Scott Sumner  

Socialism is harder than it looks

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Suppose you wanted to switch to socialism---what would be the ideal place to do so?
You'd want a country with extremely high quality civil servants.

That would be France.

You'd want a country where socialism is not a dirty word, and capitalism is.

That would be France.

You'd want a country with the Socialist party in power, a party that was committed to enact the ideas of Thomas Piketty.

That would be France.

So how did things work out in France, when they tried to adopt a Bernie Sanders/Thomas Piketty approach to taxes?


IN THE eyes of many foreigners, two numbers encapsulate French economic policy over the past decade or so: 75 and 35. The first refers to the top income-tax rate of 75%, promised by François Hollande to seduce the left when he was the Socialist presidential candidate in 2012. The second is the 35-hour maximum working week, devised by a Socialist government in 2000 and later retained by the centre-right. Each has been a totem of French social preferences. Yet, to the consternation of some of his voters, Mr Hollande applied the 75% tax rate for only two years, and then binned it. Now he has drawn up plans that could, in effect, demolish the 35-hour week, too.

Mr Hollande's government is reviewing a draft labour law that would remove a series of constraints French firms face, both when trying to adapt working time to shifting business cycles and when deciding whether to hire staff. In particular, it devolves to firms the right to negotiate longer hours and overtime rates with their own trade unions, rather than having to follow rules dictated by national industry-wide deals. The 35-hour cap would remain in force, but it would become more of a trigger for overtime pay than a rigid constraint on hours worked. These could reach 46 hours a week, for a maximum of 16 weeks. Firms would also have greater freedom to shorten working hours and reduce pay, which can currently be done only in times of "serious economic difficulty". Emmanuel Macron, the economy minister, has called such measures the "de facto" end of the 35-hour week.

At the same time, the law would lower existing high barriers to laying off workers. These discourage firms from creating permanent jobs, and leave huge numbers of "outsiders", particularly young people, temping. For one thing, it would cap awards for unfair dismissal, which are made by labour tribunals. Laid-off French workers bring such cases frequently; they can take years and cost anything from €2,500 to €310,000 ($2,700 to $337,000) by one estimate.


Unfortunately, while France is moving away from these polices, the US is like to move some distance in their direction. Of course there are differences. Our minimum wage is still lower than in France, and our top income tax rate is closer to 50% in states like California and New York. But all the momentum is with the socialists, who are especially numerous among the younger voters.

Socialist ideas are superficially appealing. Paul Krugman (who favors very high income tax rates on the rich) often says that reality has a liberal bias. Actually, reality has a neoliberal bias, and if you don't take incentive effects into account, you may end up disappointed.

Back in the US, Sander's single payer approach also has problems:

A costing of Mr Sanders's plans by Kenneth Thorpe of Emory University, using more conservative assumptions, found that the plan was underfunded by nearly $1.1 trillion (or 6% of GDP) per year. If Mr Thorpe is right, higher taxes will be required to make the sums add up. In 2014 Mr Sanders' own state, Vermont, abandoned a plan for a single-payer system on the basis that the required tax rises would be too great.
Vermont is one of the most liberal states in the union. Now think about the fact that they gave up on the idea, despite it having been previously approved and signed into law. Then think about the concept of rolling out a multi-trillion dollar plan at the federal level, soon after the only experiment at the state level failed to get off the ground. Is that evidence-based liberalism, or wishful thinking?

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COMMENTS (38 to date)
Lorenzo from Oz writes:

It is amazing how much of reality, the "reality-based community" does not want to grapple seriously with.

But a lot of the trouble is the old Will Rogers problem -- what people know that ain't so. A lot of folk go through the education system (as it is increasingly loosely called) and pick up a lot of background assumptions that they "know" are true but definitely ain't so. Of course, acting as if they are so pragmatically works in their moral/social communities; so you might call them milieu-Rortians (what is true is what works as true in their social milieus).

When you get academics citing Foucault on Chicago School economics (no, really) and swallowing grotesque misrepresentations of Hayek (did you know that he argued that welfarism led to fascism? Tony Judt and Timothy Snyder happily tell all and sundry so)* it is not surprising if recent products of said system buy happy outcome policy stories that fit with their background assumptions and work as true in their social milieus.


