Now this is actually informative....

This is some good stuff. Easy and accessible. Informative on what the tax debate actually is, and who gets what. The sort of thing I could get enthused about and post, tell others about. Now if only the Administration would stop targeting American citizens for assassination and invoking "states secrets" to do so.

But what the hell do I know? I am just a whiny unserious pie-in-the-sky leftist who is angry that the administration did not, by fiat, institute a completely socialist regime.

With a nice bit on morality and economics from Dr. Krugman here.

-Cheers

Let them eat cake....

I have been trying to do a post on this blog entry from Todd Henderson (as saved by Dr. Brad Delong because Dr. Henderson deleted the post after the backlash) for a week on so.

But I thought it warranted being quoted in its entirety.

We are the Super Rich « Truth on the Market: The rhetoric in Washington about taxes is about millionaires and the super rich, but the relevant dividing line between millionaires and the middle class is pegged at family income of $250,000. (I’m not a math professor, but last time I checked $250,000 is less than $1 million.) That makes me super rich and subject to a big tax hike if the president has his way.

I’m the president’s neighbor in Chicago, but we’ve never met. I wish we could, because I would introduce him to my family and our lifestyle, one he believes is capable of financing the vast expansion of government he is planning. A quick look at our family budget, which I will happily share with the White House, will show him that like many Americans, we are just getting by despite seeming to be rich. We aren’t.

I, like the president before me, am a law professor at the University of Chicago Law School, and my wife, like the first lady before her, works at the University of Chicago Hospitals, where she is a doctor who treats children with cancer. Our combined income exceeds the $250,000 threshold for the super rich (but not by that much), and the president plans on raising my taxes. After all, we can afford it, and the world we are now living in has that familiar Marxian tone of those who need take and those who can afford it pay. The problem is, we can’t afford it. Here is why.

The biggest expense for us is financing government. Last year, my wife and I paid nearly $100,000 in federal and state taxes, not even including sales and other taxes. This amount is so high because we can’t afford fancy accountants and lawyers to help us evade taxes and we are penalized by the tax code because we choose to be married and we both work outside the home. (If my wife and I divorced or were never married, the government would write us a check for tens of thousands of dollars. Talk about perverse incentives.)

Our next biggest expense, like most people, is our mortgage. Homes near our work in Chicago aren’t cheap and we do not have friends who were willing to help us finance the deal. We chose to invest in the University community and renovate and old property, but we did so at an inopportune time.

We pay about $15,000 in property taxes, about half of which goes to fund public education in Chicago. Since we care the education of our three children, this means we also have to pay to send them to private school. My wife has school loans of nearly $250,000 and I do too, although becoming a lawyer is significantly cheaper. We try to invest in our retirement by putting some money in the stock market, something that these days sounds like a patriotic act. Our account isn’t worth much, and is worth a lot less than it used to be.

Like most working Americans, insurance, doctors’ bills, utilities, two cars, daycare, groceries, gasoline, cell phones, and cable TV (no movie channels) round out our monthly expenses. We also have someone who cuts our grass, cleans our house, and watches our new baby so we can both work outside the home. At the end of all this, we have less than a few hundred dollars per month of discretionary income. We occasionally eat out but with a baby sitter, these nights take a toll on our budget. Life in America is wonderful, but expensive.

If our taxes rise significantly, as they seem likely to, we can cut back on some things. The (legal) immigrant from Mexico who owns the lawn service we employ will suffer, as will the (legal) immigrant from Poland who cleans our house a few times a month. We can cancel our cell phones and some cable channels, as well as take our daughter from her art class at the community art center, but these are only a few hundred dollars per month in total. But more importantly, what is the theory under which collecting this money in taxes and deciding in Washington how to spend it is superior to our decisions? Ask the entrepreneurs we employ and the new arrivals they employ in turn whether they prefer to work for us or get a government handout.

If these cuts don’t work, we will sell our house – into an already spiraling market of declining asset values – and our cars, assuming someone will buy them. The irony here, of course, is that the government is working to save both of these industries despite the impact that increasing taxes will have.

The problem with the president’s plan is that the super rich don’t pay taxes – they hide in the Cayman Islands or use fancy investment vehicles to shelter their income. We aren’t rich enough to afford this – I use Turbo Tax. But we are rich enough to be hurt by the president’s plan. The next time the president comes home to Chicago, he has a standing invitation to come to my house (two blocks from his) and judge for himself whether the Xxxxxxxxxs are as rich as he thinks.

Yes, we have entered a new gilded age. There have been a number of responses to this across the web, but I believe that Dr. Delong and Dr. Krugman, have the right of it. I will to continue with Mr. Delong:

By any standard, they are really rich.

But they don't feel rich. They have a cash flow problem. When the bills are paid at the end of the month, the money is gone--and they feel that they have to scrimp.

I know how they feel. My household income is of the same order of magnitude than theirs (although somewhat less) and we too had to juggle assets quickly when it developed that an error in Reed College's housing system had caused them not to charge us $5,000 that we owe. We too have chosen to put our income in places (tax-favored retirement savings vehicles, building equity, housing, private college costs) where we think it is better used than $200 restaurant meals, $1000 a night resort hotel rooms, or $75,000 automobiles. But I don't think that I am not rich.

Professor Xxxx Xxxxxxxxx's problem is that he thinks that he ought to be able to pay off student loans, contribute to retirement savings vehicles, build equity, drive new cars, live in a big expensive house, send his children to private school, and still have plenty of cash at the end of the month for the $200 restaurant meals, the $1000 a night resort hotel rooms, and the $75,000 automobiles. And even half a million dollars a year cannot be you all of that.

But if he values the high-end consumption so much, why doesn't he rearrange his budget? Why not stop the retirement savings contributions, why not rent rather than buy, why not send the kids to public school? Then the disposable cash at the end of the month would flow like water. His problem is that some of these decisions would strike him as imprudent. And all of them would strike him as degradations--doctor-law professor couples ought to send their kids to private schools, and live in big houses, and contribute to their 401(k)s, and also still have lots of cash for splurges. That is the way things should be.

But why does he think that that is the way things should be?

And here is the dirty secret: Professor Xxxx Xxxxxxxxx thinks that that is the way things should be because he knows people for whom that is the way it is.

Cast yourself back to 1980. In 1980 a household at the bottom of the 1% rich households in America had an income equivalent in today's dollars $190,000 a year. They know of 1000 people--900 of them poorer than they are in income brackets 90-99% and 100 people richer than they are in the top 1% income bracket. The 900 people poorer than them back in 1980 had incomes from $85,000-$190,000 a year. Those are, if you are sitting at the bottom of the top 1%, the middle class who are not as successful as you. You don't look downward much. Instead, you look upward. Of the 100 above you, 90 in 1980 had incomes less than three times their incomes. And they would have known of 1 person of that 100 who was seven times as rich as they were.

Thus Professor Xxxx Xxxxxxxxx in 1980 would have known who the really rich were, and they would on average have had about four times his income--more, considerably more, but not a huge gulf. He would have known people who were truly rich, and he would have seen himself as one of them--or as almost one of them.

Now fast forward to today. Today a household at the bottom of the 1% rich households in America has an income of nearly $400,000 a year--the income of that slot in the labor market has more than doubled, while the incomes of those at the slot at the bottom of the 10% wealthy has grown by only 20% in two decades. The 900 people he knows in the 90%-99% slots have incomes that start at $110,000 a year. Compared to Xxxx Xxxxxxxxx's $455,000, they are barely middle class--"How can they afford cell phones?" Xxxxxxxxx sometimes wonders.

But he wonders rarely. He doesn't say: "Wow! My real income is more than twice the income of somebody in this slot a generation ago! Wow! A generation ago the income of my slot was only twice that of somebody at the bottom of the 10% wealthy, and now it is 3 1/2 times as much!" For he doesn't look down at the 99% of American households who have less income than he does. And he looks up. And when he looks up today he sees as wide a gap yawning above him as the gap between Dives and Lazarus. Mr. Xxxxxxxxx doesn't look down.

