I may be missing something, but wouldn’t a worker’s council represent the workers? Like a union or workers cooperative? Their whole schtick should be ‘preventing the exploitation of workers’. Ideally, a separate (public) entity dedicated to environmental regulation would take up the defense of the planet and its resources. The two should not be on equal footing; the public entity should stand above the corporation.
~Max
I would like to make a snarky comment like quoting your post and then saying, “Oh you poor sweet summer child” & etc. On the other hand, it might be funny but not very useful.
Worker’s Councils have been tried. Historically, have not been very amenable to the needs of workers. They do not have a strong history of good management and do not tend to grow businesses, because it’s often not actually in their interest to do so. And The “Workers’ Representatives” tend either to not be very interested in the average worker except in how to exploit them more or have no idea how the business functions. There may well be a good role for workers’ unions; that is a separate issue. But it’s hard to lead well unless you actually know what to accomplish, how to run the business, and as often as not, have direct financial skin in the game. The last point is in large part because even very well-meaning people may not be especially dedicated to a business enterprise unless they have a significant investment in it. That can be emotional and doesn’t have to mean ownership, but the latter is something that, say, a Board can actually implement.
Finally, your idea of having a “public environmental group” ruling the economy would be basically nonfunctional from day one and simply won’t work with your other idea.
The workers sure.
The worker not so much.
How does the “worker’s council” determine who has to come pick up my trash off the curb once a week?
I may be way out of my league here. I’m imagining some sort of trash cooperative. They assign routes just like any other trash company, boss (route manager) tells you which route, you go out there. If you don’t like that job or aren’t getting paid enough you can quit or you can bring it up at the next corporate meeting where your vote is equal to every other employee’s. At the meeting you elect representatives to the worker’s council, worker’s council duties include hiring/firing the top-level managers. Or if it’s small enough the employees at the meeting act as the council.
~Max
You should keep in mind that when the US had extraordinarily high marginal income tax rates in the past, they only kicked in at relatively high levels of income, and took in very little revenue.
Countries like the Nordics, which have relatively high marginal tax rates today, have those rates kick in at relatively low income levels. In Sweden, you hit the highest income tax rate, of over half your income, at around 70,000 USD. Their tax rate is relatively flat from a relatively low income level.
And they continue to have relatively high wealth inequality. Sweden has one of the highest Wealth Gini coefficients in the world. Higher than the US even.
Wealth taxes are extremely hard to implement, and even relatively “low” wealth taxes represent extremely high capital income tax rates.
You shouldn’t underestimate the incentive effects here. Even a country like Sweden only has a corporate tax rate of 22%. They fund their lavish social services by encouraging investment and economic growth, not squashing it.
You’re not going to find a way to permanently fund people’s healthcare – which must be newly produced every single year – by seizing paper that indicates ownership of warehouses, trucks, and computer code.
This is the key point I was emphasizing in my previous post.
If we want more healthcare, then we need to allocate more productive resources to produce that healthcare. You have to focus on where current production goes, and you have to encourage more efficiency in production: how to get more output from the same amount of input. And that requires intelligent capital allocation, from people who know how to do it, and who have an incentive to do it.
You would probably be well justified. 
I’m not even a socialist, I identify as conservative.
In the former case, I suspect there is something awry in the election of said representatives. In the latter case, I think you can look at how U.S. local governments go about finding city managers. Look at how successful, traditional corporations have boards of directors who go about finding C-level executives. I think that is a good model to follow, rather than having worker’s councilmembers try and run things themselves.
But we already have a public entity charged with making and enforcing environmental regulations.
~Max
The “fund healthcare” part of it was about the kind of taxes the US had 50 years ago, not a massive one-time redistribution.
The whole capitalism vs. communosocialism dichotomy is so twentieth century. One of these obsolete systems has fallen and the other is teetering. Let’s be honest. The greatest threat to capitalism isn’t socialism, it’s capitalists who don’t know when to quit. And their wealth has bred power, and vice versa. So we’re running out of time in which to make them quit, but we need to form a new economic paradigm suitable for the twenty-first century or we’ll be back to Dickensian England only with computers.
What has fallen?
Oh I didn’t see the top quote before.
Overall, I agree that you don’t want to stifle innovation to try to benefit social welfare. There’s a few different threads here I want to address:
First of all, yes a lot of European countries have much less progressive tax systems than we do. They’re also starting with much less of a problem with wealth inequality than we do. In the US, the middle class don’t have as much money to give to fund a social welfare system, and structuring a social welfare system where the middle class gives almost all it isn’t a great solution to the inequality problem. I also don’t think we need a welfare state as robust as Sweden. I think Germany has a much better welfare system than we do. I basically want to have a tax system like the US had 50 years ago used to fund a social welfare state that could range from the way Germany does it to the way Sweden does it - the only problem is that in any case the US would need the higher taxes on the rich in order to pay for more people on the lower rungs.
Yes, I’m fine with the top marginal tax rate working similarly to the way it did in the US when it was over 50%. I’d be fine with upping the top marginal rate but spreading out the cutoff points for higher marginal rates so that a similar effect is possible. We either end up with less inequality and more ability for the upper-middle class or for “normal” rich people to more of the welfare state, or we wind up with ultra-rich people giving us a fat stack of cash that makes the welfare state even more solvent. Win-win. I think in reality the way wealth inequality has increased since the top marginal rates went down, we’re seeing way beyond just the top income brackets rising with inflation or anything, so we’ve already created the problem that progressive taxes help to mitigate.
I said in a different thread that from what little I know about specific wealth tax proposals they’re less effective than just regular income, capital gains tax etc. The only compelling reason I’d see for them is if more progressive income taxes
Communosocialism.
