Gene Nichol, a professor of law at the UNC School of Law, and director of UNC-Chapel Hill’s Center on Poverty, Work & Opportunity continues the N&O’s promotion of economic fallacies with this article in which he advocates for ending the Bush-era tax cuts on the highest income earners.
Much of the article is diluted with Nichol’s stale, thoughtless, envy-driven class warfare demagoguing and as such is devoid of any true economic analysis. But he attempts to assure readers that taxing the most productive participants in the economy is somehow good for growth and job creation:
a recent study from the nonpartisan Congressional Budget Office … examined 11 options to stimulate growth and job creation. The report found not only that that making the tax cuts permanent would dramatically increase the long-term deficit; it was the worst proffered option to nudge the economy forward. Extending unemployment benefits, staunching state budget cuts and providing job-creating tax credits would generate at least three times as much additional economic activity as retaining the top tax rates.
What Nichols fails to account for, however, is that CBO studies like this one include the assumption that government spending is the key to economic recovery and growth. So naturally the study will recommend government spending, because that conclusion was already determined beforehand, the “study” is just for show.
Nichols then reveals his true Keynesian colors with this line:
The poor and near-poor will spend every cent they can get hold of. Those making over $250,000 will be far more apt to save the proceeds. If the rationale is job creation, the Republicans seem to have it backwards.
In reality, it is Nichols whose rationale is backwards. The foundation for his reasoning is the easily discredited notion that consumer spending is the key to economic growth. To the contrary, ups and downs in consumer spending are the result of, not the cause of, economic booms and busts. It is investment spending that determines the economy’s fate.
Without an adequate pool of real savings to provide productive investment spending, the economy will stagnate. Those most harmed by stagnant or backward economic progress are those at the margins of employment – the low-skilled and low-income population. Unfortunately, the policies that Nichols champions have devastating results for the very people he claims to want to help through his work at the UNC Center on Poverty, Work and Opportunity. If he was truly interested in reducing poverty, Nichols would do some economic homework and understand how economies grow, thus actually providing work and opportunity to our state’s poorest citizens.
With misguided people like Nichols guiding anti-poverty efforts in the state, there is little wonder why North Carolina’s poverty rate has climbed steadily in the last decade.