Left Out - Francis Fukuyama - The American Interest Magazine

Francis Fukuyama???

Scandalous as it may sound to the ears of Republicans schooled in Reaganomics, one critical measure of the health of a modern democracy is its ability to legitimately extract taxes from its own elites. The most dysfunctional societies in the developing world are those whose elites succeed either in legally exempting themselves from taxation, or in taking advantage of lax enforcement to evade them, thereby shifting the burden of public expenditure onto the rest of society.

Yglesias » Production, Consumption, and Prosperity

A slightly muddled response to the resurgence of supply-side, producer-oriented economic blather.

If the wealthy were the source of all economic growth, we could produce our way to prosperity simply by making iPhones by the billions, have the Dallas Cowboys build eight more stadiums in Texas for eight new teams, have James Cameron film Avatars 2 through 9 simultaneously and have them in theaters by next summer.

But who would buy all those iPhones? Who would go to all of those football games? Who would watch all of those movies, buy all of those BlueRays? Precisely. The fact is no one would ever do that because there's no market for that much stuff, no audience, no customers. Which proves the point: demand for goods and services - not supply - is what drives the economy. When wealth is increasingly moved into the hands of fewer and fewer wealthy people, you destroy demand and push the economy into a golden-goose-killing death-spiral.

Businesses succeed when they build things that people want, and businesses prosper when they reinvest for the future rather than waiting for some bigger fish to buy them up and offer them the equivalent of lottery winnings.

What's needed are incentives to put more money in the hands of people who actually need things and fewer incentives for those at the high end of the income spectrum to take the money and run.