Ok, thanks.
And during that extremely high tax period, gov’t revenue as a percentage of GDP didn’t change very much.
That is a chart of federal corporate and income taxes as a percentage of GDP. The grey bars are recessions. I chose 1954 as the starting point becuse that’s when the top marginal rate was set to 91%. The gray bars mark periods of recession in the U.S.
What you’ll notice is that tax revenue has fluctuated between 14.5% of GDP up to about 19.5%. But also note where the dips and valleys are: The dips tend to coincide with recessions, and the rises with periods of stable economic growth between recessions.
Now here are some major tax rate changes during that period:
1964: Top marginal rate lowered to 70% from 92%
1982: Top marginal rate lowered to 50%
1988: Top marginal rate lowered to 28%
1988-2000: Top marginal rate slowly increased to 39.6%
The top marginal rate then slowly slid back a bit to around 35% now.
The chart also includes corporate taxes. At the start of the chart, corporate tax rates were 52%. Around 1986 they were lowered to 35% from I believe around 46%. Then in 2018 they were lowered to 21%. We don’t have data for that, though.
As you can see, even with a 52% corporate tax and a 92% top individual marginal tax, government revenue as a percentage of GDP was scarcely different than it was in 2008 before the crash.
The two largest increases in government revenue as percentage of GDP came in several places:
1990-2000, with a ten year expansion of the economy and the dot-com boom which drove corporate profits up, followed by a reversion to the mean with the inevitable crash.
2011-2016: reversion to the mean from the low of the crash, plus gov’t stimulus
But what if we don’t compare it to GDP, but just look at government revenue in constant dollars?
As you can see, revenue goes up because of economic growth. The only big changes on the curve came in 1999 and 2009. One was due to the dot-com bust, and the other the 2008 crash. Notice revenue hardly moves off the graph with the big tax changes mentioned above.
The idea of using corporate or income taxes to fund a vastly expanded welfare state has to contend with the reality shown in this graph. It is extremely hard to extract money from people past a certain point in a free society, as the incentives you create will be used to either thwart your plan through creative financing, tax avoidance, or shifting of assets, or will cause a commensurate reduction in economic activity amongst the people most highly taxed.
So how do other countries have higher overall taxes? One way is a national sales tax, which could probably bump taxes up by a few points of GDP, but that’s a regressive tax that falls mainly on the working class.
The other places that have managed higher revenues from their income taxes generally have high-trust societies with a fairly homogenous population, such as in Sweden.
We’ve seen a combination of economic growth and a massive increase in income and wealth inequality, so the welfare state in 2020 in the USA would now cost more to run and not be able to draw from as much of the middle class as it would previously in US history or in other countries where inequality is smaller. It would be great if we didn’t have as much of an inequality problem and didn’t have to worry about a hollowed out middle class that saw a disproportionately small proportion of that economic growth. Unfortunately we do and we need policies that live in reality.
At the time of the revolution, Russia was an agricultural society with a literacy rate of 16%. Fifty years of socialism brought them to above 90% literacy in a now industrialized country capable of producing technology that defeated the best German weapons and raced past the United States into space.
After WW2 China was in a similar predicament and in the same period rose to be the world leader in production and technology. China is Socialist.
It’s really not an issue of Capitalism vs Socialism, It’s an issue of Governance. South Korea, Singapore and Japan utilize both for balanced governance.
Taken out of context, but …
Is that true ?
On two sites I checked, it doesn’t look that way. Here’s just one:
Sweden (2017): 28.8
US (2016): 41.1
Also:
Wealth.
Not income. Their income inequality is relatively low. Their wealth inequality is extremely high.
Thanks for the correction.
They do have us by a nose on that metric, but I still see much lower numbers, generally, in the other advanced economies.
[speaking generally, to the thread, now, and not directly to you]
I suspect if I tried to correlate GINI’s for wealth and income with the OECD-style metrics that usually help inform Quality of Life discussions, more income equality would equate to better outcomes.
Helping to refute the impression that it’s all a zero sum game – something I think is quintessentially American.
Our model does pick winners and losers. Our model, I’d wager, creates shockingly less upward mobility than we like to imagine. Our model is confiscatory and extractive, based on the general premise of The Greedy and The Ignorant.
Our model spends most of its time trying to get every waking hour of labor, and every last penny, out of people with precious little to give.
And this is yet another good place to make reference to my thread about income taxes:
I don’t like the labels, as they tend to devolve into false dichotomies. I do think our system is likely at least as rigged as in any advanced economy, and the rigging isn’t democratic in nature.
Late add: I’d have to think this one through a bit more, but one implication of the two different GINI metrics, vis-a-vis a country like Sweden, is that high income tax rates – ones that kick in relatively early (and, presumably, can’t be avoided by fancy accounting) – do not prevent the accumulation of wealth.
To the extent this is true (and I think I’d have to do a lot of digging to figure this one out), it kind of gives the lie to another big lie.
Because the poor in Sweden aren’t so awfully poor. The wide wealth GINI implies that their wealthy are doing just fine.
I could be wrong but I think that most of the wealth in the top 1% in Sweden is inherited wealth. I don’t know the specific ins and outs and if there’s any policy that leads to that or w/e.
Sweden is a bit weird as far as income taxes go because local/regional taxes tend to be flat, and there is a progressive national tax. The top marginal rate ends up being higher but the curve to get there is not the same. It gets a bit more complicated, because there’s also a VAT which has regressive qualities.
EDIT: Should add that in the US state taxes are obviously flat also, but they’re flat and tend to pick out a smaller percentage so the federal rate as well as social security, medicare and payroll winds up being more significant.