AOC’s leftist promises and JWR’s resignation from Cabinet

Recently newcomer Alexandria Oscario-Cortez has gotten a lot of attention for her staunchly left wing ideals and some even think she will bring about a socialist political revolution in the United States.  For one her ideas are pie in the sky and the idea that a normally centre-right country will go for someone as left wing as her anytime in the forseeable future is just delusional.  She would have trouble winning in Canada where the population is far more receptive to such ideas and would be DOA in most European countries who have a long history with social democracy although over the past 15 years have taken a sharp turn away from it.  Looking at a few of her proposals here are my thoughts:

  • Top marginal tax rate of 70% on those making over $10 million.  While that may have some appeal, considering more modest tax hikes on the rich in Colorado got defeated on the ballot while North Carolina voted in favour of capping the top state tax rate at 7% suggests it may be notionally popular, but unlikely to fly once the ramifications are mentioned.  Many point out how top rates were 91% under Eisenhower and the US had a stronger middle class and better economic growth then.  What people forget is this is not the 50s a lot has changed since then.  Back then labour was much less mobile today and most developed countries had top rates this high.  Today, no country has a top rate higher than 60% and capital is much more mobile.  France tried a millionaire’s tax of 75% in 2013 and had to repeal it after 2 years as they lost revenue since many of the millionaires just left for elsewhere.  People can debate on the morality of people having high levels of wealth relative to others, but the reality is people work on incentives and you put top rates that high, the rich will just move elsewhere meaning the government will get less not more revenue.  I am not opposed to raising taxes on the rich, but I think restoring them back to the rates they were under Obama is a far more sensible idea.  The IMF and others who have studied the issue recommend a top marginal rate of around 45% and when you take federal + state + FICA that is about where they were under Obama depending on which state you lived in.  That is what they currently are around in Iceland, Norway, Germany, Luxembourg, UK, Spain, Italy, South Korea, and Australia and all of those have less inequality than the US and more generous social safety nets.
  •  A new green deal weaning the US off fossil fuels by 2030.  Even the ambitious agenda here in BC of making us fossil fuel free by 2040 is a long shot, but making the US fossil fuel free by 2030 is a pie in the sky idea.  We are moving towards greener energy but it is happening at a slow pace and we’ve been talking about this for years.  The reality is most Americans don’t live within walking or cycling distance of work thus need a car.  The most important thing to an average person is cost, with environment mattering but being a secondary issue.  So green cars will replace gas cars once they can travel as fast and do so at a lower cost.  That will come someday, but probably not before 2030, at least not on a mass scale.
  • Free college tuition.  This may sound nice and many European countries do this, but is a bad idea.  Going to college has many public benefits thus why it makes sense to partially subsidize it, but also those who get a post secondary education tend to make more money after so due to private benefits makes sense for students to pay a portion so they understand they have a stake in it.  As such I think what we have in Canada where students pay tuition, but not at the obscene rates they do in the US makes sense.  A better solution is to improve loans, grants, and scholarships for low income Americans who cannot afford college rather than go to free as it has been shown the rich are more likely to attend college even in countries with no tuition fees since those from rich families tend to get higher marks so in many ways this is already subsidizing the well off.
  • Single payer health care.  In Canada we have this and it works well, but the start up costs are massive so even if the long term savings work out well, the start up costs would either involve a bigger deficit which the US cannot afford, massive tax hikes which would be political suicide and bad economically, or big spending cuts elsewhere.  Colorado and Oregon which are both blue states had referendums on this and it was massively rejected.  On the other hand three solid red states in midterms voted to expand Medicaid, so a better solution is improve Obamacare and expand Medicaid to cover more people as that is far more affordable and also quite popular amongst many of the Obama-Trump switchers.  I totally support single payer in Canada, but copying what one country has is something you have to do with caution and realize limitations.

Trump despite his stupidity is still competitive in the polls and if Democrats move too far to the left, far from being about a socialist revolution, they will just ensure four more years of Trump.  Outside some liberal coastal cities, there is little appetite in most of the US for a hard shift to the left as much as some may wish there was.

Jody Wilson-Reyboud’s resignation from cabinet

It is fair to say this is not the bombshell the Liberals want in an election year.  While it is hard to say how this will play out, I cannot see it helping the Liberals.  The best they can hope for is it blows over and is largely forgotten by election day.  I do think in the idea of transparency they should let her speak out and if there was any transgressions on the part of the government discipline those involved and promise to not let it happen again.  I also think not just from this but other issues, Trudeau needs to seriously consider dumping Gerald Butts.  The guy is a bully and an ideologue and he may be good at playing wedge issues, but his political judgement as seen in Ontario under the McGuinty government is woefully lacking and it is caucus, not him who should be driving the agenda.  MPs meet with people in their ridings so they have the best feel on what people in their riding want and governing a country as big as Canada is no easy task thus why it is important to let MPs have as much influence as possible.  While his style is not unique to the Liberals, after all in Ontario I have called for the same from Dean French of the Ontario PCs so this is not a partisan issue, rather one where the leader wields disproportionate power and ignores the concerns of their members.  On a side note, the BC Liberals are trying to recruit candidates for the next election whenever it comes and are looking for more women, millennials, and minorities to ensure the party is more representative of 21st century BC so while I don’t know what her provincial leanings are (she may be a BC NDP supporter for all I know), I would absolutely welcome her quitting federally where her voice doesn’t seem to be valued and running provincially (Vancouver-Fairview seems like the best riding choice) as I am sure she would make a capable cabinet minister and probably be listened to more.

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