Work in progress

 Except for writing a brief concluding chapter, I appear to have substantially finished a follow-up to Literature and Inequality. This one is a lot shorter (44,000 words so far instead of twice that), more pointed, and I hope more accessible and fun, although those (I also hope) are also attributes of the current work. This is partly from learning by doing, but also from my having here a more contemporary and pop culture focus.

The current working title is Bonfires of the American Dream in American Rhetoric, Literature, and Film. It's a successor to the Part 2 follow-up of Literature and Inequality that I had previously contemplated. 

Part 1 has 3 parts, each covering 3 works from a particular time and place. Part 2 was originally going to do the same, albeit entirely restricting the canvas to the US and UK. But this not only makes the work rather long, both to write and to read, but also adds to the challenge of finding its particular focus. That took me a couple of years to nail down when I was writing Literature and Inequality, and while I felt satisfied with how that came out, it also felt a bit like drawing to an inside straight in poker. Not something that I was desperate to chance again.

Instead, then, I basically picked out one-third  to four-ninths of the projected work, depending on how one counts, and writing something which I could parse out directionally, at least in very general terms, from the start. It would emphasize a theme that had featured a bit in Literature and Inequality, but that had not been consistently in view, pertaining to the darkness and destructiveness of the Ayn Rand theme in American culture, and how it helps to explain Trump-age America.

I also push beyond just classic novels to examine three distinct types of cultural product. After the introduction, in Chapter 2, I examine two culturally important pieces of American rhetoric. The first is Russell Conwell's Acres of Diamonds speech - incredibly prominent from about 1870 to 1925, which I juxtapose with Ayn Rand's 33,00 word John Galt speech near the end of Atlas Shrugged.

Chapter 3 examines The Great Gatsby, but with an eye not just to the text, but to its variable cultural reception in different eras.

Chapter 4 examines two classic films, which I demonstrate have more in common than one might initially have thought. The first is Frank Capra's It's a Wonderful Life. The second is Martin Scorsese's The Wolf of Wall Street.

Whereas Literature and Inequality took years to write (uncharacteristically for me), this one has been entirely written during the pandemic. I was still mulling over just what sort of a project (if any) it might be when the pandemic started and I ceased going to my NYU office (I have been there just once since the middle of March). So I've been writing it on my laptop, and doing research online plus through mail purchases, to the extent that I had not already laid in my materials.

The next step, apart from writing the conclusion and finalizing the text, is looking for a publisher I hope it will be a lot easier this time around, both because Literature and Inequality has shown (I think) that the sort of thing I am doing is feasible, and because it is shorter, more pointed, and closer to contemporary popular culture. Only the Conwell speech doesn't have a current high profile. I'm also going to be thinking about the choice between seeking out university presses and (as I did with Literature and Inequality) more independent publishers that might also be more entrepreneurial.

More soon, I hope.

Writeup and brief interview regarding Literature and Inequality

 The NYU website has just posted a brief article and Q&A regarding Literature and Inequality. The book is available here, and the interview here. But as it's fairly short, here is the complete text:

God Bless Us…Everyone?

A tax professor’s new book takes a fresh look at A Christmas Carol’s uncompromising message on wealth and inequality.

Charles Dickens’s A Christmas Carol tells the tale of a hard-hearted miser who learns kindness and charity after receiving visits from three spirits who show him the error of his cold and uncaring ways. 

With hundreds of adaptations—including starring turns by humans, animated figures, and even the Muppets—the story enjoys the status of a beloved and timeless holiday classic.

But beyond its heartwarming varnish lies a much more specific message, says NYU Law Professor Dan Shaviro, who believes that Dickens meant for the story to serve as a scathing indictment of wealth concentration and neglect of the poor. 

GettyImages: duncan1890

In his new book, Literature and Inequality: Nine Perspectives from the Napoleonic Era Through the First Gilded Age, Shaviro mines literature on social status and wealth from past eras for parallels to current relationships between capitalism and inequality. In doing so, he explores the “paradox of egalitarianism” in America, which, in his view, holds that “while one might think that our egalitarian and democratic traditions would make wealth inequality easier to accommodate, it often seems to have the opposite effect, causing many among the super-wealthy to feel more angry, threatened, and vulnerable.”

