George W Bush is Bad for Capitalism

I know it sounds crazy, but check out this Economist blog post by Jason Furman, along the lines of yesterday's piece from the WSJ. Sez Furman:

Summers, Bordoff and I argue that an important part of the solution to rising inequality is a progressive fiscal system. [ . . . ]

Unfortunately, the progressive tax system offset only about 7 percent of the $664 billion income shift since 1979. Absent the tax cuts enacted [by W] starting in 2001, the tax system would have offset 20 percent of the increase in inequality. [emphasis added]

So, thanks to W, progressive taxes offset about 1/3 of the increase in inequality that they would have offset had Clinton's tax system remained in place.

Why does income inequality matter? Let's let noted Marxist economist, comrade Alan Greenspan, explain it to us:

Income inequality is where the capitalist system is most vulnerable. You can’t have the capitalist system if an increasing number of people think it is unjust.

So, in short, by contributing substantially to increasing income inequality, George W. Bush has put capitalism itself at risk.

OK. Does this mean I'm for four more years [ahem], or that I am now happy about the last eight? No. Income inequality is A Bad Thing. What's interesting, of course, is that Greenspan doesn't actually say that it's unjust. But recognition of a PR problem with capitalism is fueling a move from odd quarters back toward more progressive taxation. Yes, gross (and growing) income inequality is a symptom of a broken system, and so progressive taxation is sort of a band-aid. But it's still right, given the circumstances, and worth trying to get.

tags technorati : Bush, Capitalism, Economics, Taxes, Inequality