Editor’s Note: There is no arguing that, for a highly developed country, the United States suffers from a unusually high rate of mass murder and murder by gun violence. There is, however, debate as to how to lower the mass murder rate — one that usually focuses on gun control laws and mental health.
Economist John Komlos argues that the United States needs to adopt universal mental health insurance as a way to lower the murder and mass murder rate. Of course, universal mental health insurance means one thing: taxes. Below, Komlos, author of “What Every Economics Student Needs to Know and Doesn’t Get in the Usual Principles Text,” makes his case.
— Kristen Doerer, Making Sen$e Editor
Weep America, weep again! Murders in Moneta, Virginia and mass murders in Chattanooga, Tennessee, in the Emmanuel African Methodist Episcopal Church of Charleston, South Carolina and in a movie theater in Lafayette, Louisiana, shock the nation again and again in a matter of days. Will the pundits still dare to say that we live in “the best country in the world?”
As these shootings continue, it seems like we’re just condemned to live with it. The discomfort around discussing mental health and gun control is almost taboo — one that prevents solutions from being found.
The numbers are depressing: The FBI counts no less than 160 such mass shooting incidents between 2000 and 2013. And it’s been increasing. Between 2000 and 2006 there were seven weeks separating such incidents, but since 2007 the interval shrank to but three weeks. And that does not even count the recent bizarre attack on Dallas Police headquarters with an armored vehicle.
Have we gone mad? I think so.
Derangement has many faces: the victims are heterogeneous. The Chattanooga killings were politically motivated, while the Charleston killings had racial hatred as a motive. But the proximate cause can also be religious hatred: six killed at the Sikh temple shooting in Wisconsin by a racist white supremacist; three Muslim students killed in Chapel Hill, North Carolina; and three people were killed in front of a Jewish Community Center in Kansas. It can be fueled by misogynist resentment as were the murders in Isla Vista. Other mass murders don’t fit neatly in one category: 20 of the 26 killed at the Sandy Hook Elementary School shooting were children; the 12 killed in the Aurora movie theater were random movie goers. The unifying theme in all of these mass murders is the derangement of the perpetrator. Their hatred and venom can be directed at just about any ethnic and religious group or gender — including you and me.
And then let’s not forget that there are no less than 30 “normal” murders in which the victims are fewer than three, are either known to the perpetrator, or occurs in the course of a conventional robbery or something like that. Moreover, there are 100 suicides daily. Suicides are the third highest cause of death among people ages 15-24, and among men in their 50s the rate just about doubled in the course of the 21st century. These trends, in addition to mass murders, should worry us deeply.
But I thought that Making Sen$e covered economic issues. What has all this got to do with economics? A lot. We desperately need universal mental health insurance and other social services, particularly in schools that would provide a safety net to help identify mental illness and provide psychological treatment in a timely manner. And that means taxes.
Early intervention is crucial, because children with behavioral problems in school are much more likely to get into trouble with the law as adults. In a 25-year study in New Zealand such children were more than 10 times as likely to commit violent crimes as children with normal behavioral patterns. Preventive treatment would support families who do not have the means to pay for psychiatric help out of pocket.
There is ample evidence that interventions promoting mental health reduce crime and violence significantly. Mass murderers often exhibit depressive symptoms and anti-social behaviors for an extended period, as did the recent killers in Moneta and Lafayette. That means that there is a window of opportunity to help these individuals cope with their mental challenges.
Of course, a universal mental health care could only be financed through taxes. And as long as the wealthy refuse to be taxed appropriately, we are not going to be able to provide the safety net to help those in desperate need. We are simply not going to be able to go to the movies, to school or to church with peace of mind.
The spirit of the times is dominated by an anti-government world view wishing to deprive the government of as much revenue as possible. The strategy is often referred to as “starving the beast.” (Note that spending trillions of dollars for regime change in the Middle East is exempted from this strategy.) Unfortunately, a starving beast is unable to take care of its people and the people do not have the means to take care of their mental health by themselves especially in a sour economy.
As a consequence of this conundrum, public goods such as mental health facilities and social services in schools are in short supply. A long time ago the Harvard economist John Kenneth Galbraith contrasted our “private affluence” with “public squalor.”
Let’s face it: happy, mentally stable people do not commit murder. All of the 10 countries in which people are happiest (Switzerland, Iceland, Denmark, Norway, Canada, Finland, Netherlands, Sweden, New Zealand and Australia) have universal health insurance that includes ample provisions for mental health. The murder rate in the U.S. is on average no less than five times as high as it is in these countries. Moreover, as a percentage of GDP, the expenditure on social services is 20 percent lower in the U.S. than in these 10 countries. The implication is obvious: For a happy population and a low homicide rate, a country has to take care of its citizens, and the only way to finance that is through taxes.
The problem in the U.S. is that the ultra-rich have fought for and gotten an incredibly good tax deal. Even the billionaire investor Warren Buffett thinks that the super-rich are being coddled. We can hardly expect the poor to pay for the additional taxes needed, and the middle class is struggling to keep up with its student loan and credit card debt payments (together adding up to an amazing sum of nearly $2 trillion.) So the only common sense thing to do is to ask the super-rich to cut down on their conspicuous consumption for the common good. After all, they were the only beneficiaries of the bailout of the financial sector at the community’s expense. And how many of the super-rich would be able to earn the kind of millions they do today if it were not for the government subsidized basic research that brought us the Internet and satellite networks sponsored by the community? This is as good a time as any to pay back the community.
