Sunday, February 20, 2011

Three Charts Tell The Story

1. Chart 1: As "payments to individuals" becomes a greater and greater share of the federal budget...... see chart above

2. Chart 2: The percent of taxpayers with zero or negative tax liability goes up....  see chart below....

3. Chart 3: And the share of taxes paid by the top 1% of taxpayers goes up and the share of taxes paid by the bottom 95% goes down...  see chart above...

As John Merline points out in his excellent editorial:

"When you put these two trends together, what you find is that the federal government has over the years essentially turned into a gigantic wealth-transfer machine -- taking money from a shrinking pool of taxpayers and giving it out to a growing list of favored groups."

194 Comments:

At 2/20/2011 2:12 AM, Blogger NC said...

This comment has been removed by the author.

 
At 2/20/2011 2:13 AM, Blogger NC said...

Left says don't be greedy, give more to the new collective. Obama promises provisions supplied and risk removed. +80% of democrat party giddy for more.

 
At 2/20/2011 2:59 AM, Blogger PeakTrader said...

Interest on the national debt will soon exceed defense spending.

The solution by some people is cut defense spending :)

 
At 2/20/2011 4:16 AM, Blogger PeakTrader said...

Another trend is the explosion of budget deficits before the 80 million Baby-Boomers begin to retire.

 
At 2/20/2011 7:33 AM, Blogger Dr William J McKibbin said...

Informative and instructive, yes...

 
At 2/20/2011 8:30 AM, Blogger cluemeister said...

Never enough.

 
At 2/20/2011 9:20 AM, Blogger dhiman said...

Can we please see the per capita version of chart 1.

 
At 2/20/2011 9:44 AM, Blogger Walt G. said...

Interesting but incomplete. Some non-economics type readers might think 1% means 1% of income, but it means the top 1% of income tax filers. That’s a big difference that needs explaining. The top 1% ($380,544 AGI and above) of income tax filers have 20.00% of the adjusted gross income (AGI) and pay 38.05% tax of the taxes, and the top 5% ($159,619 AGI and above) have 34.73% of the AGI and pay 58.72% of the taxes. (Source: Tax Foundation Oct. 2010 using the latest 2008 data set from the IRS)

Obviously, the higher income earners pay more taxes for being high income earners. That’s inherent and expected with a progressive tax system, and the merits of that can be debated.

Another chart might show the increase/decrease rate of the income of the 1% and 5% groups and the rest of the tax filers over time to round out the analysis. From 2001-2008 the groups increased at the following rates: 1% group up 30%, 5% group up 25%, and the bottom 50% up 16%. I think this shows that it would be almost twice as advantageous, when looking at income, to be in the top two income groups even if you have to pay a bit more in taxes than the lower group does. I know which group I would rather be in. (Disclosure: My group, the top 25%, with 67.38% of the income, was up 20% in income from 2001-2008, and we paid 86.34% of the federal taxes in 2008.)

 
At 2/20/2011 10:15 AM, Blogger VangelV said...

Why should Americans worry about these trends? After all, don't we see posting after posting on this site telling us how great the economy is doing and how it is recovering very rapidly?

While the charts can be used by people who are pessimistic on the real economy it is hardly material to the optimists who claim that wages and employment are rising and that house prices are rising, all in an environment of mild inflation.

Might trends like the ones shown lead to a lousy economy and an economic crisis that can't actually be corrected by fiddling with statistics and waving the pom-poms?

 
At 2/20/2011 10:16 AM, Blogger PeakTrader said...

The middle class and total taxes:

Main Street: Tax burden grows even heavier
Feb. 16, 2011

"The tax burden is not just heavy on the wealthiest Americans. The burden on the middle class and even lower-middle class is stunning when you start actually counting up everything. Taxes are often hidden. For example, one of us recently purchased a nice vehicle -- not a luxury vehicle at all, but a truck that we hope to keep for 10-12 years. The sales tax bill alone was over $2,400.

It very well could be that the state of Illinois made more money on that transaction than did either the dealer or General Motors.

What was it again the state of Illinois did to deserve a cool $2,400? And of course beyond that, there was more than $100 in licensing.

We Americans, after all, should be concerned about all forms of taxes: taxes on gasoline, property taxes, sales taxes, Medicare taxes, federal income taxes and now our new state income tax, up to 5 percent from 3 percent -- a 66 percent increase. We are getting hammered by taxes.

This year Tumblin will be tracking all of his taxes. Yep, every penny. When he goes through a toll booth, that's a $2 tax. He's keeping track. When he recently bought a notebook and supplies for school and was taxed $1.67, he's counting that tax. And on and on. We will report back the "good news" next January, but also give you some periodic updates.

We believe that a typical middle class family in Illinois that makes from $60,000 to $100,000 with two income earners is already paying nearly 30-40 percent of their annual income in taxes."

 
At 2/20/2011 10:17 AM, Blogger VangelV said...

The solution by some people is cut defense spending :)

It is a big part of the solution. Why the hell is the US spending more on defense than the rest of the world combined and paying to protect Germany, Japan, and Korea?

 
At 2/20/2011 10:20 AM, Blogger VangelV said...

Obviously, the higher income earners pay more taxes for being high income earners. That’s inherent and expected with a progressive tax system, and the merits of that can be debated.

It seems to me that there isn't much of a real debate. Taxation that is enforced by force or the threat of force is theft and asking the productive class to transfer wealth to the less productive creates a sense of entitlement and a subsidy that rewards idleness and/or bad economic decisions.

 
At 2/20/2011 10:32 AM, Blogger PeakTrader said...

VangelV, the U.S. is not "paying to protect Germany, Japan, and Korea." Export-led economies pay the U.S. to protect them by selling their goods too cheaply to have the dollars to buy the commodities needed for production, which are eventually invested in U.S. Treasury bonds, at low rates, to finance the U.S. military.

 
At 2/20/2011 10:34 AM, Blogger PeakTrader said...

VangelV: "Why the hell is the US spending more on defense than the rest of the world combined."

So, the U.S. can consume more than produce than what it spends on the military.

 
At 2/20/2011 10:55 AM, Blogger PeakTrader said...

The World’s Reserve Currency
October 3, 2007

"A reserve currency is money that’s held by many countries as their foreign exchange reserves. It’s also the currency that’s typically used to price commodities, such as oil and gold, that are traded between countries.

A country whose currency is the predominant reserve currency benefits tremendously. In the case of the dollar, the U.S. benefits from the increased demand for the dollar that the reserve currency status creates. Other countries give the U.S. valuable goods in exchange for dollars issued by the Federal Reserve. They also lend the dollars they’ve accumulated back to the U.S. at low interest rates. Most significantly, the U.S. benefits from importing these goods and exporting its inflation to other countries in the form of depreciating dollars."

 
At 2/20/2011 11:53 AM, Blogger Che is dead said...

This comment has been removed by the author.

 
At 2/20/2011 11:53 AM, Blogger morganovich said...

the real problem is what such trends mean for a democracy.

when 40-50% of people know that they will not pay the taxes for any new spending program, they become entrenched supporters of any and all social spending and drive it out of control.

“A democracy cannot exist as a permanent form of government. It can only exist until the voters discover they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising them the most benefits from the public treasury, with the result that a democracy always collapses over a [lousy] fiscal responsibility, always followed by a dictatorship. The average age of the world’s great civilizations before they decline has been 200 years. These nations have progressed in this sequence: From (1) bondage to spiritual faith; from (2) spiritual faith to great courage; from (3) courage to liberty; from (4) liberty to abundance; from (5) abundance to selfishness; from (6) selfishness to complacency; from (7) complacency to apathy; from (8) apathy to dependency; from (9) dependency back again to bondage.”

-Alexander Tyler, in his 1770 book, Cycle of Democracy

i'd say we are somewhere past apathy, but it's a bit arguable where...

 
At 2/20/2011 11:59 AM, Blogger Che is dead said...

"Export-led economies pay the U.S. to protect them by selling their goods too cheaply to have the dollars to buy the commodities needed for production, which are eventually invested in U.S. Treasury bonds, at low rates, to finance the U.S. military."

Complete gibberish.

 
At 2/20/2011 12:02 PM, Blogger Che is dead said...

"Why the hell is the US spending more on defense than the rest of the world combined and paying to protect Germany, Japan, and Korea?"

Not to mention Canada.

Well, let's see, 60+ years without a major global conflict. The triumph of human liberty over the darkness of communism. The historic increase in global wealth as a result of international trade, lifting billions out of poverty. Shall I go on?

The real question is, why do so many other nations feel entitled to freeload off the American taxpayer.

 
At 2/20/2011 12:17 PM, Blogger PeakTrader said...

Che, if it's "complete gibberish," then what do foreign countries get in return for selling their goods too cheaply and lending their dollars too cheaply to the U.S.?

Also, I may add, it seems reasonable that a typical American earning $60,000 a year is paying around $20,000 in total taxes.

However, that doesn't include the cost of regulation, e.g. through higher prices.

 
At 2/20/2011 12:34 PM, Blogger Che is dead said...

First, markets set prices, not countries. So "too cheap" is just nonsense. Second, countries, like China, that hoard large dollar reserves will always choose to hold them in some form of interest bearing instrument instead of cash. The market sets the interest rate that they receive on that investment. So, here again, "too cheap" is meaningless. As, for "what do they get", all you have to do id look at the dramatic increase in wealth that free trade has brought these nations. Do you really need me to explain this to you?

 
At 2/20/2011 12:35 PM, Blogger Jason said...

Che, if it's "complete gibberish," then what do foreign countries get in return for selling their goods too cheaply and lending their dollars too cheaply to the U.S.?

PT where does China fit in your theory?

i'd say we are somewhere past apathy, but it's a bit arguable where...

Morganovich, we may be. But I think we have a unique mix of leaders in America (and a lot of adjoins too). If we can get our politicians to pass some changes, we'll fall in line.

 
At 2/20/2011 12:38 PM, Blogger morganovich said...

peak-

you think that the government taking 1/3 of your income is reasonable?

on what basis?

how does taking 1/3 of the assets away from the productive portion of society (or a lot more if you have higher income and live in the wrong state, it's easy to pay 50% in california and that's before sales tax) and shifting it to the unproductive postion strike you are a good idea?

i'm dying to hear your explanation of this.

also, che is right. your explanation of trade flows is literally gibberish.

export led economies pay us to protect them? what like china or indonsesia?

by selling goods "too cheaply"? i presume you mean by keeping their currencies from appreciating?

that is not "too cehaply" but rather "cheaply enough to keep export led growth going". it has nothing to do with buying our protection.

and "to finance the US military" is meaningless. you could as easily say "to finance the SEC or the FDA. given where our outlays go, it's most appropriate to say "to fund US social security"

so yes, that whole comment is complete gibberish and half related nonsense. the middle "selling their goods too cheaply to have the dollars to buy the commodities needed for production, which are eventually invested in U.S. Treasury bonds, at low rates" doesn't even make grammatical, much less logical sense.

i have no idea what you have been reading, but you should stop.

 
At 2/20/2011 12:43 PM, Blogger jeremy h. said...

There seems to be a major disconnect between the first chart, and the second two. The trend in Chart 1 is largely driven by increasing Social Security and Medicare spending. These programs are funded primarily by Payroll Taxes. But Charts 2 & 3 only show Income Taxes.

This is no minor quibble, since: a) all workers pay Payroll Taxes (applies to Chart 2); and b) Payroll Taxes are almost as large in total as Income Taxes ($865 vs. $899 billion).

 
At 2/20/2011 12:46 PM, Blogger PeakTrader said...

Che, yes, the goods market-money market-foreign exchange market set prices.

That's why the U.S. has been able to consume more than produce (up to $800 billion a year), since it became a (more) open economy around 1980.

Obviously, the U.S. benefited more than its trading partners. Do you need a basic math lesson?

 
At 2/20/2011 12:54 PM, Blogger PeakTrader said...

Jason, China's communist elites and U.S. multinationals benefit at the expense of China's masses.

China wants a stronger central government, even if it means making the U.S. stronger too.

 
At 2/20/2011 12:57 PM, Blogger PeakTrader said...

Morganovich, I meant the middle class paying one-third of its earnings in taxes is a reasonable (and perhaps accurate) estimate.

 
At 2/20/2011 1:01 PM, Blogger morganovich said...

jason-

"But I think we have a unique mix of leaders in America (and a lot of adjoins too). If we can get our politicians to pass some changes, we'll fall in line."

athens said the same thing.

our leaders are no better and possibly worse than theirs.

the only actual hope we have is that our founders (particularly jefferson) were too astute to trust democracy.

democracy itself is one of the most viscous forms of tyranny.

51% of us can vote the other 49 into subjugation. repeat until you are a nation that is 1% free and 99% enslaved. it's all legal and democratic.

only through inlaienable rights derived from personhood and inviolate to encroaching government can such abuses be prevented.

it is our rights that we need to be guarding, not our democracy, and there, alas, we seem to be losing on all fronts under the banner of "the collective good" which is how all tyrants get rolling.

worse, we have developed an economically interventionist government run by agencies outside of democratic control (like the fed) who are pursuing ruinous policies the keep the bread and circuses flowing, substituting inflation for growth and manipulating markets in totally unsustainable fashion. watching the fed buy 40% of US bond auctions and call it "quantitative easing" is like watching a snake swallow its tail. at some point, it needs to stop or it will consume itself entire.

read the histories of argentina or france under louis and law to see how this story tends to end.

we are much closer to the edge than i suspect you realize.

the budget needs to be balanced immediately, and i don't mean nonsense balanced like clinton claimed (and lied - see this discussion for the evidence:

http://activerain.com/blogsview/855368/the-clinton-budget-surplus-fact-or-fiction-

about), but really balanced under GAAP not the fanciful modified cash accounting of the CBO, a thing that has not been even close to occurring since eisenhower.

we passed a long time ago through complacency that persistent deficits were fine (which is utterly insanse) and blew right through apathy.

we are now dependent on the ludicrous fed policy that has kept us recession and perpetual asset bubbles for a decade (if you calculate CPI properly) and on a powerful and growing welfare state.

the more i look at it, the more i think we are already slipping into bondage between the patriot act and obamacare and kelo vs new london and the disturbing cronyism of the innumerable bailouts of GM and freddy and fannie and all manner of other defunct organizations. GE gets to write "green" laws in exchange for political donations.

if you think a fascist government and corporate state cannot happen here, look more closely. it's happening already.

with such seeds planted, it will be easy to take away freedom once times get a little tougher and the budget really starts to fail. this is what happened all over europe in the 20's and 30's. people ASKED to have their freedom taken and governments were happy to oblige. most of the fascists were freely and fairly elected and even now i hear Americans clamoring for us to imitate china and run a centrally planned/controlled economy.

the more history you read, the more ominous our present situation will seem.

