The present unemployment rate is 7.9%. But as Iraq War veterans have been flooding back home and Afghanistan War veterans are expected to be coming home in droves over the next 2 years, some are having a tough time adjusting to the cruel ways of market capitalism - the onus is on them to find a job in this tough economy. There are institutions out there that try to make it easier for vets to transition. But these aren't widely marketed and don't guarantee anything other than an increased access to a chance to be hired. That's not the same thing as a job.
Meanwhile, the unemployment rate of recent US veterans is 2% higher than the national average. And for some categories of recent vets (women, 2001-present), it's almost 2X higher: 15.5% and this is projected to rise rapidly as the surge of vets finally come home.
What is our country to do to support these men and women? We could continue our current track of offering lip service, or we could work to enact a real policy change that could have a real positive effect. The only way to directly solve this problem is to enact a thoroughly non-mainstream economic policy (albeit on a smaller scale): jobs guarantee specific to our returning vets.
A jobs guarantee program is exactly what it sounds like. Instead of trying to indirectly get people back to work by stimulating demand/spending, or by providing more opportunities for interviews etc, the government literally guarantees a public job potentially offering a laundry list of positions including: beautification, public works, counseling service to fellow vets, etc. In the past I've expressed concern about enacting a nationwide jobs guarantee program, and I still have those concerns: creating another unproven permanent government bureaucracy with the potential to increase beyond its initial scope, promoting potentially nontransferable job skills, disrupting the private labor market, creating a moral hazard of labor, etc. But, when we are talking about creating this on a much smaller scale, and for a specific segment: for recent veterans, most of those concerns become minuscule compared to the potential benefit - the necessary sacrifice we owe our returning soldiers. The least we can do is guarantee them a minimum wage paying job while they are undergoing private sector job-search. This point of this program would not be to give a solider a permanent job - but to give them temporary work, to more fully employ their expertise and resource, until they can find a better higher paying private sector job.
It's time to do this. Stop wasting money on all these government services that don't get vets jobs - they maybe just get them in the door. That's not good enough. In the meantime, we waste precious expertise, talent and labor resource that could be adding to our GDP, and our tax revenue. The other added benefit of this program is that it can act as a small-scale trial / test for a more broadened nationwide program. Maybe it will prove the skeptics, like me, wrong. And if it doesn't, if it does have unintended consequences, the scale of it means the costs are small relative to the potential debt we owe our soldiers.
Saturday, November 10, 2012
Thursday, November 8, 2012
Capital Gains Vs. Net Wealth
Yesterday stocks plummeted by the biggest % all year. No one knows exactly why, but most think it's from a combination of things including the fact that Wall Street doesn't like our status quo politics, and they particularly don't like the looming fiscal cliff: the series of tax hikes and government spending cuts scheduled to kick in in a couple months.
It may be that investors are worried about what Obama might make them pay as he continually hammered during the election that people like Mitt Romney and Warren Buffet actually pay less in taxes relative to their income compared to a typical worker because their incomes are largely earned by capital gains. Are capital gains tax increases destined to be part of any cliff negotiations ?
Classical economists (conservatives) generally don't like taxes on capital gains because it essentially acts as a negative incentive to save money. Keynesians don't fret as much about that since in their view investment often leads the savings and wealth creation and investment decisions by firms are partially benefited by furthering demand (consumption). Say's Law is rather outdated!
I'm against capital gains hikes personally much as I also dislike income tax hikes (or income taxes in general). For one thing they are taxes on flows not stocks. That is, you are taxed based on an annual increase or decrease in wealth via capital gains (or income). Well I could be a billionaire but have one bad year in terms of my income and thus owe nothing to the government despite my wealth. In fact, that was the case for many firms during the recession. They had net operating losses and owed $0 to Uncle Sam. Or, you could be a recent college grad making mad bank and therefore paying big taxes even though you are still young, have no wealth to speak of, have $0 in your 401K and have $100K in student loans. Income taxes are stupid.
Similarly regarding capital gains, if the stock market takes a dive and they make no capital gains, then they don't pay the taxes. If we care about distribution of wealth (and most conservatives don't, but I do) then we should care about this inherent loophole. Another reason I don't like capital gains tax is that it creates a perverse incentive: it makes people want to save less for their futures. If we want a populace that cares about its future and how it's going to pay for their golden years, then we should care about not promoting the next car purchase over the next Roth IRA purchase. Notice this is not the same argument classical economists make. Classical economists are pathological, and don't give a shit about you personally.
Some European countries use a net wealth tax, which to me is much more preferable (though perhaps not at the exorbitant rates as some of those countries) - it compares your assets minus your liabilities (stock variables) and the more you have, the more you are taxed. Simple, efficient, dynamic. So if I'm an average Joe, I won't feel queasy about saving for my future. I might feel a little queasy if I'm a billionaire in terms of net wealth: if I have a McMansion on the hill, 10 porches, and private jet... but frankly, if you are a billionaire and you are queasy about giving back to society that has helped you so much to get where you are, then you are an asshole and I don't particularly care.
It may be that investors are worried about what Obama might make them pay as he continually hammered during the election that people like Mitt Romney and Warren Buffet actually pay less in taxes relative to their income compared to a typical worker because their incomes are largely earned by capital gains. Are capital gains tax increases destined to be part of any cliff negotiations ?
Classical economists (conservatives) generally don't like taxes on capital gains because it essentially acts as a negative incentive to save money. Keynesians don't fret as much about that since in their view investment often leads the savings and wealth creation and investment decisions by firms are partially benefited by furthering demand (consumption). Say's Law is rather outdated!
I'm against capital gains hikes personally much as I also dislike income tax hikes (or income taxes in general). For one thing they are taxes on flows not stocks. That is, you are taxed based on an annual increase or decrease in wealth via capital gains (or income). Well I could be a billionaire but have one bad year in terms of my income and thus owe nothing to the government despite my wealth. In fact, that was the case for many firms during the recession. They had net operating losses and owed $0 to Uncle Sam. Or, you could be a recent college grad making mad bank and therefore paying big taxes even though you are still young, have no wealth to speak of, have $0 in your 401K and have $100K in student loans. Income taxes are stupid.
Similarly regarding capital gains, if the stock market takes a dive and they make no capital gains, then they don't pay the taxes. If we care about distribution of wealth (and most conservatives don't, but I do) then we should care about this inherent loophole. Another reason I don't like capital gains tax is that it creates a perverse incentive: it makes people want to save less for their futures. If we want a populace that cares about its future and how it's going to pay for their golden years, then we should care about not promoting the next car purchase over the next Roth IRA purchase. Notice this is not the same argument classical economists make. Classical economists are pathological, and don't give a shit about you personally.
Some European countries use a net wealth tax, which to me is much more preferable (though perhaps not at the exorbitant rates as some of those countries) - it compares your assets minus your liabilities (stock variables) and the more you have, the more you are taxed. Simple, efficient, dynamic. So if I'm an average Joe, I won't feel queasy about saving for my future. I might feel a little queasy if I'm a billionaire in terms of net wealth: if I have a McMansion on the hill, 10 porches, and private jet... but frankly, if you are a billionaire and you are queasy about giving back to society that has helped you so much to get where you are, then you are an asshole and I don't particularly care.
Subscribe to:
Posts (Atom)