Laffer, Godard; Taxes and Property

The newspapers today were filled with incredible stories--incredible as in they strain our credibility, bordering on the absurd or surreal.  To paraphrase Chilean author and filmmaker Alberto Fuguet, why read magical realism when what is really happening in the world is so much crazier.

The French are manning the barricades again, resisting raising the retirement age from 60 to 62 and talk of tinkering with the 35 hour work week.  At moments, the French seem almost hopelessly out of touch with economic realities, a contrast made all the starker by comparisons to the other big E.U. economy, austere Germany.  But it is not all dreary economics and gritty protests.  Today's New York Times also reports that Paris has installed its first public fountain that spurts sparkling water.  What a wonderful idea, perfectly capturing bourgeois eco-consciousness.  Maybe the Germans, who mostly drink their (sparkling) water from glass bottles, do have something to learn from the French after all. 

That same issue of the Times reports on Jean-Luc Godard's rejection of intellectual property rights.  Godard proclaims that "there is no such thing as intellectual property."  He goes on to state that:
"Copyright really isn't feasible. An author has no rights. I have no rights. I have only duties."
Godard's statement exemplifies the best of professional virtue, vocations driven by intrinsic rewards.  Rejecting what has become a sort of neo-feudalism for the knowledge economy, Godard argues that IP is not a private property right from which he is entitled to collect rents. He writes movies because that is his calling, he has "only duties" to himself and his audience.  The extrinsic rewards are nice, but secondary.  We would all do well to follow Godard's example: living a good life based around the pursuit of meaningful (and not just lucrative) projects.  To realize this, of course, we need more jobs with dignity, but that's another issue. 

Turning to The Tennessean, the editorial page today ran an opinion piece by Arthur Laffer (the trickle-down theorists of the Reagan years) and his associate Ford Scudder titled "Raise taxes on all-except the wealthy."  I assumed the title was a touch tongue-in-cheek, if not fully ironic, and read the piece eagerly.  Alas, there was not satire or irony, but a case that high-income workers (having more control over their destiny and less daily need to work) will defer income or work less if taxes rise, which the authors claim would more than negatively offset the gains proposed by higher taxes.  But taxing the wealthy will not only reduce tax revenue, they argue, it will also lead the wealthy to "close down factories, hire fewer workers, invest less and move jobs offshore."  In short, raising taxes on the wealthy will produce more poor people.  It would be cruel to the poor, really, to tax the rich.

Where to start?  I would refer the author first to Lynn Stout's new book discussed below in which she looks at the many ways folks (even the wealthy) are motivated by factors beyond short-term financial incentives.  Maybe high-income earners wouldn't shutter up all the factories and reduce their productivity if they took home a few percent less--perhaps in fact these privileged folks also have the privilege of doing some they like, something they are committed to, something from through and on the society in which we all live and to which we must all contribute. 

In fact, we need to raise the number of high income tax brackets.  The top rate is currently above about $370,000.  We should have brackets of over $500,000 and over $1m.  And those should have a progressively higher rate.

Speaking of intrinsic rewards rather than material incentives: The Tennessean today also reports on a Vanderbilt study that found  that offering teachers financial incentives for student performance had no impact on student test scores.  Again, as Lynn Stout argues in Cultivating Conscience, many professions, such as teaching, are perversely corrupting by financial incentive schemes.  We want to pay teachers well but we also want to accord the profession the dignity it deserves (and pay is a symbol of that) and attract teachers who are driven by a calling, by the intrinsic rewards of teaching and not just by instrumental financial incentives.