Bar Stool Economics

[heironymouspasparagus]

Warren says that under this set of rules, he and people like him should be paying more.  In the context of people like his secretary is having to pay a certain amount due to the rules the way they are.

I have no doubt that he would appreciate paying even less than he does, as long as his secretary also gets to pay equitably and proportionately less.  That is NOT the way it works today, though.  

This disparity in the tax situation is due in great part to the opportunity for "face time" that I have touched on a time or two where the rich get privileged access to the representatives who are supposed to be representing the general populace.  Inhofe comes to mind most immediately with his bragging about the millions he has received from big oil and others and publicly stating that it is not enough.  He feels they should give him more.

Haven't heard Coburn or Sullivan bragging about it that way.  (They may talk about it to friends behind closed doors??)  In addition to all his other problems that I have dwelt on ad-nauseum (sp?), this points out the absolute arrogance and hubris of the man and his overwhelming confidence that he has so convincingly conned the state voters that they will keep on electing him no matter what.

And so far, he has been right; for a public 'lack-of-service' life that spans decades!

How many times will people vote against their direct fiscal, physical, mental, and emotional interest??  Well, since late '60s anyway.

[RecycleMichael]

We should tell the EPA and local organizations to stop giving them Environmental, health, and safety awards.  They won 185 of them last year.

Yes. The polluters have their own fake environmental groups that award themselves. And surprisingly, politicians they have supported also give them awards. In fact, President Bush appointed a vice-President of the firm to serve as EPA's Inspector General. After Koch donated $800,000 to republican candidates during the election cycle, the administration dropped most of the charges and plea bargained the fines to a fraction of the amount.

Who could believe that industry could pay off politicians?

[we vs us]

How do you do that?

Would it surprise you to hear that one of my suggestions would be to take Mr. Buffet up on his suggestion?

Nah, didn't think so.

In my opinion, we've created a system that funnels a good amount of the wealth in our society to the top tier.  This is through taxes, primarily, but also through corporate law and statute.  Many people at the top are there no longer by dint of their hard work and success.  They're there because they've rigged the system to keep themselves up there.  I'm not talking about you, or Guido, or anyone else still in the middle class.  I'm talking about the people who are in the stratosphere and control resources that dwarf all of ours' combined. 

We have well-reasoned and litigated arguments for why that sort of monopolization is bad for corporations; I think there's a similar argument to be made for individual wealth.  When it starts to distort healthy functioning of a market (or government), we've got problems.  I think that's where we are.

And in any event, I don't have a problem with success through hard work.  That will be the place that Guido jumps to immediately, but I credit what success I have to that very thing, and hope that my continued hard work will pay off more in the future.  The problem is, there is less and less of a chance of that happening.  Not because I will work less hard but because the deck is stacked away from my possible success regardless of how hard I work.   

I don't know how to address an unequal economic system outside of government power (taxes); allowing the economic system to regulate itself leads manifestly to bubbles and collapses like we're living through.  Even Greenspan admitted as much.  Outside of that, what is there?  Individuals organically deciding for themselves?  Forgive me, but I'm a skeptic and believe enough in markets and incentives to know that for the mass of men there's very little incentive to work together spontaneously to create more rather than less opportunity.

[Red Arrow]

Roger, cancel the American dream for we vs us.

[Gaspar]

I'm going to just pull the important stuff out of that.

They're there because they've rigged the system to keep themselves up there

If you have wealth, you want to preserve it.  I'll give you that.  Why should they have to "rig" the system, unless the system is inherently designed to confiscate wealth?

The deck is stacked away from my possible success regardless of how hard I work.

That is a very poor outlook. Successful people rely on themselves for reward.  If you blame the system "the deck," you are looking for success or reward from the wrong source.  If you envy the success of others, then you own only failure.

Allowing the economic system to regulate itself leads manifestly to bubbles and collapses like we're living through.

What we are living through is a result of the manipulation of the housing market by the government.  Banks were pressured to make loans and put under penalty of investigation if they did not.  Investers viewed the packaged product as a guaranteed investment backed by government policies.  The result was a boom in home sales and the development of a massive economic engine (the building industry) fueled on the movement of equity by homeowners from properties that they could afford to properties that they could not, but perceived would increase in value without end. POP!

Without the initial manipulation, there would have been no bubble.

Individuals organically deciding for themselves?

I believe that individuals should have the freedom to make ALL of their own decisions.  You insinuate through your choice of the word "Organic" that it is somehow wrong for people to be allowed to make their own decisions.

For the mass of men there's very little incentive to work together spontaneously to create more rather than less opportunity.

Wrong!  The incentive exists, it always has, and always will.  The vehicle is diverse.  There will always be a minority that feels prosperity is legislated.  This interpretation is socialized over time and more of a psychological ill than something debatable.

[Gaspar]

Roger, cancel the American dream for we vs us.

It seems that he makes that call himself.

[heironymouspasparagus]

I had a TU professor tell me one time (long ago) in Econ 101 that national debt was no problem - it's just money we have to repay to ourselves.  And he actually said that with a straight face.  I didn't agree then (1970's), and I don't agree now. 

