Quote of the Day on Taxpayers as the Government's ATM, and Really Expensive $500 Haircuts
"The government's chief asset—in fact, pretty much its only asset—is its ability to tax people, now and in the future. The taxpayers are the government's ATM. Make a withdrawal today, and there's less available tomorrow.
Now the ability to tax is a pretty huge asset and the government has not (yet!) come close to depleting it. In that sense, there's a lot of money in the bank. But no matter how much you've got in the bank, a policy of ever-increasing withdrawals is nothing at all like a decision to earn more income. It's important to get the analogy right. And it's clear from the blogs and the op-ed pages that not everybody gets this.
Instead, the notion persists that an extra trillion in federal spending can be converted from "irresponsible'' to "responsible'' as long as it's accompanied by an extra trillion in tax hikes. That's like saying a $500 haircut can be converted from "irresponsible'' to "responsible'' as long as you withdraw the $500 from your bank account. If the super committee loses sight of this fundamental truth, it is doomed to fail."
~Steven Landsburg in today's WSJ
36 Comments:
So, let's not sugar coat.
The greatest asset of the political class is the serfs. They are not human with rights but simply property of the State. As has historically been the case, the crown will squeeze the serfs to finance its whims.
Sounds about right.
Make a withdrawal today and less is available tomorrow.
Not if the pie is getting bigger.
"The government's chief asset—in fact, pretty much its only asset—is its ability to tax people, now and in the future"...
The abuse of taxation leads to lovely headlines like the following: Chance of 2012 U.S. recession tops 50 percent: Fed paper
Here's my analogy:
Government represents your under-aged son. Tax revenue is his allowance. He's borrowing against it.
If the creditors get antsy, you are liable. After all, he's under-age. And giving him a larger allowance in no way reduces the family's credit exposure.
In the same light, increasing his debt when the family is in trouble merely bets that the father and mother will get a job before household assets collapse. It certainly doesn't make us richer.
Somewhere along the line, it became "prudent' to spend $1 trillion a year on the defense-homeland security-VA. parasitical megaplex.
When we have no military foes. But we tax $3,333 per USA man, woman and Child, or $13,000 for a family of four. Every year and more every year. We tax the money out of the private sector, and put into the corprolitic black hole of the federal government.
Our only "enemies" are some guys armed with homemade bombs and screwball plots. They have no armies, navies, air forces, artillery, or even armored vehicles.
We will spend $10 trillion in the next 10 years on this waste--enough to eliminate our national debt.
And at the end of that 10 years, we will hear that threats are mounting, equipment is old, quality troops are quitting, enemies are gaining the upper hand etc etc etc. In other words, the money was wasted.
Borrowing can make one richer: it depends on how the money is spent.
Government has other assets besides its ability to tax. In corporations we recognize the benefits of the ability to organize, economies of scale, and the rational need for overhead.
In government we refer to these as coercion, socialism, and waste.
"When we have no military foes..."...
Wat an insanely inane comment...
BTW we waste more money than the unsubstantiated claim on defense spending pandering to parasites in this country...
At the moment, we have no credible military foes. We spent the Soviet union into oblivion, which only goes to show what is possible.
Environmental defense se a.d. military defense are both important, but we cannot afford unlimited expenditures on either.
"Make a withdrawal today and less is available tomorrow.
Not if the pie is getting bigger."
but the very act of making the withdrawal means the pie will not be as big as it would have been.
the incremental $1 you would have invested gets paid in tax and goes to non productive purposes.
companies borrow based on the ability to produce cash flow later.
they use the money to fund productive assets. you buy a cab with a loan, use it to generate cash, and use that cash to pay it off. it's also secured by assets.
the government borrows based on the ability to print money. these leads to terrible return on capital (as they don't even care for the most part) and huge debt at outlandish ratios.
US "income" is 1.5tn. debt is 15.
not many established companies have a debt/revs ratio of 10:1, and none without collateral do.
your arguments here seem wildly off hydra.
Another, even simpler way to look at the left's position:
They want the government to take more money from wealthy people [and also borrow more money from wealthy people and nations] and give it to the poor people, either directly or indirectly through government spending.
They claim this is a good thing because the poor will as a result have more money money to buy things from the wealthy people. When that happens, the wealthy people are supposed to need to hire more poor people to keep up with demand.
How is it that people don't see that this plan is just plain stupid?
If the top 1% or five% or ten% keep taking home an ever larger percentage of the total pie, then the argument is that it makes no difference because they are also making the pie larger.
But if government takes more that argument does not hold?
Must be a bad argument.
I did not say the government was doing a good job at borrowing, only that not all borrowing is bad.
. companies borrow based on the ability to produce cash flow later. ++++++
So do governments.
Both parties sometimes screw up.
How is it that people don't see that this plan is just plain stupid? 11/15/2011 1:45 PM
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Because maybe the alternative is equally stupid?
hydra-
"But if government takes more that argument does not hold?
