The Fall and Rise of China, a course by Richard Baum (late professor at UCLA), has an interesting section on the Great Leap Forward (1958-1962). Essentially the Chinese economy didn’t produce enough to give the government the resources that was required to meet the leaders’ objectives. Without any analysis or claims that the measures they were taking represented a likely optimum, the government introduced one policy after another in hopes of increasing the amount of money flowing into the capital. The Chinese Great Leap Forward had a big emphasis on infrastructure, albeit not subsidized child care as “infrastructure”, but dams and other massive civil engineering works (these ultimately proved to have been poor investments).
The parallels aren’t perfect. Mao was trying to create a society in which every able-bodied person worked; the U.S. is a work-optional society in which ever-more people can get paid for not working (child support plaintiff, means-tested housing/health care/SNAP/Obamaphone beneficiary, alimony plaintiff, stay-at-home parent, SSI or TANF recipient, 1.5-year unemployment check recipient, etc.). Americans these days get upset when they hear about powerful people having sex with the less powerful; according to the professor, Mao, then in his 60s, partied with teenage girls every night (bedroom with oversized bed (since multiple teenage girls would occupy simultaneously) next to a dance hall).
The high-level picture seems similar. The proposed corporate tax rates are not being set based on the idea that they will lead to a optimum balance of economic growth, competitive positioning with respect to Europe, and revenue for the government without discouraging effort and investment. The new rates are justified with “we need the money”. We’ll assess capital gains tax against people with $1.0001 billion in assets, but not those with $0.99999 billion (it would be a lot simpler just to eliminate the charitable contribution deduction so that the super rich couldn’t avoid taxation by stuffing money into foundations).
Readers: Do you think there is a parallel here?
(Also, if the federal unrealized capital gains tax on billionaires goes through, why can’t the billionaires simply move to Puerto Rico for 183 days per year and pay 4% income tax instead? Could it be that this is the way the Democrats pull Puerto Rico in as the 51st state? If all of the billionaires move there to escape the new 20 percent haircut (and why won’t California add 13 percent on top?), isn’t the most obvious solution to make P.R. a standard part of the U.S. and therefore subject to conventional federal taxation? Or maybe the Feds will say that the tax still applies even for those who flee to Puerto Rico because the gains happened while the targets of the tax were still living within the 50 states.)