The Commons

Along with his proposals to raise the U.S. corporate tax rate to 28% (President Trump cut it to 21% from 35%), President Biden has offered something up to his global counterparts that has been around for a while, but which no U.S. president had heretofore seriously contemplated: a global minimum corporate tax rate of 21%, which would be paid by large businesses wherever they operate. The aim is to mitigate international tax arbitrage, which is facilitated by global multinationals that book paper transactions in low-tax jurisdictions such as Ireland or the Dutch Antilles to substantially reduce their tax bills.

Of course, all of this will require a degree of global coordination that has never been seen. Unless all relevant countries go all-in on the Biden proposal, it’s an idea that will go nowhere.

If President Biden is serious about genuine tax reform, however, he doesn’t need to secure international agreement. Instead, he could introduce something even more radical on the domestic front: revisiting the concept of corporate taxation, considering it relative to more productive alternatives, or, even better, eliminating the federal corporate tax altogether.

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As the Biden administration and Congress consider “industrial policy” legislation (e.g., the Endless Frontier Act, the CHIPS Act, funding for shoring up domestic supply chains, and a more robust R&D credit) it’s perhaps not surprising that many pundits, journalists, and policymakers are asking how this is any different than what China is doing. After all, most policy analysts rightly criticize China’s “innovation mercantilist” policies that distort the global economy. Why should America go down the same road and be an “economic sinner” like China? This view is particularly prevalent among free-market conservatives, but it finds broad support because few experts and policymakers understand the long and successful history of U.S. industrial policy.

The reality is that the choice of industrial policy is not binary: Adam Smith’s laissez faire vs. Xi Jinping’s neo-command economy. In fact, there is a continuum of state involvement in industry and technology policy that spans from doing nothing to picking particular firms and technologies (e.g., rather than batteries, the government picks only gold nanowire gel electrolyte batteries). For free-market conservatives, “leave it principally to the market” is the right approach (see figure 1). Position 2—support factor inputs such as science funding and non-specific policy tools such as STEM immigration and the R&D tax credit—is often acceptable, particularly to more centrist and liberal economists. Beyond that, most economists are blind to any distinctions between position 3 (support key broad technologies and industries) and position 4 (pick specific technologies and firms), seeing them as essentially a distinction without a difference, with both in the dangerous territory of “industrial policy” or even command-economy socialism. These economists and other pundits wrongly imply that any move by the U.S. government to go beyond position 2 is simply emulating Chinese state capitalism.

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In a non-binding concurrence, Justice Clarence Thomas (joined by no other justices), argued that social media platforms could be labeled “common carriers,” and should therefore be treated like phone companies or similar utilities. Thomas’ commentary accompanied a Monday Supreme Court order instructing a New York district court to dismiss as moot a lawsuit against former president Donald Trump over his blocking of some Twitter followers.

Justice Thomas has entered a hot debate about the best means of regulating social media.  His approach to regulation tends to be more function-centric as opposed size-centric (which is often a major preoccupation of the “big is bad”) neo-Brandeisian approach to regulation and antitrust enforcement.

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Government economic statistics are critical to understanding the economy and making policy. For example, the Federal Reserve relies on accurate information about inflation to make monetary policy. Accurate statistics are also important for understanding structural economic changes and economic performance.

Nowhere is this more important than in understanding what has happened to manufacturing output and business investment. For both, analysts and policymakers rely on the U.S. Bureau of Economic Analysis data. According to BEA data, things look pretty good on both fronts. Inflation-adjusted manufacturing output has been growing, leading most analysts and pundits to claim that all is well and that the massive loss of manufacturing jobs since the early 2000s has been the result of superior productivity growth, not declining international competitiveness and offshoring. Likewise, many argue that companies are investing in capital investment at a robust rate, supposedly refuting any claims, such as from American Compass’s Oren Cass, that our capital allocation and investment system is flawed.