Must be a bad argument."
the fact that you cannot see the difference here astounds me.
those who earn their own wealth do it by providing goods and services that grow the pie.
for the government to grow, it takes more from precisely those people and gives it to the less able.
thus, you get less pie.
this is so simple as to essentially be a tautology.
wealth redistribution from the most productive and the best investors to the worst has a very clear effect.
beyond the basics of maintaining a common defense, law and order, and protecting rights, very few government activities are productive. you can maybe argue for some basic infrastructure, but beyond that, it's all a taking from productive use to fund non productive.
for steve jobs to increase his income he has to produce something people want.
for the government to raisse more "revenue" it just has to increase steve's taxes and make it harder for him to invest in the next batch of things people want.
if you think that increasing taxes is the same as inventing an iphone, i really have no idea what to say to you.
"So do governments."
no, they don't.
when acme metal invests in a new forge, they have to come up with a business case and give it to a bank showing them how the forge will make money and how they can pay off the loan. the loan is backed by the forge itself or other assets of the company.
federal debt is nothing like that. it is not put to productive use. there is no plan for spending it to generate return. there is just a non binding promise to levy tax or print money later to pay it off. it's backed by no assets. you cannot repo the feds.
federal borrowing is like running up a huge credit card bill drinking expensive wine and staying in 5 star hotels.
find me a credit card company that will let you run up an unpaid balance of 10X your annual income while you still spend 66% more than you take in and then maybe you have a comparison, but you're not going to find one.
the whole point of borrowing is to put money to productive use and get return on investment.
you are paying interest. to cover that, you need return. otherwise, you are in real trouble when you seem to pay it back.
Now you are telling me governments borrow money thinking they will have less income to pay it back with later?
the fact that you cannot see the difference here astounds me.
++++++++?
Why? Structurally the arguments are identical.
And equally bad.
Hydra, you seem to be under the mistaken assumption that the government must do a cost benefit analysis of the money it spends. They don't. They can and do borrow money to create a bike path, or a baseball museum or whatever and they spend exactly zero effort to determine if it will generate enough tax revenue to pay back the amount they borrowed. ZERO. Now, if you were to back a law requiring them to do that, you might find some support here.
"
Why? Structurally the arguments are identical.
And equally bad."
that's absurd hydra. they are nothing like the same.
private firms invest. governments do not.
private wealth is concentrated by individuals having great ideas and executing them well. it only works if they provide a good or service people want to buy.
steve jobs gets wealthy by selling you an iphone that you value and that you feel will make you life better. best, if you don;t feel that way about an iphone, you don;t need to buy one. steve does not take from you, nor harm you.
a government that taxes you does so whether you like it or not.
51% can vote to take all steve job's money, crush apple, and destroy their products.
sure, that's government "revenue" but it no longer gets used to grow a successful company. the pie shrinks.
can you seriously not see that increasing taxes is not the same as inventing ebay?
your whole argument is absurd.
it's so fundamentally wrong it's difficult to even know where to start, but think about it this way:
private revenues can exist without government. tax revenues cannot exist without private revenues.
the latter must siphon from the former, but the former does NOT need the latter.
and as marko said, the government does nothing like a cost benefit analysis. they mostly do a "how many votes can i buy by stealing from some voters to give to others" analysis.
in many cases the "benefit" of their spending is actually negative. they take you money and use it to enforce insane, counterproductive regulations or meaningless wars or aid to ridiculous foreign recipients.
they take a dollar, and get you -$10 in return for it.
worse, they crowd out private investment and, because instead of going out of business, as public schools would if they were a business, they just borrow money, up taxes, and keeping destroying wealth. we spend $12,600/student/year on public school. that's $250k/class of 20.
if people had the money, they'd never spend it on that crap willingly.
government COMPELS you to provide "revenue". businesses have to entice you. this is why government never bothers to invest well, be cost effective, or provide quality. they don't care.
Tax Obama's cronies at Solyndra, Tonopah Energy, Jeffy Immelt at GE, and then tax all of Michelle-Marie Antoinette Obama's vacations du jour, and the budget will be immediately balanced.
Next question!
Hilarious, JR!! :)
Morganovich. You're very patient. I get the impression you're talking to a brick wall.
>>>> If the stupor committee loses sight of this fundamental truth, it is doomed to fail.
I fixed the above (in bold) for veracity. Glad I could help.
.
Methinks:
I'm put in mind of a Dilbert in which Dogbert announces a test of "The Emergency Monarch System".
followed with:
"Had this been a monarchy, you would already be wretched."
:D
>>> Somewhere along the line, it became "prudent' to spend $1 trillion a year on the defense-homeland security-VA. parasitical megaplex.
More "Benny blather"
a) "Defense" is an actual Constitutionally-specified job for the Federal government.
b) "Health care", "Old Age Pensions", "Business Investment Supports" (aka "Solyndra/WS Banks") and so forth are rather clearly NOT.
So, even IF we concur with your preposterously absurd contention that "we have no military foes", and that the Defense/Security budget needs to be seriously slashed (say, by 50%), It's still a blatant fact that
1) It's only a drop in the bucket of the Democrats' and President Downgrade's overspending spree (here or (quicker) here)
2) Those other things should be slashed by at least that much, as there's no Constitutional excuse for them to be included as government expenditures at all.
