcome of his proposed changes.

  12. Madness, sheer madness is what Sach’s advocates. The ideas he presents are not even worth commenting upon beyond saying he offers all that has gloriously failed as the way.

    It is very sad that an educate person could so torture reason to say what he thinks.

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