Talking Business

January 13, 2014

A call to the millennial generation about economic reforms is ruined by rhetoric

An article in Rolling Stone by left-wing activist Jesse A. Myerson that demonizes capitalism shows what is hobbling public discourse these days. Predictably, liberals are cheering and conservatives recoiling. But Myerson’s proposals are not as fearsome as critics on the right believe. Neither are they as radical as cheerleaders on the left think.
Left-wing activist Jesse A. Myerson has thrown down some words worth fighting over. An article by Myerson in Rolling Stone, “Five economic reforms millennials should be fighting for,” reads like a call to revolution wrapped in anti-capitalist rhetoric. Myerson grounds his five reforms in the struggles inflicted on millennials by the economic downturn: “Here are a few things we might want to start fighting for, pronto, if we want to grow old in a just, fair society, rather than the economic hellhole our parents have handed us.” 1. Guaranteed work for everybody. 2. Social Security for all. 3. Take back the land. 4. Make everything owned by everybody. 5. A public bank in every state. Predictably, liberals are cheering and conservatives recoiling. But Myerson’s proposals are not as fearsome as critics on the right believe. Neither are they as radical as cheerleaders on the left think. No. 1 is simply a public works program, and as Myerson points out we’ve already been down that road with the Works Progress Administration in the 1930s. Myerson updates the idea for millennials, anchoring such a program in the non-profit sector where people could at least “contribute skills that inspire them” like teaching or cleaning up the environment. No. 2 isn’t totally crazy either. We already have Social Security for everyone over a certain age, and even some conservative economists support what’s called a “universal basic income” that at least gives people enough to survive on. Remember Milton Freidman’s negative income tax? Myerson makes one compelling point: A basic income might be a good idea in an economy that no longer needs as many actual human workers. As Myerson writes, “We live in the age of 3D printers and self-replicating robots.” Machines are becoming so complex the intelligence and skills needed to run them are beyond many people, who are, in essence, surplus commodities. Hence, stubbornly high joblessness. Myerson pushes this notion another step, again upping his appeal to millennials. A universal basic income “could make participation in the labor force truly voluntary, thereby enabling people to get a life.” Reforms Nos. 3 and 4 — taking back the land and making everything owned by everyone — suffer from the use of the commandeering words “taking” and “making.” In both cases, Myerson falls back on more mainstream mechanisms as half measures. After first contending stupidly that landlords “don’t really do anything to earn their money,” and that the value of land “reflects the nearby parks, subways and shops,” he proposes taxes on land instead of outright expropriation. Such taxes are already used in a few places, notably Pennsylvania. On No. 4, he contends that instead of “having to stage uprisings that seize the actual airplanes and warehouses and whatnot,” government should just buy up all the stocks and bonds of the ownership class. But once again, he would tap a mechanism already in use — so-called sovereign wealth funds — that could buy up private assets. The funds would then pay dividends to U.S. residents. But state pension funds are a form of sovereign wealth funds, and Alaska has its Permanent Fund, which pays each resident an annual dividend. Reform No. 5 — a public bank in every state — borrows an idea from North Dakota, which has a public bank funded by state taxes. It uses that money for cheap loans to farmers, students and businesses. Myerson writes that all banks are greedy Wall Street players, making bad loans and slicing them up to sell on the secondary market while placing bets on derivatives. But the vast majority of community banks didn’t get deep into that game and provided their borrowers just the services a public bank would. Now, I disagree with the extent of nearly everything Myerson proposes. It would be an easy column tearing them apart. But I wanted to give them a dispassionate presentation, because I think Myerson’s article represents what’s wrong about our discourse these days. Too many people on both the left and right just want to demonize opposing arguments and those who disagree with them. Academics politely label it delegitimization. In Myerson’s view, capitalism is the culprit and capitalists are the villains. Just to grind Myerson’s gears a bit, one could point out that a capitalist system is the only economic system that can generate the prosperity that makes it even remotely possible to afford his reforms. And, as noted anyway, many of the mechanisms he proposes to implement his visions already exist inside a capitalist system. Our political leaders and top business executives should take note, however. This is the kind of thinking that gains traction when you oversee a bad economy. At any rate, I’m not too worried. Myerson’s presumes to speak for an entire generation, but millennials, like any other generation, won’t act as a monolith. I doubt many of them, given the governmental incompetence, corruption and idiocy on display in recent years, will want to rush deeper into the embrace of an all-encompassing state. And then again, there’s the question of who will pay. Myerson thinks it will be older generations, but his lightning-rod rhetoric, rather than persuasive, will just inflame and add years to any debate about his reforms. It will be the millennials themselves who’ll have to pony up.

Alternate universe

In reply to Myerson’s five reforms, Dylan Matthews of The Washington Post’s Wonkblog wrote an article called “Five conservative reforms millennials should be fighting for.”

In Matthews’ words, you can “frame (Myerson’s) policies a bit differently and it sounds almost like a conservative wish list.” All his proposals have some support from conservative economists.

1. End the long-term unemployment crisis.

But rather than giveaways or wasteful infrastructure spending, pay businesses directly to keep workers on payrolls during recessions.

2. Tear down the welfare bureaucracy.

The current system is fragmented, inefficient and singles out subsets of people who get unequal treatment. Instead, just send checks to everyone, a “basic income.”

3. Eliminate job-killing income, payroll and corporate taxes.

Replace them with, yes, a land and resources tax.

4. Have Social Security invest in the private sector, not the government.

5. Help small businesses grow.

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