Ask Auntie Pinko
September 6 , 2001

Dear Auntie Pinko,

Conservatives say increasing corporate taxes and marginal tax rates on the upper income bracket harms the economy and causes job loss because it takes money away from the upper class meaning less money is invested in the economy and in providing more jobs. Is this true?

Matt,
St. Louis, MO

Dear Matt,

If you asked this question of three different economists, you would get three different answers, based on their individual politics, the economic models they espouse, and how many cups of coffee they've had that day. Mr. Keynes would say one thing, Mr. Friedman would say another thing, and Mr. Marx (yes, he was an economist) would give you yet a third answer.

Economics is not an exact science, because so many of its variables depend on chance and on human nature-and while human nature can seem predictable at the macro level, no one who really knows predictive statistics would ever make book on it. Therefore, from an economic level, no one, certainly not Auntie Pinko, can say "this is right and everything else is wrong."

However, let's take a subjective look at a few of the assumptions on which this particular conservative economic model is based:

1. Only rich people invest in the economy. 2. Only rich people provide jobs. 3. Direct job creation is the best (or maybe the only) way to invest in the economy. 4. All job creation is good for the economy.

Assumption One: Bushwah! (Auntie Pinko just loves using that word, so appropriate, don't you agree?) The greatest surges in economic prosperity in Auntie Pinko's lifetime resulted not from giving rich people money, but from giving middle-class and working-class people more money, and from lifting people from poverty into the middle class by increasing their income and moderating their basic cost of living expenditures.

Assumption Two: More Bushwah! The vast majority of new jobs are created by small and medium-size businesses as they start up and grow and expand. Yes, some of those startups and expansions may be bankrolled by wealthy venture capitalists, but certainly not all, and there are plenty of ways to get capital into small and medium-size businesses without routing it through the bloated offshore accounts of the greedy.

Assumption Three: In many sectors of our economy, we currently have more jobs than we have qualified workers to fill them. Think about this, instead: What if the average job paid a worker enough so that after meeting all her family's housing, transportation, health care, and other basic needs, she still had a little money to save or invest? What would that do to the economy? I suggest that we stop looking at creating more jobs that don't pay enough to support a family, and instead look at two things: improving the quality of the jobs we already have, and making costs like transportation, health care, and housing take up less of a family's budget.

Assumption Four: See the previous assumption. What kind of jobs? Where? Will they pay enough to support a family? Will they be available to the people who need them most? Will there be qualified people to fill them? If not, are there easily-accessible ways for the people who need those jobs to get qualified?

In short, Matt, while no economic model can provide us with empirical truth, our economy should reflect our values. Do you value giving more money to the rich, and letting everyone else's standard of living slide inexorably downward?

Not if you're a Democrat.

Thanks for writing to Auntie Pinko!

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