Using A Christmas Carol, published in 1843, as just one example, he outlines the context of Victorian England that informed Dickens’s viewpoint and motivations. NYU News sat down with Shaviro to discuss the past, present, and future of Dickens’s not so subtle messages and warnings.

A Christmas Carol has really become a feel-good story about a man’s change of heart, but you note that Dickens had a very a specific goal in writing his novel.

Dickens consciously thought of A Christmas Carol as a message book, which he hoped would deliver what he called a “sledge-hammer” blow on behalf of ameliorating the suffering of the urban poor. 

He used it to dramatize, and give emotive force, to the demand that they be treated with Christian charity, rather than being blamed for their own hardships and left to suffer if they could not support themselves.

Dan Shaviro

Yet A Christmas Carol also conveys a deeper, if perhaps less conscious, message rooted in Dickens’s response to the rise of new fortunes during the early stages of the Industrial Revolution. Even outside the United States—with its American Dream ideology encouraging the false beliefs that everyone has a fair chance, and that merit, not luck, decides everything—modern capitalism can invite celebrating the rich as better than the rest of us, and disparaging the poor as undeserving losers. Against this background, A Christmas Carol offers a pointed dignitary challenge to 19th-century England’s rising new hierarchy of wealth. It harshly rebuts any claim that getting rich inherently entitles one to other people’s respect. Instead, one must earn that respect by showing enough kindness and generosity to replicate the ethos of the benignly viewed patriarchal family.

We often fail to realize the extent to which this feel-good story is actually a tale of serial humiliation, as Scrooge sees his old self being disparaged and insulted in scene after scene, culminating with a vision of his own pitiful and lonely future death. Only the story’s enormously effective candy coating allows us to view all this as delightful, rather than as cruel. 

In your book, you introduce the concept of “Scrooge Truthers,” who identify pre-conversion Scrooge as a free market hero. How does this reading of the story conflict with Dickens's intentions?

President Reagan’s longtime senior aide and later attorney general for his administration, Edwin Meese, said Scrooge “wasn’t unfair to anyone,” that the free market made exploitation impossible, and that Bob Cratchit had “good cause to be happy” with the salary that his job-creator boss could offer by reason of his own entrepreneurial gifts. Other, more fervid Scrooge truthers have in print called pre-conversion Scrooge “really a hero” and the only character in the book who “treats his fellow men justly.” They also assert that his post-conversion decision to boost Bob’s salary would have been “disastrous” in real life. They claim that Scrooge’s clients would suffer because he would have less money to reinvest in granting them loans.

However inadvertently comical we may find the Scrooge truthers, their stance reflects the gulf between A Christmas Carol’s values and those of their idol Ayn Rand, whose novel, The Fountainhead, celebrating selfishness and mocking altruism, was published exactly a century later. Scrooge, pre-redemption, is not just exclusively selfish and profit-minded, but affirmatively heroic, in a Randian sense, in his determined indifference to what everyone else thinks. He truly feels free to follow his own beliefs, moved only to scorn by the world’s disagreement with him.

Yet the rewards that he gets for his Randian virtues start with mockery, and only escalate from there. First, Scrooge offers the reader campy amusement, via his sputtering outrageousness, such as repeating “Bah! Humbug!” Then he is swiftly exposed as pathetic, neurotic, and miserable. Even by the early stages of the first Christmas Spirit’s visit, he has been reduced from his previously ready bluster to a state of shamefaced blubbering. While he excites compassion—as we learn about the early hurts that helped turn him into the man he is now—from a Randian perspective, that only makes the insult worse. 

What among the book’s messages on capitalism can we apply to modern-day concerns about inequality?

Despite A Christmas Carol’s arch-Englishness, it has lessons for us today regarding the strife and cruelty that have become so prominent in American political culture. In A Christmas Carol, we hear, through the unreformed Scrooge, the voice of English followers of Thomas Malthus. Scrooge says that poor people who can’t support themselves must accept whatever meager scraps they are offered. “If they would rather die,” he says, “they had better do it, and decrease the surplus population.” Malthus had said that if a poor person cannot find work and is in danger of starving, he “has no claim of right to the smallest portion of food.”

This sentiment has clear echoes in modern America’s plutocratically dominated, often wealth-worshipping and poor-hating ideological battles today. Even before Donald Trump took plutocratic arrogance and entitlement to previously unimagined levels, Mitt Romney had mocked the notion that poor people “are entitled to health care, to food, to housing, to you-name-it.” Likewise, he urged that “job creators” and “business creators” get the deference and admiration that he felt they deserved. He believed that to question, as President Obama had, the claim that they had achieved their success completely by themselves was “insulting to every entrepreneur, every innovator in America.”

