Free Rise

From this morning’s NY Times, “For Many, a Boom That Wasn’t“:

In 2000, at the end of the previous economic expansion, the median American family made about $61,000, according to the Census Bureau’s inflation-adjusted numbers. In 2007, in what looks to have been the final year of the most recent expansion, the median family, amazingly, seems to have made less — about $60,500.

This has never happened before, at least not for as long as the government has been keeping records. In every other expansion since World War II, the buying power of most American families grew while the economy did. You can think of this as the most basic test of an economy’s health: does it produce ever-rising living standards for its citizens?

Seven years is not a blip. It’s a trend. And there’s no denying the unstoppable forces that created this stagnation:

• The opening of the American economy to global supply competition has forced manufacturing and increasingly value-added services jobs overseas
• The opening of the American workforce to large inflows of immigrants, and the ubiquity of the two-career household, increased the labor supply and pushed wages downward
• Global economic development also put demand pressures on commodities. Oil, food, and materials have never been more expensive
• And America’s three most serious household expenses — housing, health care, and education — were goosed ever upwards by systems that thwarted market forces

But there’s also one input that is utterly discretionary and susceptible to the whims of humankind: taxation. The philosophy of our governments — not just federal, but all levels — has been to regress their tax systems so that the rich pay a lower share of their income than they did before. Economic conservatives promote low and flat taxes as the drivers of economic growth. And they’ve won their battles: As a percent of GDP, US taxation ranks 34th of the 36 largest economies.

Low taxes, however, are not enough to grow an economy. You also need investments. And my family is getting a whopping tax refund this year — one that we didn’t really need — while our neighborhood school slashes its staff, while our freeways clog up, and while the middle class faces higher bills for college, cancer treatments, and dirty energy.

In short, America’s government treats this country like a cash cow business, like AOL or RJ Reynolds. We should be a growth play. But you don’t grow your organization by paying out all your profits as dividends. You have to plow them back into the org.

So let’s invest in America. Let’s redirect our spending to tomorrow’s projects. And let’s fund these investments not from those who can afford it least (or with more debt), but from the ever-wealthier people who have benefited most from this American system.