We're Too Damned Cheap, Sez Brooks

David Brooks writes one of his usual pseudo-intellectual columns, this time about how someone who died in 1974, whom Brooks names "Sam," had a different outlook on life than does fictional Sam's fictional grandson "Jared." Brooks attributes the country's economic woes to all the Jareds of today. I thought I did a darned good job of ripping into Brooks' thesis. I guess the Times moderators thought so, too, because they scotched my comment. So here it is:

As you so commonly do, Mr. Brooks, you contradict yourself in this essay. After claiming that Jared isn't doing much to create jobs, you say that one thing that makes him happy is that "Every few months, new gizmos come out." You also imply that Jared, like others of his generation, "has spent much more on health care." You also say Jared "lives beyond his means."

Who do you think produces "gizmos"? It's people you describe as "down the income scale." True, our corporate laws and trade policies being what they are, nine out of ten of those gizmos are probably made entirely outside of the U.S. Still, they are generating wealth for the American corporate bigwigs who import the gizmos & for the American merchandisers who sell them.

In addition, almost all of the money you say Jared spends on health care stays in the U.S., and a good deal of that money goes into job creation: medical personnel, yoga instructors, health food store workers, etc.

And we know Jared is a big spender because you say he's living beyond his means. While that's not a good idea, spending every penny & then some does produce jobs.

In short, you disproved your own theory. It looks to me as if Jared has created more jobs than his more circumspect, cautious grandfather did.

So what has caused "The Great Stagnation"? Is Tyler Cowen right? Partly. He's right about this:

There was the tremendous increase in education levels during the postwar world. There were technological revolutions occasioned by the spread of electricity, plastics and the car. Those factors were causes of much of the improvement in our standard of living.

And to the extent that we have quit educating our children -- and we have -- and have fallen behind on technological innovations -- less so -- these factors contribute to economic stagnation.

But by far the greatest cause of stagnation is the work of your friends and neighbors, a/k/a the Congress & the President & the gentlemen of the Supreme Court (I say "gentlemen" because very few of the gentlewomen on the Court have been serially culpable.) Cowen uses a cutoff date of 1974. I would make it a few years later, but why quibble? Our economic policies, beginning with Jimmy Carter, & much exacerbated by every Administration & Congress since, are directly responsible for our falling behind other nations.

The most obvious factor is the tax code, which Congress has repeatedly made less progressive, so that the wealthy pay only a bit more than the middle class (tho with creative deductions, many pay less). The free ride we give corporations is a scandal. (G.E., for instance, pays about 3.5% of its profits in taxes; I pay a heckuva lot more in income tax, & I'm no Jeff Immelt.) In addition, we let corporations get away with moving jobs and profits overseas. And now the Supremes have given corporations individual rights! They're not even corporations anymore except when it comes to getting tax breaks.

Our trade policies are anti-American. The revolving door between Wall Street & other businesses on the one hand and government "regulators" on the other, is but one of the many disincentives for regulators to do their jobs. (Right now the Obama Administration is promising to cut regulations & the House is planning to underfund the S.E.C., for instance.) If businesses skirt the law, everybody -- except the big businessmen -- loses. The big guys get richer, through cheating, and we get comparatively poorer.

The Congress has modified our estate tax law to ensure a permanent aristocracy. The Congress's and state legislatures' restrictions on unions are unconscionable. Cutbacks on education funding at every level explain "why Johnny can't think." All of these factors, and more, explain why the U.S. has become a second-tier economy. In a country in which laws have been amended to leave only a small minority with discretionary income, it is only that minority who can afford to spend. Our governmental policies have put the brakes on a once-vibrant economy. And they keep on making matters worse.

Jared is in debt, not necessarily through his own doing, but because our governmental bodies made him poor. If he takes pleasure in other aspects of life, it's partly because that's all that's left to him. These other activities are coping mechanisms, not raisons d'êtres.

Update: Paul Krugman takes a different tack from mine, & his post is well worth reading. He says of Brooks' hypothesis: "My immediate reaction was that this is all wrong — that people like David’s hypothetical Jared are actually rare, that the reality is that we’re more into the rat race than ever before." Krugman backs up his "immediate reaction" with data. What a novel idea!