*Just to be clear to readers not up on their Hayek, Hayek argued that economic planning could make fascism seem more acceptable -- that the Second Reich's War Socialism made the German middle class more willing to accept the Third Reich's National Socialism. Which, as Adam Tooze points out in The Wages of Destruction, was really a loot economy.

ThaomasH writes:

Socialism is probably a lot harder than the two changes in days/week worked and marginal tax rates as it involves removing assets from the ownership of people in the private sector and transferring them to the public sector with likely massive changes in who would manage them.

Why call things"socialism" that are not? In "socialism" marginal taxes on income might not "need" to be so high and in any case would not distort investment decisions (which would be being made by the state)

Would 75% marginal tax rate be any better or worse if you did not call it "socialism?"

Liberal bias ~= Neoliberal bias.

Nick Bradley writes:

This is a rather clumsy analysis I'd expect at Heritage or somewhere like that.

The US had comparable rates before 1982, with higher real growth, higher productivity growth, lower inequality, etc. The 33 years before Reagan - 2.55% real GDP per 25-54 year old growth; 1.6% before. And that includes the oil shock of the 1970s.

As for single payer, I think the transition be quite messy - you'd have to start off with high, current reimbursement rates. I prefer a public option, where people or corporations can just buy into Medicare and piggyback on their bargaining power.

Nick Bradley writes:

I just want full employment. Or at a minimum, you know, a central bank that actually hits their own inflation target.

So - full employment from monetary policy, excess inflation sopped up with high marginal tax rates - its nice counter-cyclical policy too.

its also known as US/western policy before Reagan/Thatcher/UChicago convinced us all to chase Harberger's unicorns while giant Okun gaps exist...

Nick Bradley writes:

@Lorenzo from Oz

I've always liked reading your blog, but I think you're really wrong (and Hayek!) on your history. most authoritarian regimes emerge from an environment of mass unemployment or worse (e.g. starvation).

So maybe a system that strives for full employment would be less likely to experience fascism or communism.

American conservatives are incredibly intellectually lazy; Bruning's policy of deflation -- something the modern right would cheer! -- caused unemployment to expectedly skyrocket to 30%. NSDAP promised to end the crushing deflation and implement spending programs to reduce unemployment - which it did.

http://marketmonetarist.com/2013/11/17/deflation-not-hyperinflation-brought-hitler-to-power/

Andrew_FL writes:

@ThaomasH-

Why call things"socialism" that are not?

A question better directed at Bernie Sanders.

Scott Sumner: I can't tell if your are serious or joking when you write:

You'd want a country with extremely high quality civil servants. That would be France.

R Richard Schweitzer writes:

Thaomas,

Perhaps the problem is that each of the various systems designated as socialism have an objective or operative purpose.

Capitalism is the label given to those conditions that result from individuals and groups seeking their own objectives by means of their determination in varying specific circumstances. As a resulting condition, capitalism has no objective or operative purpose; although those results reflect the acquisitive and accumulation propensities of humans, individually and in groups.

The systems of socialism require mechanisms for the attainment of objectives or the purposes of their operations. Most commonly they require taking from some and distributing to others; or, just as frequently, imposing obligations on some for the benefits or amelioration of burdens of others. When the mechanisms of governments are used, taxation (in various forms) is the usual instrument. However, it is not the only instrument by which some may be required to serve others who provide no commutative service.

If there is some other way that the systems of socialism can function, given their particular objectives and operative purposes, it would merit treatment equal to the New Testament.

R Richard Schweitzer writes:

Nick B says:

So maybe a system that strives for full employment would be less likely to experience fascism or communism.

Come now, "full employment" can very well be an objective of any socialist system as well as of any totalitarian system (usually is – compulsorily), and certainly was in the various attempts at communist (and communal) structures whether philosophically or politically-based.

As for "striving," all sorts of things might count, including currency manipulations, credit manipulation, constraints on labor independence and managerial discretions. Haven't we seen them all?

Lorenzo from Oz writes:

Nick Bradley: "I've always liked reading your blog, but I think you're really wrong (and Hayek!) on your history. most authoritarian regimes emerge from an environment of mass unemployment or worse (e.g. starvation)."

Glad you like my blog :)

That's not what I argue, that's what Hayek argued. I basically agree with you. My view of interwar Fascism (Italy), Nazism (Germany) and traditionalist authoritarianism (Spain) is that it developed in countries suffering economic stress with large and threatening Leninist/Stalinist Parties where, in particular, rural voters felt threatened because the centre-left Parties alienated them also, thereby giving the Fascists, Nazis and Franco a break-through mass base.