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Large numbers of American workers are trapped in low-wage jobs in low-tech, low-profit industries in the nontraded domestic service sector, including leisure and hospitality, retail and child and elder care. To raise wages significantly, firms would have to increase their productivity by investing in innovative technology, but their profit margins are too small for them to make the investments. Read More

Despite the impact of “Stupid-19,” life rolls on in a very essential fashion for myself and many other workers. In my case, I work in energy distribution, and here in the cold northeast, the “propane must flow” if homes were to be kept warm this past winter, and some level of comfort is to be maintained for those stuck inside from sickness or unemployment.

Many of those “stuck inside,” however, are part of a particular caste that a favored podcaster of mine likes to call those with “e-mail jobs.” Many of them work for various levels of government or as middle managers within every corporation in America. Many, if not most, of these people will never have to work 75 hours a week, drive and/or grind it out in terrible weather conditions, and then get home too late to put their children to bed.

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Joe Biden’s multi-trillion-dollar infrastructure plan is big and bold. Most pundits and the media see it as a rejection of the prior half century of small government, free-market conservative thinking and a new kind of growth policy. As the Wall Street Journal puts it, “It all marks a major turning point for economic policy. The gamble underlying the agenda is the belief that government can be a primary driver for growth.”

But this is wrong. The plan, and much of the administration’s economic agenda, is not based on the belief that government can be a primary driver for growth, any more than the conservative’s free market agenda was based the belief that free markets were the key driver of growth. Free-market conservativism was first and foremost about freedom. Progressive economics is first and foremost about fairness: widescale redistribution of income and wealth.

This gets to the pivotal question for our nation’s economic policy: what should the overarching goal be? There are three choices. Read More

In a world so “Orwellian” that the term has lost its oomph with too much use (one wonders if Eric Blair would advise against continuing its employ on grounds that now it, too, is “ugly and inaccurate”) perhaps “health care” is our most Orwellian bit of obfuscation. There are lots of reasons to suggest this, including the role the phrase plays in arguments about certain kinds of politically fraught surgical procedures. But I want to step back to something even more basic than doctor-assisted experiments and executions in bodily autonomy, to simple bodily health. America is very fat. Being very fat is bad for you. Being very fat is expensive. Our health care system is in need of improvement, but no answer, whether a public option or something else, is going to work unless we can be honest about what all these empty calories are doing to us, and who profits by it. 

According to this depressing but handy guide, more than 70 percent of Americans over the age of 20 are overweight, with about 36 percent obese. Almost 20 percent of children (2 to 19) are obese, with many more overweight. These are astonishing numbers, even on first glance, but big numbers are hard to picture, especially big numbers like 70 million or so obese Americans. If like many, perhaps too many, readers of the Commons, you live in a middle- or upper-middle-class professional neighborhood in the suburbs of a metroplex and buy much of your food at a nearby grocery, you cannot picture what this looks like; there are cruel class and race divides on the scale in America, and the burden is not shared equally. You know overweight people, of course, but the obese are largely still novelties to you. Certain of your peers, however, have decided to celebrate this enormity as a giant new kind of civil rights cause, the right to not feel badly about yourself, only bigly. They, and the food and pharmacy conglomerates they are enabling, are killing people.  Read More

In my Catholic corner of the world, a surprising number of people are talking about “integralism.” The term comes from nineteenth and twentieth century French debates about the relation of the Church to the state. The liberal and secularist forces insisted that the Church should have no power over civic affairs. Traditionally minded Catholics argued that the truths of the Catholic faith should guide and govern the political life of the nation. According to this way of thinking, civil authority may be distinct from ecclesiastical authority, but the two should work together as a single whole. Thus integralism, from the Latin integrare, “to make whole.”

By my reading, today’s upsurge in Catholic integralism is a one of the many signs of growing dissatisfaction with liberalism’s efforts to keep metaphysics out of public life. Read More

There’s a simplistic way to talk about the history of American associational life that goes something like this: Neighbors used to help each other raise barns, churches provided much-needed charity, and benevolent societies covered costs due to injury or untimely death. Then the New Deal or the Great Society stepped in and Americans began bowling, and doing everything else, alone.

That story contains some truth. Yet it misses that much of the decline of associational life is not due solely to state crowd-out, but because we as a society grew more affluent – we can hire contractors to build that barn, a growing economy means poverty nears record lows, and commercial insurance can smooth out unexpected losses before you miss a beat.

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