 
At 2/20/2011 1:11 PM, Blogger morganovich said...

peak-

"That's why the U.S. has been able to consume more than produce (up to $800 billion a year), since it became a (more) open economy around 1980."

this is more gibberish.

you don't have to sell an export to pay for every import.

we produce most of our goods at home and are perfectly capable of become richer without any trade at all.

every year we produce $14tn in new wealth. if we run a $400bn "trade deficit" which is a totally meaningless term then that is under 3% of our wealth. big deal. we still have the other 97% and we got something for what we spend and better still, thought it was worth more than we spent on it, else we would not have engaged in the transaction.

imagine you have an apple tree.

every year it grows 100 apples worth $1 each.

show me how giving 3 apples every year to your friend in china will ultimately bankrupt you or is in any way unsustainable.

you can't.

it's even less possible if he is giving you something in exchange.

you act as though having a trade deficit is synonymous with "living beyond your means". this is completely untrue as can be shown with the simple apple tree example.

we are not "running out of stuff" by having a trade deficit nor does it mean we are doing anything unsustainable or that impoverishes us.

 
At 2/20/2011 1:21 PM, Blogger Jason said...

Morganovich, I don't disagree with your thoughts on democracy. As a matter of fact, the mor democratic we've become, the more schiztophrenic our society has become. I look to California as my microcosm of America, the more constitutional amendments they pass through referendum, the crazier things seem to become.

But even in the republican (not party, government) pieces of the federal government are things amiss. You mentioned GE writing laws - this is the dark side of a republic. The power is concentrated amongst a few. I see corporations writing our laws and I cannot believe this is really in the best interests of America.

I mean, where do you start? Entitlement reform? A constitutional amendment prohibiting campaign contributions from parties that cannot vote? (my idea)

I do believe that if politicians can summon the political courage to make a few changes in key areas, that could spring board things. I believe we have enough people of spirit to lead enough of the rest...we just need to start on the path.

I sure hope you are not correct we are past apathy.

 
At 2/20/2011 2:03 PM, Blogger Che is dead said...

"Che, yes, the goods market-money market-foreign exchange market set prices."

Baby steps.

"That's why the U.S. has been able to consume more than produce ... Obviously, the U.S. benefited more than its trading partners."

Your assumption about the imbalances - among other things - is just wrong. Your education begins at about 2:20. Click HERE

 
At 2/20/2011 2:55 PM, Blogger morganovich said...

jason-

where does one start indeed...

that's the key problem. everyone want's to see the budget balanced, but they have even more vested interest in whatever goodies they are getting.

no snowflake blames itself for the avalanche.

this is why these cycles are inevitable. on the margin, you can never get a demos to vote itself fewer goodies. even as we all agree that something needs to be done, it's always "but not to my goodies".

there is nowhere to start. that's why you end up fascist.

we already lost when we began to conceive of government as the solution to inequality of economic outcome and a guarantor of prosperity.

under coolidge, the federal budget was 2% of GDP. under hoover and FDR it ballooned into the 30's and has never gone back. we are far too far gone now to ever go back to how it was.

we are over the event horizon and there is no getting out.

i have acquired dual citizenship in a no tax non information sharing country out of fear that giving up US citizenship (itself now a taxable event BTW) may become necessary. it's a thermonuclear option and one i would hate to pursue, but better to have a liferaft and not need it that the converse...

i don't see how we can get around this.

 
At 2/20/2011 2:55 PM, Blogger morganovich said...

numerous policy ideas seem possible, but never practicable.

it would be useful to have the courts step in and really champion the constitution and the bill of rights to roll back these manifold encroachments, but many judges are "activists" and believe in legislating from the bench "for the public good". read the kelo vs new london decision for a particularly outrageous example.

estonia takes away your vote if you are on the dole. that seems like a good start - you cannot vote yourself more benefits while receiving them. but you'd never get that through in the US, especially with 40-50% of americans not paying federal taxes.

social security needs to be done away with altogether. take what money is there, split it into lump sums akin to 401k's and pass it out, then get out of the business.

this has HUGE advantages. it controls costs while also upping the personal savings rate and funneling money into productive areas instead of "investing" it in government IOU's. but again, it will NEVER happen. just not politically palatable and frankly, we don't have the money. the SS trust fund has been so mismanaged and misappropriated that it has yielded significantly negative real returns even if the IOU's are paid back, and hell if i can see how that is going to be possible without just printing money.

medicare/aid also needs to be turned into a lump sum money transfer. this would allow costs to be controlled and encourage users to shop for price on medical procedures. the very reason that health care costs are out of control is the all you can eat nature of our insurance. what other major purchase do you make without asking what it would cost? again, i see ZERO political will to do this and everyone lined up against it.

our states are about to be ruined as the children of "the greatest generation" retire and state agencies spend as much on their pensions as they do on providing services.

witness the debacle in Wisconsin over quite minor changes in existing contracts asking the public employees to pay a share of their helath and retirement costs that is still lower than the private sector. do you think we have the political will to defund public pensions?

this is why democracies wind up turning to fascism - at some point, you just cannot kick the can any further down the road and you can never muster the political will to drive real change democratically once too many people have their noses in the trough. we elect tranche after tranche of politicians promising to "do something about the problem", but look at what they actually do. they argue over cuts to 20% of the budget and let the 70% that is out of control go right on hurtling toward the abyss.

i'd love to believe there is a way out of this that could actually be put into practice, but damned if i can see it.

 
At 2/20/2011 3:19 PM, Blogger morganovich said...

there is some interesting insight on the KITCO website:

http://www.kitco.com/ind/Dougherty/jan222010.html

the US budget deficit for 2009 was $9 trillion if you use GAAP to account for future liabilities.

According to the Federal Reserve’s most recent report on wealth, America’s private net worth was $53.4 trillion as of September, 2009. But at the same time, America’s debt and unfunded liabilities totaled at least $120,000,000,000,000.00 ($120 trillion), or 225% of the citizens’ net worth. Even if the government expropriated every dollar of private wealth in the nation, it would still have a deficit of $66,600,000,000,000.00 ($66.6 trillion), equal to $214,286.00 for every man, woman and child in America and roughly 500% of GDP. If the government does not directly seize the nation’s private wealth, then it will require $389,610 from each and every citizen to balance the country’s books. State, county and municipal debts and deficits are additional, already elephantine in many states (e.g., California, Illinois, New Jersey and New York) and growing at an alarming rate nationwide. In addition to the federal government, dozens of states are already bankrupt and sinking deeper into the morass every day.

Putting Fiscal Year 2009’s $9,000,000,000,000.00 ($9 trillion) deficit another way, 17% of America’s private wealth, accumulated over a period of 235 years, was wiped out by just one year’s worth of government deficit spending insanity.

we are like a frat guy who has just taken 30 shots of tequila in 2 minutes and claims he is fine because he is still standing.

upright he may be, but the tequila, like the unfunded liabilities, is in the pipe now and it's coming whether we like it or not.

democracies never vote to pump their own stomachs.

 
At 2/20/2011 4:27 PM, Blogger Ron H. said...

Peak

"VangelV, the U.S. is not "paying to protect Germany, Japan, and Korea." Export-led economies pay the U.S. to protect them by selling their goods too cheaply to have the dollars to buy the commodities needed for production, which are eventually invested in U.S. Treasury bonds, at low rates, to finance the U.S. military."

Based on that explanation, the list of countries should include China. Do you believe the Chinese are paying for US military protection?

 
At 2/20/2011 5:20 PM, Blogger Ron H. said...

Walt G.

"Some non-economics type readers might think 1% means 1% of income, but it means the top 1% of income tax filers."

"Share of Total Income Taxes Paid By Top 1% of Taxpayers" is confusing? I have to believe that anyone confused for very long by that, would have a great deal of trouble with the rest of the post also - on an economics blog, incidentally - so any lack of understanding caused only by this chart and its title is unlikely.

"Obviously, the higher income earners pay more taxes for being high income earners. That’s inherent and expected with a progressive tax system, and the merits of that can be debated."

To believe that the merit of a progressive income tax is debatable, is to believe one of two things, or perhaps both:

1. Everyone should have pretty much the same amount of income, and anyone who makes more than others by working harder, or making good decisions and providing something society values more than what others provide, should be penalized for making that positive contribution, by having more of their earnings taken away from them.

2. Bureaucrats and those in government are better able to determine how a person's money should be spent, than they are able to determine for themselves.

Those who are wealthy, or have higher incomes, are demonstrating that they make a larger than average contribution to the well-being of all of us. Those who are poor, or have lower incomes, have demonstrated just the opposite. To believe that high contributors should be forced to share more, or even pay to support, low contributors, is an idea that's beyond bizarre.

 
At 2/20/2011 6:02 PM, Blogger Ron H. said...

Jason

"A constitutional amendment prohibiting campaign contributions from parties that cannot vote? (my idea)

Better yet, how about NO restrictions on campaign contributions, but a transparent reporting requirement?

If you know who is financing a candidate, you can predict where his/her allegiances lie, and cast your vote accordingly.

As an unlikely example, if you knew ahead of time that a presidential candidate was heavily financed by unions, you might expect him to favor union interests after winning the election. Just sayin'.

 
At 2/20/2011 6:17 PM, Blogger Walt G. said...

Ron H.,

You can't assume Professor Perry only draws an economics' audience to his blog (5 million hits!).

I'm just saying most of the wealth is in the top just like most of the taxes, and it is trending up. To show an increase in tax share over time and not the corresponding increase in income share over time is not very balanced. I don't have a problem understanding my share of taxes going up if my income is rising much quicker than my tax share/tax rate, which it is (but, of course I would prefer to see my dollar amount of taxes decrease). Like I said, the progressive federal tax can be debated; I will let others do that using ALL of the available information. Issues are debatable even if you don't agree with the other side.

I agree and disagree the way you stated your position. I agree work now pays a premium for knowledge, but I am not necessarily sure that makes knowledge-based workers "high contributors" over others. The people who design and figure out how to bolt on fenders are going to make a lot more money than the people that actually bolt the fenders on, but the cars would be pretty useless on the road without the fenders.

 
At 2/20/2011 6:22 PM, Blogger Walt G. said...

I should have used the term "income" instead of wealth. Wealth is much different than income. A lot of people with high incomes can never figure out how to turn their income into wealth, and a lot of low income people can become wealthy if they can delay gratification and have a plan with goals.

 
At 2/20/2011 6:35 PM, Blogger Jason said...

The people who design and figure out how to bolt on fenders are going to make a lot more money than the people that actually bolt the fenders on, but the cars would be pretty useless on the road without the fenders.

Walt, this is a flawed argument. Designers are less common than assemblypeople. It isn't a matter of what is more or less necessary, it is a matter of how much is available of one or another. This is true of engineering versus factory. Or, probably the best example, fighter pilots versus fighter assemblers. Japan found out at the end of World War II when their capacity to produce planes far outstripped their capacity to train and produce pilots.

You can find far more factory workers, in a major metropolitan area for instance, than you would need to assemble any vehicle. Finding the engineers would be the difficult part.

 
At 2/20/2011 6:42 PM, Blogger PeakTrader said...

Ron, if China isn't paying for U.S. military protection, or at least some U.S. restraint, then it's overpaying, which is likely the case.

 
At 2/20/2011 6:49 PM, Blogger PeakTrader said...

Che, you may want to educate yourself with some international economics, e.g. the Mundell-Fleming model to start.

 
At 2/20/2011 7:30 PM, Blogger PeakTrader said...

U.S. trading partners lose (up to 10% a year) when they exchange their goods for dollars instead of U.S. goods, e.g. through inflation (postponing U.S. purchases), low interest rates (U.S. Treasury bonds are the safest investment in the world), and currency exchange rates (exchanging more dollars for their currencies from a depreciated dollar).

Milton Friedman:

The "worst case scenario" of the currency never returning to the country of origin was actually the best possible outcome: the country actually purchased its goods by exchanging them for pieces of cheaply-made paper. As Friedman put it, this would be the same result as if the exporting country burned the dollars it earned, never returning it to market circulation.

 
At 2/20/2011 8:01 PM, Blogger Che is dead said...

"U.S. trading partners lose (up to 10% a year) when they exchange their goods for dollars instead of U.S. goods, e.g. through inflation (postponing U.S. purchases), low interest rates (U.S. Treasury bonds are the safest investment in the world), and currency exchange rates (exchanging more dollars for their currencies from a depreciated dollar)."



Where are you getting this stuff? We haven't had 10 percent inflation since Jimmy Carter. The U.S. dollar, like all currencies, experiences periods of increasing and decreasing value. It increased substantially in the '80's and again in the mid '90's. Do you remember the asian financial crisis? Being long dollars at that time provided a tremendous return for our trading partners. And what does the Mundell-Fleming model have to do with this conversation?

Time to adjust your meds.

 
At 2/20/2011 9:12 PM, Blogger VangelV said...

VangelV, the U.S. is not "paying to protect Germany, Japan, and Korea."

Your taxpayers pay to station troops in Germany, Japan, and Korea. You have to call it the way it is, not what you want it to be.

Export-led economies pay the U.S. to protect them by selling their goods too cheaply to have the dollars to buy the commodities needed for production, which are eventually invested in U.S. Treasury bonds, at low rates, to finance the U.S. military.

Nonsense. One of the reasons why they can make cheaper goods because they do not have to pay for their own defense. They do not sell 'too cheaply' and they certainly do not sell you stuff so that you can sell them Treasury bonds later. And there is no 'they.' All you have are individuals and corporations pursuing their own best interests.