A Christmas Carol challenges such toxically classist attitudes by demanding humanity and compassion. But even more shrewdly and tellingly, it eviscerates the arrogance around economic success that American culture encourages far more nakedly than English culture, with its genteel aristocratic heritage, ever did.

NYU Tax Policy Colloquium: Another year ends

 Yesterday was the last session of Year 26 (both for me and the institution) of the NYU Tax Policy Colloquium. Obviously, this was a bit of a different year, what with Zoom.

The Zoom experience wasn't all bad. Starting with the classroom side, we had 16 students (usually it's in the low to mid 20s), and I have never met any of them in person except for one whom I knew from a prior year. One does get to know them to a degree, albeit only as little square boxes on one's laptop screen, although it's obviously not entirely the same. But it may have had more of an adverse effect on their lateral interactions than at the professor-student level. For example, since everyone was a Monday class discussion leader once, we had preparatory Zooms with them all.

With a group of that relatively small size, I think there was a more widespread (although not universal) willingness to volunteer than one gets in an actual classroom. That's a good thing, but on the other hand I think it made the conversations somewhat more lateral and less interactive than they would have been in person.

When one has information to convey in a lecture type of mode, as was required by the background needed to understand some of the papers more than others, a big downside is that it's harder to read the audience without having them there in purpose. But using slides to make it easier to follow has less of a downside than in an actual classroom - albeit, perhaps because one has already lost what one loses in the live setting by using slides.

A number of the students were outside NYC due to the pandemic and the switch away from live classes. The one downside of this was that we had more people who were working full-time than we'd normally have with live  classes. This meant that they might have greater time constraints than we've expected in the past from live students. But on the other hand, it was better for us, and I hope for them, than their not being in the class at all.

The Tuesday public sessions benefited from Zoom meetings' one great advantage: the fact that one can participate from out of town. We had occasional European visitors, along with a much larger number of people in the US from different parts of the country. I would guess that we averaged maybe 20 non-student attendees per week, which is more than we would typically get from live even in a non-COVID world. Plus, a number of them had lots to contribute but would never have been able to attend in person.

While we probably had more value (so to speak) flowing from the "floor" than one would typically get in a live session, it was also, like the Monday classes, less interactive within the group than what "live" might have yielded. So maybe a net benefit, albeit a tradeoff.

The main downside of this year's sessions was not entirely the result of Zoom. The colloquium has evolved over time, and while on the main positively also with some lost value. Back in the day, we'd get less from the floor, so the conversation would be more for the front (ie., myself, my co-convenor, and the author). So we got to pursue things in much more depth. But the downside is that you lose audience involvement, and at a certain point why would people even want to come if they're just sitting and listening, plus they do have worthwhile perspectives to add to ours.

I've been on the whole glad to take much more of a backseat than I used to, once I have offered my thoughts about the paper. But this does mean that the sessions might have too much of the following character. Either Lily Batchelder or I, whoever was the "lead" and went first in a given week, would offer a bunch of thoughts and ideas in reaction to the paper. Then the other of us would do the same. Then the author would respond, but briefly and not to each point since that would have taken too long. (Also, he or she might otherwise be responding to a bunch of things that were said a half hour ago) Then people in the audience take their turns, all generally having interesting and worthwhile things to say, but it becomes a bit scattershot.

E.g., I might have made a few points that I thought were interesting and that I was eager to discuss - I didn't just want to orate my side but have a conversation about them. But this would never happen because all sorts of other things came up. Again, that doesn't mean one should move back towards top-down and squelch all the valuable contributions from the floor (which would hardly encourage attendance by people with interesting things to say). But I felt as if there ought to be some way to get the balance better.

One way to have done this would have been to break down the discussion by topic. For a while in past years, we would discuss Topic 1 only, then Topic 2 only, and so forth. But this was problematic as well - later topics tended to get the shaft, plus I didn't want to keep saying "Can you save that for Topic 2," plus papers vary in the extent to which they invite this sort of rigid division.

So, with Zoom or not next year (and I am hoping not, although a hybrid option to bring in a few remote attendees might be intriguing if it could be done well enough), we'll probably go on in much the same way, enjoying the improvements although regretting some of the lost virtues from past years.

