Backlash to the Backlash
Published: December 30, 2012
Josh Haner/The New York Times
Imagine if academics sat down with ordinary people like you and me and ironed out some real solutions to our capital gains crisis.
With the election season over, maybe you’ve forgotten about capital gains, but I certainly haven’t. It would be easy to forget that the problem even exists, when our headlines are constantly splashed with the violence in Serbia, the authoritarian crackdown in Iceland and the still-unstable democratic transition in France. But the capital gains problem is growing, and politicians are more divided than ever. Democrats seem to think that capital gains can just be ignored. Republican politicians like Marco Rubio, on the other hand, seem to think that shrill rhetoric will substitute for a argument.
But the Republican party of Marco Rubio is not the Republican party of Teddy Roosevelt. Roosevelt wouldn’t stare down the opposition, he'd break ranks with members of his own party because he'd understand that the fate of the country, and his own political career, depended on a lasting solution to the problem of capital gains.
The first rule of holes is that when you're in one, stop digging. When you're in three, bring a lot of shovels. If I had fifteen minutes to pitch my idea to politicians, I'd tell them two things about capital gains. First, there's no way around the issue unless we're prepared to spend more: and not just spend more, but spend smarter by investing in the kind of human capital that makes countries succeed. That's going to require some tax increases as well, but as they say, "When in Rome."
Second, I'd tell them to look at Finland, which all but solved its capital gains crisis over the past decade. When I visited Finland in 2001, Tintin, the cabbie who drove me from the airport, couldn't stop telling me about how he had to take a second job because of the high cost of capital gains. I caught up with Tintin in Helsinki last year. Thanks to Finland's reformed approach toward capital gains, Tintin has enough money in his pocket to finally be able to afford a swimming pool for his kids.
That's all it takes. Don't expect to see any solutions as long as fringe bloggers insist on playing a high-stakes game of chess with one another. America has to rise above it all.