Business/Finance

Income, tax, fairness, redistribution and response

Income distribution is a divisive subject. Fairness, more so. The standard way of evaluating income distribution is the GINI Coefficient, an extremely complex equation that produces a number between 0 and 1. With GINI = 1, one person in an economy gets all the money, and everyone else has nothing. At GINI = 0, everyone is absolutely identical.

There are no nations at either end.

The current approach to ensuring some degree of fairness is to use the tax system. And, here presented, are various systems of taxation as well as the impacts of targeted changes to tax systems. It does involve some maths, but it is presented as simple tables. Like this one…

Figure 1: Equal Taxation

Much of modern economic theory has been about reducing the gap between rich and poor, and making a more equitable society. Troublingly for social scientists, GINI varies wildly irrespective of economic system. However, poor and autocratic societies tend to be more unequal than wealthy and free ones. And even where income disparities are wide (as in the US, where the poorest 20% of Americans earn as much as the richest 20% of Russians) it doesn’t always mean that the poorest are scrabbling in the dirt while the rich dine on caviar.

In Figure 1, we have a tax system that really would be unfair. But first, the rules behind these graphs:

  1. Total GDP (or Gross Domestic Product – the wealth generated by the entire “nation”) is set at 100;
  2. The income brackets of this society have been divided into five, with income presented pretty much as it breaks down in the US, with the top 20% earning some 9 time more than the bottom 20%. The sum of all the incomes adds up to 100, so the top 20% earn 45, and the bottom 20% earn 5;
  3. Total tax levied against the nation is 17 – this is equivalent to what the US raises from its citizens currently – note that the current deficit of 4% implies that there is a tax under-collection of 19% which is where the current national debt comes in;
  4. The blue bar is the gross income accrued by the particular income bracket;
  5. The red bar is the total tax levied from that particular income bracket;
  6. The green line is a % and reflects the proportion of income that is paid in tax (this definition will change in later figures, but I’ll let you know when);
  7. You can click on the images to see a larger figure (and so read the text).

Back to Figure 1

Here, total tax is 17 and has been divided equally (and fairly) across the population. So, everyone gets to pay 3.4. Only problem is, income is not distributed equally, so the poor pay relatively more than do the rich. This is a recipe for riots. There aren’t really any countries in the world that practice this one on purpose.

Lets try some redistribution

There are many different tax systems in the world. Some breathtakingly complex (the US one is quite frightening), and some quite straightforward. One of the easiest (at least, to understand) is the concept of a flat tax. The government intends to raise 17% of GDP to spend on things it deems important, therefore everyone must pay 17% of their revenue to the state.

This looks like this:

Figure 2: Flat Taxation

This is much better, don’t you think? The rich are clearly paying much more in absolute terms than are the poor, and everyone pays the same proportion of their incomes. There is little incentive to try and manipulate things by changing tax brackets, because there is only one bracket.

What’s this bracket thing? Well, the alternative to a flat tax is what is known as a progressive tax. This basically means that income is divided into a set of brackets and, depending on what you earn, you pay a different amount of tax. This is the most popular form of income tax around and results in monstrously complex tax law. The reason is that the last thing any government wants is to create moral hazard here. For instance, if you knew that a salary raise was going to place you in a higher tax bracket and your net take-home pay would actually be LESS than what you were earning before, you wouldn’t want a raise.

Worse, is that investors wouldn’t invest either since any increase in their profits would leave them worse-off than if they hadn’t invested at all. So there are usually all sorts of grants, and back-payments and things like that to make sure that it remains “fair”. Now you get that usual distribution curve where the people at the bottom don’t pay taxes, and the people at the top cover the bill:

Figure 3: Progressive Taxation

This is the situation for most taxpayers in most democracies. Unfortunately, this system creates a lot of problems. Actually … let me demonstrate.

Progressing the tax further

Say a government decides to give tax relief to the middle class (i.e. bracket 3 and, to a lesser extent, 2; brackets 4 and 5 don’t pay tax anyway so you’ll never hear anyone offering to give them tax relief). Let’s take a look at how everyone imagines this will work out (and here, the green line reflects – not the % of income paid as tax – but the % change in gross income, where negative numbers imply a decrease):

Figure 4: Redistributive Taxation

This is what we imagine will happen. The rich will trouser the 2.4% loss to their gross income, while the middle classes earn an extra 1.7% to 4.1%, while the poor don’t experience much of an impact and the net tax effect is neutral since the total collection remains 17.