Let’s keep in mind that those who earn between $200,000 and $500,000 pay an average of 20 percent taxes, while those who earn above $500,000 effectively pay 23 percent. That is not progressive enough. Let’s keep in mind that median household income is $52,000 and pay an average of 8.5 percent taxes. So a household that enjoys an income of $500,000 has roughly 10 times the median income, but the rate at which they are taxed is merely 2.5 times as high.
MORE FROM JOHN KOMLOS
Here are some facts about the ultra-rich from IRS data: there were about a million IRS returns above the $500,000 threshold in 2012 with a total income of $1.8 trillion. The average income in this group was $1.7 million, and they paid $423 billion in taxes. So their combined after-tax income was some $1,433 billion or $1.3 million per return. Suppose we’d reduce the after-tax income in this elite group to a round number of $1 million per household by collecting an additional $300,000 per return in taxes. That $1 million allowance should give them plenty of opportunities to continue their conspicuous consumption albeit at a slightly reduced rate, but at the same time enable Uncle Sam to collect an additional $329 billion. The average tax rate of these million individuals would increase from 23 percent to 40.5 percent, but would be about the rate they would have without deductions and still much less than the top tax rate under the Carter administration which was still 70 percent!
I accuse my economist colleagues, who teach that taxation is inefficient and distorts the free market of complicity, of misleading the public in promoting a worldview in which starving the beast dominates. In their view, taxes are supposedly inefficient because they reduce the incentive for highly productive workers to work, so they’ll work less, thereby decreasing total income. However, this inference is based on inappropriately oversimplified assumptions. It assumes that the CEOs would actually work less if their tax rate increases.
According to their claim, Tim Cook, the CEO of Apple Inc. who earns about $400 not per day, not per hour, but per minute, would work less if his salary were reduced to $300 per minute or even $200 per minute. I seriously doubt it. Would Beyoncé sing fewer songs if her taxes were doubled? Would LeBron James play fewer games? I doubt that too.
In fact, there is no empirical evidence that higher taxes on the super-rich would bring forth less managerial skills. After all, lower managerial salaries have not hurt German, Swiss or Japanese firms even though their CEOs make a fraction of their counterparts in the U.S. Not counting stock options, average CEO pay in the 15 largest companies was $10.4 million in the U. S., but “merely” $3.6 million in the Netherlands, $6.8 million in Germany and $6 million in Australia.
Including stock options, the average U.S. CEO earned some $24.4 million in 2007. Between 2003 and 2007, CEO compensation increased by 45 percent in the U.S., while the pay of the average worker increased by barely 3 percent. Today a CEO earns more than 350 times the earnings of an average worker. In 1980, the comparable ratio was closer to 50. Could it be that the productivity of CEOs has increased by a factor of seven relative to the rest of the workforce? No way! Their product is a joint effort, so it is nearly impossible to allocate productivity gains among the participants. Moreover, relative productivity of CEOs did not increase so much in other countries. In the Netherlands, for example, the ratio is “only” 103. Rather, these distortions are due to deficiencies of corporate governance.
As a matter of fact, economists Paul Samuelson and William Nordhaus write in their influential textbook Economics, “Empirical evidence… suggests that the damage of taxes on work effort is limited… Most studies find that taxes have only a small impact on labor effort for middle-income and high-income workers.”
Thus, efficiency would not at all be reduced by increasing the taxes of the super-rich, because they would continue to be as productive as before. Furthermore, their contribution would enable us to invest in mental health which would lower the murder rate and thereby improve the quality of life. After all, the saved lives would contribute to efficiency. The lower anxiety level and improved security would also contribute to the quality of life — that should count toward efficiency as well. What kind of life is it when we are worried if our children go to school or to the movies or to the mall or to church? That cannot be a decent life. Increased taxes on the ultra-rich would lead to a safer and more relaxed society, which, in turn, would improve our sense of well-being.
Note that our annual expenditures on mental health care amounts to $135 billion, so the additional revenue would enable us to provide universal mental health care coverage and enable us to more than triple expenditures on mental health. That should greatly reduce mass murder and the homicide rates, hopefully to that of European levels. That has to be our absolute goal.
And there can be no conversation on how to prevent mass murders without mentioning the need for a sane system of gun control. Other democratic societies such as the United Kingdom can do it, why can’t we? Switzerland has restrictive gun laws, even though it allows reservists to keep a rifle at home (but without ammunition), and still retains its status as a model democracy to be emulated. In short, we must overcome our firearm fetishism.
The recent ghastly mass murders in Moneta, Chattanooga, Charleston and Lafayette in quick succession should be a catalyst to reduce our fascination with firearms. The inconvenient truth is that we are experiencing an epidemic of mass murder based essentially on mental health challenges of the perpetrator and their extremely easy access to dangerous firearms. This must be the moment to come to our senses and set entirely new priorities for our society in vigorously confronting the mass murder epidemic head on. We will never be able to lead decent lives unless we are capable of reigning in the terror at home, because we will continue to live with constant anxiety.
Instead of vacuous slogans of growing the economy and ineffective lamentations about the vicious murders, which will do absolutely nothing to lower the murder rate, we should set ourselves the explicit goal of reducing mass murders in the same way President John F. Kennedy declared the goal of reaching the moon within a decade. Ask the parents of the Sandy Hook Elementary School disaster if they’d agree with such a national mobilization at any price. We cannot do that on borrowed money. The only way to accomplish such a goal is by paying for it through additional taxes and a reduction in the conspicuous consumption of the super-rich. There is no getting around that. Continuing a policy of starving the beast will be the equivalent of shooting ourselves in the foot.