Obama's Tax Plan Less Demanding than Reagonomics

After the American Century

The Republican position on taxes is essentially that their hero Ronald Reagan was wrong. President Obama wants to go back to a tax code much like that which became law under President Reagan. It reduced taxes but it also closed some loopholes and it made American corporations pay more than they had been.   

Look at the maximum tax rate for today and for 1986, when Reagan had been president for six years.
In 1986 the Federal tax rate for a husband and wife, filing together, was 50% on income over $358,782. 

In 2011 the Federal tax rate for a husband and wife, filing together, was 35% on income over $379,150.

Of course the US tax code is complex, and many deductions can come into play, but let us focus on the basic fact. The highest rate in 1986 was 50%, but a quarter century later it is only 35%. Under President Clinton the highest rate was 39.6%.  The rich have seldom had it so good, and the economy has seldom been so bad.

A tax plan that is far less demanding than that passed by President Reagan is now being attacked by the Republicans as "class warfare" - which shows how ridiculous public debate in the US has become, Warren Buffet and other billionaires are willing to pay more taxes, because they see that it is not just or fair or economically sustainable for them to pay as little as they now do.

The Bush tax cuts during his first term were not responsible fiscal policy. They encouraged a housing bubble and they made it impossible for the US government to pay its bills. They created the current financial mess, and the tax laws they passed need to be revised.

Obama should promoting his plan as a return to Reagonomics.

First Female Prime Minister in Danish History

After the American Century

Denmark has elected its first female prime minister Helle Thorning Schmidt. Gender was not an issue in the election, which focused on domestic issues. Foreign affairs were scrarcely discussed in the  debates, which dealt with the economy, health care, and the like.

The new prime minister was educated in political science, graduating from Copenhagen University in 1994. She also studied at the University of Bruges, as an exchange student in 1993. Before being elected to the European Parliament in 1999, she worked for three years as leader of the Secretariat for the Danish Socialist Party in Brussels.  Compared to most Danish politicians, therefore, she has had an unusual career, since it began in Europe and only later brought her back to the Danish Folketing (Parliament), where she was first elected as recently as 2005.

Thorning Schmidt is married to the son of Neil Kinnock, once the leader of the British Labour Party and later an EU Commissioner. Her husband lives much of the time in Switzerland, where he works.  This fact, combined with her extensive EU experience, suggests rather strongly that the new government will not be as xenophobic as that which has been toppled by the voters.

The new coalition government does not have a large majority, and the four parties involved disagree on many issues, so it may not be easy to hold them together.

Denmark on the Brink: The 2011 Election

After the American Century

I do not have a vote in the Danish election, coming up in 36 hours, and as it happens I will not even be in the country when the result is clear late Thursday night. Danes who read this column will already know a great deal about the election, and Americans and other non-Danes will know very little, if anything. So what follows is written to the non-Danes.

Imagine a country which is self-sufficient when it comes to energy, with its own oil fields, and a world leader in wind power as well. So energy is not a drain on the economy, but a profit center. Imagine a country that has a small military whose budget is an extremely small part of the total budget. So this is not a drain on the economy either. Imagine further that the country seldom suffers any massive disasters, such as tornadoes, hurricanes, or tidal waves, so it does not have to spend large sums on rebuilding after natural disasters. Imagine, too, that this country is a net food exporter. It gets even better. Imagine that this country, Denmark, has a positive balance of trade, year after year.

Denmark has all this going for it, yet it still has the world's highest taxes to pay for one of the most extensive and comprehensive welfare states. In many ways. it is a model for the world to emulate. But the bureaucracy just keeps growing and the top down control becomes more and more pronounced. 

All the parties seem to go in for some kind of tight controls. Some want to control the borders and keep the bloody foreigners out. Others want to control the work force and make everyone work longer or retire later. Other parties want to force anyone who is not working to go to university, which is tuition free. There are politicians calling for high taxes on foods that have sugar and or fat, to force people to eat healthier foods. Whatever the problem, at least one party has a compulsory solution. 

The focus of the election is the economy. Even though it is one of the wealthiest per capita countries in the world, with a diversified economy and its own energy supplies, the Danes are telling each other that they are on the brink of disaster. The politicians are warning them that they could soon be like Greece, a miserable bankrupt land, unless certain reforms are immediately adopted. Some parties are saying the taxes must go up, others that they must come down. All say at one time or another that education is a good idea, as we all live in a knowledge economy now. But in fact the schools and universities have been cut back for the most part. 

Does any of this make sense? If you live here and get closer to the debates, it seems to. But the problems here are strictly from Lilliput compared to what Spain or Italy is facing. Likewise, the United States should be so lucky as to have the problems the Danes have.  There are no crazies running around Denmark denying the reality of global warming or Bible thumping idiots who seem to swarm through the Republican Party these days. Abortion is not a campaign issue. No one demands that "creationism" be taught in the schools.

I am caught up in the elections here and have begun to feel my fate hangs in the balance. I am convinced that unless the present government is voted out of office, Denmark's very existence as a functioning economy may be threatened. Let me go further: keep the present government much longer and this place will become a theme park, with locals playing parts for tourists, while all the real jobs are off-shore. 

I exaggerate. But the election does matter. If the current government stays in power, it will continue the reverse Robin Hood policies that take money from unemployed and poor people and give it to the wealthiest third of society. If they stay in power, the country will become more xenophobic, which means guys like me won't want to come any more. If the present government stays in power, there will be no new ideas. They have been in power for ten years now, and haven't had a new thought since about 2005.

The polls say that Denmark is on the brink of change. So I hope.
UPDATE for non-Danish readers. The parties on the left did win, and will need more than a week to work out how to share power among the four party coalition that together has a small majority. 

The World Before (and After) 9/11

After the American Century

I now teach students who were as young as nine or ten years old in 2001. For them, 9/11 is not only a defining moment, and one of their earliest historical memories, but also the horizon of their personal historical knowledge. Few events before then registered, because they were just too young. Their world essentially is the world since that September morning, or afternoon, as it was here in Europe. 

So much has been said and written about that time, including several MA theses that I directed, that I am not going to try to say something profound in addition. But I want to recall the decade before the attacks, not to idealize it, but nevertheless to emphasize the qualities of the 1990s that were snuffed out. The decade between the fall of the Soviet Union and 9/11 was a period of ebullience and considerable hope. There was plenty of hype, too, notably the breathless enthusiasm for the "new economy." But even so, it was a time of prosperity in the US and Western Europe and of rapid growth in many other economies. It also saw the widespread adoption of email, the advent of the World Wide Web, and the globalization of business, information, and shared experiences.

There were bad things happening in the 1990s, too, but the fundamental feel of the time was completely different than the decade that followed, the "flat decade" as I have called it elsewhere in this column. As we pass this milestone, I sense the tides of pessimism, fundamentally about economics, but contributing in turn to an undertow of right-wing or even anti-democratic politics. I hope I am wrong about that. 

In talking to my students, I realize that the 1990s are their childhood, and not much of a repository of political or historical experience. How ingrained in their fundamental sense of the world are today's often harsh political rhetoric, the fear of terrorist attack, and the continued economic uncertainty? 

How strange to think that half a century ago it seemed obvious to most people that future prosperity was assured, that most people would not work more than 25 or 30 hours a week, that they would retire early, and that the great problem of the future would be how to use all the leisure time. Now almost all economists and politicians seem to agree on just the opposite: that future prosperity is by no means assured, that people need to work 38 or more hours a week, that they should not be allowed to retire early but keep on until they are 67 or more, and that the great problem of the future will be the shortage of workers.

Quite possibly the future we read about in the newspapers will be just as inaccurate as the one imagined in 1961. Quite possibly, fifty years after 9/11, it will seem less a defining moment than an interruption in some larger arc of history. So remember it we must, but we should not let it cut us off from the hopes and dreams it has displaced.

Historical Document: A "White" Slave in 1862

After the American Century

Occasionally I find an interesting document while doing my research. Often it has nothing to do with what I am looking for. But rather than let these documents go entirely, I will now reproduce selected items from time to time. The first one is from the Davenport Daily Gazette, Iowa, during the American Civil War.  It concerns slavery, and as one can see from the accompanying map, the slave concerned was living in the cotton growing area of Arkansas.

Slave crops, 1860

Monday Morning
September 1, 1862

White Slavery.