However, money is liquid and mobile and the rich are – by virtue of the fact that they’re in the top 20% – quite good with money. They have options. For starters, they can simply increase their fees (either in their time, or for the products they sell):

Figure 5: Scenario 1 – Increased Prices

The rich were expected to absorb a 0.9% decrease in their overall take-home pay. Instead, they increased their charges. Their total revenue went from 45 to 45.9. You can see the impact which is felt equally across society. Brackets 2 and 3 are still up from their original salaries – the redistributive tax has still left them better-off – but the poor have taken it in the neck. The poorest 20% have actually seen their salaries negatively impacted by 4.4%.

In other words, a redistributive tax has the impact of making the rich richer and the poor poorer. Exactly the opposite effect of what was intended. But this isn’t the worst scenario.

You see, the rich really do have other options. They could decide to invest their money offshore.

Investing Offshore

The rich may decide that the tax option of declaring an income one bracket down is very attractive. So they move a proportion of their investment offshore. Either they close down a factory and move it to China, or they place their investment equity holdings in an emerging market. Consider, emerging markets are expected to grow by 6 to 8% over the next 12 months, while US and EU economies are either to hold still, or even contract. A lot of cash could start moving in unusual directions – especially since US and EU banks now belong to their governments.

Figure 6: Scenario 2 – Investing elsewhere

The richest 20% decided to become the 2nd richest 20%, and sent the rest of their money overseas. Now the total tax take has changed dramatically. Instead of collecting 17, the state now collects 5.1.

Instead of the deficit being 4, the deficit now expands to 15.9. In other words, for every $1 that the state raises through taxes, it is spending another $4.1. That is a recipe for economic collapse.

Conclusions

The most likely result of a tax redistribution is a mix of scenarios 1 and 2. The US deficit will go up as a result of taxing the rich more heavily, but inflation (as the rich raise their fees) will also erode the gains experienced by the rest of the population while increasing the absolute levels of inequality.

Now, we can argue about this. Maybe the rich shouldn’t be so “selfish”. Maybe you can come up with a way to stop them taking the money they already have away. What you can’t do is force investment that did not happen to happen.

You can’t force the young inventor who would have built his new factory in the US from seeking a more favourable tax environment elsewhere. You can’t enslave the young engineering graduate to prevent her from taking her skills to a more favourable country.

The only way is to offer ostensible advantages.

That’s if you want them at all.

69 replies »

  1. Whythawk, is there any reason why a government has to permit the wealthy to take their money overseas or to move from bracket to bracket? It seems to me that a well designed progressive system (which the US system most assuredly is not) could get the benefits of a flat rate while avoiding the pitfalls of a graduated system.

  2. Probably. But a government can make it arbitrarily difficult to move money. Whether it should or not is a fair question, but the fact of the matter is that it can. Most governments who do that, though, end up with entrepreneurs fleeing (think Russia after it started nationalizing major industries, for example), even if it means leaving their money behind. So there’s certainly good reasons not to.

    But maybe there are good economic reasons to make the moving of cash out of the country – by direct transfers or by currency exchanges – more expensive than “free.”

  3. Gavin: The problem I see here is that your analysis seems not to fully account for the past several years – you take our current moment as the starting point, but since Bush took office things have been damned cozy for the rich. So if I try and reverse engineer your analysis, I’m hard pressed to see how we’re in the mess we’re in at present.

  4. I don’t think that any of these examples can really explain where we are now, because the graphs/explanations don’t account for any of the myriad ways one can work the tax code. These all assume that bracket A pays X% and then actually pays X%, not deduct this write that off, etc.

    Part of me wonders if a flat tax wouldn’t be best. At least it’s straightforward. And while the lowest brackets that don’t currently pay might have to pay some, the higher brackets would still pay significantly more in dollar value. Imagine a life without tax lawyers (particularly the ones who work for the IRS).

    But the mess we’re in now – i think – stems mostly from spending much more than we take in, while trying to cut taxes. There seems to be no thought to what tax receipts will actually be when the budget is laid out…or maybe i should say not enough thought.

    FY 2007 saw tax receipts of $2.674T. Debt servicing cost $429B. In other words, 16% of the gross income of the country went towards covering the minimum monthly payment on the credit card. That $429B represents almost all of Treasury’s budget.

    DoD, HHS, and SSA accounted for $1.88T. Add in the interest costs and we end up at $2.309T…that doesn’t leave much left over for everything else unless we go over budget.

