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Paul KRUGMAN
pkrugman@stargazete.com
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The Real Romney Emerges

29 Eylül 2012 Cumartesi

As many people have been pointing out, Mitt Romney’s talk about the “47 percent” was no different what you hear all the time Rush Limbaugh and the like. But bear in mind that Mr. Romney was talking to the financial super-elite, and gave every appearance of believing what he said. (I’m usually scornful of analyses based on how someone “comes across,” and would never put much weight on it, but the Mitt Romney of this video was a lot looser and more articulate than the guy we usually see.)

What this strongly suggests is that the Masters of the Universe, and Master Mitt himself, really believe all this stuff — which is pretty remarkable. His “lucky ducky” trope about people who depend on the government and pay no federal income tax is clearly, obviously nonsense. Equally obviously, it was originally d in an effort to dupe people who didn’t know better.

It was and is what the novelist George Orwell called, in “1984,” “prolefeed”: junk aimed at the ignorant masses (ignorant by design) — the people who are ready to believe at a moment’s notice that we’ve always been at war with Eastasia.

In Mr. Orwell’s vision, however, the Party, and especially the Inner Party, wasn’t supposed to consume this same tripe. It was supposed to understand the true Party agenda and vision.

So it actually is a revelation to see Mr. Romney and friends obviously swallowing the prolefeed whole. The news here isn’t really about their lack of empathy; it’s about their raw ignorance.

The Political Economy Of Redistribution

Mitt Romney is getting beaten up, and rightly so, for claiming that redistribution is un-American. Of course we redistribute, and we’ve been doing it on a substantial scale for generations.

Medicare, for example, is in effect a strongly redistributive program: it’s supported by a payroll tax (and other revenue) in which the amount you pay in depends on your income, but it supplies a benefit that depends only on your medical costs. From each according to his ability, to each according to his needs!

So no, President Obama isn’t a radical for suggesting that we should continue to do what we’re already doing; the real radicals are the people on the right who want to much of what our government has been doing these past three generations illegitimate.

The real question — arguably the central question of political economy — is how much to redistribute. And it’s both interesting and important to try to understand how that decision gets made.

There’s a substantial literature that makes use of something like the following model:

1. The government levies taxes on everyone — say, as a constant proportion of income.

2. It uses that revenue to pay for a benefit that everyone receives.

3. Voters choose parties based on which offers a tax/benefit program closest to the one that maximizes their own utility.

4. The end result reflects the preferences of the median voter.

This kind of model suggests that the median voter will, in fact, want redistribution as long as his or her income — median income — is less than average income, because in that case he’ll have more to gain than to lose a bit of redistribution. And this condition is always met because income distribution is skewed to the right (there are people with incomes $1 million above the median, but none with incomes $1 million below the median).

But in that case, won’t the median voter favor complete redistribution, with all income taxed away and then handed out as benefits?

No, because of incentives: too high a tax rate will discourage effort and reduce overall incomes. So there’s a trade-off that leads to some equilibrium level of redistribution.

O.K., it should be obvious that while this model is pretty, it falls down badly in the realism department. For one thing, median-voter models of politics suggest that the parties should converge on similar policies; in fact, they’re polarized.

Beyond that, the model suggests that higher income inequality should lead to more redistribution.

What we see in practice, however, is that European countries with relatively low inequality do much more redistribution than the United States, with its high inequality — and that as the United States has gotten more unequal, its tax and transfer system has grown less, not more redistributive.

I don’t think we have a full explanation of these awkward facts.

But the model is still useful for thinking about the political world we live in.In particular, imagine yourself as a hired gun for the right tail of the income distribution.

What would you do in an effort to stop median voters realizing that they would benefit a more European-style system?

Well, you’d do everything you could to exaggerate the disincentive effects of higher taxes, while trying to convince middle-income voters that the benefits of government programs go to other people.