 
At 2/20/2011 9:14 PM, Blogger VangelV said...

VangelV, the U.S. is not "paying to protect Germany, Japan, and Korea." Export-led economies pay the U.S. to protect them by selling their goods too cheaply to have the dollars to buy the commodities needed for production, which are eventually invested in U.S. Treasury bonds, at low rates, to finance the U.S. military.

The US military is helping to bankrupt the country. Not only will you not be able to spend on cheap goods when the dollar collapses but you will not have the capital necessary to accumulate the wealth necessary to build your own infrastructure when you will need to.

 
At 2/20/2011 10:10 PM, Blogger VangelV said...

"Why the hell is the US spending more on defense than the rest of the world combined and paying to protect Germany, Japan, and Korea?"

Not to mention Canada.


You misunderstand. The US does not have an occupying army and large bases with thousands of troops inside of Canada as it does in Okinawa, Tokyo, Garmisch-Partenkirchen, Bamberg, Wiesbaden, Wackernheim, Mannheim, Heidelberg, Germersheim, Hohenfels, Ansbach, Darmstadt, Stuttgart, Schwetzingen, Lampertheim, Schweinfurt, Miesau, Kaiserslautern, Vilseck, Illesheim, Mainz Finthen, Uijeongbu, Waegwan, Dongducheon, Seoul, Pyeongtaek, etc., etc., etc. Why is the taxpayer paying to keep soldiers in South Korea or Japan?

Well, let's see, 60+ years without a major global conflict. The triumph of human liberty over the darkness of communism. The historic increase in global wealth as a result of international trade, lift billions out of poverty. Shall I go on?

Yes because your attribution of peace over the past few decades to having bases in Japan, South Korea or Germany is total BS. Europe has an economy that is as big as the US and is perfectly capable of paying for its own defense. Unlike the US, South Korea is still solvent and can afford to pay for its own defense. As for Japan, it already has a first class fighting force and needs no protection from marines in Okinawa or the navy in Yokohama.

 
At 2/20/2011 10:12 PM, Blogger VangelV said...

when 40-50% of people know that they will not pay the taxes for any new spending program, they become entrenched supporters of any and all social spending and drive it out of control.

My neoconservative teachers certainly understood this well and gave the class the usual Straussian critique of democracy. Sadly, few students were smart enough to understand the simple argument.

 
At 2/20/2011 10:18 PM, Blogger VangelV said...

The real question is, why do so many other nations feel entitled to freeload off the American taxpayer.

They don't. Most Japanese do not want the US troops in their country. Most Germans did not ask the Pentagon to keep troops in Germany.

 
At 2/20/2011 10:20 PM, Blogger VangelV said...

Che, if it's "complete gibberish," then what do foreign countries get in return for selling their goods too cheaply and lending their dollars too cheaply to the U.S.?

They get capital accumulation and massive infrastructure projects that are funded by those sales. When the USD is toast the capital will still be in place and will be able to generate wealth.

 
At 2/20/2011 10:21 PM, Blogger VangelV said...

First, markets set prices, not countries. So "too cheap" is just nonsense.

Correct. The Keynesians don't seem to understand this point. They still think in terms of groups and countries rather than individuals making decisions.

 
At 2/20/2011 10:23 PM, Blogger VangelV said...

If we can get our politicians to pass some changes, we'll fall in line.

How things have changed. Americans used to have such a hard time falling in line. I guess decades on the road to serfdom has changed the landscape.

 
At 2/20/2011 10:26 PM, Blogger VangelV said...

Obviously, the U.S. benefited more than its trading partners. Do you need a basic math lesson?

Start in 1980, as you suggested, and look at the standard of living in the average worker in China and the United States. Fast forward to today and look at the improvements over the past 30 years. No math lesson would have the American worker benefiting more than the Chinese worker.

 
At 2/20/2011 10:28 PM, Blogger VangelV said...

Jason, China's communist elites and U.S. multinationals benefit at the expense of China's masses.

I take it that you have never been to China. If you had you would not have made this statement.

 
At 2/20/2011 10:29 PM, Blogger VangelV said...

democracy itself is one of the most viscous forms of tyranny.

51% of us can vote the other 49 into subjugation. repeat until you are a nation that is 1% free and 99% enslaved. it's all legal and democratic.

only through inlaienable rights derived from personhood and inviolate to encroaching government can such abuses be prevented.


As long as the Supremes are setting the tempo you are dreaming of respect for inalienable rights.

 
At 2/20/2011 10:42 PM, Blogger VangelV said...

We haven't had 10 percent inflation since Jimmy Carter.

Here I would side with our crazy friend. If we used the same methodology to calculate the CPI as we did during Carter's time in office we would have had a number of years during which the CPI was over 10%.

http://www.shadowstats.com/

 
At 2/20/2011 10:55 PM, Blogger Ron H. said...

Walt G.

"You can't assume Professor Perry only draws an economics' audience to his blog (5 million hits!).

I'm just saying most of the wealth is in the top just like most of the taxes, and it is trending up."


As is usual with you, you either didn't understand my comment, or you misquoted me. I'm not assuming anything about Prof. Perry's readership, except that a person without the slightest interest in economic issues wouldn't likely read the whole post as it contains only boring references to dollars and taxes, and uninteresting charts.

What you were "just saying" was that a person might be confused by the title of chart 1. My response was that if someone was confused by that easy to understand title, they would likely be confused by the entire post.

"Like I said, the progressive federal tax can be debated; I will let others do that using ALL of the available information."

Apparently you don't feel up to the task. I can't imagine what you think should be debated. I know you don't have a problem with some making more money than others, and I know you aren't calling for "fairness" here.

"I agree and disagree the way you stated your position."

Pick one or the other. You can't have it both ways

"I agree work now pays a premium for knowledge, but I am not necessarily sure that makes knowledge-based workers "high contributors" over others."

There is nothing in my comment about knowledge based-workers. Are you responding to someone else here?

When someone makes a high income, it is because they have a skill that is valuable to employers, for which they are willing to pay a high salary. When someone becomes wealthy, it is because they provide a good or service that others value and are willing to pay for. We are all better off because of it.

When someone is poor, it is because they don't have a valuable skill, or don't provide a good or service others value highly and are willing to pay for. Only in an Orwellian world does it make sense to punish the high producer and reward the low producer.

"The people who design and figure out how to bolt on fenders are going to make a lot more money than the people that actually bolt the fenders on, but the cars would be pretty useless on the road without the fenders.

This has nothing to do with the subject at hand, or my comment. Why did you write this?

 
At 2/20/2011 11:00 PM, Blogger Ron H. said...

Peak

"Ron, if China isn't paying for U.S. military protection, or at least some U.S. restraint, then it's overpaying, which is likely the case."

Restraint? Do you think that if we weren't lulled by the flow of low priced tribute from China, we would invade?

 
At 2/21/2011 2:48 AM, Blogger PeakTrader said...

Just because something is shiny doesn't mean it's good.

After 30 years of hard work, what does the average Chinese have to show for it?

Real income of $3,000 a year on average (after quality adjustments and social costs)? Little or nothing for retirement? Lots of infrastructure? (which is owned by the communist central government, not the private sector).

As recently as 2007, Americans were buying houses, autos, retail goods, etc. with little or nothing down, zero percent financing, 50% to 70% off, etc.

Of course, some people are still in depression, and in denial.

 
At 2/21/2011 2:54 AM, Blogger PeakTrader said...

Che, Japan's yen has appreciated since the mid-'80s from 250 yen per dollar to 85 yen per dollar.

And among many other things, the Mundell-Fleming model shows government intervention in the foreign exchange market typically causes a disadvantage for that country.

 
At 2/21/2011 3:00 AM, Blogger PeakTrader said...

Ron, there may or may not be some restraint on geopolitical events or relevant policies.

 
At 2/21/2011 5:38 AM, Blogger Jason said...

How things have changed. Americans used to have such a hard time falling in line. I guess decades on the road to serfdom has changed the landscape.

I think if major entitlement reform occurred, we would find a way to move on without the gubment cheese. But you are correct in that Americans, historically, are a notoriously disobediant group of people.

I know over 235 years we've gon through great hardships and managed to come out stronger. I guess I have faith that the welfare state hasn't made us too soft.

 
At 2/21/2011 7:35 AM, Blogger Walt G. said...

Here's another perspective: The top 50% income group has 87.25% of the income (AGI) and pays 97.3% of the taxes, and the bottom 50% income group has 12.75% of the income (AGI) and pays 2.7% of the taxes (that's about a +10% in one direction and a -10% in the other direction). (Source: Tax Foundation using IRS 2008 tables)

How much of the taxpaying disparity is due to the success of the top 50%? Do we really want to change the taxpaying disparity if it means moving some of the income from the top 50% to the bottom 50%? Some people will say yes and others will say no way. There will always be a "soak the rich" and "the poor don't pay anything" argument.

I think all taxes have to be looked at and considered. Even a poor person will pay Social Security tax on the first dollar made, but a high income person will not. Gas taxes are no cheaper for poor people than rich people so they will be a higher percentage of their income as well as the glut of other pesky taxes such as telephone taxes and cable (yes, poor people have cable).

I think we all pay too much in taxes, but we still want ours. How many of you are willing to forego collecting your own Social Security checks while still paying for those who are on it now? It will take a mentality of being able to make drastic sacrifices like that to lower the expenses necessary to support programs for an aging U.S. population.

 
At 2/21/2011 8:06 AM, Blogger Walt G. said...

Correction: A poor person wil pay Social Security tax on the first and last dollar made, but the rich person will not pay Social Security tax on the last dollar made.

 
At 2/21/2011 8:51 AM, Blogger VangelV said...

Ron H.

Restraint? Do you think that if we weren't lulled by the flow of low priced tribute from China, we would invade?

Isn't this going into silly territory? You could not hold Lebanon and now we are talking about invading China?

 
At 2/21/2011 9:04 AM, Blogger VangelV said...

After 30 years of hard work, what does the average Chinese have to show for it?

A lot. He moved from a small apartment without an elevator, plumbing, or heating into a bigger place that has everything that he needs. In that place you will find a large flat screen TV that has more than a hundred channels of entertainment. The family eats much better than it used to and has many more material possessions as well as a great deal in savings.

Real income of $3,000 a year on average (after quality adjustments and social costs)?

While average income may seem low to you it buys a lifestyle that is significantly higher than what it used to be 30 years ago. When it comes to improvement in lifestyle the American worker is far behind his Chinese counterpart.

Little or nothing for retirement?

I would say that when it comes to being prepared for retirement many Chinese are better off than their American counterparts. Unlike Americans, they did not rely on the government to fund a retirement out of a bankrupt SS system that requires huge taxes to be placed on their children. The average American who owns a home with a mortgage has around 3% equity in it. That is far behind Chinese workers.

Lots of infrastructure? (which is owned by the communist central government, not the private sector).

That is not true. A new highway is more likely to be owned and operated by a private company in China than in the US. And I also do not see the point you are making. I would say that most of the infrastructure used by Americans is controlled by their government. Are you arguing for more privatization of infrastructure?

 
At 2/21/2011 9:09 AM, Blogger VangelV said...

I know over 235 years we've gone through great hardships and managed to come out stronger. I guess I have faith that the welfare state hasn't made us too soft.

Good luck on that thesis. From what I see the American schools have created conformists and serfs who would have a hard time standing up to oppression and who would have a hard time dealing with massive dislocations in the economic system. Sadly, I see riots and violence being driven by the American left. In most ways the US is still the best country in the world but it is moving away from the principles that made it so great.

 
At 2/21/2011 9:25 AM, Blogger VangelV said...

I think all taxes have to be looked at and considered. Even a poor person will pay Social Security tax on the first dollar made, but a high income person will not.

That is wrong. A rich person pays SS tax on the first dollar earned. But given the fact that SS contributions are capped there is a point after which earnings are not taxed. Of course, given the inevitable means testing what we will get is the poor people getting back SS payments while the rich do not. That would mean that the rich got screwed again while the poor got what they did not deserve again. This is the system that you favour? Why?

Gas taxes are no cheaper for poor people than rich people so they will be a higher percentage of their income as well as the glut of other pesky taxes such as telephone taxes and cable (yes, poor people have cable).

If you have a car, cable, and a cell phone then you are not very poor. I think that you need to check your definitions.

I think we all pay too much in taxes, but we still want ours.

As little kids most of us learned that we could not always have everything that we wanted. Only a naive fool would think otherwise.

How many of you are willing to forego collecting your own Social Security checks while still paying for those who are on it now?

I imagine that very few people would want that. The question is why would they need to pay for a system from which they opted out. Of course, most people would jump at the chance of paying 5% or so rather than the current rate and be allowed to opt out.

It will take a mentality of being able to make drastic sacrifices like that to lower the expenses necessary to support programs for an aging U.S. population.

This is the morality of slavery. Why should anyone 'sacrifice' for anyone else is s/he does not wish to? And since when was the sacrifice of liberty and justice transformed into a virtue?

 
At 2/21/2011 9:26 AM, Blogger Hydra said...

What was it the stare did to deserve $2400?

Maintain the roads that make it possible to use the truck.

Most of us aren't paying near enough for road use. In virginia the gas tax hasn't been adjusted for 24 years.

 
At 2/21/2011 9:27 AM, Blogger VangelV said...

Correction: A poor person wil pay Social Security tax on the first and last dollar made, but the rich person will not pay Social Security tax on the last dollar made.

So what? Contributions are capped because benefits are capped. Are you asking the high income earners to make even more sacrifices than they already do?

 
At 2/21/2011 9:54 AM, Blogger Hydra said...

Governments primary job is to protect people and property and to do so equally. The wealthy have more to protect, so it is reasonable that they should pay more. Sure enough, even with a flat tax, they will pay more, but that is an incomplete answer. As Walt points out, even after graduated taxes, they still have more left to work with. Over time, this means that what they can accumulate is more nonlinear than those with less disposable income. A flat tax does not address that nonlinearity, and therefore would allow the wealthy more protection at a relatively lower price.