Instead, Mr. Xxxx Xxxxxxxxx looks up. Of the 100 people richer than he is, fully ten have more than four times his income. And he knows of one person with 20 times his income. He knows who the really rich are, and they have ten times his income: They have not $450,000 a year. They have $4.5 million a year. And, to him, they are in a different world.

And so he is sad.

That is what we are contending with. That is the perspective of those making the most noise on the possibly extension of the Bush tax cuts. Let's face it tax are going to have to go up, as well as, spending being brought under control. If you think just one of these will solve our problems you are delusional. And for too long (the last 20-30 years) while the amount of income has shifted increasingly to the top earners, their tax burdens have been decreased. Yet this is what they are complaining about a 2-4% increase on income above 200,000-250,0000.

Near 10% unemployment and this is the complaint we hear. The utter lack of social consciousness is startling. You are in the top 99 percentile....

I do not believe that the "rich" are evil, by any stretch of the imagination, but the lack of any feeling of culpability on the part Wall Street and business officials is jarring. Now Mr. Henderson, is but an economics professor at the University of Chicago, but the mindset is very similar. These are the titans of industry. They believe that a 2-4% increase in taxes are draconian. So you decide what they are.

-Cheers

Better Living Through Science

I saw this article and thought it was mighty nifty. I will be back to political kvetching later this afternoon.
But I thought this was a nice, feel good, distraction for a Monday.

Basically it is a pouch used to transport grain foodstuffs and once it is emptied, it can be used as a solar power water purification device.

Ingenious.


-Cheers

On bigotry.

Recently there have been a number of polls, articles, news stories about the rise of Islamophobia in the country.

A couple weeks back Howard Dean defended the the American people and the opponents of Park 51, from the accusations of intolerance and bigotry:

I think some of my own folks on my end of the spectrum of the party are demonizing some fairly decent people who are opposed to this. And, again, in no way am I defending, you know, the right wing of the Republican Party. But there are 65 percent of the people in this country are not right-wing bigots. Some of them really have deep emotional feelings about this.

To me this is a hollow sounding rationale. Simply because a majority supports something does not imbue it with virtue.

Why is that?

Well Jim Crow laws were widely accepted through much of the country not long ago. Women were disenfranchised until the turn of the last century, and that was popularly held belief. When surveyed, American troops supported segregation pre-WWII. Bigotry can be just as popular in this country as baseball and apple pie. If history has taught
us nothing else, it has taught us that; and there was nothing virtuous about any of the above . It is and was that the time, just simple bigotry.

Ta-Nehisi Coates does an admirable job of talking eloquently about this. Simply because a lot of people believe a thing it still can be prejudiced or biased or even racist.

The notion that that there are no actual bigots in America is hinted at in Dean's last sentence, that opposition to Park51 comes from "deep emotional feelings," as opposed to a presumably thin and shallow bigotry. In fact, bigotry is often quite substantive and emanates from "deep emotional feelings." The planter in the antebellum South who refused to emancipate his slaves was not committing evil simply because it felt good. He was, in the main, doing it to protect the interest and welfare of his children. In other words, he had "deep emotional feelings" about the fate of his progeny and the nature of their inheritance.

That about sums it up, for me.


-Cheers

Things that are hard to convey

A problem I have had for a long time, is trying to explain something that is counter intuitive to a hostile audience.

This comes up from time to time. It is even hard to explain something counter intuitive to a sympathetic audience if they are not already aware of the phenomena.

A couple of examples of this are things would be this, a variation of the Monty Hall Paradox, and Quantum Mechanics.

Recently a couple of topics have come up that I find to have this characteristic: Conversations on the effects of the Stimulus, and Climate Change.

First on economics. I will be the first to admit that I am no master of economic theory, but I do understand aggregate effects. So I can understand why Dr. Krugman may be pulling out his hair over the general dialog with regards to "counter cyclical" spending (Stimulus), especially how public opinion rarely coincides with the proper action. He returns to the topic many, many, many times.

