Restore the Middle Class by Raising Taxes: A Leftist Has Just the Program
The American Prospect is a Left wing site that promotes the expansion of the state at all levels. The Wikipedia entry begins as follows:
The American Prospect is a quarterly American political magazine dedicated to American liberalism. Based in Washington, D.C., The American Prospect says it aims "to advance liberal and progressive goals through reporting, analysis, and debate about today's realities and tomorrow's possibilities." The American Prospect was founded in 1990 by Robert Kuttner, Paul Starr, and Robert Reich.
Reich was Clinton's Secretary of Labor.
On About Us, we read this:
The American Prospect's mission is summed up in the phrase "liberal intelligence" that runs under the logo on the magazine's cover. We aim to advance liberal and progressive goals through reporting, analysis, and debate about today's realities and tomorrow's possibilities.
You get the picture.
Recently, its executive editor wrote an OpEd piece for the Los Angeles Times: "L.A.'s middle class is gone. How do we rebuild it?"
He of course offered no proof that L.A.'s middle class is gone. We are supposed to take this on faith.
In one sense, it really is gone. By the standards of the rest of the nation, it has moved into the upper middle class. The median price -- half more, half less -- of a home in L.A. County is $650,000. Is this middle class housing in your city? You decide.
The author recommends that the voters consent to a half percent increase in the sales tax in order to fund additional high-speed rails.
This is a wildly right wing policy from the outlook of leftists. Sales taxes are "regressive," i.e., they tax the poor at the same rate as the rich. This is considered unfair by leftists. It does not redistribute wealth from the rich to the poor. It forces the poor to live with the taxes that they vote to impose on the rich. In short, a flat tax is a more fair tax than a graduated tax, and leftists hate fair taxes. A flat tax is too much like the tithe to suit leftists.
Yet here we have a leftist promoting an increase a tax that is not based on double theft: from the rich to the state (political theft), but not from the poor (social theft). It limits itself to a single tax: from the free market to the state. What gives?
He thinks higher taxes will make middle class people richer. OK, this is standard liberalism. "Taxes make most people richer." All of modern liberalism is based on this assumption. Take this away, and all that is left of modern liberalism is the grasping state.
He begins with an assertion.
Of all the problems besetting Los Angeles, the most fundamental is this: It doesn't have much of a middle class.
He offers no statistical evidence for this.
L.A. County is gigantic in size. The population is huge. So, there is no escape. If you want a job in the county, you must live in the county.
How is it that there is no middle class? Where is the evidence? He offers none.
Remember, he is a leftist. We are supposed to trust him -- no questions asked.
Like the nation as a whole, only more so, L.A.'s economy has morphed over the last half-century from one that featured widespread prosperity to one in which the pay is too damn low and the rent is too damn high. That was the conclusion of the real-estate website Zillow, which determined that L.A. ranked first among the 35 largest American cities last year in the percentage of income that residents with median-income levels had to pay, on average, for rent (49%; the national average was just 30%). Millions of Angelenos can barely afford to be Angelenos.
They can move out of state. They can sell their $650,000 homes, pocket the profits, and buy an upper middle class home in most other regions. But they prefer to live in Los Angeles County. Their idea of a big move is to move to Orange County.
I moved. But I did that in 1975.
LOWER CLASS WAGES AND $650,000 HOUSES?
People pay high prices because they compete against each other. If they have low pay, how do they pay $650,000 for a 1400 square foot home? They don't.
Just as the hollowing-out of the L.A. economy was partly caused by events beyond local control, so the rebuilding of an Angeleno middle class isn't something that local leaders and residents can accomplish by themselves. But there are some things they can do that can surely help.
How many middle-class people in your city pay $650,000 for a home?
Who can rebuild the middle class? Why, the state! It can raise taxes.
Then what will happen to real estate prices? They will go up.
What's really wrong with L.A.? Not enough federal money.