I believe that on basic principles the ability to accumulate stuff nonlinearly implies that payment for government "protection" should be nonlinear.

Which brings us to the argument of what protection?

Protection from having to look at homeless people, and unemployed beggars? Protection against women having unwanted babies? Protection against asbestos, PCB, and bad baby cribs?

We seem to have lost all sense as to what risks we can be protected from and at what cost.

One result is that when we pay more to prevent one risk, than some other equivalent one, then we are no longer protecting people equally, and we are then violating basic principles.

I believe that such disparities are far greater, and less reasonable than disparities created by the graduated tax. And, when we make budget cuts, such disparities are a good guide as to what to cut first.

 
At 2/21/2011 9:56 AM, Blogger Hydra said...

In short, three charts do not tell the story: it is more complicated than that.

 
At 2/21/2011 10:05 AM, Blogger Hydra said...

Why should anyone sacrifice for someone else if they don't wish to?

Because presumably that other person sacrifices proportionately for you. Those trades may not occur equally in time, the proportionality may not be fair, etc. But to the extent that fair trades are generally agreed to, it is wrong to call a fair trade equivalent to slavery.

 
At 2/21/2011 10:23 AM, Blogger morganovich said...

hydra-

this argument:

"Governments primary job is to protect people and property and to do so equally. The wealthy have more to protect, so it is reasonable that they should pay more. Sure enough, even with a flat tax, they will pay more, but that is an incomplete answer. As Walt points out, even after graduated taxes, they still have more left to work with. Over time, this means that what they can accumulate is more nonlinear than those with less disposable income. A flat tax does not address that nonlinearity, and therefore would allow the wealthy more protection at a relatively lower price."

is completely inconsistent.

first, you state that government ought to protect people equally. that is equality of opportunity.

then, you launch into a demand for equality of outcome. that is not equal protection, it is, by definition and design, unequal.

these two positions are not compatible.

you don't to provide equal protection, you want to provide equal results.

this is the single most destructive economic philosophy extant. even under a lawless system, people will still seek to better themselves and produce more, but not under a system that will take the fruits of their labor from them and give them to the indolent.

what incentive is there to work?

the whole economy becomes a rapidly shrinking tragedy of the commons.

this has happened to every communist system not based on slavery (like the spartans). this is why the pilgrims nearly starved to death for the first 2-3 years. it's why the soviet empire failed. how do you get people to work when those that do not share equally in the results?

if you believe in the rights of self determination and private property, there is no way to defend the "equality of outcomes" system you propose.

it is as morally bankrupt and incompatible with individual rights as it is economically disastrous.

 
At 2/21/2011 10:23 AM, Blogger Hydra said...

Taxation through force: it is those who believe they should be allowed to be free riders that are taxing the rest of us by force. Everyone else has agreed to have some kinds of mutual exchange, for some kind of mutual benefits, and that is not stealing.

There is, however a continuing disagreement about the proper level, cost, and value of such trades.

I believe one answer is more market driven regulations and less regulation driven by special interests, whose main job is to lobby for unfair advantage.

 
At 2/21/2011 10:45 AM, Blogger Hydra said...

Where did I suggest, let alone mention equality of outcome?

All I'm suggesting is that basic reason for government is mutual protection of persons and property. If the wealthy wind up with exponentiallly more property, then why shouldn't they pay exponentially more to protect it, even if that means nonlinear taxation of their income?

Apparently many don't think they have enough protection and choose to live in gated communities and other high tax locations.

This is one example of market driven regulation.

 
At 2/21/2011 10:47 AM, Blogger Walt G. said...

VangeIV,

The SS taxes taken out of your pay are to pay the people on SS now. Your benefit and cap will depend on the next generation being both willing and able to pay yours. Too many people think of SS as a savings plan, and it isn't. SS is a tax just like any other tax, and the effective and marginal rates can be figured accordingly for each income group. Using that analysis, the lower income group pays a higher rate than the higher income group that goes over the yearly limit ($106,800 in 2011).

There is really no argument about ability to pay. You have to fish where the fish are to catch them. The top 50% have almost 90% of the income. The income is not equally distributed, so how can the tax be? How are you going to get much out of what is left of the bottom 50%'s income when they still have to pay other taxes? Taxes and governmental fees are everywhere even if they are not called taxes (license plates . . .). Nobody is getting something for nothing, and I expect the lower income earners are hit harder on a percentage of their income than the high income group when everything is counted.

Any analysis of income tax share has to consider income share to see the whole picture because they cannot be separated. You need all the facts to have an informed opinion.

 
At 2/21/2011 10:56 AM, Blogger Hydra said...

If you think equal opportunity means equal incentive to work, why not tax 100% of disposable income above some minimum amount?

You are the one suggesting equal outcome, not me.

 
At 2/21/2011 10:59 AM, Blogger Walt G. said...

VangeVI,

I'll quantify my definition of "poor" to the bottom 50% of adjusted gross income filers ($33,047 and below in 2008) who have just 12.75% of the adjusted gross income. Everything else I will keep the same.

I fully expect to lose my SS to means testing, but I am willing to pay for those who are on it now until I retire. A clean break has to be made somewhere, and as breaks always do, it will hurt.

 
At 2/21/2011 11:03 AM, Blogger morganovich said...

"Most of us aren't paying near enough for road use. In virginia the gas tax hasn't been adjusted for 24 years."

not only is this a logical fallacy that takes one purported example and makes generalizations about the whole from it, but the example is flawed.

roads are paid for by more things that gas tax.

did you register that car and pay the tax when you did and then pay license fees to the DMV every year?

do you pay tolls?

how about tax on auto insurance?

the fact is that most DOT's are actually over funded. (and my father used to be on the federal highway board and sold traffic control equipment for decades, so i happen to know a lot about this) they have plenty of revenue from a wide variety of sources.

their problem is that, like social security, their surpluses attracted attention and got raided by greedy governments for their general funds. this trend got so strong that several states have passed laws (often by referendum) ring fencing DOT funds because they were being raided in a way that would have embarrassed a visigoth in rome.

 
At 2/21/2011 11:06 AM, Blogger VangelV said...

Why should anyone sacrifice for someone else if they don't wish to?

Because presumably that other person sacrifices proportionately for you.


But that is a lie. And I do not demand that anyone sacrifice for me because I find such a demand stands against every decent principle that I believe in.

Those trades may not occur equally in time, the proportionality may not be fair, etc. But to the extent that fair trades are generally agreed to, it is wrong to call a fair trade equivalent to slavery.

Agreed to? How? No matter how much you try to dress it up we are talking about coercion. When you force people to do what they do not want to do you are using force to get what you want. Yours is the morality of slavery and you want to spread it even if it destroys the principles on which your once great nation was built.

 
At 2/21/2011 11:13 AM, Blogger Hydra said...

Cmon. The pilgrims had a near impossible task, regardless of their social structure. They struggled like any newspapers small business would.

I'll loan you five acres if you will homestead it with nothing but hand tools. If you survive the first two years you will probably be able to subsist ok.

But you will probably have to trade with your neighbors on a fair basis. Conceptually, this is no different than sharing on a fair basis.

The market is one way of deciding what is fair, but it is not always perfect.

Lumping all of the pilgrims problems and successes in one category is revisionist and simplistic.

 
At 2/21/2011 11:17 AM, Blogger VangelV said...

Taxation through force: it is those who believe they should be allowed to be free riders that are taxing the rest of us by force.

Who said that? If people were allowed to opt out of programs there would not be any question of free riders. They could not demand SS payments if they do not pay into SS. The same would be true of health care and any other program run by government.

Everyone else has agreed to have some kinds of mutual exchange, for some kind of mutual benefits, and that is not stealing.

You are either confused, being deceptive, of just plain stupid. Nobody has agreed to a mutual exchange because there is no market for that free exchange. All you have are coercive programs run by thieves and charlatans for the benefit of themselves and their benefactors.

There is, however a continuing disagreement about the proper level, cost, and value of such trades.

Value is subjective. End of story. What I might find of value may be irrelevant to you and vice-versa. If you want something stop asking others to pay for it and stop demanding that it be offered by a government monopoly.

I believe one answer is more market driven regulations and less regulation driven by special interests, whose main job is to lobby for unfair advantage.

Regulations are always driven by special interests. That is why there shouldn't be very many. A civilized society needs a legal system that is based on natural rights, not legislative law.

 
At 2/21/2011 11:27 AM, Blogger Hydra said...

There are two forms of coercion. We agree to have a government for mutual protection. Part of mutual protection means we don't allow free riders. That is government coercion, which is unavoidable as part of mutual protection.

Unfortunately, there are unscrupulous individuals who will form organizations whose goal is to influence what we will agree to for " mutual benefit".

Therein lies the root of unfairness which some people mistakenly see as government coercion.

It is really nothing more than market forces negotiating for what THEY think is fair, and usually some kind of deal is struck.

Suppose we did away with all that and every citizen had to negotiate individually. Would you be better off or have more say?

I don't think so. First thing you would do is go hire someone to stand in line for you.

 
At 2/21/2011 11:29 AM, Blogger Hydra said...

And what natural right is more basic than equal protection of persons and property?

 
At 2/21/2011 11:31 AM, Blogger VangelV said...

All I'm suggesting is that basic reason for government is mutual protection of persons and property.

Your utter ignorance is showing up again. The wealthy do not rely on the state to protect them or their property. They usually pay private companies to do the job that state police forces are incapable of doing. In fact the biggest threat to the property of an honest man often comes from the state.

If the wealthy wind up with exponentiallly more property, then why shouldn't they pay exponentially more to protect it, even if that means nonlinear taxation of their income?

Even if we accept the morality of taxing income (which I do not) we can argue that if a person has five times the income than you do it is possible to argue that he should pay five times more in income tax, which can be done by using a simple flat tax. But even if you accept the morality of taxing income there is no way to justify disproportionate payments that have a very small percentage of individuals pay most of the tax while the majority pays very little or nothing.

Apparently many don't think they have enough protection and choose to live in gated communities and other high tax locations.

Correct. The state is not very good at delivering services so those that can afford to choose places where there are better schools and more security.

This is one example of market driven regulation.

This is one of your stupidest statements. When you have a monopoly on policing, education, fire protection, etc., the market has no impact on those services. If you want them you will have to forgo the lost taxes and pay more.

 
At 2/21/2011 11:38 AM, Blogger Hydra said...

I agree there should not be very many. Special interests OR regulations. Furthermore, we install regulations in order to avoid certain costs. Therefore, we should be allowed to just pay those costs to avoid the regulation.

There is still the problem of whether the claimed costs are correct, but we can let the market argue about that.

 
At 2/21/2011 11:40 AM, Blogger VangelV said...

VangeIV,

The SS taxes taken out of your pay are to pay the people on SS now. Your benefit and cap will depend on the next generation being both willing and able to pay yours. Too many people think of SS as a savings plan, and it isn't. SS is a tax just like any other tax, and the effective and marginal rates can be figured accordingly for each income group. Using that analysis, the lower income group pays a higher rate than the higher income group that goes over the yearly limit ($106,800 in 2011).


Let me see if I understand your argument. What you are saying is that what we have in place is a tax that is being sold as a pension program to the ignorant masses and that to perpetuate the lie we need to have rich people pay more.

Feel free to point out any errors that I may have made.

There is really no argument about ability to pay. You have to fish where the fish are to catch them. The top 50% have almost 90% of the income. The income is not equally distributed, so how can the tax be? How are you going to get much out of what is left of the bottom 50%'s income when they still have to pay other taxes? Taxes and governmental fees are everywhere even if they are not called taxes (license plates . . .). Nobody is getting something for nothing, and I expect the lower income earners are hit harder on a percentage of their income than the high income group when everything is counted.

Once again let me see if I understand what you are saying. You know that the government has promised way too much by buying votes from people it made promises to that were supposed to be paid by the "rich". Because the people who voted for the liars have no interest in paying for the promises made to them out of their own income you suggest that the government go out and try to extract even larger payments from the rich?

Explain to me how such an attempt does not lead to massive changes in behavior and a major reduction in reported income as it always has. And how you will convince the productive class to play along when they can simply move abroad and use their skills to earn and keep a lot more than they do now?

Any analysis of income tax share has to consider income share to see the whole picture because they cannot be separated. You need all the facts to have an informed opinion.

Facts without understanding lead you to coming up with stupid conclusions. Try as you might you will never get the rich to go along and keep working as hard as they do to generate income. Your unfunded programs will fail no matter what you do. The only choice is between destroying the economy by chasing out the productive classes and choosing collectivism and admitting that the country is broke and that those programs cannot be funded.

 
At 2/21/2011 11:44 AM, Blogger Jason said...

Hydra, so wealthier people need more protection, so it is ok to make them pay a higher percentage in taxes?

How is this not a shakedown?

I've concluded our progressive tax system has been justified by people with conflicts of interest. The government needs revenue to pay for "stuff" it thinks it needs and if you are wealthy clearly you use more "stuff" then, say a homeless guy. So, paying more is fair, right?

Wrong. I am being held hostage as a citizen of the USA by special interests who are the least bit concerned with my well being. Why would I want to pay for stuff such as corporate welfare for oil companies or some pet project for a well-entrenched senator? Or medical care for illegal aliens? I benefit from this stuff? Well then what largess, passed by a corrupt congress with full intentions of it improving the public good, could I not benefit from? Where does this logic eventually take us?

Morganovich once said, and paraphrased again above, "A majority voting for mote taxes on a minority sounds an awful lot like tyranny to me."

 
At 2/21/2011 11:45 AM, Blogger Hydra said...

I'm arguing against that monopoly by arguing for market driven regulation. We decide runoff costs shrimpers a hundred million a year in lost yield. We develop setback requirements to prevent that loss. If the revenue from people paying to avoid the setback requirement is more than 100 million, the requirement is too strict.

 
At 2/21/2011 11:48 AM, Blogger morganovich said...

hydra-

"Cmon. The pilgrims had a near impossible task, regardless of their social structure. They struggled like any newspapers small business would. "

BS. they almost died due to communism and the sort of extremely progressive taxes you seem enamored of and then their whole experience turned around in one year when they gave it up allowing the plenty for the first thanksgiving.

read the journals of winthrop and bradford.

as ever, you are just making up your facts.

watch this video:

http://www.youtube.com/watch?v=igdCrePWTF4

full of quotes from bradford himself.

