President Beaver? Your Father Would Like to Talk to You

N. Gregory Mankiw, a Harvard Economics professor, published an op-ed in theassuming the role of Ward Cleaver, offering sage advice to Obama couched in simple-minded concepts a nine-year-old could understand. Let's listen in.
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Remember Leave it to Beaver? Remember how young Theodore "The Beaver" Cleaver would get into scrapes, as big brother Wally teased and Mom June offered motherly comfort and Dad Ward taught valuable lessons?

I ask, because on January 2nd, N. Gregory Mankiw (a professor of Economics at Harvard) published, in the New York Times, an op-ed piece in which he essentially assumed the role of Ward Cleaver, offering sage advice to President Obama while couching it in the kind of simple language and simple-minded concepts even a nine-year-old could understand. Let's listen in!

Dear President Obama,
Sorry to bother you. I know you are busy. But I have the sense that you could use a few words of advice.

Isn't that nice? Oh, "I have the sense that you could use" is a bit ESL, but we know he means well. Then, after two quick puffs on the pipe of "here come the Republicans" and "I am here to help," Dad gets down to cases:

Focus on the long run: Liberals, [Jimmy Carter's chief economist Charles L.] Schultze suggested, tend to worry most about short-run policy. And, indeed, starting with the stimulus package in early 2009, your economic policy has focused on the short-run problem of promoting recovery from the financial crisis and economic downturn.

But now it is time to pivot and address the long-term fiscal problem.

You see, Beaver, even though unemployment is pushing 10% (with the worse consecutive series of months over 9% since the Great Depression), banks and businesses are sitting on record hoards of cash, and the middle class is teetering on bankruptcy and downward mobility, it's time to "pivot." What I mean is, now that the obstructionists, liars, religious nutbars and frothing lunatics of the Republican Party have arrived to rule the House, "it's time" to assuage, not the short-term problems of corporations and the wealthy, but their longer-term concerns.

Think at the margin: Republicans worry about the adverse incentive effects of high marginal tax rates. A marginal tax rate is the additional tax that a person pays on an extra dollar of income.

From this perspective, many of the tax cuts you have championed look more like tax increases. For example, the so-called Making Work Pay Tax Credit is phased out for individuals making more than $75,000 a year. That is, because many Americans lose some of the credit as they earn more, the credit reduces their incentive to work. In effect, it is an increase in their marginal tax rate.

From the standpoint of incentives, a tax cut is worthy of its name only if it increases the reward for earning additional income.

Now, Beaver, I know you're wondering: Do people really do that? Other than tough-talking Randroid cranks?

I think they do. Even though I've never met a single individual (making more than 75K a year -- the tax is applied to adjusted gross income) or couple (making more than 150K) who contemplate the change in their tax and decide, "I know my lifestyle has expanded to take advantage of my decent income, and I know that various notorious costs, such as that of college for my kids or health insurance for me and my family, are skyrocketing on a daily basis, and I know that it's wise to earn as much as I can during my 'peak earning years' if for no other reason than to set more aside for what everyone is still laughingly calling 'retirement,' but still, I dunno -- I just don't feel right. That little bit of extra tax stinks. I have no incentive. I think I'll work less."

Nonetheless I'm sure those people exist. And both of them matter very much to me, and they should to you, too.

Stop trying to spread the wealth: Ever since your famous exchange with Joe the Plumber, it has been clear that you believe that the redistribution of income is a crucial function of government. A long philosophical tradition supports your view. It includes John Rawls' treatise "A Theory of Justice," which concludes that the main goal of public policy should be to transfer resources to those at the bottom of the economic ladder.

Now I know your mother says that the phrase "redistribution of income" can be applied to anything from agribusiness subsidies to Social Security. But to us it means "giving the poor a free ride." And it's true that I'm arguing deceptively, invoking Rawls as someone who "supports" Obama's view (supported, actually; A Theory of Justice was published in 1971, when Obama was ten), and then (dishonestly) ascribing to Obama the view of Rawls. But that's what Republicans do, son.

Many Republicans, however, reject this view of the state. From their perspective, it is not the proper role of government to fix the income distribution in an attempt to achieve some utopian vision of fairness.

Yes, Beaver, I'm doing it (i.e., disingenuously engaging in rhetorical sleaziness) again, because on Leave it to Beaver, father knows best: "fairness" is necessarily a "utopian vision." When the top 1% of the population takes in 21% of the national income, fairness must be equated with impractical idealism, or we'll have anarchy and socialism.

Whereas hard-headed, non-utopian, principled-but-realistic Republicans...

...believe, instead, that in a free society, people make money when they produce goods and services that others value, and that, as a result, what they earn is rightfully theirs.

Now, it's true that the most callous, greedy, and morally self-satisfied monster in Charles Dickens's London would say precisely the same thing. But you don't know that, because you're still a child, Beaver.And so are the readers of the New York Times.

Spread opportunity instead: Despite their rejection of spreading the wealth, Republicans recognize that times are hard for the less fortunate. Their solution is not to adjust the slices of the economic pie, as if they had been doled out by careless cutting, but to expand the pie by providing greater opportunity for all.

Since the mid-1970s, the gap between rich and poor has grown considerably. One of best analyses of this long-term trend is by the Harvard economics professors Claudia Goldin and Lawrence Katz in their book, The Race Between Education and Technology. The authors conclude that widening inequality is largely a symptom of the educational system's failure to provide enough skilled workers to keep up with the ever increasing demand.

Of course, your mother might ask, "If that were true, Ward, wouldn't 'skilled workers' find themselves increasingly in demand, with rising salaries? And what makes Goldin and Katz's book so great? What about this one?" But she's just the mother, Beaver.

We're almost finished, and then you can go outside and play. But first:

Don't make the opposition your enemy: Last month, when you struck your tax deal with Republican leaders, you said you were negotiating with "hostage takers." In the future, please choose your metaphors more carefully.

Republicans are not terrorists. They are not the enemy. Like you, they love their country, and they want what is best for the American people. They just have a different judgment about what that is.

Son, remember those Republicans, who have bragged about how they want to destroy you and your administration? The ones who have held up a record number of your judicial appointments because they hate America and love to cripple its justice system? The ones who refused to fund medical care for 9-11 responders until they were shamed and/or bribed into going along? The ones who encourage and underwrite the certifiable paranoia and foaming idiocy of the Tea Parties, who call you everything from Stalin to Hitler to a Muslim terrorist? Don't make them your enemy. Because they're not terrorists. They just want to crush you and everything you stand for.

Let me propose a New Year's resolution for you: Have a beer with a Republican at least once a week. The two of you won't necessarily agree, but you might end up with a bit more respect for each other's differences.

Okay, son. I hope you've learned your lesson. And don't worry that what I've said insulted your intelligence, because it didn't. You're just a kid!

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