  5. The biggest problem with this presentation is it’s full of logical fallacies as well as out and out lies on some points.

    First lie:

    If you move up a tax bracket, you could lose more than if you didn’t get that raise. Look back at the assertion “For instance, if you knew that a salary raise was going to place you in a higher tax bracket and your net take-home pay would actually be LESS than what you were earning before, you wouldn’t want a raise”

    Now look at the tax progressive tax schedule from the IRS.

    http://www.irs.gov/formspubs/article/0,,id=164272,00.html

    From $0 to $7,825 you pay 10%. If you were at the top of that bracket, your tax is $782. Look at the next line. If you make, say, just a little more… that bit that sticks in the lie.. $8,000. What does that chart say your tax is? .. $782 + 15% of $175, or $782 + $26.. that leaves you with $150 more because of your raise just over the bracket, NOT “worse off”.

    That’s a logical fallacy that’s been around for a LONG time, and if you don’t actually look at your government schedules, you might buy it.

    Now lets talk about those charts. In figure 1 the scale on the right side is 5% to 25%. Same in figures 2 and 3.

    Yet, when you to figure 4 and try to show the “steep downfall” in contrast to the left side (totally different scale representing something completely different), the scale goes from -3% to 5%. As in, not a 25% scale, but an 8% scale. That creates an illusion of scale that becomes meaningless in reality.

    Then from figures 4 to 5, the scale changes again to make it look like “raising prices” has a much more dramatic effect.

    Using charts to elicit visual responses that are exaggerated seems kind of dishonest to me. It works, don’t get me wrong, you end up with the intended effect of making the viewer think there is something substantial going on.

    Now, investing off shore. You DO realize that we have in our tax code a means to exempt certain amounts of wages derived from work overseas, right? Now, since I’ve not had any major investments in foreign companies, I can’t tell you how much, if any, of that return might be considered exempt.. but I can tell you this. No matter where you try to “put” your money, if you’re an American and you make money, you pay your income taxes. Even on money made in foreign investments.

    Now, we can debate about how much that’s taxed at, and we can _certainly_ adjust those tax rates to either A) discourage foreign investing (that would piss off a select few foreign powers, I’d think) or B) get the same amount of money in our National coffers no matter where the money is generating returns on.

    The other thing to keep in mind is, even leaving the physical country of America doesn’t exempt you from paying your taxes on money earned where ever. In fact, a lot of companies stay headquartered in America because the tax laws favor that for them. But, the bottom line is, if you’re an American, you pay your American income tax no matter WHERE you get your income.

    People taking their money and leaving? Still doesn’t help you. If you’re an AMERICAN, you are still required to pay your taxes. There are some rules that defer amounts if you have to pay taxes in foreign lands, but those are part of the free trade agreements, in effect.

    So, multi-billionaires decide “I don’t want to play that game! I’m no longer an AMERICAN!”

    That’s called renouncing your citizenship, and since people were doing it to avoid taxes while still living here and profiting here, there are some very harsh penalties for doing that.. something like 75% tax rates? .. I forget, but you can google for some info on becoming an ex-pat, or giving up your citizenship. It ain’t cheep.

    And at the end of the day, if you revert to a protectionist system to some varying degree, you will ALWAYS have people that are willing (and able) to do the job the “ultra rich” don’t want to. In fact, I found this to be the most misleading and false statement of the entire posting:

    “However, money is liquid and mobile and the rich are – by virtue of the fact that they’re in the top 20% – quite good with money.”

    I’d guess that most of the ultra rich don’t do much managing of their money. They have accountants who scour the books and the tax law and find ways to bury the money. The rich aren’t “good with money”, they are simply greedy bastards who can afford to pay others to shuffle their money.

    And the trust fund kids that get handed hundreds of millions, or billions? They are “good with money” simply because they were born with diamond studded platinum spoons in their asses? I don’t think so.

    The other thing I’m still trying to find support for is how “40% of Americans” don’t pay taxes. According to that chart, every dollar of net income is taxable. You get $3,500 off the top, then you get various reductions PROVIDED you had enough money to have some of those things. The poor renters out there with no car don’t get very many deductions.. so, if they made $12,000 for the year, and took $3,500 off the top, and say managed to find another $1,500 some how, they still pay $700 in taxes (or there about). and at $12,000 a year, you have a pretty shitty life in this economy.