 
At 2/21/2011 11:53 AM, Blogger Hydra said...

It is not a shakedown if they get what they pay for. Which will still allow them to accumulate more wealth and use it to earn more income.

When people flooded the streets in Egypt it was because they perceived the president had more rights and more protection than they did and they demanded he pay higher taxes or get less protection.

 
At 2/21/2011 11:53 AM, Blogger morganovich said...

your ideas about equality of outcome are precisely the same.

you are just one of the lazy ones bradford rails against.

you cannot break the link between work and wealth and expect people to work.

take a look at Venezuelan agriculture. 5 years from being an exporter of food to famine just by destroying this incentive. communism starves yet another nation.

you seem terribly confused about the difference between equality of opportunity and outcome.

the former works well so long as it does not try to impose the latter.

once you do, incentives break down and all you get is equality of starvation and stagnation.

 
At 2/21/2011 12:02 PM, Blogger Hydra said...

Brewster was an ancestor. I'm aware of the quotes. Put your money where your mouth is and try homesteading as an individual. You will probably be hungry the first few years.

Lets not forget, the pilgrims that survived did better. Some died and some went back home. We can't measure success of the system by only those that succeeded.

Nor do I claim the changes made weren't necessary, just that other conditions were in play.

 
At 2/21/2011 12:05 PM, Blogger Hydra said...

You haven't said how a fair trade has Jan different result from a fair share.

It is only how we decide fair that we have a problem with.

 
At 2/21/2011 12:06 PM, Blogger VangelV said...

I'll quantify my definition of "poor" to the bottom 50% of adjusted gross income filers ($33,047 and below in 2008) who have just 12.75% of the adjusted gross income. Everything else I will keep the same.

So someone who is obese from eating too much and owns a cell phone can be seen to be poor in your view. How interesting.

I fully expect to lose my SS to means testing, but I am willing to pay for those who are on it now until I retire. A clean break has to be made somewhere, and as breaks always do, it will hurt.

Yes, it has to be made somewhere and the sooner the better. From what I see the collapse of the USD puts all that rely on SS in danger now and puts your own retirement at risk.

 
At 2/21/2011 12:07 PM, Blogger VangelV said...

Cmon. The pilgrims had a near impossible task, regardless of their social structure. They struggled like any newspapers small business would.

Funny how their problems melted away once there was incentive to work as hard as possible.

 
At 2/21/2011 12:08 PM, Blogger Hydra said...

For the record, I'm one of the lazy one above the top 5%.

 
At 2/21/2011 12:12 PM, Blogger VangelV said...

There are two forms of coercion. We agree to have a government for mutual protection. Part of mutual protection means we don't allow free riders. That is government coercion, which is unavoidable as part of mutual protection.

But we did not 'agree' at all. I did not agree to have some crooks steal 60% of GDP and doubt that anyone else did either. And as I said, the free rider problem is a false one. If you let people opt out they could not demand health care or SS payments and you would not have a free rider problem.

And isn't what we have a free rider problem? You have the top few percent pay for the services that the bottom 50% are getting. If you can't understand the problem with that you have more serious issues than I thought.

Unfortunately, there are unscrupulous individuals who will form organizations whose goal is to influence what we will agree to for " mutual benefit".

Let's keep Congress out of this. They are crooks and will always get into the act when there is money to steal. Why do you think that the government does all of the things that it was not authorized to by the Constitution?

 
At 2/21/2011 12:14 PM, Blogger VangelV said...

And what natural right is more basic than equal protection of persons and property?

Natural rights are negative. An individual has the right to life, liberty, and property. What you are saying is that rights are positive. That view is incompatible with natural rights.

 
At 2/21/2011 12:15 PM, Blogger VangelV said...

I agree there should not be very many. Special interests OR regulations.

How stupid can you be? You ARE a special interest. So is everyone else on this planet. That cannot be eliminated in a human society. What you can eliminate is the power of special interests to use force to oblige individuals to do what they would not do voluntarily.

 
At 2/21/2011 12:18 PM, Blogger VangelV said...

I'm arguing against that monopoly by arguing for market driven regulation. WE DECIDE runoff costs shrimpers a hundred million a year in lost yield. WE DEVELOP setback requirements to prevent that loss. If the revenue from people paying to avoid the setback requirement is more than 100 million, the requirement is too strict.

Who the hell is WE? And why don't you recognize that your example is a simple property rights problem that needs no government intervention?

 
At 2/21/2011 12:20 PM, Blogger VangelV said...

It is not a shakedown if they get what they pay for. Which will still allow them to accumulate more wealth and use it to earn more income.

But they don't get what they want to pay for. You have a state monopoly on security that does not respond to market forces. This is why the 'rich' pay for private security.

 
At 2/21/2011 12:21 PM, Blogger Hydra said...

Sorry about my speller. New small business got translated as newspaper business.

No, their problems didn't vanish.
They did figure out how to work harder, and make it worth while. It took protection of individuals and property, as a group, to allow that to happen.

For some. Not all succeeded equally. Even with that simple government. Nor do people succeed equally today. This does not suggest that they should succeed equally, just that to measure the system we have to include the failures.

Where is the proof that repressive and confiscatory government in the US is somehow equivalent to Cuba or Argentina?

 
At 2/21/2011 12:28 PM, Blogger Hydra said...

Some of them don't get what they want to pay for and others want to pay still more.

If both sides are not getting what they want equally, then isn't that one measure of a fair trade?

I'm willing to let people opt out of a regulation for a price, same as those in gated communities opt in, for a price.


What is not fair about this?


For you, the only thing fair is you get a free ride?

 
At 2/21/2011 12:35 PM, Blogger Hydra said...

Oh, sure a gone who wants to can pay more, website and all that.

But it doesn't solve the equality or free rider problem.

 
At 2/21/2011 12:40 PM, Blogger Hydra said...

I'm suggesting rearranging regulation so it does respond to market forces rather than throwing out the baby with the bathwater. We have regulation for a reason, and then the reason or the price changes, but the regulation doesn't.

 
At 2/21/2011 12:40 PM, Blogger morganovich said...

what is all this nonsense about the rich needing to pay more because they get more?

what a colossal lie that is.

i pay for my own healthcare, my own home, my own food etc.

above a small number, my deposits are not insured.

what is this magic "additional protection" that i get?

where are my extra services?

i pay more for absolutely everything that i use, but it's still the same park and the same library and roads and schools.

 
At 2/21/2011 12:45 PM, Blogger morganovich said...

"Put your money where your mouth is and try homesteading as an individual. You will probably be hungry the first few years."

this is a foolish straw man argument.

i am not a farmer nor a homesteader. the pilgrims were. they had all the skills they needed. they didn't suddenly learn them one year, they just finally had the incentive to use them.

 
At 2/21/2011 12:46 PM, Blogger Walt G. said...

VangeVI,

SS is not a savings plan. Those who pay now are paying for those on it now. Any attempt to reduce reliance on SS in the future will have future recipients get less than they paid in. The current recipients will never allow being cut off, and they have a lot of political power. Sunk costs are a bitch for anyone to swallow.

Let's get rid of the rich and poor terminolgy, and use the top 50% and bottom 50% income earners (as determined by IRS AGI and the Tax Foundation). In 2008, the top 50% have 87.25% share of the income and pay 97.30% share of the tax. From 1987 to 2008, the top 50% increased their share of the income (84.37% to 87.25%) or 2.88% and a corresponding share of the tax increased (93.93% to 97.30%) or 3.37%. This shows that the top 50% are increasing both their share of the income and their share of the taxes at about the same rate over the last 21 years.

Any attempt to lower the top's 50% share of taxes would probably mean lowering their share of the income because the current ability to collect is in the top 50%. I think what we are seeing is a linear education premium and the corresponding tax increase over time that comes with making more money. I'll accept the increase in pay and the tax increase that goes with it (I don't necessarily like it). I will still be ahead. I am not in the bottom 50%; I don't want to be. I know a lot of people who are in the bottom 50%, and I won't voluntarily trade places with them.

 
At 2/21/2011 12:48 PM, Blogger morganovich said...

"If both sides are not getting what they want equally, then isn't that one measure of a fair trade?"

no. that's a sign of a bad situation.

if you and i both get robbed of $200 by a mugger, we both got something we didn't want equally.

fair trade must be entered into willingly.

saying, you're both unhappy so it's fair is the worst basis for decision making i have ever heard.

 
At 2/21/2011 12:59 PM, Blogger morganovich said...

walt-

"SS is not a savings plan. Those who pay now are paying for those on it now. Any attempt to reduce reliance on SS in the future will have future recipients get less than they paid in. The current recipients will never allow being cut off, and they have a lot of political power. Sunk costs are a bitch for anyone to swallow."

this is a flawed argument because the returns on social security are negative in nominal terms. you are literally paying them to hold your money. we are already getting less than we pay in.

returns on private investment are 600-1200% higher over a work lifetime.

(go back and read my earlier link for the math on this)

thus, even if i give up my SS halfway through my career, i'm still better off if i can save that money privately.

SS currently has a "trust fund" at least in accounting terms.

break it up, make private accounts based on what was paid in and age, and be done with it.

you could make every single tax paying individual better off that way.

moving a system from -0.8% annual returns to 3-8% returns leaves an awful lot of extra money around for people ($3.26 - $21.72 per dollar invested over 40 years vs 72 cents from SS) while simultaneously driving better growth by increasing investment in productive resources as opposed to government IOU's.

take away tax advantaged status under a full flat tax, and just that tax revenue would more than pay for feeding hungry oldsters, especially if it were means tested.

if i were trying to design a system to impoverish our seniors while stunting US investment, it would be difficult to top SS in terms of structure.

 
At 2/21/2011 12:59 PM, Blogger VangelV said...

Lets not forget, the pilgrims that survived did better. Some died and some went back home. We can't measure success of the system by only those that succeeded.

But we can measure success by looking at what succeeded and what failed. Your communalism did not work. Freedom did.

 
At 2/21/2011 1:01 PM, Blogger morganovich said...

"Any attempt to lower the top's 50% share of taxes would probably mean lowering their share of the income because the current ability to collect is in the top 50%."

huh? this does not make any sense.

if you lower taxes on the rich, they will get more income just through investment compounding and the ability to saver and invest more through higher take home pay.

what does ability to collect have to do with income share?

 
At 2/21/2011 1:15 PM, Blogger Walt G. said...

morganovich,

I'll let others debate our progressive tax system (ability and willingness to pay). With 90% of the income in the top 50% and trending up at least the last two decades, that's where the money is at, and all indicators point that's where the money will continue to be.

I won a lawsuit from someone who had no money years ago--I never could collect. Don't let a person with no money and no insurance run over you with a car, and don't expect them to pay taxes.

 
At 2/21/2011 1:16 PM, Blogger morganovich said...

"We can't measure success of the system by only those that succeeded."

we can certainly identify systems that fail and make everyone worse off.

plymouth and venezeula provide wonderful tests cases - the former fails under massively progressive wealth distribution then becomes successful when that policy is abandoned and the later was bountiful under private enterprise, but was then ruined in just a couple years literally going from a food exporter to a famine when such a policy was imposed.

a pretty clear picture about the response of private individuals to incentives emerges from that.

i defy you to show me a counter example.

where did this sort of collectivism work?

look at the 10's (possible 100's?) of millions it killed in china and the soviet union.

this policy may well have caused more death and suffering in the 20th century than all the wars put together.

http://www.hawaii.edu/powerkills/COM.TAB1.GIF

 
At 2/21/2011 1:24 PM, Blogger Walt G. said...

morganovich,

I consider all taxes negative in nominal terms. I consider SS a tax. There is nothing to break up and distribute. I expect the same thing from SS in the future that I will get from the steak I ate last night. They have both been consumed.

There is no "trust fund." The money is in the form of IOUs from a country $14 trillion in debt. There is no money.

 
At 2/21/2011 2:00 PM, Blogger VangelV said...

When people flooded the streets in Egypt it was because they perceived the president had more rights and more protection than they did and they demanded he pay higher taxes or get less protection.

The people did not demand that he pay more taxes. They demanded that he stop stealing from them. They wanted freedom for everyone, not to add one more servant to the state.

 
At 2/21/2011 2:01 PM, Blogger Hydra said...

We can tell which systems fail, maybe.

But we have no independent trial, a system could succeed and still make people worse off than some other system.

We have no wy of knowing, and that is why the Democrats and Republicans can make a living endlessly arguing over what is best.

I'm only claiming that the pilgrim social system wasn't the only reason they were starving at first. Nor do we know the true success level unless we know what happened to the parts of it that failed.

 
At 2/21/2011 2:03 PM, Blogger VangelV said...

It is only how we decide fair that we have a problem with.

All voluntary transactions are fair. Any fairness in a coerced transaction is accidental.

 
At 2/21/2011 2:04 PM, Blogger VangelV said...

For the record, I'm one of the lazy one above the top 5%.

For the record, you are free to give as much as you want to the government.

 
At 2/21/2011 2:06 PM, Blogger VangelV said...

Where is the proof that repressive and confiscatory government in the US is somehow equivalent to Cuba or Argentina?

Cuba is not equivalent to Argentina. And how do you propose to measure equivalence?

 
At 2/21/2011 2:07 PM, Blogger morganovich said...

walt-

i think you missed my point.

what i do not understand is why you suspect that lowering taxes on the rich will reduce their share of income.

 
At 2/21/2011 2:07 PM, Blogger Hydra said...

Ok Walt, so we set money aside for social security but actually spent it on something else.


That doesn't mean you got ntothing for your money, just not what was promised. That was an ethical dilemma long befor it was a cash dilemma.

We have created a government and some people insist on having it lie to us.

In the free market, If you have a vendor who lies to you, how can you tell when you have a fair deal?

Government isn't doing its job if it isn't treating people equally and fairly, but we didn;t hear any complaints from whoever got and spent the SS money.

 
At 2/21/2011 2:09 PM, Blogger VangelV said...

If both sides are not getting what they want equally, then isn't that one measure of a fair trade?

You are confused again. A voluntary trade is a fair trade. This is why markets work. Coercion is not interested in fairness because it does not permit choice.

I'm willing to let people opt out of a regulation for a price, same as those in gated communities opt in, for a price.

You are an ignorant nobody who has no say in the matter. You have a hard enough time figuring out simple things that you should understand without trying to dictate to others what they should do for themselves.

 
At 2/21/2011 2:11 PM, Blogger VangelV said...

I'm suggesting rearranging regulation so it does respond to market forces rather than throwing out the baby with the bathwater. We have regulation for a reason, and then the reason or the price changes, but the regulation doesn't.

You sound like the idiot lefties who could not respond to Mises' criticism of Socialism so came up with all kinds of rubber words and ill defined scams to pretend that they had a response. They didn't have a valid response and neither do you.

 
At 2/21/2011 2:11 PM, Blogger Hydra said...

For the record, you are free to give as much as you want to the government.

=================================

I commented on that. Doesn't prevent you from being a free rider. Government has an obligation to protect people equally, so If I pay more I should get more.

You really want individual accounts for every government service?

 
At 2/21/2011 2:13 PM, Blogger VangelV said...

this is a foolish straw man argument.

What do you expect from a fool? If our friend were able to think logically he would have already provided us with a sound argument. He can't so he dances around the issue and avoids dealing with reality. No wonder your country is in so much trouble.

 
At 2/21/2011 2:14 PM, Blogger Hydra said...

You are confused again. A voluntary trade is a fair trade.

=================================

No Im not. A voluntary trade often includes statements about what is NOT included as much as waht is included.

It is no longer a fair trade if what is usual and customary is suddenly no longer included and this is not disclosed.

 
At 2/21/2011 2:14 PM, Blogger morganovich said...

hydra-

and your claim (regarding the pilgrims) is inaccurate according to every single piece of available data.

they starved, they changed their system, and immediately prospered.

in addition to this coincidence of events, you have the direct impressions of the participants who attribute the change in prosperity to the change in economic system.

bolstering this result, you have an independent test case in venezeula where imposing the sort of system under which the pilgrims began upon a self sufficient and prosperous group created famine.

against all this data you continue to claim that it must have been something else while providing no data.

you can always suggest "something else". perhaps objects don't really fall at 9.8m/s2 at earth's surface, perhaps they are destroyed every femtosecond and recreated by a sarcastic deity in the next at a slightly different location and never really move at all.

the reason we apply occam's razor to theories is to avoid such endless nonsense.

 
At 2/21/2011 2:18 PM, Blogger morganovich said...

hydra-

"It is no longer a fair trade if what is usual and customary is suddenly no longer included and this is not disclosed."

this is just nonsensical rhetoric.

how can a trade include enforceable conditions that were not disclosed?

if you make assumptions or fail to read and understand a contract, that's your lookout.

but how can i force you to perform something to which you have not agreed?

many people will often perform services that a contract does not require in order to further future commerce and reputation, but that does not make it required.

 
At 2/21/2011 2:20 PM, Blogger VangelV said...

SS is not a savings plan. Those who pay now are paying for those on it now. Any attempt to reduce reliance on SS in the future will have future recipients get less than they paid in. The current recipients will never allow being cut off, and they have a lot of political power. Sunk costs are a bitch for anyone to swallow.

You have said nothing new. We know that SS is a Ponzi scheme. The only issue is how to deal with the Ponzi scheme.

Let's get rid of the rich and poor terminolgy, and use the top 50% and bottom 50% income earners (as determined by IRS AGI and the Tax Foundation). In 2008, the top 50% have 87.25% share of the income and pay 97.30% share of the tax. From 1987 to 2008, the top 50% increased their share of the income (84.37% to 87.25%) or 2.88% and a corresponding share of the tax increased (93.93% to 97.30%) or 3.37%. This shows that the top 50% are increasing both their share of the income and their share of the taxes at about the same rate over the last 21 years.

Nothing new again. We already know that the rich are paying more than their share.

Any attempt to lower the top's 50% share of taxes would probably mean lowering their share of the income because the current ability to collect is in the top 50%.

???

I think what we are seeing is a linear education premium and the corresponding tax increase over time that comes with making more money.

Education premium? How did you get there from what was being discussed?

I'll accept the increase in pay and the tax increase that goes with it (I don't necessarily like it). I will still be ahead.

I doubt it. You are probably failing to notice the corrosive effect of the loss of purchasing power on your savings and net income.

I am not in the bottom 50%; I don't want to be. I know a lot of people who are in the bottom 50%, and I won't voluntarily trade places with them.

That is not the issue. The issue is the morality and effectiveness of ripping off the rich to buy votes from the poor. I see nothing in your argument that suggests that the taxation is necessary or right.

 
At 2/21/2011 2:21 PM, Blogger Walt G. said...

morganovich,

The data back to 1980 show proportional increases in income share and income tax share trending up for the top 50% while the income share and income tax share for the bottom 50% declines at the same rate. The lines would be about on top of each other on a chart. It would be an assumption that reversing that decline would also reverse the trend in the future, but the past is all we have to use.

Hydra, the money currently is in a pot with a -$14 trillion sign in front of it. You can think you have something or you are owed something if you want. I just don't see it.

VangeIV,

What country are you in?

 
At 2/21/2011 2:22 PM, Blogger Hydra said...

You sound like the idiot lefties who could not respond to Mises' criticism of Socialism

"""""""""""""""""""""""

You sound like the idiot righty who either did not read what I said, had no cogent response, or was so stuck in his won thinking he can't recognize any thing different.



In case you haven't looked, the ideas I espuse are already codified in government regulation and law. they are not new ideas, nor are they mine.


And, similar ideas are already in practice, where in maqrket forces are used to mitigate the effect of necessary regulation.

All I'm suggesting is that we are nto consistent about how we go about such things. One way to get more consistency is to demand equal protection and equal treatment.

If we spend 50 million on swimming pool safety and fifty million on seat belt safety, but seat belts save twice as many lives,then those protected by swimming pool safety are getting unequal protection: more is spent for each life saved, and that is not only a waste of resources, but a violation of basic principles.

Therefore we should either reduce spending on swimming pool safety or increas spending on seatbelt safety, until we get equla cost results.

Whats lefty about that?

 
At 2/21/2011 2:23 PM, Blogger VangelV said...

I'll let others debate our progressive tax system (ability and willingness to pay). With 90% of the income in the top 50% and trending up at least the last two decades, that's where the money is at, and all indicators point that's where the money will continue to be.

I won a lawsuit from someone who had no money years ago--I never could collect. Don't let a person with no money and no insurance run over you with a car, and don't expect them to pay taxes.


Again you are avoiding the argument. Just because the rich have more money does not mean that it is right or wise to take it from them so that you can buy votes from the poor.

 
At 2/21/2011 2:26 PM, Blogger Hydra said...

"If both sides are not getting what they want equally, then isn't that one measure of a fair trade?"

no. that's a sign of a bad situation.

if you and i both get robbed of $200 by a mugger, we both got something we didn't want equally.

==================================


Don't be ridiculous.

I buy a car and I want a million mile warranty but I don't get it.

The dealer wants no responsibility once it rolls off the lt, but he doesn't get that either.

In the end we both agree to a deal that gives neither of us (all of) what we want.

Government is no different, except the negotiations are more protracted, and we hire people to do it for us.

 
At 2/21/2011 2:30 PM, Blogger Hydra said...

Again you are avoiding the argument. Just because the rich have more money does not mean that it is right or wise to take it from them so that you can buy votes from the poor.

====================================

Ridiculous again.

suppose we continue the current path and trends until five people have all the money, all the income and all the wealth.


Who will pay the taxes?

Who will be protected by government?

Under those conditions I would guess the rich would pay the taxes and government would protect primarily the rich.


Who will still be blaming all their problems on the poor ne'er do wells.

 
At 2/21/2011 2:31 PM, Blogger VangelV said...

We can tell which systems fail, maybe.

Not maybe. History tells us very clearly that systems that respect rights and do not meddle much in the voluntary affairs of individuals succeed while collectivist redistribution systems fail.

But we have no independent trial, a system could succeed and still make people worse off than some other system.

How stupid do you have to be not to see the problem with your statement. Who has ever said that all people will be better off under a market system than under collectivism? In a market system if you do not work or do not make good decisions you have to depend on help from others who may choose to ignore you. That may make you worse off than in a collectivist system that does not care about good judgment or hard work. That means that if you are one of a very tiny minority you might be better off being a thug in a collectivist system than self reliant in a free one. But that does not mean that we should move towards a system that is better for a tiny portion of the worst of humanity and reject one that is better for the rest.

We have no wy of knowing, and that is why the Democrats and Republicans can make a living endlessly arguing over what is best.

How foolish you are. There is no material difference between the Party of Evil and the Party of Stupid.

I'm only claiming that the pilgrim social system wasn't the only reason they were starving at first. Nor do we know the true success level unless we know what happened to the parts of it that failed.

But we do know that their attempt of collectivism led to starvation and misery and that when they moved towards individual property rights they did much better. Stop mangling the rules of logic and using rubber words that can have many meanings and stick to sound principles and rigorous fundamentals.

 
At 2/21/2011 2:35 PM, Blogger Hydra said...

they starved, they changed their system, and immediately prospered.

=================================

bad logic. Post hoc ergo propter hoc.

I don't deny that was a contributing fact, but aI seriously doubt that it is the only fact, or that it has been properly represented.


When some monks developed the mechanical hammer that made forging possible, was that because of their order?

 
At 2/21/2011 2:38 PM, Blogger VangelV said...

You sound like the idiot righty who either did not read what I said, had no cogent response, or was so stuck in his won thinking he can't recognize any thing different.

I read what I said. And if you confuse me for an idiot righty than you have trouble understanding what I am writing.

In case you haven't looked, the ideas I espuse are already codified in government regulation and law. they are not new ideas, nor are they mine.

Your confusion is astounding. As a panderer to power that is not surprising.

And, similar ideas are already in practice, where in maqrket forces are used to mitigate the effect of necessary regulation.

Stupidity alert. If market forces mitigate the effects the regulations are not 'necessary.'

All I'm suggesting is that we are nto consistent about how we go about such things. One way to get more consistency is to demand equal protection and equal treatment.

But you are not. You expect the 'rich' to pay a disproportionate share of taxes to fund services that they do not wish to get from incompetent government bureaucrats.

If we spend 50 million on swimming pool safety and fifty million on seat belt safety, but seat belts save twice as many lives,then those protected by swimming pool safety are getting unequal protection: more is spent for each life saved, and that is not only a waste of resources, but a violation of basic principles.

Therefore we should either reduce spending on swimming pool safety or increas spending on seatbelt safety, until we get equla cost results.

Whats lefty about that?


Other than the central planning part not much. If you can't understand how stupid and inconsistent your writing is then you have a serious problem with understanding the fundamentals. Try learning.

 
At 2/21/2011 2:38 PM, Blogger Walt G. said...

VangeIV,

The increase in income disparity is commonly explained as the earning gap between college- educated wages and high-school educated wages or droputs. It's not a stretch to apply that to the IRS tables.

I am not saying tax policies are right/fair/moral, whatever that is. I am saying this is not new (the data show at least a 30-year trend). The poor could argue the rich have political advantages they don't have, too.

I don't know about right or wise, but I am not going to spend a lot of time, money, or effort trying to get something from somebody that doesn't have anything again.

 
At 2/21/2011 2:40 PM, Blogger Hydra said...

You can think you have something or you are owed something if you want. I just don't see it.

==================================

I didn't say that. The money is gone. That does not mean we got nothing, just not what was promised.

Now consider the swimming pool vs seat belt safety argument.

There are two issues: was the money well and fairly spent, and did we get what we paid for.

A good deal is not a fair deal if you didn't get what was promised, even if you got something else more valuable.

 
At 2/21/2011 2:44 PM, Blogger VangelV said...

Don't be ridiculous.

I buy a car and I want a million mile warranty but I don't get it.


Now who is being ridiculous. If you bought the car without it, we can conclude that you did not really want to pay for a million mile warranty.

The dealer wants no responsibility once it rolls off the lt, but he doesn't get that either.

In the end we both agree to a deal that gives neither of us (all of) what we want.


Bad logic alert. If you agreed to the deal it means that you wanted it over the alternatives. As I said, you can get a million mile warranty without any trouble if you are willing to pay for it.

Government is no different, except the negotiations are more protracted, and we hire people to do it for us.

Stupidity alert. Government is different because you have no say in what you get.

 
At 2/21/2011 2:44 PM, Blogger Hydra said...

But we do know that their attempt of collectivism led to starvation and misery

=================================

We don't know that was the only reason, and it is stupid to claim it is.

Suppose they had landed in the garden of eden instead of the frozen tundra. With plenty to eat for everyone, would they have starved under collectivism?

 
At 2/21/2011 2:47 PM, Blogger Hydra said...

History tells us very clearly that systems that respect rights

==================================

And what am I saying? That property rights are the most basic of rights, and we need to respect them equally.

Now we are arguing about equal, not collectivism or socialism, or capitalism.

 
At 2/21/2011 2:48 PM, Blogger VangelV said...

suppose we continue the current path and trends until five people have all the money, all the income and all the wealth.

You are being stupid again. The top ten richest people in 1990 were not the richest people in 2000 or 2010. Money and wealth does not just accrue to people who have it. If it did the world would have been owned by a few powerful individuals centuries ago.

Who will pay the taxes?

Who paid taxes when there was no income tax?

Who will be protected by government?

Why do we need government to protect us? Food is very important and we do not need government to tell us what to grow and what products to make. You do know that Marxism and National Socialism were discredited, don't you?

 
At 2/21/2011 2:50 PM, Blogger Hydra said...

Bad logic alert. If you agreed to the deal it means that you wanted it over the alternatives.

===================================

Or the ALTERNATIVE WAS NO ALTERNATIVE. Didn't exist.

The bad logic is the idea that the buyer has perfect control.