Can we agree there is a resource "pie" generally called gdp and that as stated by MP the pie is growing?
Lets look at how the arguments are the same before we bring in additional arguments.
In order to agree on this point we do not yet need to consider how it grows or how it is divided.
>>> At the moment, we have no credible military foes.
a) Conventional ones, mmmm, debatable, as China's capacity to field an army of many millions of men at the drop of a hat, and its clear lack of concern for human life in the pursuit of government goals makes it quite capable of becoming a threat faster than we could retool and retrain an army were we to ease off too much.
b) Unconventional ones, duh, the statement of yours is flat-out retarded... Pretty much the entirety of fascist Islam is an enemy, and hardly a negligible percentage OR number of Muslims classify as fanatics. While they are incapable of a concerted action, it's rather obvious by the inclusions inherent in "defense-homeland security-VA. parasitical megaplex" that we ARE talking about our defenses and counter-operations against them.
c) A large chunk of that expense goes towards something that has a secondary purpose -- a floating military CITY of 5000+ men and women capable of being located offshore of a disaster area inside of several day's notice is rather clearly a worthwhile secondary usage of those funds which has both good will value as well as basic humanitarian value. One would not justify that alone for that purpose, but they have been used exactly that way several times just in the last decade alone. So claiming that there is no value in these without a clear classical military target is egregiously wrong.
.....vacations du jour, and the budget will be immediately balanced.
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Wishful thinking, and not even mildly amusing because it is so blatantly untrue.
Our problems are bigger than the first ladies " vacations".
>>> Now you are telling me governments borrow money thinking they will have less income to pay it back with later?
LOL, No, we're noting that politicians don't THINK about things like this AT ALL. They certainly don't weigh it heavily in the decision making calculus if it is factored in at the least.
>>> Why? Structurally the arguments are identical.
You are utterly brain damaged to believe this.
>>> Morganovich. You're very patient. I get the impression you're talking to a brick wall.
No, eventually, you might get through a brick wall if you pound your head against it. Might take a few hundred years, but there might be some possibility of success.
I'd say Morganovich is attempting to "grow the pie by taxing the pie makers"... LOLZ
:D
a) we will never field a conventional army capable of taking on China in hand to hand combat. If it comes to that, Armageddon ensues.
b) we are also outnumbered by followers of Islam. Get used to it. Even so, we can rebuild a thousand times faster than handfuls of radical islamists can organize to damage us. There is no credible terrorist Islamic state that would not be reduced to glass if it comes to that. We do not eliminate every thug in the city because it costs too much. We do not eliminate every terrorist on the planet because it costs too much. We do not eliminate every environmental or safety hazard because it costs too much. But we are reasonably efficient at eliminating known hazards, leaving very few credible threats.
c) I never said or suggested that there are not useful jobs for the military to do, when they are not dwarfing Libyan gnats from 3000 miles away. Far be it for me to argue if we need 5 or 10 or 20 times the power of the next five navies, but even Andrew and Katrina are not credible threats to our nation or our military.
Are there groups that could do damage? Of course. Are there capabilities improving? Yes, we now hitch a ride to the space station, while our ride is in the shop. But a substantial credible threat? Really?
All I am attesting is that there is some level at which prevention becomes too expensive, and insurance looks like a more cost effective alternative.
I don't expect to kill every bug and every weed in my fields, so I need a backup plan.
No, we're noting that politicians don't THINK about things like this AT ALL. They certainly don't weigh it heavily in the decision making calculus.
+++++++++++++++++++
Hopeless. Now you are in evasion mode. No entity borrows money thinking they will be in worse shape in the future.
No rational entity. Your claim here is that government practitioners are irrational. OK, so we do not have a system that provides proper and frequent incentive.
agreed, but that does not equate to totally hopeless.
Back to the pie. We agree that under certain conditions, given the pie is growing, everyone who vets a piece could theoretically get a bigger piece.
Right?
You are brain damaged to believe this.
++++++
You attack my mental faculties rather than showing a difference.
One party takes a bigger piece of a growing pie. Every one else is still better off. No?
Now the ability to tax is a pretty huge asset and the government has not (yet!) come close to depleting it.
I am sorry is Landberg insane? Given the fact that most productive individuals give half of their marginal dollar to the government as taxes I would argue that the government has already gone past the point of no return.
My thirteen-year old reminded me today of Etienne de La Boetie's observation that all governments depend on the consent of the governed. A revolution does not need guns and violence, only that the people stop feeding the state and doing what it wishes. If Congress is not careful it may see an uprising of the taxpayers who are sick and tired of paying as much as they do so that the parasites in the ruling parties and their supporters can get to live off of the transfer payments. The super committee and Steven Landsburg better not lose sight of that.
Nicely explained. Truly impressive and nice information. Thanks for sharing.
Nicely explained. Truly impressive and nice information. Thanks for sharing.
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