Stripped of its pretexts and posturings, the current argument over tax cuts in the United States is ...
Stripped of its pretexts and posturings, the current argument over tax cuts in the United States is very old stuff.
Most of the talk about repaying the national debt is a red herring. So is the wrangling over whether this plan or that plan will help pull the economy back from the brink of recession.
The real matter at issue, understood by far more people than say it aloud, is who should command the power that comes with control of economic assets. You know, money.
It's individualism against collectivism. One side says private owners acting in their own enlightened self interest achieve the greatest social benefits: when you put your trust in government, you get the motor vehicle department.
The other side says that as an impetus for achieving the best things of which man is capable, individual self-seeking will never work.
Seen in those terms, the current Republican proposal to cut tax rates and a Democratic suggestion to provide each taxpayer with a $300 rebate are diametrical opposites.
The Republican idea, in effect, renounces the Government's claim to $1.6 trillion in prospective future tax revenues. The Democrats' rebate idea keeps the Government squarely in the role of distributing money where it purportedly ought to go.
How long has this been going on? At least two millennia, to judge by the book of Acts in the Bible, which tells of the earliest days of Christianity.
"All the believers were one in heart and mind," we read in chapter four, New International version. "No one claimed that any of his possessions was his own, but they shared everything they had. From time to time those who owned lands or houses sold them, brought the money from the sales and put it at the apostles' feet, and it was distributed to anyone as he had need."
Why, that's communism, 18 centuries before the birth of Karl Marx! People who talk about the "Christian Right" in today's world would have to call these ancients the "Christian Left," wouldn't they?
People all over the world have tried to recreate that biblical vision many times since. In the former Soviet Union, for example, also in West Roxbury, Massachusetts, from 1841 to 1847. There, nine miles from Boston, a utopian experiment called Brook Farm attracted heavy hitters like Nathaniel Hawthorne and Charles A Dana, later a legendary New York City newspaperman.
At Brook Farm "intellectual life was stimulating," the Columbia Encyclopedia relates. The group ran an excellent school. But the community didn't do so well at practical economics, including farming. "Most of the work was done by men who had trouble distinguishing the business end of a scythe from its handle," said Alfred H Fenton in a biography, "Dana of the Sun".
However gallant the struggle, the project failed. But the dream was a long way from dead. Harking back on such stories in US history, an event like the Woodstock music festival in August 1969 presents itself as a sort of revival meeting.
In the same era as Woodstock, but light years away on the political spectrum, a strange new force made its presence felt in the tug of war between communitarianism and capitalism Ã the mutual fund.
Yes, the mutual fund. Many socialists sneer at funds, a capitalist invention lacking the right ideological pedigree. Many people in the fund industry, for their part, squirm at any talk about the social significance of their product. One senses they find it grandiose.
So it may be. But funds have helped give more than 80 million Americans a "we're in this together" equity stake in the economy. Because of funds, the us-versus-them distinction between business owners and workers is less clear than before.
Another step in that direction could be taken now, if some sort of social security reform were adopted that allowed members of the system to invest money they contribute, by means of mutual funds or some similar setup.
You can see the potential power behind this idea in the fact that it so thoroughly scares both sides in the present ideological divide. Conservative capitalists fear it would give government dangerous new levers of power over businesses and free markets, liberals anguish over the reverse. Both have reason for those worries, probably, if whatever plan that might be adopted isn't wisely designed.
As a result, deadlock seems a much more likely outcome than any true reform plan. Wherever it leads, though, we wouldn't even be having the discussion if it hadn't been for the breakthrough that has already happened, the underestimated innovation known as the mutual fund.
Chet Currier in the Bloomberg New York newsroom
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