    I agree that our tax code is a nightmare. But that has nothing to do with the progressive scale.. it has to do with the trying to find inventive ways (facilitated by bought and paid for legislators) to BURY money. The “tax” part is pretty clear. The incentives and discounts and deductions and capitalization of assets and 1,000,000 other things business types want put in there so they can hide money, THAT is what makes it complicated.

  6. Let me clarify about the paragraph of denouncing your citizenship. The tax that’s imposed when you decide to no longer be an American is on your “total assets”. So, if you are a Warren Buffet, for example, and want to denounce your citizenship, you’re going to have to pony up (it might be as low as 50%, I thought it was higher.. but it’s been a few months since I glanced it over) between $25 billion and $35 billion.

    not that many “very rich” people are going to do that just to avoid paying a million a year more in taxes on their $20 million in profits… think about it.

    Oh, and one thing I forgot in the above..

    Comparing the poorest 20% of Americans to the richest 20% of Russians, and doing it in terms of dollars is comparing apples to que-tips. First off, we have what, 2.5 times the population of Russia? So you’re summing up 70 million Americans to 28 million Russians?

    And with the top 1% of Americans owning 40% of the wealth, talking in terms of income only with the bottom 20% is silly since they own nothing. Then diluting the top 1% by adding that upper upper middle class to offset the multi-millionaires, that’s a numbers game too. And when you consider that the top 1% doesn’t actually “work” (in a manual labor sense, or even in a desk job sense, most times), it becomes offensive to compare that with people doing back breaking labor for wages that doesn’t let them pay all their bills.

    The other HUGE part of this that’s being left out are the death and inheritance taxes.

    While I’m supportive of the idea that parents should be able to provide a good life for their children if they can, I also don’t think that provision should be to the tune of billions upon billions. We need to find some decent limits to how much we let transfer from generation to generation.. but if that wealth is never recirculated, no one else can ever hope to earn more than their parents in the broader context.

    That is, coming from the standpoint that we only have so much real wealth in the world/country, if it is allowed to build in the hands of the few with no means to get it circulated back to being available, then no one else (in the general context) has a way to move up.

    I had a potato example not all that long ago. If you have 10 lbs of potatoes and 6 people, one person takes 8 lbs and leaves 2 lbs for the other 5 people, those 5 people are going to have to fight over what’s left. If you take 3 lbs from the one guy, leaving him 5 lbs, more than he needs, then you have 1 lb for each of the remaining people. chances are they will be ok with that, so long as they aren’t having to kill each other over scraps.

    This isn’t about having a nicer rollex, or a better bently for most of the population, this is about food and shelter and clothing with some distractions along the way, and a way to retire some day and not have to be a laborer for 60 of your 80 years on the planet.

    It disgusts me that we have old people.. really old people, that _have_ to work to survive. And just down the street from them we have some jackass with 7 houses and 13 cars. Something is seriously wrong with us as a species when we let our old and sick and infirm suffer so the few can have tons and tons of baubles just to inflate their egos.

  7. Savanster,

    If you work outside the United States you do not pay any American income tax on the first $70,000 that you earn. You have to file, but that’s it. It’s a fact, i’ve lived it. I have no idea how it works if you are employed by an American company in an overseas division. I’m talking about working for a foreign company on foreign soil…and paying income tax in your foreign domicile.

    And all you have to do to become an expat is move to a different country (aside from obtaining a visa for that country).

  8. Being an ex-pat is not the same as giving up your citizenship. Just living in a different country and paying taxes there doesn’t automatically exempt you from paying your taxes in America, and that varies based on what country you’re in.

    I was surprised when I read through the laws myself.

    http://travel.state.gov/law/citizenship/citizenship_776.html check section E.. says check the IRS for more insight.

    It’s getting late so I’m not going to bother hunting down all the links. but what it boils down to is you don’t get to simply tell Uncle Sam you’re not paying taxes by investing in foreign companies, or by moving to some other country.

    I don’t have any overwhelming fears that if we increase taxes on the rich folk by a few percent that they will be flooding off to some other country. It’s another distraction and distortion.

  9. And, again, Lex.. we’re talking millionaires here. Those making millions a year, or billions. That $70,000 is less than noise.

  10. Starting at the top…

    @JS: Yes, you can stop people taking their money overseas. It is called Exchange Control. It is a very bad idea. The high walls that prevent people taking money out, also prevent them bringing it in. Given the US national debt, and the fact that it is being financed by foreigners, it would result in another Great Depression. There is also the additional problem that about half the US dollars in circulation are already outside US borders.

