Bloomberg, May 14, 2012
How Roe v. Wade Empowered U.S. Investors
by
Edward Conard
Edward Conard was a partner at Bain Capital LLC from 1993 to 2007. The
article is an excerpt from his new book, “Unintended Consequences: Why
Everything You’ve Been Told About the Economy Is Wrong,†He opined:
... Why does the U.S. have lower labor redeployment costs, more
open trade borders, lower marginal tax rates and, ultimately, more tolerance
for unequal distribution of income? By the random dint of
history, the landmark Supreme Court case Roe v. Wade of 1973 brought
pro-investment voters to power in the U.S. The faction of pro-investment
voters, representing about 35 percent of the electorate, combined with
enough of the now-mobilized social conservatives -- principally the members
of the Christian Right, who vote Republican and represent 15 percent of the
electorate -- to seize the majority and permanently shift the political
economic center to the right.
... This marriage of convenience between pro-choice fiscal
conservatives and pro-life social conservatives brought the larger
pro-investment faction in this coalition to power. Without the unique set of
circumstances surrounding Roe, the U.S. would probably be in the same place
politically as Europe and Japan with respect to well-intended, but
misguided, anti-business economic policies. Instead, after Roe, lawmakers
cut marginal tax rates to about 30 percent, from 70 percent before the
decision.
2-4-8 Response: Abortion Economics
It is very refreshing to read about abortion and Roe
vs. Wade in economic terms. Edward Conard has presented some important
insight into traditional union politics and the marriage of convenience
between “pro-choice fiscal conservatives and pro-life social conservativesâ€
The partisan face-off ripened during Regan’s first term as women accelerated
their entry into the labor force that had begun after WWII. Birth control
and abortion (often for economic reasons) let women do more than bring in
some extra cash to the family and slowly led to equal pay for equal work.
Changes to the tax code made sure that wages for the middle class would
remain flat take-home pay would go down and income and wealth redistributed
to the top. Around the same time as Roe vs. Wade the nation embarked upon a
new employee retirement system which resulted in most businesses eliminating
their pension plans in favor of inexpensive 401k type programs-funded
largely by the employees. Soon the baby boomers (and certainly their
children) became two-earner families, with no pension, lower wages, higher
debt for housing and education, and chaotic child care arrangements.
When the recession hit in 2007-8 the economists did not
appreciate how brittle the economy had become. The political alliance had
led to tax cuts for the well-to-do, beginning in 1986, and at the expense of
the middle class and strivers. When layoffs began it was quickly learned
that one wage earner was no longer sufficient to pay the mortgage. Consumers
lost purchasing power, housing values crashed and the economy stalled.
Business temporally prospered due to stimulus, tax expenditures and large
public debt. The extreme loss of resilience in the traditional economy
comes, in significant part, from abortion and the corresponding loss of
50,000,000 consumers (even if most economists won’t admit it). The birth of
these people would have created more jobs, more economic demand, fewer full
time moms in the work force, and more money for dads. A family that is
supported by one earner or even one earner and a part time worker is
economically stronger than a two earner family stretched to the brink or
just a paycheck from bankruptcy. Roe vs. Wade has had consequences that even
the pro-choice fiscal conservatives could not have foreseen. The chickens
have come home to roost.
Eugene Patrick Devany, JD, MPA
www.TaxNetWealth.com
|