Saturday, March 06, 2004

Atlantic Monthly Articles of Interest

Shock and Disbelief
Radical Tax Reform

Rodger Payne left a comment on my rant about taxes.  Naturally, I went to his blog  and found that he has a lot to say about Human Security.  This is a term I had not heard before, but I like it, because it seems to encapsulate the topic of some of my recent posts about public health and the relationship between arms control and public health.  In his comment, he left a URL to an Atlantic Monthly article  by Maya MacGuineas about tax reform.  The title is Radical Tax Reform.  I read that next.  It reminded me of an article  I had read there earlier, about electroconvulsive therapy (ECT).  The title is Shock and Disbelief, by Daniel Smith.  It was republished later in The Best Science and Nature Writing, 2002.

Tax reform and electroconvulsive therapy have little in common, at first glance.  But there are some commonalties, and it is up to the Corpus Callosum to make the connection.

Neither is a pleasant topic.  Both are things we wish were not necessary.   Neither is something we want to undergo.  Undergoing either one can feel unpleasantly like some kind of passive submission to a higher authority.  Both elicit strong emotional reactions and provoke heated -- sometimes uniformed -- discussion.  Both seem destructive, but both actually can enhance growth, if applied wisely.  (1 2 3 on ECT and neurogenesis; 1  by Mike Moffatt, on tax increases) 

There are some crucial differences.  ECT already has been reformed in a major way, and is undergoing a slow process of further improvement, guided by objective, scientific study.  Taxes are undergoing a slow change, but no improvement is in sight.  The change is not guided by scientific study.  This is not because economists are unscientific; it's because politicians are unscientific. 
The Best American Science and Nature Writing 2002
Both articles are well-written, and present an even-handed treatment of their respective difficult topics.  The author of Shock and Disbelief, Daniel Smith, carefully lays out the history of ECT, and alongside, the history of public perceptions of ECT.  He glosses over much of the science.  This is not a criticism, as the science is rather esoteric.  The article on taxes is interesting because it does not address the usual topic of higher versus lower taxes.  Thinking only in terms of higher or lower taxes is such a gross oversimplification that it is useless.  Worse that useless;  in fact, it is misleading.  Ms. MacGuineas instead addresses tax structure.  Specifically, she advocates for a tax system that encourages saving more and spending less.  This could be accomplished by allowing a complete tax deduction for contributions to savings accounts such as IRA's:

Imagine a "progressive consumption tax" levied not on individual purchases but on total spending, as measured by the difference between what you earn and what you save. It might work like this: no tax at all on the first $25,000 you spent, a 10 percent tax on spending from $25,000 to $100,000,Maya MacGuineas and a 15 percent tax on all spending above $100,000. In effect, basic necessities would not be taxed, and luxuries would be taxed at higher rates. This plan would be simple to execute. Each year taxpayers would calculate their total income from wages, investment income, and other sources, just as they do now. But then they would take a second step, subtracting the value of all their savings that year—such as savings accrued in a bank account, through a 401(k) plan, or through an investment fund (all of which are easily tracked, meaning that it would be hard for cheats to escape detection)—from their total income. The resulting figure would be the base amount to which the consumption tax would apply, at progressive rates. The less you spent, the lower your tax rate would be. Low-income earners would for the most part be taxed less onerously, since they spend less; and middle- and high-income earners would have an incentive to save their money, preparing for retirement and bolstering the country's long-term economic prospects. A national progressive consumption tax would go a long way toward recouping revenues lost from the elimination of the payroll tax, and it would make the system fairer, too.

Let me get back to a statement I made earlier in this article, a statement that was intended to be provocative.  I stated that higher taxes can increase economic growth.  Note that I included only one reference to support this contention.  Honestly, it was the only reference I could find.  This is probably because, in general, higher taxes do not increase economic growth.  Just like, in general, delivering a large electrical shock to the brain does not increase neurogenesis.  As Mike Moffatt  points out in his article on taxes, the key to using higher taxes to increase growth is to tax at the right rate, tax the right things, and spend the money for the right reasons.  The key to success with ECT is in using the right dose, for the right people, and for the right diagnosis. 

Postscript: as I was finishing this up, I came across a reference  on RETURN of the RELUCTANT to a $20 million lawsuit being filed against Daniel Smith and the Houghton Mifflin Company (publisher of The Best American Science and Nature Writing 2002). 

January 29, 2004

Can Houghton Mifflin Handle the Truth?

Some distressing news from Publisher's Lunch. The ironically named Committee for Truth in Psychiatry has sued  Houghton Mifflin and writer Daniel Smith for $20 million in punitive damages. The suit comes about because Smith's investigative piece  on electroshock treatment appeared in The Best Science and Nature Writing, 2002.

Even if this suit is settled or dismissed, there's still the larger issue of whether hard-hitting exposes will appear in Houghton Mifflin's compilations. Will Houghton Mifflin backpedal on future selected essays? Even if the author were to prove all of the facts were on his side, my fear here is that tomorrow's compilations will be fluff that maintains the status quo.

Posted by DrMabuse at January 29, 2004 09:29 AM | TrackBack

DrMabuse refers to the Committee for Truth in Psychiatry as "ironically named."  This reminds me of the State Peace and Development Council, the name for the brutal junta that took over Myanmar (Burma).  See this  World Press Review article for a good review of recent Myanmar history.  Disclaimer -- don't sue me --  the CFTP is not a brutal dictatorship, but their name is  ironic.