    As for stopping people moving brackets… all it takes is one story about a highly paid auto-worker losing his job and taking a lower-paid one in another industry and then being FINED for changing tax brackets … i.e. also unworkable.

    @Ann: I like a flat tax. However, as has been pointed out, it does suddenly require that people at the lower end have to pay taxes when they don’t normally. This can be overcome through something called a Basic Income Grant where EVERYONE qualifies for a specific annual grant, whether they pay tax or not … and this can be used to redress someone paying tax on a tiny salary. As well as ensuring that there is no incentive for benefits fraud, since everyone gets the grant, no matter what they earn.

    @Dr Slammy (and Lex): Firstly, this is influenced by US experiences (simply to get the ratios right) and there is no way it can explain things like the Credit Crunch (which has little to do with taxation); It is also about gross tax paid, not the various percentages and back-payments as set by Treasury. Note that the top tax bracket in the US is over 40%. Company tax is over 30%. Yet, in my graphs, the top 20% pay tax of 20.8% of their incomes. In other words, this includes all the impact of tax lawyers.

    @Savantster: Gosh, you write a lot. Firstly, I go into a long explanation about bracket-creep and how it is avoided. Please read it. Secondly, international firms of tax attorneys exist to enable the wealthy to arbitrage their revenue. This does not require them to renounce their citizenship. However, I can buy a farm and qualify for tax relief in the US (lots of Senators and Congressman are “farmers”), you can buy an island in the Caribbean for resource extraction and claim a deduction. Hell, there are millions of schemes, none illegal and the ones that work the best you can bet no-one is talking about.

    In short, as the world becomes increasingly interconnected, and companies (and employees) more footloose and global, it gets harder to police where the money is and where tax should be paid. The more complex the tax system, the more open it is to exploitation.

    One of the greatest reasons to adopt a flat tax (one that impacts on everyone the same way) is that it does a better job of preventing this type of arbitrage. However, it is bad for tax attorneys.

  11. Whythawk, thanks for the responses to all. I do/did not think that our present financial situation is a result of taxation issues…though everyone wanting them low but spending big can’t help.

    Savanster, my deepest apologies for misunderstanding your comment. Now, if you’ll excuse me i must go wipe the egg from my face.

  12. Whythawk,

    I’ll have to see if I can find where you explain “bracket creep” better than your assertion here, and if it addresses the fallacy you expressed implying that people would refuse raises to avoid making more money if they go up a bracket. I thought I was pretty clear in my example, but if you have some straight forward examples of someone actually having a “net loss of income” by making more money, I’d sure like to see it.

    RE: globalization. The biggest reason there are so many ways for people to exploit various nations is because now various nations are all competing for the same resource (i.e. investors). As you open that can of worms further, you make it easier to bury money. I don’t think anyone here disagrees with that. So, we have 2 things..

    First, we don’t have to keep the tax code as insane as it is. The reason it’s getting crazy is the ruling elite, the ultra rich, WANT it that way.. and they pay well to have those laws written. As you said, “none illegal and the best ones aren’t being talked about”. So, shouldn’t our leaders be making some of those illegal? After all, they are legal because we said so.. and we said so because the people that want to avoid taxes the most pay millions upon millions to have the rules written to benefit them, then hire specialists who’s job is to make sure all the “paperwork” is in order, so they can leverage the laws they had written for them. That means, we should stop putting “pro-Corporate” leaders in place, and start putting in pro-People leaders.

    Second, we don’t have to keep on this path of globalization we’re on. For America to function in the global market, we have to be willing to sink a serious segment of our population (or force those ultra wealthy in America to care for those they won’t give jobs to.. but, they aren’t giving them jobs because they would rather pay pennies on the dollar to 3rd world laborers). I don’t find that acceptable. For the world to have a reasonably functioning “global economy” (one that doesn’t allow billions to wallow in the muck), the world has to be on the same page. We’re FAR from that. So, until the rest of the world gets their shit straight, all “globalization” is is a means for the ultra rich to acquire more wealth while not doing much for the general population (certainly nothing for most Americans).

    I apologize for being long winded. I’ve found that almost nothing in life fits in a 30 second sound bite.. and, ironically, that’s what most people expect their information to show up in.

  13. The reason it’s getting crazy is the ruling elite, the ultra rich, WANT it that way.. and they pay well to have those laws written.

