I agree with Keisuke Akita’s opinions in his Jan. 8 letter, “A simple remedy for inequality,” except for his assertion that economics is not a science. There are no indisputable laws in economics comparable to Newton’s laws in physics, but much of the pure sciences is based on theories, and theories are “merely” explanations. Darwin’s theory of evolution and Einstein’s theories of relativity are extremely well-reasoned, insightful and convincing; nonetheless, they are theories and not laws. Would anyone argue that they are therefore unscientific?
Oddly Akita then declares rather absolutely that ending the preferential tax treatment given to unearned income is the best way to “end” inequality. I agree that capital gains should be taxed much more, but there are more direct alternatives for dealing with a wealth gap. Economist and journalist Daniel Altman has recently advocated wealth taxes (presumably higher estate and inheritance taxes), which he contends would better offset the intergenerational effects of wealth accumulation than higher and more progressive rates on income, unearned or not.
There’s always room for debate in economics, but the real problem is that those who approach it scientifically are often marginalized by those aiming to keep their own taxes low.
Conservatives predicted that quantitative easing would lead to soaring inflation, but Nobel laureate Paul Krugman and a few others correctly countered that it would not because of liquidity-trap conditions. Krugman has repeatedly cited evidence from the Great Depression and recent experience in Europe, where every country that imposed fiscal austerity slid deeper into recession and/or saw recovery badly delayed. Yet, conservatives continue poisoning the political discourse there.
So, economics is science. It is not politics, which is the fine art of conning the middle class.
The opinions expressed in this letter to the editor are the writer’s own and do not necessarily reflect the policies of The Japan Times.