I have heard Professor Goss speak many times. He is a
conservative economist and his commentary always seems to hit home. I
thought you might find his December commentary interesting.
Last week, Francoise Hollande,
Socialist President of France, recommended homework be eliminated in French
schools. He argued that assigning homework provides an unfair advantage to
students with stable home environments. This same type of anti-competitive
thinking has produced a social safety net in France and most of Europe that has
undermined economic incentives and encouraged workers to remain unemployed or
underemployed.
For example, the World Bank
estimates the annual cost of the social safety net as a percent of GDP in
France is more than twice the size of that in the U.S. (graph). Not surprisingly over the past decade, France's
unemployment rate averaged 2.6 percentage points higher than the U.S. rate, and
the Gaullist nation's annual GDP growth was about one-third that of the
U.S.
Unfortunately, the Obama
administration's proposed tax increases currently under deliberation by
Congress on higher income, higher productivity and more highly educated workers
pushes the U.S. in France's direction.
The top five percent of wage earners, or those earning over
$154,000, already pay an average income tax rate 11 times that of the bottom 50
percent of U.S. workers. Not only do Obama's tax rate hikes on the most
productive Americans shrink incentives, they reduce the yearly budget deficit
by less than 10 percent. Instead of diminishing the income of higher wage
workers via elevated taxes, U.S. economic policy should be directed at raising
the income of lower income workers. The U.S. should import French wines and
movies, not French economic policy.