    They can also afford the expert advice to use those laws to their best advantage, right?

  14. One of the troubles arguing theory when you have actual experience available is that if your theory predicts stuff that varies widely from observation then it is very likely that it is theory and not reality that is in error.

    Under the New Deal top tax rates ran to 90%, the numbers of new millionaires dropped precipitously, and people moved from Depression era poverty to the highest average wealth the world had ever seen. There was even talk about eliminating the Income tax entirely and transferring all the tax burden to a variable tax on Corporations based on their size. The point being that size granted power, and by placing an increasing burden on maintaining that power the net result would be a leveler playing field.

    Still despite the tax burden people still made lots of money, but instead of pocketing the profits, they plowed it back into stable income, improved their work force with higher wages and benefits, and made capital improvements, resulting in huge growth in actual wealth.

    With the change in tax policy, and Reagan Tax cuts especially, capital improvements became money not in pocket, and a machine was worth more sold to China than it would produce in profits in several years, and nearly overnight a very large part of American manufacturing was openly looted, as Pirates left cratered industries as they scooped up all that investment cash lying about. The wealth generated by those machines of course came to a screeching halt.

    There is a detailed BBC account here, focusing on England but also the US

  15. Freedem, the other major aspect of the reality you’re talking about is Globalization. Allowing the rich to ignore people in their own country while still making massive profits helped drag various nations out of the mud, but it also requires using the bottom 30% – 50% of Americans as a stone to stand on in the water.. Without sacrificing those people, you can’t let the very rich become the only rich.

    And I don’t think we should be sacrificing our citizens so the top 1% can try to rule the world, and I don’t think the top 10% should be all that’s left of “middle America” when it’s all done.

    And, as you note. Economics is a theory, not hard science. It uses a lot of number and statistics and charts and graphs, but there is nothing provable about a lot of its underlying dictates. Supply and Demand? I think we all get “supply”… having “stuff” available to those who “demand” it. .. Define demand. Explain how you know, with certainty, what will and wont be demanded, and to what extent. Will green cars be in demand? If there is no supply, will that shift to red cars? or will it go to blue boats? If you have corn and oats, which will be in more demand? Can’t tell until AFTER? .. not science.

    I can tell you exactly what will happen if I pinch the vein in your neck. I can tell you exactly what will happen if I inject you with various chemicals. I can tell you when and where the sun will come up. And I can tell you exactly how long it will take for that CEO to hit the ground after he jumps if the Market falls out any further.

    You say cutting taxes for the rich will give more prosperity to the middle class. The middle class is at its worst in 80 years, the rich are at their best. You say free markets regulate themselves, but we see that free markets require human action, presence.. that presence corrupts the theory, the ideology, and we have one of the biggest market crashes in centuries.. The theory suggests the “business types” know best, yet they just caused the entire globe to convulse and shrink economically.

  16. @Savantster: “there are usually all sorts of grants, and back-payments and things like that to make sure that it remains “fair”.”

    The tax system is not a conspiracy. It is a generations-old system for paying for stuff that is, supposedly, in the public interest. What is defined as being in the “public interest” is continually expanding and changing.

    Every year, thousands of new clauses are added to the tax system; some to create new grants (such as the payment to farmers who turn corn into ethanol), some to fix unexpected problems created by old laws. So you wind up with a chaotic patch-work quilt.

    Now, it is the job of politicians to govern, not companies. If your politicians are creating this environment, it seems silly to blame businesses. After all, unions are major contributors to the Democrats and also have particular vested interests which result in legislation which also has ostensible costs.

    I don’t think the rich enjoy paying lawyers thousands of dollars so that they can pay less tax. An inefficient system is expensive for everyone.

    Blaming the wealthy, as you seem to be doing, for all the world’s problems is naive. You are also contradicting yourself.

    Over the past decade 300 million people have been lifted out of absolute poverty in China alone. That has been the result of rich people looking out for their self-interest and investing their cash – not in the US – but in China.

    Over that same period, the US did not create 300 million unemployed – hell, that’s the population of the whole country. In fact, US unemployment remained relatively constant over the last decade.

    GDP growth, across the world, has been at about 4% for the last decade. That is, in 10 years, we generated 40% more wealth than there was before. That is quite astonishing.

    This didn’t come about from charity. It didn’t come about from favouritism. It happened because of self-interested investment. That it could have been better … well, that is a different discussion.