Australia had a particularly bad Depression, but right-wing authoritarianism remained a fringe phenomenon because there was no mass Stalinist Party and the Labour Party did not (unlike the SPD or the SPI) implicitly or explicitly threaten rural voters with collectivisation. That analysis also goes for the Anglosphere generally plus Scandinavia and Benelux.

France was a bit of an intermediate case, because there was a large Stalinist Party but the Socialists and the Radicals (who included a centre-left element) did not flirt with collectivisation of land, so were not threatening to peasant voters.

If you want to know why traditionalist or pseudo-traditionalist authoritarianism breaks through into a mass base, it is always a good idea to have a hard look at what the centre left and hard left are doing/looking like/not saying/saying because such a break through is usually a response to anxiety/fear/insecurity/social stress. Thus, the longer term story in the US is the Democrats shifting away from the white working class, significant numbers of whom moved to the Republicans and then felt somewhat abandoned by them also.

Of course, on the economic stress/future anxiety side of things, what central bankers are doing may also matter.

Mark writes:

Nick Bradley:
"The US had comparable rates before 1982, with higher real growth, higher productivity growth, lower inequality, etc. The 33 years before Reagan - 2.55% real GDP per 25-54 year old growth; 1.6% before. And that includes the oil shock of the 1970s."

...

So - full employment from monetary policy, excess inflation sopped up with high marginal tax rates - its nice counter-cyclical policy too.

its also known as US/western policy before Reagan/Thatcher/UChicago convinced us all to chase Harberger's unicorns while giant Okun gaps exist..."

Um, I think the only way we could replicate our postwar era prosperity would be to bomb all our competitors until half of the world's remaining industrial infrastructure was in the US, rendering us immune to global competition. Personally, I don't buy that our postwar policies were the cause of the high growth back then nor that Reagan and Thatcher ruined it all; I'd say it was reverse causality: the redevelopment of Europe and Japan, the industrialization of the USSR and eventually China made it so we could no longer remain competitive under the previous policy regime, something the '70s helped demonstrate.

Lorenzo from Oz writes:

Nick Bradley: I have a longer response which is caught in moderation, but that was Hayek's argument, not mine.

E. Harding writes:

"The US had comparable rates before 1982, with higher real growth, higher productivity growth, lower inequality, etc. The 33 years before Reagan - 2.55% real GDP per 25-54 year old growth; 1.6% before. And that includes the oil shock of the 1970s."

-U.S. Federal revenues as a percentage of GDP peaked during WWII and the end of the Clinton administration. Those high marginal tax rates had little to no impact on anything, and little to no revenue was collected from them. As for the years before and after Reagan look at Greece during exactly the same time period. Unlike most countries in the 1980s, Greece moved leftward.

"So maybe a system that strives for full employment would be less likely to experience fascism or communism."

-Maybe so. But Greece in the 1960s is an important outlier. Also, Thailand.

"This is a rather clumsy analysis I'd expect at Heritage or somewhere like that."

-No, it's not.

"So - full employment from monetary policy, excess inflation sopped up with high marginal tax rates - its nice counter-cyclical policy too.

its also known as US/western policy before Reagan/Thatcher/UChicago convinced us all to chase Harberger's unicorns while giant Okun gaps exist..."

-Have you ever heard of the 1970s and of how all this fell apart? Reagan and Thatcher didn't just come out of the fever swamps when everything was working just hunky-dory.

The French socialists would say that the real problem is foreign competition "not playing by the rules". If the UK (and Luxembourg/Switzerland) hadn't replied to the 75% tax by saying "French entrepreneurs, we extend the red carpet to you"; if China/Southern Europe/Eastern Europe didn't engage in social dumping by working through Wednesdays (for a long time, there was no public schooling on Wednesdays in France, so many parents took that day off); if other countries made workers as hard to fire, and so on..., then it would work.

Personally this reads as "if everybody else were to screw up their economies as well, we'd stop looking bad by comparison", but it is the typical defense of their system.

Tom D writes:

While I don't endorse the idea, single payer would cost whatever we want it to cost. Just because no one wants to say no to anything doesn't mean we couldn't if we wanted to.