Anyway, thanks to my co-convenor, Lily Batchelder, and to all of our presenting authors, and to our students, and to all of our remote attendees at the Tuesday sessions. I hope to see many of  you again next year.

NYU Tax Policy Colloquium, week 14: Erin Scharff's Revisiting Local Income Taxes

 Yesterday at our final colloquium of the year, we discussed the above paper, coauthored by Erin Scharff (who was our presenter) and Darien Shanske. At this stage, it could still go in several different directions. For example, it presents an argument for treating local income taxation (e.g., by cities or counties) as potentially reasonable, at least under specified conditions, despite the fiscal federalism tradition weighing against it. In addition, it addresses how-to questions for a local income tax, and surveys state-level, anti-home rule legal barriers to the enactment of such instruments. Here are some thoughts on two of the paper's main topics.

Addressing the fiscal federalism literature - Over the years, I have written a bit about fiscal federalism  i.e., taxation at subnational levels, although not recently. It's a rich and interesting field, with strong parallels to international taxation. The paper, as it develops, may address two fiscal federalism sub-fields in particular:

1) Tax base specialization - There's been a conventional wisdom in the field (although I don't know to what extent it's been questioned recently), holding that there is a natural logical division between the tax bases that should be used at each of our major levels of government. Under this view, (a) income taxation should be reserved for the federal government, (b) sales taxes should be the province of state governments, and (c) local governments should stick to real property taxes (along with various fees, user charges, etc.).

The arguments for this tripartite division go both to mobility and presumed fields of administrative advantage. Local governments, for example, may both lack the resources to run income taxes and be especially strongly subject to taxpayer mobility issues, but they ostensibly know best how to value the real property that is located right within their bounds. Local income taxation would violate this set of canons - although in fact it is fairly widespread in the US, especially if one counts county-level as well as city-level income taxes. The paper challenges the canon by suggesting that local income taxation can indeed be a reasonable choice, as one within a diversified set of fiscal instruments that a given locality could use. It notes, for example, how fiscally challenged many local governments are these days, especially post-COVID, and argues that using many small taxes may be preferable to using one large tax. (Diversification of various fiscal, administrative, and business cycle risks is one of the reasons for this.)

Even before reading the paper, I had the feeling that an overly strong version of the "one tax base per level of government" had perhaps reached its sell-by date. The diversification arguments are especially important here. And we shouldn't be so US-centric as to forget that ALL peer countries have both income taxes and VATs at the national level. Our not having the latter is simply one more instance of what I call reverse American exceptionalism. There are good reasons for doing this. Thus, for example, I have argued that advocates of a destination-based cash flow tax (DBCFT) were unpersuasive when they apparently argued that countries should have an origin-based corporate income tax or a VAT but not both. (The right argument for them to have made, although I also found it unpersuasive, was that there actually shouldn't be any origin-based corporate income tax.)

Arguments for multiple local tax bases, including income taxation at least in some cases, include not just that for diversification but also the following:

--Sometimes residence or source - whichever (or both) is used in a local income tax - may actually be less tax-responsive than, say, where one shops,

--Local real property taxes are effectively a species of wealth tax with a very narrow base, since they look only at real property holdings. It's rightly assumed that a more broad-based wealth tax would be hard to operate administratively at the local level. Income and consumption taxes can more easily be made broad-based within their realms.

--The informational differences between the levels of government may not be as great as they used to be. For example, local governments could readily be given access not just to W-2s but also to 1099s. And insofar as real property taxes rely on sales data, that should be available to all levels of government. Supposed local knowledge to create nuance in how one adjusts sales data, even insofar as localities purport to use it, may lead to abuse.

--Insofar as localities - be they cities, counties, or groups thereof - have market power such as from local agglomeration amenities, they may have the market power to impose income taxes without overly inducing exit relative to taxpaying. This, by the way, is an argument pertinent not only to income taxes, but also to, say, the proposal in NYC a few years back to tax the value of nonresidents' luxury apartments (reflecting, e.g., foreign billionaires interest in holding such items). This was potentially a great idea, depending on what the marketplace response to the tax would have been.

2) Behavioral Tiebout - The Tiebout model is a hugely important contribution to the fiscal federalism, whether or not one believes that the conditions for applying come close to being met. If one thinks not, it is still a great signpost for analysis, since the reasons for its being empirically false then assume special importance. In this regard, one could compare it, for example, to the Modigliani-Miller (MM) model in which the form that corporate finance takes (e.g., debt or equity) is simply irrelevant under specified conditions. MM provides a valuable orienting device for one's analysis even if one concludes that the preconditions for its empirical truth do not hold.

Under the Tiebout model, state and local governments become, in effect, so many shops competing for mobile customers (i.e., potential residents) by offering tax-benefit packages. This can lead both to efficient provision and to desirable diversification to serve different types of consumers.

In the pure case, this involves lump-sum finance for residents, no spillovers, sufficient mobility, sufficiently robust competition between neighboring jurisdictions, etc. But it is analytically relevant and useful even insofar as these premises fail to hold - although, in that case one must be careful to focus on the relevance of why it doesn't hold, as opposed to assuming with eyes closed that it does.

The paper suggests a contribution to the analysis that one might call "behavioral Tiebout." Since Charles Tiebout's classic article came out 64 years ago, behavioral economics has vastly grown as a mechanism for understanding how consumer markets actually function. "Behavioral Tiebout" as applied to tax and benefit competition between localities might suggest, for example, that the optics of having multiple small taxes, rather than a single large one, might significantly affect people's locational responses.

State law and home rule - Shifting to another topic within the paper's purview, it extensively discusses how various US states, despite any "home rule" provisions that they may adopt empowering local legislation in tax and other areas, disempower localities to impose income taxes, either at all or if they have specific features such as graduated rates.

In defense of such limits, it's conceivable that states may have valid reasons for wanting to resist within-state "tax exportation" by one locality at the expense of others' residents. But that's not to say that it's unreasonable to seek to tax non-voting users, such as commuters or tourists who take advantage of local amenities that are costly to maintain. Who "ought" to get particular tax base may be as normatively elusive here as in the case of international taxation.

Even without regard to how such debates might rightly come out, there is plenty of room for a political economy analysis that might rightly be, in major respects, extremely hostile to state-level limits on effective home rule, whether in tax design or elsewhere.

Consider, for example, state officials' political incentive from mandating, blaming, and under-funding local officials. They say: All localities must provide X. Then they get the credit for saying so, while the locals get the blame for both providing X imperfectly, and levying the taxes to pay for it (which seem to come from them, although actually made necessary by the mandate).

Dominant state-level coalitions may also choose to exclude and even oppress those who are outside the coaltion. Consider, in this regard, the ugly and ongoing history of anti-urban state-level politics, often energized specifically by anti-urban racism.

These days, we live in a country in which one major political party includes open supporters of armed military occupation of large cities. For example, the fascist Tom Cotton, in that infamous NYT editorial, made it clear that he views the residents of places like NYC, Washington, Chicago, Portland, and Seattle, no differently than he viewed armed guerrilla fighters when he was a US solder in Fallujah. Numerous members of his party have also labored in the cause of systematic urban disenfranchisement. And for years (e.g., recall Sarah Palin's hateful rhetoric to this effect in 2008), they have portrayed city-dwellers as not real Americans, and implicitly as not worthy of being regarded as human beings.

Such efforts to destroy both democracy and the right to dissent are aimed not just at non-whites, but also at members of the urban upper middle class, who are these people's Jews even when not actually Jewish. "Owning the libs" can all too easily escalate to wanting to kill them, much as Hitler upped the ante among anti-Semites, and there are already signs that this is happening.

Returning to home rule, state-level control is also an important mechanism, and usually the main one, for rural groups' acting out their anti-urban agenda. Think of what various states in the southeast and southwest have done with regard to issues such as the minimum wage, gun control, and COVID safety - often without regard to such potentially valid grounds for state-level intervention as spillover or the scale of local provision.

To be sure, state-level override that is unjust, inefficient, or even affirmatively malignant is not solely done by any one side. I recall, as a history major in college, learning how opportunistic both the South and New England were, in the years from the founding through the Civil War, with regard to national control vs. states' rights. It seemed (and still seems) like virtually everyone cares more about the substantive outcome - at whatever level they can best, as a political matter, achieve it, than about these federal vs. state vs. local debates. We all can be hypocrites about this.

Still, the story of racist and anti-urban state-level control at the expense of valid home rule is an issue that merits attention these days.