 
At 2/21/2011 2:51 PM, Blogger Hydra said...

I offered an argument where a voluntary deal was struck, in which neither side gets all of what it wants, its is a better example than you example of each being robbed by a third party.

Its not perfect, just illustrative.

 
At 2/21/2011 2:54 PM, Blogger Hydra said...

I accept the pilgrim story as illustrative, but not perfect.


All I'm suggesting is a very basic and limited concept of what government should do and is allowed to do, and a pretty rigid way of testing it.

We are not testing it, we have no QC, and as a result we get bad government. QC at the voting booth has proven insufficient.

 
At 2/21/2011 3:02 PM, Blogger Hydra said...

You are being stupid again. The top ten richest people in 1990 were not the richest people in 2000 or 2010.

==================================

Your argument does not change mine.


Whoever the five or ten people are who have all the money and wealth this year, they will still be paying the taxes, and still be expecting most of the protection. they could do away with taxes and support the poor through charity, but they will soon be suspicious that one of the ten is paying less than the others, and is therefore a free rider.


And they will still be blaming the poor ne'er do wells for the fact that the rich have to support them. Unless they are truly willing to exterminate them.

Now suppoase it is a hundred people controlling all the wealth, or five hundred, the argument only changes quantitatively.

Doesn't matter which year or which 500.

 
At 2/21/2011 3:07 PM, Blogger Hydra said...

That may make you worse off than in a collectivist system that does not care about good judgment or hard work.

==================================

I understand the theory Vange, and I see the examples same as you.

I just don't come to the conclusion that it works in the real world of indians and fishheads the way you see it.

I think you are blinded by the theory, to what happoens in practice and how it might be improved.

Ont he road to improvement, we might find we have to turn a little left or right.

I don't concern myself with that (evile party vs stupid party) as you say. All I concern myself with is how do we measure an improvement?

 
At 2/21/2011 3:12 PM, Blogger Hydra said...

Why do we need government to protect us?

=================================

Because there are evil people who are bigger and stronger but intrinsically no better.

I don;t know why such people cannot be polite and fair, good citizens, but often they are not.



I do not know, therefore, WHY we need government to protect us.

All I know is that we have governments to protect us, and frequently they do a bad job of it, socialist, monarchist, capitalist, or buddhist.

I don;t see that we can make them incrementally better by arguing to disband them.

 
At 2/21/2011 3:44 PM, Blogger VangelV said...

The increase in income disparity is commonly explained as the earning gap between college-educated wages and high-school educated wages or droputs. It's not a stretch to apply that to the IRS tables.

First, the advantage of an education is dependent on the programs in question. Someone who partied for four years and wound up with a BS in women's studies or communication is unlikely to be making all that much more than a high school dropout that became an auto mechanic. A degree is great if you want to be an engineer, lawyer, or pharmacist but
not so good for many routine jobs for which there is no direct university training available.

Second, even with a good education a person is not guaranteed to do very well and be a top earner. In the real world all kinds of sills not learned in university matter.

I am not saying tax policies are right/fair/moral, whatever that is. I am saying this is not new (the data show at least a 30-year trend). The poor could argue the rich have political advantages they don't have, too.

But they can't argue anything of the kind because they get money that comes out of the pockets of high income earners. In a country like the US being rich or poor is a usually a matter of choice.

I don't know about right or wise, but I am not going to spend a lot of time, money, or effort trying to get something from somebody that doesn't have anything again.

But that does not mean that it is OK to shake down those that have something.

 
At 2/21/2011 3:47 PM, Blogger VangelV said...

We don't know that was the only reason, and it is stupid to claim it is.

Nonsense. History has a lot to say about collectivism. None of it is good. It is time that you closet lefties dropped Marx and started to look at the real world as it is.

Suppose they had landed in the garden of eden instead of the frozen tundra.

They did not land in the frozen tundra. The same land provided them with plenty once there was incentive to work it.

With plenty to eat for everyone, would they have starved under collectivism?

On this planet there is no garden of Eden. Things are not just handed to us and we have plenty without working. Stop with the utopian ideology and go with reality.

 
At 2/21/2011 3:49 PM, Blogger VangelV said...

And what am I saying? That property rights are the most basic of rights, and we need to respect them equally.

Now we are arguing about equal, not collectivism or socialism, or capitalism.


Your position is incompatible with property rights. If what is mine is really mine then you can't tax it away from me to give it to the poor. That should not be hard to understand. Even for you.

 
At 2/21/2011 3:52 PM, Blogger VangelV said...

Or the ALTERNATIVE WAS NO ALTERNATIVE. Didn't exist.

If that were the case you would have done nothing. The fact that you acted means that you preferred the car to not buying a car. I hope that this is not too complicated for you.

The bad logic is the idea that the buyer has perfect control.

Who says anything about 'perfect control', which has not been defined so it is not worth talking about. The argument is about human action. When you act you choose one alternatives over all of the other alternatives available to you. That means that you got what you wanted as did the counterparty. Otherwise, there would be no deal because no force was used.

 
At 2/21/2011 4:21 PM, Blogger juandos said...

"Why the hell is the US spending more on defense than the rest of the world combined and paying to protect Germany, Japan, and Korea?"...

I have a better question vangeIV why is the US spending more on pandering to its parasites than it does on defense?

Can you find the word, 'entitlement' anywhere in the Constitution?

 
At 2/21/2011 5:50 PM, Blogger Walt G. said...

VangeVI,

Suppose two people are in a room and one has $87.25 and the other has $12.75 (our 2008 IRS table data). A representative they both had an equal chance to vote for comes into the room and says a man outside is armed and will come in and take all the money unless you hire someone to stop him for $25. How much does each person have to gain or lose if all the money is taken? Obviously, the person with $12.75 cannot survive on the 25 cents left if they split the cost equally, and the do nothing alternative is a total financial loss for both. How much does each person pay?

I think a lot of the education premium (it could be trade school) is from showing dedication and perseverance to accomplish long-range goals. Those are usually great qualities to have in a worker. If all things are equal, a degree/certification could be an intangible asset even if it does not pertain directly to the job.

 
At 2/21/2011 6:53 PM, Blogger Ron H. said...

Hydra

"Suppose they had landed in the garden of eden instead of the frozen tundra. With plenty to eat for everyone, would they have starved under collectivism?"

You don't see how silly this question is, do you? If they had everything they might want, there would have been no economic or social structure possible. They only work required of anyone would have been that they raise food to their mouths. You couldn't even pay someone to do it for you, as you wouldn't have anything to offer them, that didn't they already have.

You need to think more before you touch the keyboard. I must say, you have really outdone your previous efforts at nonsensical writing on this threads, and that's really saying something.

You also need to tidy up your typing. It's hard enough to read your comments, as they lack any logic, but the typos make them almost impossible.

 
At 2/21/2011 7:38 PM, Blogger morganovich said...

hydra-

"bad logic. Post hoc ergo propter hoc."

now you are just being ludicrously obstructionist.

effect followed cause. i understand that correlation is not causation, but you have provided precise ZERO other factors that might have caused the change.

the colonists themselves in their own words attribute the change to a change in ownership.

they believe that's what did it. the effect followed right after the change. the process worked precisely the other way in VZ over the same policies. how much more evidence do you need?

that's a pretty convincing narrative. so provide some counter evidence. what else caused their sudden change of fortunes?

by your standards no one ever knows anything, and while that's a cute parlor game, it is a useless idea in the real world. we do not live in platos cave, and even if we did, it gains us nothing to act as if we do.

 
At 2/21/2011 7:39 PM, Blogger morganovich said...

ron-

go easy on people who can't type.

i type like an epileptic monkey with mittens on...

 
At 2/21/2011 7:47 PM, Blogger VangelV said...

I offered an argument where a voluntary deal was struck, in which neither side gets all of what it wants, its is a better example than you example of each being robbed by a third party.

Its not perfect, just illustrative.


Bad logic alert again. If the voluntary deal was struck it was because it was favourable to both sides. If you did not want it you would not have gone through with it. The same is true of your counterparty.

It seems to me that you have this delusion of a utopia where perfect things happen and nobody pays. But that is not the way the real world works. Here we have to choose from a list of options, which do not include perfection, and decide what to do. When we decide to act it means that we preferred the option we chose over all others, including holding out for the chance of perfection.

You need an education in economics.

 
At 2/21/2011 7:50 PM, Blogger morganovich said...

"Don't be ridiculous.

I buy a car and I want a million mile warranty but I don't get it.

The dealer wants no responsibility once it rolls off the lt, but he doesn't get that either.

In the end we both agree to a deal that gives neither of us (all of) what we want."

you are the one being ridiculous.

deals are not struck because of what we don't want, they are struck on what we do. you are looking at the negative space when you ought to be looking at the positive.

you want a car with a warranty, he wants to sell a car for a profit. if you can find a point where you are both GETTING what you want, there is a voluntary transaction. focusing on not getting what you want is a foolish way to look at it.

what does that show you? you could both just as easily not get what you want if there is no sale. you get no car, he gets no profit.

worse, the endpoints for "not getting what you want" are totally arbitrary. he'd love to sell the car to you for $100 million and retire to tahiti, but that's a stupid metric for measuring the desirability of a transaction. you could set that endpoint anywhere.

you need to focus on what you get, not if you are unhappy. why would anyone willingly enter into a transaction that made both people unhappy?

 
At 2/21/2011 7:51 PM, Blogger VangelV said...

Whoever the five or ten people are who have all the money and wealth this year, they will still be paying the taxes, and still be expecting most of the protection.

What protection are you talking about? A rich person gets no more protection from the government than a 'middle class' person does. The security provided behind those gated communities or lobby entrances comes from private companies, not public cops.

they could do away with taxes and support the poor through charity, but they will soon be suspicious that one of the ten is paying less than the others, and is therefore a free rider.

You are being an idiot again. The rich pay most of the taxes while the poor pay little. If there is a free rider problem it is with the poor getting stuff that they did not earn, not from the rich getting security or health care that they did not pay for.

Now suppoase it is a hundred people controlling all the wealth, or five hundred, the argument only changes quantitatively.

Your statements are so muddled, so illogical, and so stupid that I have no idea what you are really trying to say. I suspect that you don't either.

 
At 2/21/2011 8:14 PM, Blogger VangelV said...

I think you are blinded by the theory, to what happoens in practice and how it might be improved.

Not at all. I look at human nature as it is, not as you naive utopians on the left or right want it to be.

Because there are evil people who are bigger and stronger but intrinsically no better.

I never claimed that we should not have protection. I only claim that governments may not be the best providers of it. Governments are notoriously poor at providing any reasonable quality service at a decent cost so I do not see why they have to be the providers of policing, fire and other protection services.

I do not know, therefore, WHY we need government to protect us.

You don't. As I wrote above, government is terrible at providing high quality services at a decent cost. The private sector would do a better job even if it used the same employees because the incentives are better when there is no monopoly and no bureaucracy to get in the way of good people doing their jobs.

I don;t see that we can make them incrementally better by arguing to disband them.

Of course you can. Incompetent or unnecessary agencies need to be disbanded as quickly as possible and replaced by competitors who are more capable and better at delivering effective services.

 
At 2/21/2011 8:19 PM, Blogger VangelV said...

I have a better question vangeIV why is the US spending more on pandering to its parasites than it does on defense?

Can you find the word, 'entitlement' anywhere in the Constitution?


I agree that both defense and entitlement spending has to be cut to the bone and most taxes need to go to zero. People should buy their own services just as they buy their own cars and food.

 
At 2/21/2011 8:22 PM, Blogger VangelV said...

Suppose two people are in a room and one has $87.25 and the other has $12.75 (our 2008 IRS table data). A representative they both had an equal chance to vote for comes into the room and says a man outside is armed and will come in and take all the money unless you hire someone to stop him for $25. How much does each person have to gain or lose if all the money is taken? Obviously, the person with $12.75 cannot survive on the 25 cents left if they split the cost equally, and the do nothing alternative is a total financial loss for both. How much does each person pay?

Stupid argument alert. The rich already pay for private security moron. They do not get any more security or police protection for their taxes than the average middle class wage slave who can't get anywhere because the government steals 60% of what he earns through taxes, fees, regulatory costs, etc.

If we defund most of the regulatory agencies because taxes are cut even the poor, who pay little in taxes will benefit. Not only will they have an incentive to work harder, once the regulatory burdens are lifted, they will find that many of the things that they buy cost a lot less.

 
At 2/21/2011 8:37 PM, Blogger VangelV said...

In the free market, If you have a vendor who lies to you, how can you tell when you have a fair deal?

Laws against fraud apply to private companies and individuals so there is incentive not to lie to customers. Government has no such incentive because it has a monopoly on most of the activities that it engages in. Had managers of private companies done what Congress did they would be in jail and broke.

 
At 2/21/2011 8:47 PM, Blogger Ron H. said...

"go easy on people who can't type.

i type like an epileptic monkey with mittens on...


Ya, I know, but you are quite readable, compared to Hydra.

Typing wasn't my main complaint anyway.

At least I have a pretty good idea what word you intended to type, because it is part of a coherent thought.

 
At 2/21/2011 9:16 PM, Blogger VangelV said...

I commented on that. Doesn't prevent you from being a free rider. Government has an obligation to protect people equally, so If I pay more I should get more.

But I am not a free rider. I have no problem with hiring private security guards to protect property, private garbage collection, or private schools. In fact, I did pay for the education of my kids, private garbage collection and private security for a number of years.

My problem is with the massive tax burden that robs me of purchasing power on the money that I earn just so that some politicians can try to buy votes from freeloaders who want the transfer wealth from the rich to themselves. In my case I put my money where my mouth was and retired at age 41. Because I do not have earned income my tax burden is much lower even though my real income and my real standard of living are much higher.

I have used the economic ignorance of people like you as a tool to make a lot of money by betting that the stupidity will continue. So far it has turned out brilliantly as my bets against fiat currencies and in favour of inflation have returned massive gains even as deflationists and the panderers to power have had their heads handed to them.

In a way the worst thing that can happen to me is a stroke of insight on the part of voters and the adoption of prudent actions on the part of governments. Fortunately, things like that do not happen in the real world. Most people are just like you and have no interest in logic or reality. In case I forgot, thanks for all of that ignorance and arrogance. It is helping me do quite well without working and given me a lot of time to spend with my family.

You really want individual accounts for every government service?

Hell, no. I want competition in all services. That means that there would be no government services at all.

 
At 2/21/2011 9:19 PM, Blogger morganovich said...

ron-

i type like an epileptic monkey with mittens on...

"Ya, I know"

you know, you could have disagreed here or at least said, "well, only one mitten"...

 
At 2/21/2011 9:33 PM, Blogger VangelV said...

I think a lot of the education premium (it could be trade school) is from showing dedication and perseverance to accomplish long-range goals. Those are usually great qualities to have in a worker. If all things are equal, a degree/certification could be an intangible asset even if it does not pertain directly to the job.

How do four years of avoiding life by partying and drinking heavily show a dedication and perseverance? Many people in university do not belong there. They would be better off working and getting much cheaper on-line or night school based degrees that cost a lot less and are often paid for by their employers.

 
At 2/21/2011 11:34 PM, Blogger Hydra said...

What protection are you talking about? A rich person gets no more protection from the government than a 'middle class' person does.

====================================

If you believe that, you are freaking dreaming.

 
At 2/21/2011 11:48 PM, Blogger Hydra said...

My problem is with the massive tax burden that robs me of purchasing power on the money that I earn just so that some politicians can try to buy votes from freeloaders who want the transfer wealth from the rich to themselves.

===============================

You have not shown that is the case, but if you believe it is the case, then you do have a problem.

I earn more than all but a few percent of the population, but thay have and earn many times what I do.

I know someone who has a full time 24 hour staff just to manage his cash flow. And I know people who work seven days a week to subsist mainly on rice and beans.

And people worse off than that: they are incapable of doing any meaningful work. Freeloaders you call them.

So no, I don't feel sorry for my frined because he has a massive nominal tax burden of 35% of every thing over $375,000.

I can't wait to get "robbed" at that rate.

After taxes, he can still grow his money faster than I can, because at that level he has a lot more opportunities.

If everything really goes south, he will lose thousands of times what I lose, but I don't think he is paying thousands of times as much taxes.

So now lets talk about equality of opportunity and equality of obligation.

 
At 2/21/2011 11:56 PM, Blogger Hydra said...

Your position is incompatible with property rights. If what is mine is really mine ....

===================================

You are an idiot. You don;t have any property rights unless they are protected. Without property rights whats yours isn't yours. Those rights will need to be enforced by someone.

You can hire security and someone else can hire more security. therefore we have government to make sure people are protected equally.

There is nothing incompatible with my position and property rights: it is just that you are so intent on defining my position for me that you are blind to the facts.

In a perfect world, we wouldn't need government. In an imperfect world, we need government and it is presently imperfect.

Wishing for a perfect worl and anarchy is no solution to the problem at hand.

 
At 2/22/2011 12:10 AM, Blogger Hydra said...

But I am not a free rider.

=================================

Of course you are.

You can hire all the private help you want. Just don't expect to escape your obligation which provides for equal public protection.

As you say, I can pay all the taxes I want to, voluntarily.


But I am not a charity, If Im going to pay for more police protection, I expect to get it, whether I pay for additional private police or not. I would need aq sepaqrate account and separate proof that I'm getting more services.

You claim you would prefer to opt out of the public pool and hire your own protection, but you would be a fool to do that. You really think you can protect yurself if a collection of thugs lay siege?

Nope, you would be running for help in a heartbeat.

 
At 2/22/2011 12:13 AM, Blogger Hydra said...

....government is terrible at providing high quality services at a decent cost.

===================================

So is private enterprise. On the rare occasion private enterprise offers high quality, they want luxury prices for it.

 
At 2/22/2011 12:15 AM, Blogger Hydra said...

focusing on not getting what you want is a foolish way to look at it.

==================================

I'm not focusing on it, I'm mnerely pointing out that an agreement includes agreement on what you are not getting as well as what you do get.

Unless you are a damn fool.

 
At 2/22/2011 12:18 AM, Blogger Hydra said...

have used the economic ignorance of people like you as a tool to make a lot of money by betting that the stupidity will continue. So far it has turned out brilliantly as my bets against fiat currencies and in favour of inflation ....

=================================
I'm no fool, I bet on inflation, too. Borrow as much as you can, and pay back with cheap dollars.

 
At 2/22/2011 12:20 AM, Blogger Hydra said...

It is helping me do quite well without working and given me a lot of time to spend with my family.

===================================

What was that you said about people who don't work?

 
At 2/22/2011 12:25 AM, Blogger Hydra said...

Laws against fraud apply to private companies and individuals so there is incentive not to lie to customers. Government has no such incentive


+++++++++++++++++++++++++++++++

What the F__k?


You just said you don't need the protection of law, now you are invoking the protection of fraud laws?

And what about incentive? When the incentive is big enough, who carea about the law? Just make sure you do it when you are old, like Ken Lay.

 
At 2/22/2011 12:32 AM, Blogger Hydra said...

Incompetent or unnecessary agencies need to be disbanded as quickly as possible

=================================

Disbanding an agency is different from disbanding government, which is what you really advocate, since every agency is incompetent, in your book.


What I'm arguing is keep the agency,and let people buy out of the regulations. This introduces competition, because the agency has to justify its price. EPA cannot justify water poollution regulations based on damage to a catch that is a hundred times what has ever been recorded.

Government now has an incentivge to get it right, because either over regualtion or under regulation will cost it money.

Right now, that isn't the case.

 
At 2/22/2011 12:34 AM, Blogger Hydra said...

Hell, no. I want competition in all services. That means that there would be no government services at all.



================================

And no laws against fraud, and no protection of property. Perfection ins self policing capitalism.

Yessirree. I want some of that kool aid.

 
At 2/22/2011 12:51 AM, Blogger Hydra said...

I apologize for my typing. When I went to school typing was for girls only. I had to resort to self teaching, which worked reasonably well, but not having the competition of class, or a teacher was a minor handicap all my life.

I actually work, mainly as a writer, and when I'm getting paid, I do much better.


But now my fingers are arthritic, and no longer point where they think they are going. I have yet to relearn the spatial realities.

That, and my droid speller, which will change entire words after they were correctly typed. I have not got the hang of that contraption yet, though I'm sure it works well once mastered.

And I'm quite sure that on a dial up it is possible to get ahead of the signal and transpose letters.

None of which is a valid excuse for my laziness: I should compose off line and use a speller.

If I thought there was the slightest possibility of turning your line of reasoning from pure dogma to actual thinking, I might do that.

But the way things stand, I'm just throwing chum to the sharks. It doesn't matter much WHAT the hell I throw, the same morons will come to the surface making the same commotion.

I just enjoy watching you thrash aimlessly around so it doesn't matter much what I say or how I spell it.

 
At 2/22/2011 12:55 AM, Blogger Hydra said...

If we defund most of the regulatory agencies because taxes are cut even the poor, who pay little in taxes will benefit. Not only will they have an incentive to work harder, once the regulatory burdens are lifted, they will find that many of the things that they buy cost a lot less.

================================

Like I said, i get the theory. I don't see it happening in practice.


Total Cost = Production Cost + External Cost + Government Cost.

It is total cost that matters, and reducing government cost doesn't always reduce production cost. There is a reason why business is the primary promoter of having government do things for them: they can't do it for a profit themselves.

 
At 2/22/2011 1:04 AM, Blogger Hydra said...

Your statements are so muddled, so illogical, and so stupid that I have no idea what you are really trying to say. I suspect that you don't either.

==================================

Try paying attention, instead of jumping ahead to your rebuttal, which mainlly consists of ad hominems.

If one person has all the money and all the wealth, he is going to pay all the taxes or all the charity, take your pick, unless he is actually willing to exterminate the people who rely on him for total support: which would be everybody if he has all the money.

But suppose he only has half.

Two people are going to pay all the taxes all the charity or all the support.

And one of them is going to be suspicious of the other: that he isn't paying his fair share.

So whether it is two people or four or four million the problem is the same.

You can only get money from people who have it. The people who don't have it are not going topay very much.

 
At 2/22/2011 1:09 AM, Blogger Hydra said...

I never claimed that we should not have protection. I only claim that governments may not be the best providers of it. Governments are notoriously poor at providing any reasonable quality service at a decent cost so I do not see why they have to be the providers of policing, fire and other protection services.

=================================

We have revolutions when government protection becomes worse than no protection.

But private protection would go to the highest bidder, and those who paid the most would demand the most protection.

Which would amount to no protection at all. no one wins in that scenario, and pretty soon someone says, hey, we need a government.

 
At 2/22/2011 2:31 AM, Blogger Ron H. said...

"And I'm quite sure that on a dial up it is possible to get ahead of the signal and transpose letters."

And yet another subject you are clueless about!! No, it's not possible.

In any case, the slowest modem I ever had transmitted at a rate that would equate to 768 characters/min. I don't think you can type that fast. If you are now using a dial-up phone connection, you are probably operation at about 40 times that speed. Why do you keep blaming technology? Man up about it. It's YOU!

"None of which is a valid excuse for my laziness: I should compose off line and use a speller."

Finally! Something you are correct about.

"What was that you said about people who don't work?<"

Again you have misread or misunderstood what someone has written. Not working isn't the problem, it is not earning, and depending for support on those who do.

When VangelV says he doesn't work, that's not quite true. He appears to work very hard at enlightening people like you, but he's been completely unsuccessful.

 
At 2/22/2011 2:52 AM, Blogger Ron H. said...

"If one person has all the money and all the wealth, he is going to pay all the taxes or all the charity, take your pick..."

Again, you need to think before you type. If someone has all the money and all the wealth, it is worthless, as there's nothing to buy.

"So whether it is two people or four or four million the problem is the same."

Yes. The problem remains that you don't know what you're talking about.

 
At 2/22/2011 1:04 PM, Blogger VangelV said...

If you believe that, you are freaking dreaming.

It is a fact. Police do not patrol the streets of those gated communities or luxury condominiums that you are complaining about. They are looked after by private security companies hired by the rich.

 
At 2/22/2011 1:06 PM, Blogger VangelV said...

You have not shown that is the case, but if you believe it is the case, then you do have a problem.

If you can't figure out that all those spending promises are used to buy votes it is you who have a problem. Didn't you watch the debate on tax increases last year? Obama promised that it would be the rich that paid for all those schemes that he promised because they could afford to. He never mentioned the fact that they are the ones that are already paying a disproportionate amount of tax.

 
At 2/22/2011 1:09 PM, Blogger Ron H. said...

Correction to one of my previous comments:

I'm now skeptical that morganovich types like an epileptic monkey wearing mittens, as he only has one mitten.

 
At 2/22/2011 1:23 PM, Blogger VangelV said...

I know someone who has a full time 24 hour staff just to manage his cash flow. And I know people who work seven days a week to subsist mainly on rice and beans.

So? Consumers give money to those that supply them with products that they want. They do not reward idleness, low skills, or bad judgement. That means that the productive can make lots of money while the unproductive can have a hard time making ends meet.

But here my BS detector goes off. A competent individual who worked hard to get marketable skills does not have to work seven days a week to eat rice and beans. And that person does not have a claim on the property of others who are more productive and have more marketable skills.

And people worse off than that: they are incapable of doing any meaningful work. Freeloaders you call them

Whose fault is it that people have failed to acquire marketable skills? And if they can't do 'meaningful' work they need to do what they can.

So no, I don't feel sorry for my frined because he has a massive nominal tax burden of 35% of every thing over $375,000.

I can't wait to get "robbed" at that rate.


That is because you are stupid. Why should someone else have a claim on the money that you earn because of all of the hard work you did to acquire marketable skills or to develop or market products that people want? Why should you be a slave who is asked to support others that you may not like when you are perfectly capable of giving your money to whoever you want, or to invest it so that you can earn even more?

After taxes, he can still grow his money faster than I can, because at that level he has a lot more opportunities.

If the government takes more he has less incentive to work. Smart people do not pay the highest tax rates because there are many perfectly acceptable legal ways to reduce one's tax burden and avoid paying taxes. My earnings exploded after I retired but my tax rate went down by more than 90%. If I were richer I would have even more opportunities open to me as they are to most people who are very high earners. What you fail to understand is that lower tax rates across the board do not help the rich as much as the poor.

If everything really goes south, he will lose thousands of times what I lose, but I don't think he is paying thousands of times as much taxes.

Why should he pay taxes on wealth? The system only requires him to pay on income, which is easy to play with if you make enough.

So now lets talk about equality of opportunity and equality of obligation.

The government kills the little guy with a high tax rate. It can't raise rates on the top earners because that would cause it to lose massive amounts of revenues. But there are huge opportunities for anyone willing to work hard and invest properly, not matter how wealthy they are. The loser's lament that you keep playing over and over again is not very convincing.

 
At 2/22/2011 1:32 PM, Blogger VangelV said...

You are an idiot. You don;t have any property rights unless they are protected. Without property rights whats yours isn't yours. Those rights will need to be enforced by someone.

Ahh, here is the source of your stupidity. You think that we have property rights because of laws and policemen. But in fact, it is the other way around. As Bastiat reminded us, and your Founding Fathers understood so well, "It is not because men have made laws, that personality, liberty, and property exist. On the contrary, it is because personality, liberty, and property exist beforehand, that men make laws."

You can hire security and someone else can hire more security. therefore we have government to make sure people are protected equally.

You are confused. If you spend more of your own money on security you get more of it as you should. How much you get depends on how much you are willing to buy, the same as any other commodity. You need to go back to the whole 'rights are negative' argument because you are still confused and think that they are positive.

There is nothing incompatible with my position and property rights: it is just that you are so intent on defining my position for me that you are blind to the facts.

Your arguments are shallow and stupid and your claimed position is not compatible with most of the drivel that you write. Your mind is very confused because the foundation of your knowledge is not very strong. What you need to do is to write less and read more. The Bastiat book, The Law, would be a good start because it exposes most of your confusion in very few pages.

 

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