Economist Daniel Altman issued a warning to his audience before a book signing on Saturday afternoon at the Yale Bookstore.
“Just raise your hand if this ever gets boring,” he said.
Altman, a columnist for The New York Times, kicked off this year’s Yale Bookstore Author Series by reading excerpts from his new book “Neoconomy,” in which he criticizes the economic practices of the current presidential administration.
Altman described the concept of a “neo-economy” as a refined and updated version of Reagan’s supply-side economics. Neo-economists have the long-term goal of increasing the rate at which the economy grows by cutting taxes on savings and wealth — a tactic Altman likens to going to the doctor with a headache and getting an epidectomy.
“If you put one dollar in basic research, it will yield $1.50 in the long run, but if you instead give this dollar back as a tax cut, will it also generate $1.50,” Altman said. “Some academic theorists would say yes, but the fact is, it has never been put into place in an economy like ours.”
Altman said by eliminating the estate tax and lowering the tax rates on dividends and capital gains, neo-economists make it more appealing to accumulate rather than spend money. This is done in an effort to expand tax-free savings accounts.
“This is something that was sold to the public as short-term stimulus to help the economy,” Altman said. “I think that the social side effects get a lot of attention, but the economic effects that create social changes in the long term don’t.”
Abolishing taxes on savings encourages people to receive their income from financial assets rather than salaries, Altman said. These changes in incentives benefit chief executives, who can be paid solely in stock options or high interest bonds, rather than clerks or health workers.
Moving salaries away from labor and toward financial resources would exacerbate rising inequality and widen the income gap, Altman said. In the long run, wealthy people will be just as hurt by these policies. A disparity in the distribution of resources would limit educational opportunities for the poor, affecting the workforce pool.
After reading a passage from his book, Altman answered questions ranging from social security to progressive taxation.
A New Haven substitute teacher who identified herself only as Hannah raised the question of outsourcing. Altman — who defended outsourcing by saying it frees up labor and offers incentives to utilize available resources — provoked dissent from a few audience members.
“New Haven is basically a working class city, and there are more and more positions for low paying jobs,” the teacher said. “If you’ve got highly skilled positions, our own people will not be employed.”
After the book signing, audience member Eleanor Tignor — a family friend of Altman’s — also took issue with the author’s stance on outsourcing.
“Poor workers are losing their jobs to foreigners,” Tignor said. “Now you call computer services and you get a voice in India — when this should be an American voice.”
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