David Brooks has a good column in today’s NYT on the way social breakdowns—in marriage and family and education—interact with global economic change. He shares the story of a young woman who, though tough and hard-working, loses out on a good education because of her family problems and an early pregnancy. She’s stuck, unable to advance because she doesn’t have the education she needs. Raising a child alone holds her back. Taxing the rich won’t help her; neither will cutting taxes on the rich and deregulating the economy. Both Democratic and Republican policy prescriptions seem to miss her situation, and to miss the American economy and its actual issues.
Brooks says we need bold action to strengthen families and support education, so that the whole population—not just an educated elite—can compete in a globalized economy. He says we also need a revamped, lean tax-and-regulatory system so that business can compete globally. “This agenda is libertarian in the capitalist sector and activist in the human capital sector.”
Two caveats. First, taxes aren’t about punishment, but about allocating resources. We’ve cut taxes for the rich so that they pay at the lowest rates in modern history. Nudging that back a bit isn’t the second coming of Robespierre. It can help provide some of those family and educational supports that people need. The money has to come from somewhere.
And second, it’s not clear that American business is in trouble because of excessive taxes and regulation. There are problems, certainly, but right now we’re digging out of a hole enabled by under-regulation. “Libertarian in the capitalist sector” sometimes produces disaster—just as often, I would say, as does “activism in the human capital sector.” Deregulation and simplification of taxes have to be done right—and there are plenty of capitalist forces, throwing lots of bribes in Washington, who want to bend the rules in their favor.
That said, I agree with the thrust of Brooks’ piece. I doubt the government is ever very good at industrial policy, advancing “green jobs” or whatever. I want the government to set the rules—including a carbon tax—and let the forces of capitalism find the preferred way.
The government is really the only way, however, to provide good social services including education for the less-than-elite. This is not just do-gooding; it helps bring economic opportunity to people who will work hard and play by the rules. This too has to be done right. But when it is, that is good for us all.