Justin Fox Likes Jim Manzi; I Am Not Sure Why...
Justin Fox likes Jim Manzi:
The Curious Capitalist - Justin Fox - Economy - Markets - Business - TIME: I think Jim Manzi, surely the most interesting new conservative voice on economic issues to emerge in the past few years, has produced a screed against Obamanomics.... A sample:
Growing inequality and middle-class wage stagnation are big problems for America. But trying to re-regulate the economy and redistribute income is a cure worse than the disease. Of course, all of my criticisms of Obama’s economic plans would also be a lot more useful if his opponent seemed to care at all about any of these issues, and was presenting creative alternatives. Further, for all of my litany of dumb things Obama wants to do (and things that the current government is doing right now) to inhibit growth, the United States is a very rich country with a strong economy. Subject to normal ups-and-downs, it is likely to keep growing for a long time even if Obama does all he wants to do. If you keep eating enough french fries, however, eventually you’re going to have a heart attack.
I'm not saying Manzi is necessarily right. His post begins by approvingly citing Boskin, after all. But this is what the discussion ought to be about.
Well I will say that Manzi is wrong. I don't understand why Justin Fox approves of him.
Here is Manzi:
High Taxes Kill Jobs: I’ve been trying for weeks to get around to cataloging just how many bad economic policies Obama has proposed.... For all the “We are the change we’ve been waiting for” yak-yak about a new generation or whatever, and for all the celebrated economists who are advising him, the odds-on candidate for the U.S. presidency has apparently decided to do his best to recreate the economy of the late 1970s. One important part of this is the incentives that his tax policies will create.... Obama’s proposed tax policies would likely reduce... new company start-ups. Long story short, expect many fewer new companies to be founded if Obama gets his way on economic policy. Given that something like 7 million people in the U.S. work in companies that are or were venture-backed, including a majority of the employees in high-growth sectors of the economy like computers and software, this is likely to matter a lot in the long run.
The key thing to keep in mind about the economics of starting a growth company is that generally you are trading lower current income and much longer hours for some years in exchange for the low-odds chance of a big payday.... The potential pot of gold has to be very big to get people to make the leap.... [C]onsider Anne’s incentives as they exist the moment before she makes the leap. As she considers whether to do it, her potential payday gets two big haircuts under the Obama plan versus current tax rates: (1) she loses an additional 10% of her payout when she sells the company or goes public, due to the higher capital gains tax rate, and then (2) unless she plans to buy and eat an immense number of pizzas and cheese steaks the day she sells the company, she will invest the proceeds, and will now expect to pay higher taxes on all of the capital gains, dividends and interest income that she will earn on this in perpetuity. The second haircut is actually the larger one...
I think we can stop there. I am a progressive-consumption-tax guy myself--I don't like to see capital income taxed unless that tax is linked to high consumption spending in some way. But the claim that Anne's entire stake is subject to the capital gains tax on the day of the IPO is so false as to be totally bonkers.
No, Justin, keep looking.