At the root of L.A.'s decline is that fact that, like the cities of the once industrial Midwest, it has de-industrialized -- indeed, de-industrialized twice. In the 1970s and '80s, the L.A. area, which had been home to a concentration of auto factories second only to Michigan, saw them all close down, taking with them tens of thousands of unionized jobs that had been filled by a racially diverse work force. In the '90s, with the Cold War's end, the local aerospace industry, which employed hundreds of thousands of unionized production workers and engineers, saw massive cutbacks from which it has never recovered.
Unionized workers, who earned their above-average wages by government coercion -- keeping out competition by law -- lost their theft-based jobs. Oh, woe!
In a 1985 survey conducted by the Los Angeles Area Chamber of Commerce, six of the dozen largest Southern California employers (both public and private) were aerospace manufacturers, ranging from Hughes Aircraft, which ranked second, with 65,704 employees, to Lockheed, which ranked twelfth, with 20,302 workers on its payroll.
I see. And how many people live in Los Angeles County? Ten million.
You say his example doesn't prove his point? That is because you are not a leftist.
In 2014, just two of the top 20 L.A. County employers were aerospace manufacturers (or, indeed, manufacturers of any kind): Northrup Grumman, with 17,000 workers, and Boeing, with 10,500. Six of the top 10 were public sector (with L.A. County and the L.A. Unified School District topping the list). Government, hospital companies, universities and retail chains dominated the top 50.Thus the public sector supports the largest part of what remains of the middle class. The number of such jobs was reduced in the wake of the 2008 crash, however, and has not yet returned to its pre-recession levels.
So, the state is supposedly the big employer. There are "retail chains," but we are not told how many.
How is it that the state is the big employer, yet the median price of a house is $650,000? Where do these house buyers owners get the money to pay the mortgages? Who pays the taxes? Where do taxpayers/producers live? How do they make enough money to buy homes and also fund the tax receivers?
We are not told. We are only told that the state creates wealth . . . mainly the U.S. government.
But the link between public spending and middle-class jobs in Los Angeles is not new. Even the great aerospace companies of the postwar boom, after all, were funded chiefly by taxpayer dollars funneled through the Defense Department.
The key to wealth is government power. Through government power, unions can keep out competition. This is the outlook of the Left.
The chief distinction between public- and private-sector jobs in today's L.A. -- and today's United States -- is that public-sector workers are unionized and have retained the power to bargain for wages and benefits, while workers in private-sector industries that were once largely unionized -- construction and trucking, for instance -- have lost that power, largely as a consequence of management's hostility to worker power.
Yet there is this nagging question. Who pays these above-market, union-coerced wages? Half a century ago, union workers in California accounted for a third of the work force in California. Today, it is 17%. But even 50 years ago, two-thirds of the workers were not unionized. Today, it is 83%. So, how do unions explain high income in Los Angeles County?
BOONDOGGLE ALERT!
What is needed to raise wages for the middle class? A massive boondoggle, of course. This man is a leftist.
The most plausible immediate hope for creating such jobs is a ballot measure being put together for November's election that would raise the county sales tax by a half-cent, which would generate $120 billion over the next 40 years for an ambitious program of rail and highway projects. Besides building numerous long-overdue rail lines -- including one to LAX and another through Sepulveda Pass -- the measure will generate many thousands of middle-income jobs. The Los Angeles County Economic Development Corporation estimates that Metro's union-labor projects will employ 190,000 construction workers, and that when the economic multiplier effects of the project are tallied up, it will create a total of roughly 425,000 new jobs in the County.
But boondoggles must be paid for. Yes, even in the world of liberalism. Who will pay for this boondoggle? Taxpayers. How? With money they will not be allowed to keep.
Once again, there is no tooth fairy.
But at least everyone will pay the same percentage: one half of one percent.
Once again, the tax collector will send out threatening letters: "Pay up, or else!"
CONCLUSION
Our leftist ends with this: "Can L.A. rebuild its middle class? In November, voters can do their bit to help."
This is the fantasy world of the Left. They never met a tax they didn't like.
We will see if the voters vote to pay an extra 0.5% sales tax. In urban California, economic logic is always in short supply . . . even at high prices.