A Correspondent writing from Helena, Arkansas, says:

I was greatly surprised the other day by the declaration of a person with whom I had been conversing in the post office of this place, when, in reply to a suggestion of mine about his loyalty, he answered, “Why, my dear Sir, I am a slave. I belong to Dr.____,” I looked in his face, unable to believe my own eyes. His complexion was whiter than my own; his eyes a blue gray; his hair and features Caucasian; his language free from Negro dialect. I asked him again, “Is it possible that you are a slave? Why don’t you go North and claim the privileges of a free man?” He answered, I have a wife and children, and I don’t want to go till I can take them with me. I have been allowed by my master to enjoy a measure of freedom, and to possess a little property of my own. As soon as I can realize something of this property I intend, while the opportunity exists, to secure the freedom of myself and family.”

Our conversation had commenced upon a written document which he had been showing me, and which he could read as well a myself. When he left me I wondered greatly that such a man, at least 40 years of age, evidently a gentleman and a Christian, could be held a slave, and another white man be allowed to take his wages for naught in a Christian community. And then I remembered that the modern doctrine of the South, as taught by the Richmond Enquirer and other expounders of the system, is that slavery is not based upon complexion or race, but that capital should own labor, and the best condition of society is that in which the entire laboring population are slaves. This is the doctrine on which the leaders of this rebellion are striving to establish a Southern Confederacy, and thousands of laboring men in the South are blindly led to give it their aid by fighting against the Government of their fathers from mere sectional hatred and prejudice.

            When the rebellion shall be crushed and the South opened to free institutions and a higher civilization, the people who will be most benefited by the change are those who are now, by conscription and ignorance, arrayed in battle against us. May God speed the day when their eyes shall be opened, and they shall be able to discern between light and darkness!

Finding James Dudley Gray in History

After the American Century

We live life forward, enjoying what moments we can, but history gets written backward, and a major event tends to be read into the years before it occurred.

I was forcibly reminded of this when beginning to read a collection of letters I have in my possession, written in the nineteenth century. They are American letters, composed by one James Dudley Gray, born in eastern Ohio. He began to write to his favorite cousin in 1842 and sent her at least one letter each year until the Civil War began. In 1850 he moved to Iowa, which was then the frontier, and settled half way between the towns of Washington and Sigourney

It is hard to read these letters today in the same spirit that they were written. The author did not know that he would go into the Civil War as an assistant surgeon and treat casualties of the fighting in Vicksburg and other battles up and down the Mississippi. Even more frustrating for me, the modern reader, the letters cease in 1861 and I have nothing more from his pen about the war or anything else, even though he lived for another thirty years.

Yet James D. Gray was a highly literate man, who quoted Thomas Carlyle and occasional poems in his letters. He spent some years working for newspapers in Ohio, and possessed an uncommonly high level of literacy and more than the usual political engagement. One of his sons, Charles Gray, was so accomplished a painter that two of his portraits hang in the halls of Congress in Washington, DC.

Charles Gray, portrait of Joseph Warren Keifer

As far as I can tell from preliminary research, James D. Gray has been completely forgotten by posterity, one of the millions of men and women who settled in the American west during the nineteenth century. Yet it seems to me inconceivable that someone who wrote over 100 pages to just one correspondent left no other records anywhere. With luck, I hope to recreate his life right up to his passing, apparently in 1894.

Students Should Worry Less about their Careers

After the American Century

The academic year is beginning again, with more students than ever seeking university education. The immediate lack of jobs and worries about careers have become a constant refrain in the media, which at the same time tell us that there are not enough young people to do all the jobs that will be vacated by retirement.

Logically, the new students should not worry, because the demographics say that there have to be jobs for every one of them. Logically, they should just study what they love, and trust that a good position will be there for them later.

But we do not live in logical times, we live in panicky times, when politicians and economists say many contradictory things. Logically, the young will be desperately needed in the European and American job markets as the baby-boomers retire. But the megaphones, loud speakers and teleprompters belong not to the young but to the middle-aged, supervised by the generation about to retire. These people are worried about both the high rate of unemployment right now and the coming shortage of workers at all levels.

The students are all in a rush to find a practical career and a safe job, as though high unemployment were a permanent situation, as though job security will be difficult to attain in the future. But logically, this should not be the case. Logically, the young should not worry so much, and instead make sure they find a career that they really will enjoy.

When I look back at my own experience, it was just the opposite. I went to college at a time of prosperity and no one worried very much about what our education would be used for. We probably should have been more worried, because we were the baby-boomers, i.e. we were too many. Even so, for the most part it worked out.

Statistically, well over 90% of people with a university education do have jobs, and on average they make good money.  The problem is not getting a job, it is getting one you like.