Nick Bradley writes:

@Lorenzo - thanks for the follow-up; I'm generally in agreement with your hypothesis -- I also think the US and Australia benefited from the lack of a desire for land collectivization, for pretty obvious reasons (it was distributed fairly equitably when the countries were founded).

As for US working-class whites, the paper cited appears to be generally correct: democrats stopped being able to effectively deliver on economic populism (final straw was the gutting of Humphrey-Hawkins), and a shift in messaging away from economic populism -- Carter was an economic conservative, for the most part. Carter's decision to appoint Volcker and subsequently implement monetary austerity in order to cure an oil shock also destroyed confidence in the democrats.

Nick Bradley writes:

@Mark - thank you for the response.

First, trade has never been *that* large of a percent of GDP in the US, at least compared to other countries.

Second, to the extent that exports (and competition against imports) did decline, the strong dollar policy of Volcker that culminated in a crisis in the mid-1980s and the Plaza Accords absolutely decimated America's ability to compete against imports.

The trade-weighted US dollar index (DTWEXM) went up 55% over a five-year period under Volcker. that did far more damage than anything else to our trade position.

Nick Bradley writes:

@E. Harding - thank you for your reply

1. Of course high marginal rates have little impact on revenue: that's the point! extremely high marginal rates on top incomes discourage large incomes for those at the top -- that is the point. With a highly progressive structure, firms are incentivized to pay workers more and reinvest more. With that removed, firms don't even invest long-term and wages have stagnated - its all about quarterly earnings and managerial compensation -- its a really rotten system.

2. sure there are outliers -- and much of that is due to the pre-existing distribution of land. And I don't have enough familiarity with their economies at the time

3. Yes, in the 1970s a large oil shock, coupled with a smaller food shock and a demographic shift (lots of baby boomers moving into adulthood, suppressing wages and increasing demand for goods and services) caused a surge in inflation.

3a. the right seized on this opportunity to break the back of labor and propose the same old liquidationist policies that they've been proposing since the 1920s! its really that simple. factoring out energy/food and demographics, inflation wasn't that bad.

as a final note, we also "double-counted" many aspects of inflation back then, which led to reforms in CPI. most notably, mortgage rates were used to measure housing costs -- which is problematic because interest rates are partially built on inflation expectations. A shift to owner equivalent rent fixed this.

Lorenzo from Oz writes:

Nick Bradley: One cannot achieve full employment by legislative fiat. The world changed, but the Democrat's policy prescriptions did not (or, at least not enough).

I would also add in cultural anxiety as a factor, particularly in more recent times. The US has been buffeted by a lot of social change, and clearly a lot of folk have felt left out or ignored.

For example, failure to achieve border control makes the US state look not competent, therefore not protective in crucial ways, therefore not reassuring. While same-sex marriage turned into "we will dragoon your labour to support it" (e.g. requiring provision of cakes, etc if requested).

Balancing inclusion and liberty, openness and benefit is difficult enough without a tendency to treat issues as if there is only one factor to consider, one absolutely right answer -- which immediately cuts out every one with contrary concerns.

The more the US federal government tries to do, the more trust in it falls. The more information there is about public affairs, the more trust in it falls. Yet government clearly has strong expansionary tendencies, information flows continue to expand. It is a genuinely difficult balancing act, made a lot more difficult if it is not even recognised as a balancing act.

BTW The US still exports a great deal. The US is not producing less manufacturing output, just doing it with fewer workers.

ThaomasH writes:

@ Andrew

Sanders does not have a blog and I expect a little better from professors of economics than from politicians.

One of the more interesting intellectual journeys of the twentieth century was that of Yves Montand, once touted as the French Reagan:

''Europeans mock Reagan,'' Mr. Montand said. ''But he's done a lot to restore America's confidence in itself and the world's confidence in America.

''We must never forget what distinguishes the West from he East,'' he said. ''If the Americans want to get rid of Reagan, they can vote him out. The Russians can't get rid of Gorbachev.''

On domestic policy, Mr. Montand could be classified in American terms as a liberal Republican or conservative Democrat. Government must be compassionate, more so than Mr. Reagan's, he said. But it must also free the creative energies of its capitalists, unlike President Mitterrand's Socialists.

''People must be free to create jobs and wealth for France, even if they cheat a little on the side,'' Mr. Montand added, bowing toward his country's deeply ingrained political cynicism.