    But the point is that wealth is not finite. Your potato example is a known economic model, called the “Lump of labour fallacy”. There is no lump of labour. There is no lump of wealth. A movement of capital from the US to China does not leave the US poorer.

    And attacking investors is counter-productive. I am a serial entrepreneur. I’ve started dozens of businesses. Some successful, some horror stories. I have recently left a country where I am victimised because of what I am, to go to a country where I am appreciated.

    I’m not much more than a minor-middle-class type, but South Africa has lost close to 1 million people as emigrants in the past decade. Most, like me, are highly educated and highly ambitious. We left to seek opportunities elsewhere.

    We are not slaves. We do not “belong” to the nations we happen to have been born in.

    The US is testament to the originality and ambition of immigrants. Don’t think that you can keep the golden eggs, but gut the goose.

    Language like “force those ultra wealthy in America to care for those they won’t give jobs to”, “rather pay pennies on the dollar to 3rd world laborers”, “we have some jackass with 7 houses and 13 cars”, “we let our old and sick and infirm suffer so the few can have tons and tons of baubles just to inflate their egos”.

    Language like this is astonishingly insulting. I earn my money by doing things other people are unable to do. I do not bully other people away from some finite feeding trough and steal from them. I EARN IT! I invent wealth. I create new products.

    Consider the iPod. Its existence is not theft. That some people are wealthy does not mean that they stole it from poor people.

    Poverty is an insult, you’re correct. But you are wrong about where the insult lies. It has nothing to do with the wealthy. They are the lesson you could learn but choose not to.

    Wealth can be created out of nothing. Poverty is an aberration.

  17. Gavin and Savantster, I have to ask this, since I can’t help but think that this may be the crux of much of what you two are arguing about.

    What do you mean by wealth?

    Your respective definitions appear to be similar and related, but still different.

  18. The tax system is not a conspiracy. It is a generations-old system for paying for stuff that is, supposedly, in the public interest. What is defined as being in the “public interest” is continually expanding and changing.

    That’s what I thought, and where I’ve been getting a bit lost. When everyone here refers to “the redistribution of wealth,” are they referring to who bears the cost, through taxation, of services that are spread among the population? And is the fairness issue about how much of that burden various groups should bear?

  19. Oh boy.. I can see this is going to be a long reply..

    “Now, it is the job of politicians to govern, not companies. If your politicians are creating this environment, it seems silly to blame businesses. After all, unions are major contributors to the Democrats and also have particular vested interests which result in legislation which also has ostensible costs.”

    First, politicians have been getting cash for favors almost as long as there have been politicians. When a lot of that money is coming from the hands of businesses, it’s the businesses that are paying for policy. Most of the “lobbying” that’s being done, in terms of big money, is from fronts for companies. Secondly, saying that “unions give money to Dems” is a red herring. Over the past 40 or 50 years, the Dems have been the party of the people while the Reps have been the party of the corporations. The end analysis can only be that “politicians tend to be paid for, so they aren’t always doing their jobs”. The difference is that when people are paying to have the rules give them more rights and be treated more fairly, it looks to me like you’re paying the politicians to actually do their job. Corporations don’t vote. They shouldn’t have representation in Government.

    “I don’t think the rich enjoy paying lawyers thousands of dollars so that they can pay less tax. An inefficient system is expensive for everyone.”

    Who said they “enjoy” it? But they DO IT, to avoid paying taxes. If they would quit begging to have new laws, new loopholes, new ways to hide money, it wouldn’t be so complicated for them. But, in their drive to “maximize profits”, they need more and more ways to dump and defer gross receipts. With those vehicles, they get more ways to hide their own money from the tax man. Enjoy? no.. but it’s obviously cheaper than just paying the taxes off the top.

    “Blaming the wealthy, as you seem to be doing, for all the world’s problems is naive. You are also contradicting yourself.
    ………
    Over the past decade 300 million people have been lifted out of absolute poverty in China alone. That has been the result of rich people looking out for their self-interest and investing their cash – not in the US – but in China.”

    And all the pollution in China, and the tainted products, are a result of the rich not wanting to spend any money while making money. While they have lifted 300 million people out of poverty, they have poisoned them and abused 10s of millions more that are still in poverty and still working in sweat shop conditions.

    And, while doing that, they have made themselves richer, and still have the protection of the United States and its military and with the blood of its citizens. How is it reasonable for them to get richer while making life more difficult for those that allowed them to get where they are? … