Sunday, September 09, 2007

Resuscitating the middle class

I do not agree with everything in an editorial in The New York Times entitled "The Employment Tea Leaves", but I do agree with their assertion of the need to "help the increasingly squeezed middle class."

I agree when The Times says that:

Democrats, or some Republicans with a change of heart, must articulate — and Americans must demand — a program for ensuring that the middle class gets a bigger share of the economy's spoils than it has received during the Bush era, when gains have largely been funneled to the richest Americans.

To have a fairer and more inclusive economy, workers need true mobility, which requires health care reform. And they need to see a reversal in the country's ever-deepening inequality, which could come about through more progressive income taxes, better public education and more help for workers whose jobs are displaced by globalization.

In fact, now that I think about it, a middle class income tax reduction would make a lot of sense.

And the hedge fund managers and private equity fund managers who have done so much structural harm to the economy in recent years (e.g., excessive speculation in commodities and subprime mortgage securities and causing a mispricing of risk) need some "incentive" to focus on delivering long-term benefits to the economy (true investment) rather than focusing so much of their attention on sleazy short-term profit "skimming" schemes. Don't raise the taxes on every dollar of their "profit", but definitely hit them very hard on short-term profits that have been doing more harm than good to the long-term health of the economy.

The economy does not need a Fed interest rate cut or cheaper credit, but rather it is in dire need of a variety of reforms to resuscitate what used to be known as "The Middle Class."

-- Jack Krupansky


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