And at the same time, you’d do everything you could to disenfranchise lower-income citizens, so that the median voter would have a higher income than the median citizen.

So far, efforts along these lines have been remarkably successful in the United States.

But operatives on the right are clearly worried that their three-decade run of success may be coming to an end.

 

DUELING VIDEOS

As the November presidential election draws closer, comments made by President Barack Obama and his Republican challenger, Mitt Romney, have drawn attention to the issue of wealth redistribution in the United States.

In a video released by Mother Jones magazine on Sept. 18, Mr. Romney is seen at a fundraiser earlier this year describing President Barack Obama’s supporters as people who do not pay income taxes and “who believe that they are victims, who believe that government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you name it.” He said that this group constitutes 47 percent of the population.

His remarks, delivered to an audience of wealthy donors at a closed-door event in May, drew harsh criticism not only Democrats but some Republicans, who expressed concern that Mr. Romney could alienate conservative-leaning voters like blue-collar workers the elderly.

“I think there is a broad and growing feeling now, among Republicans, that this thing is slipping out of Romney’s hands,” wrote Peggy Noonan, a conservative columnist at The Wall Street Journal, in response to the video’s release.

The Romney campaign, on the defensive, quickly pointed to a video that was uploaded to YouTube the same day featuring a 1998 speech given by Mr. Obama at Loyola University. “I actually believe in redistribution,” Mr. Obama says on the video, “at least at a certain level, to make sure that everybody’s got a shot.” Mr. Obama made those comments when he was a state senator in Illinois.

At a fundraiser in Atlanta on Sept. 19, Mr. Romney followed up on this topic. He said: “I know there are some who believe that if you simply take some and give to others then we’ll all be better off. It’s known as redistribution. It’s never been a characteristic of America.”

A Presidential Campaign With No Plan B

Karl Rove recently wrote an op-ed for The Wall Street Journal explaining the deep trouble Mitt Romney is in. Of course, that’s not how Mr. Rove puts it — it’s an effort to buck up Republicans, not discourage them.

But here’s what he says in the article, published on Sept. 19: “In the two weeks before the presidential debates , Mr. Romney must define more clearly what he would do as president.  In spelling out 

his five-point plan for the middle class, he’ll have to deepen awareness of how each element would help families in concrete, practical ways, and offer optimism for renewed prosperity.”

Let’s look at that plan, shall we? It is:

1. Energy independence, presumably through weakened environmental regulation.

2. School choice.

3. Trade agreements, plus implicit China-bashing.

4. Deficit reduction, not explained.

5. Lower taxes on small businesses (but actually just on the rich), and repealing health reform.

First of all, this isn’t a “plan for the middle class.” And do you see anything in there that can “help families in concrete, practical ways?” I don’t.

Even if you believed that Mr. Romney’s plan would yield prosperity, the benefits to middle-class families would have to trickle down — and assertions that Bush-style policies are just what we need aren’t going to give Mr. Romney the boost he wants.

So what is Mr. Rove thinking? Probably he remembers how President George W. Bush sold his first tax cut with “tax families,” supposedly real-world examples of how the cuts would benefit regular Americans. But what made that strategy possible was the way the core of the Bush plan, which consisted of big tax cuts for the rich, was decked out in loss-leaders that did help selected middle-class families: an expanded child tax credit, a reduced marriage penalty, and so on. These loss-leaders, by the way, played a major role in expanding the number of Americans who ended up paying no income tax — that is, they’re at the root of Mr. Romney’s terrible “47 percent.”

There’s nothing like that in Mr. Romney’s plan; nor could he have added such things at this late date, even if he hadn’t made a fuss over working families’ paying too little in taxes. The truth is that Mr. Romney based his whole campaign for president on the belief that he could blur his way to the White House, mouthing right-wing slogans, fudging the math, and counting on voter disillusionment with Obama to do the rest. Now that this doesn’t seem to have worked, he has no plan B.