For those too young to remember Yves Montand, he was once France's most beloved singer/actor. A protege of Edith Piaf, later married to Simone Signoret, paramour of Marilyn Monroe, and the son of a prominent Italian Communist who'd fled Mussolini in the 1920s. Montand himself once toured the USSR at the personal invitation of Nikita Khrushchev.

Montand's brother was one of the top leaders of France's Communist Party. When Montand broke with the Communists--having wavered in 1956 over Hungary--after the Czech invasion in 1968, his brother never spoke to him again. Even though they lived in the same building in Paris.

One of the things that bothered Montand was the high taxes on France's middle class. Which is still the case today.

Nick Bradley writes:

@Lorenzo -

You certainly can legislate full employment - is simply a matter of policy preference (unemployment vs inflation).

And to your other points, yes - older white america is having a collective panic attack over the demographic and cultural shifts currently underway. They'll mostly be dead or irrelevant in 15 to 20 years, but in the meantime politics are going to be very ugly.

Andrew_FL writes:

@ThaomasH-LOL okay then.

Unfortunately for you, who deeply cares about the word "socialism" and what it means, we do not have protected property rights over ordinary words. So if Bernie Sanders et al have redefined "socialism" for an entire generation of young people, Scott Sumner is going to have to use their terms for them to know what he means.

Mark writes:

"And to your other points, yes - older white america is having a collective panic attack over the demographic and cultural shifts currently underway. They'll mostly be dead or irrelevant in 15 to 20 years, but in the meantime politics are going to be very ugly."
I doubt it will get any less ugly after that as BLM protesters and people to the left of Sanders find their way into the political mainstream as well. And plenty of young people may react against it even harder than their parents did. Politics is a pendulum, after all.

William Barghest writes:

The Vermont comparison is horrible, since it is quite easy to move to say, NH, as opposed to leaving the US for Switzerland or Singapore to escape Sanders style taxes.

Brett writes:

If the goal of the labor law changes is to help the French young, then the young aren't particularly happy to receive them - they're making up much of the protesters against the changes.

It's not really surprising, either. The young are stuck in temp jobs right now, but they may have a shot at a regular job down the line - and if they get it, they'd want a job where they actually have due process in being fired. Reducing that protection means they never get there, even if it means they have an easier time finding a job.

If you really wanted to improve it, what you'd do is increase the probationary period to 3-5 years on permanent jobs, and expedite the hearings in the labor courts. They already have the option to buy out workers since 2008, assuming the worker takes the deal.

Lorenzo from Oz writes:

Nick Bradley: "You certainly can legislate full employment - is simply a matter of policy preference (unemployment vs inflation)." Not by simply decreeing monetary/fiscal policy will deliver it. The regulatory structure of your labour market(s) is as crucial as monetary policy.

Not sure that the age demographic of Trump voters is as straightforward as you suggest. Nor that a policy of deliberately turning the core of existing residents into a minority in their own country by systematically blocking them having any say about it is exactly a moral policy.

Though I would agree that mass importing Hispanics (and, for that matter, East Asians and South Asians) into the US is much less problematic than mass importing Muslims into Europe. But one of the problems is that facing that not all migrants are equally compatible, and that migration also has costs, is apparently not kosher (so to speak).

ThaomasH writes:

From the description of Mr. Montard, he could be almost any kind of Democrat (maybe even a Sanders "socialist" -- sorry Andrew_FL) if he avoided mood affiliation praise of Reagan.

Scott Sumner writes:

Nick, In my view the cuts in the top MTRs in the 1960s and the 1980s helped the economy. But yes, no single policy is decisive. Still the French seem to have concluded that the experiment failed.

Looking at simple GDP growth rates with no historical context is very misleading, as I've pointed out in earlier posts on taxes.

Richard, You said:

"I can't tell if you are serious or joking"

Serious.

Tom, You said:

"While I don't endorse the idea, single payer would cost whatever we want it to cost. Just because no one wants to say no to anything doesn't mean we couldn't if we wanted to."

The defenders often claim it is merely an expansion of Medicare, which is popular in the US. If they are going to make that comparison, don't you think it's valid to point out that Medicare is extremely expensive, and has poor cost controls (relatively to foreign health care, not private health care in the US.)

Unlearning writes:

Piketty explicitly states that higher taxes would have to be internationally coordinated to prevent capital flight, which would be a problem for any government (such as France) that tried to implement them alone. Although he does advocate higher income tax rates he focuses mostly on a wealth tax, which meshes better with his theoretical framework.

Also I'm not sure I would call higher taxes 'socialist' as they don't change how production is organised. Piketty is certainly not a socialist and rejects anti-capitalism early on in the book.

James writes:

Unlearning:

"Also I'm not sure I would call higher taxes 'socialist' as they don't change how production is organised."

If your criteria for calling something socialist is changing the organization of production, you are plainly mistaken. Take a look at the platforms of the world's socialist parties, past or present. They all include multiple objectives, many of which do not change how production is organized. One unanimous objective of all socialist parties is support for higher taxes as a share of economic output.

If you meant to argue that socialists should stop seeking higher taxes and focus on policies that change the structure of production, you may be on to something. Socialists and many others on the left frequently call for governments to raise taxes on high income earners without giving any particular reason to believe that transfers of money from high income earners to political bodies would be beneficial.

Mark writes:

Ulearnin: "Also I'm not sure I would call higher taxes 'socialist' as they don't change how production is organised. Piketty is certainly not a socialist and rejects anti-capitalism early on in the book."
I guess that depends on to what extent owning the output means controlling the means of production, since taxation is essentially the proportion of output claimed by the state.

Regarding Piketty, I think he seems like something of a Fabian socialist, perhaps an unwitting one; the kind who, like many social democrats, espouses 'reformed capitalism' in name, but would be hard pressed to name a regulation or tax hike they wouldn't at least apologize for if not defend, or a point at which they would actually say, 'ok, we have enough socialism, let's stop at that.'

I think in Europe especially, it's confusing, as there are plenty of Socialists who aren't really socialists (the Social Democratic parties were in fact originally largely full-blown Marxists until they reformed and moved toward the center over the course of the 20th century) and nominal capitalists who are more socialist than they themselves are aware.

Unlearning writes:

Yeah, I think the abuse of the term 'socialist' goes beyond this post and is not confined to either side.

However, I don't think it's true that those who call themselves socialists across the world express zero interest in changing production. Chavez, for example, organised a number of worker coops, and though Correa has not gone this far he campaigned partly on a platform of ending workplace exploitation and in favour of labour over capital.

Richard Familetti writes:

Try starting this conversation from a 5% tax rate rather than 50% (with state and local). Krugman and these socialist ideas are simply stealing. Thats why France rejected it. If the tax rate was 5% and they said lets got to 10% there would be a similar uproar. The goal posts have already moved too far.

Scott Sumner writes:

Unlearning, Piketty engages in a lot of anti-capitalism in his book.

Are you saying that Piketty opposed the French government's decision to raise tax rates to 75%? That's not my impression.

Unlearning writes:

I would say 'enacting the ideas of Thomas Piketty' would almost definitely entail a wealth tax, which was his focus in Capital. Higher income taxes are a much more commonly discussed idea that have been in the spotlight much longer than his book. In fact, the tax in France was implemented before the book was released. You might say the idea is similar to Piketty's, but I wouldn't say implementing such an idea is tantamount to implementing the ideas of Thomas Piketty.

And I'm not sure where you think he expresses anti-capitalism. Early on in the book he states:

I belong to a generation that turned eighteen in 1989, which was not only the bicentennial of the French Revolution but also the year when the Berlin Wall fell. I belong to a generation that came of age listening to news of the collapse of the Communist dicatorships and never felt the slightest affection or nostalgia for those regimes or for the Soviet Union. I was vaccinated for life against the conventional but lazy rhetoric of anticapitalism, some of which simply ignored the historic failure of Communism and much of which turned its back on the intellectual means necessary to push beyond it. I have no interest in denouncing inequality or capitalism per se—especially since social inequalities are not in themselves a problem as long as they are justified, that is, “founded only upon common utility,” as article 1 of the 1789 Declaration of the Rights of Man and the Citizen proclaims.

He expresses an aversion to 'unearned' capital income and inherited wealth, but this is combined with an enthusiasm for entrepreneurship, which seems pretty pro-capitalist to me. I don't think we should equate not being completely free-market with being anti-capitalist.

Effem writes:

Not a fan of socialist policies...but you have to admit, CA and NY are doing very well despite extremely high marginal tax rates. Very little sign of high-earners moving out either.

Then again, these states have a lot of already-wealthy people. And if you fall into that category high marginal rates might be welcome - it basically makes it much harder for the middle-class to catch up.

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