This post is a placeholder/teaser for a more complete post that I plan to write up later.
We're taught to think of monetary policy, fiscal policy, industrial policy and tax policy as four completely different things. In fact, they are each part of a complex political topography that manipulates the human nature of individuals to produce a collective result in the broader political economy.
The focus of this "checkpoint" post is tax policy, which many claim redistributes wealth. This is incorrect. Tax policy, against the broader background established by monetary, fiscal and industrial policies, does not so much affect one's wealth as how one's wealth is distributed among wages, entrepeneurship and rent-seeking.
The current policy of relatively low tax rates for the highest wage earners and favorable capital gains treatment for financial speculation exaltts non-productive rent-seeking over true investment in the productive economy. If the goal is to encourage investment in the real economy (domestic entrepeneurship), one way to do that is to discourage rent-seeking by providing relative incentives for investing in domestic businesses that create jobs in the United States, which would funnel unneeded earned income into productive businesses as opposed to non-productive financial speculation. Both productive businesses and non-productive financial speculation throw off wealth, if managed properly (and losses, if not), so no wealth or opportunity is lost by choosing to invest in productive businesses over non-productive speculation. Indeed, as we're learning with the continuing collapse of our debt-financed speculative economy, speculation is actually destructive in the long term.
The point is that we need to think of these various policies together and not in isolation. I'd go further to say that we need to reconstruct these policies in parallel to provide the appropriate incentives for creating a self-sustaining political economy that is not subject to the boom-bust cycles caused by debt-financed speculation.