Whenever the issue of fiscal stimulus comes up, you can count on someone chiming in to say, “Only a moron could believe that the answer to a problem created by too much debt is to create even more debt.” It sounds plausible — but it misses the key point: there’s a fallacy of composition here. When everyone tries to pay off debt at the same time, the result is contraction and deflation, which ends up making the debt problem worse even if nominal debt falls. On the other hand, a strong fiscal stimulus, by expanding the economy and creating moderate inflation, can actually help resolve debt problems.

In particular Dr. Krugman is obliquely referencing what is known as the Paradox of thrift.
The idea that an individual action when multiplied over a large group worsens the status of the group as a whole.

Ezra Klein chimes in here as well, just to show how mainstream some of these economic ideas are.

On the environmental front this piece, is an interesting read. What do you do, when there is a very tangible immediate benefit, but the consequences are safely in the future, so that those who reap the benefits never have to pay the consequences associated with those actions?

So in short, I was just stricken by how pervasive this is. No matter the proof you bring to bare, it runs headlong into the inability of people to understand aggregate effects.

-Cheers

Round-Up

Posting has been a lot slower of late. Lots of stuff keeping me occupied recently, from Dawn of War II, to bar crawl preparations.

Anyway thought I would toss out a nice Sunday afternoon post on things non-political.

I recently switched from Comcast to At&t U-verse.

I must say I have been impressed with it thus far. First off the receiver is nice and compact, not the clunky contraption that Comcast provided. So it fairly easy to put it near the tee vee with little hassle.

The modem/signal box/wi-fi device that they use to convert the signal from the telephone jack is pretty snazzy as well. It resembles a large cable modem, but has a pretty informative display
to give you feedback on what components are being used.

The actual service is enormously different then what Comcast offers. There are far more bells and whistles in this At&t product. From the layered menus, to the interactive options (updated weather, stocks and scores displayed on screen), to even a built in on screen dual view option.

So all in all I am pretty pleased with my purchase. In general I loathe the bundling cable tee vee does. It is designed to bilk as much from customers as possible. That all being said though, the channel selection seems pretty good. And lets face it, I would be excited about anything that lets me not have to deal with Comcast.

I would highly recommend it, if for no other reason then to give Comcast some serious competition. Maybe then they would lower their prices and improve their customer service.

-Cheers

You are going to hear this alot....

....Over the next few months you are going to hear a lot of very important people say, "
No one could have predicted this!".

Now I loathed this when Republicans did it with the Iraq War (as Glenn Greenwald ably documents) and I hate it even more when Democrats do it with regards to the Great Recession.

Asked if the stimulus bill was too small, [White House press secretary Robert] Gibbs says: "I think it makes sense to step back just for a second. ... Nobody had, in January of 2009, a sufficient grasp of ... what we were facing." He adds that any stimulus was "unlikely to fill" the hole the financial meltdown created.

"What the Recovery Act did was prevent us from sliding even into a deeper recession with greater economic contraction, with greater job loss than we have experienced because of it," he says.

But in this case, one of the main critics who called them on this is not afraid to speak up. Not because he is always correct but because this what always happens when errors in judgment are made. First, it is "unprecedented", then "No one could have known", always an attempt to deflect and pass blame. Well "nobody" was "concerned" at the time.

The truth is that some of us were practically screaming back in January 2009 that the administration was proposing too small a program. Start with this post and work forward. And no, the point isn’t that I’m so smart — it is that given the forecasts we had at the time, and given historical experience of recessions after financial crises, it wasn’t at all hard to see that the plan was too small. Things have been worse than expected — but not that much worse.

And why does this matter? Because the best chance Obama et al have to change things now is to make the case that we need to do more, and that Republicans stand in the way. Yet here they are, apparently trying to run on the claim that they had it right all along, or something. Is this just boneheaded political strategy? Is it about the egos of the advisers who called it wrong? I don’t know — but it fills me with despair.

Me too Dr. Krugman.

And the Democratic leadership is surprised at the lack of enthusiasm in their base. Maybe if you didn't lie about even this. You would have shown a small glimmer of the leadership we had hoped for.

-Cheers