Some "long cycle" theories have the accumulation of wealth in fewer and fewer hands as a particular symptom of the declining sections of the cycle.  Becomes kind of "vapor lock" for the economy.

If that is true, then the whole idea of a "death tax" would be a good thing, no matter how distasteful I find it.  But then, just as Bill O'Reilly says, people who didn't earn the wealth have no right to it - Paris Hilton being the poster child in favor of nearly confiscatory death tax.  Kennedy's, Rockefellers, Richard Roberts, all the big heirs.  (Heirs, not to be confused with Heironymous.)

Kind of like Monopoly, when a player leaves the game, the money goes back into the pot - returned to the bank.

Here is an entry that might be of interest to some.
Debt is a huge factor in these cycles.

http://en.wikipedia.org/wiki/Kondratiev_wave

[Red Arrow]

I see an inheritance not as a right of the receiver so much as the right of the giver to distribute their tax paid wealth where ever they want.  If the receiver is stupid, they won't keep it for long.  If the receiver is smart, the money will work for them and be invested somewhere.  Very few people keep money in their mattress. 

[Conan71]

What we are living through is a result of the manipulation of the housing market by the government.  Banks were pressured to make loans and put under penalty of investigation if they did not.  Investers viewed the packaged product as a guaranteed investment backed by government policies.  The result was a boom in home sales and the development of a massive economic engine (the building industry) fueled on the movement of equity by homeowners from properties that they could afford to properties that they could not, but perceived would increase in value without end. POP!

Without the initial manipulation, there would have been no bubble.

And right there should be evidence enough that the government picking the winners and losers does not end well.  Our government does nothing out of altruism.  A government's actions are for sale to the highest bidder as per Recyclemichael's post about large EPA fines being able to be reduced with substantial campaign contributions to the right people.  Either that or they are the sole discretion of a bureaucrat who has no accountability to voters.

What they call "fairness" is nothing more than a term for repaying those who helped get them elected.  In the case of housing, it was home builder's associations, mortgage bankers, hedge funds who invested in mortgage-backed derivatives, and community activists.

Again, I find it laughable anyone puts a whole lot of weight on Warren Buffett and Bill Gates view on their taxes being too low.  It's incredibly disingenuous.  They pay a lower rate of taxes by their own choice.  They could most definitely take much higher compensation in the form of salary and be taxed at a higher rate if they wished.  Instead they are paid in dividends which are taxed at a lower rate.  If tax rates on dividends rise, these two will continue to spend millions in tax avoidance and I would be surprised if their total net contribution to the treasury went up significantly, if at all.  It might even force them to *gasp* save even more and resort to more active and passive investment.

[nathanm]

In other words, taxing comes after earning, the solution to this problem is with the earnings not the taxation.

The taxing changes the incentives. If people get taxed 90% on all your income over $40 million, there's less incentive to pay a CEO more than that. It's not so much taxing to take money away, although the tax does that, but to change behavior by changing incentives.

Not that there are probably many, if any, CEOs getting paid that much that get paid in ways that get taxed as earned income. Better to hold the options for a year and pay capital gains instead, after all, but it was the first example that came to my tired mind.

[guido911]

This article is freakin hilarious:

http://www.bernardgoldberg.com/thank-god-for-rich-people/

[heironymouspasparagus]

Funny, for sure.
And like so much revisionist history, GM was bailed out by Obama (when in reality, it was Bush that started it).  And we actually are gonna make money on that deal.

And the fact that 50% of the people in this country don't MAKE enough to pay taxes.

And the 700 billion stimulus that Obama was about 45% in the form of tax breaks for everyone that makes under 250k.  $290 billion of it.  And it is still working through the economy.  And the FACT that for all the bailouts of banks and auto companies, no improvement was seen for about a year, while the relatively small stimulus that got into the working peoples hands actually DID start to show results in less than 3 months.  March to June.

And the banks that were bailed out even earlier in the Bush administration.  Actually gonna make money on that deal, too.  (Boy was I wrong in being so against the bank bailout!)

And those richest ARE the richest because they are literally riding on the backs of that lowest paid 50%.

Hilarious article.  Kind of like Steve Martin for rich guys? 

[Red Arrow]

And the 700 billion stimulus that Obama was about 45% in the form of tax breaks for everyone that makes under 250k.  $290 billion of it.  And it is still working through the economy.  And the FACT that for all the bailouts of banks and auto companies, no improvement was seen for about a year, while the relatively small stimulus that got into the working peoples hands actually DID start to show results in less than 3 months.  March to June.

I found an old paycheck stub. Looks like my stimulus was about $5 per 2 week pay period.  I'll try not to spend it all in one place.

[heironymouspasparagus]

And yet, you still complain about Obama's stimulus?  5 bucks you didn't have before.  Just no pleasing some people.

Some people would still be bitchin' if they were farting in silk!

[Red Arrow]

And yet, you still complain about Obama's stimulus?  5 bucks you didn't have before.  Just no pleasing some people.

Some people would still be bitchin' if they were farting in silk!

I am happy to say that $5 every other week doesn't make the difference between food on the table or being hungry.  Unfortunately, it's not even beer money.  Give me a stimulus that I can actually buy something with.