What do conservative thinkers David Frum and David Brooks, and progressive thinkers Hendrik Hertzberg and Robert Reich have in common? They're thinking big picture about what opportunities for good the cratering economy may be able to bring us. In particular, they're wondering aloud whether there's a political opportunity to shift taxes away from adding friction to things we want (e.g. payroll tax friction on jobs), and adding it to things we want less of (e.g. taxes on emissions with large carrying-costs).
In his New Yorker article, Hertzberg reports on the idea of taking a payroll tax holiday as a way to provide a direct spending stimulus into the sagging economy (it would return ~15% of taxed income to employees). He then takes it a step further suggesting
we redesign the tax structure to map it more closely to certain types of consumption. The political argument will naturally be in defining what "certain types" means. Nevertheless he's invoking the nudge thinking that Richard Thaler and Cass Sunstein discuss in their great book of the same name.
Sunstein and Thaler talk about creating a choice architecture that allows people to make decisions beneficial to themselves without restricting their freedom of choice. If you've ever watched a parent in action getting a 4-year old ready to leave the house, you've seen choice architecture at work. A related example is the physical environment (no windows, oxygen, lighting, eye-level elements) that casinos use to maximize gaming play -- though this type of nudge is not to the benefit of the gamer, but given the odds, to the benefit of the house. A positive choice architecture takes outcomes that data show to be beneficial to the individual, and makes it easier for the individual to make up their own mind up toward selecting actions that lead to the positive outcomes. Crucially, the decisions are not forced on the person. Sometimes a Shack burger with bacon is exactly what you want, and you should be able to have it.
What's exciting for me is the prospect of even considering such a fundamental national change. Because of the entrenched partisan poison, on both sides of the aisle, that commonly favors the preservation or regaining of power over all else, these kinds of political portals do not come around often. But if Frum and Hertzberg can agree on something, and the economic upheaval makes enough people open to really trying something new, then we may be able to transform the crisis into a portkey that structurally puts us in a better place than when the collapse began. From carnage, renewal. It's not clear yet whether the tax shifting idea would indeed be the right call -- there's a lot of numbers to run. But bold moves? I like it.
Incidentally, choice architecture is in part what we're providing to Endeavor Prep customers. My goal is for people to make more creative, more informed decisions about their work life.
If you want to learn more about nudge, read this interview (scroll down) or check out this quick overview here from Ashoka's Changemakers:
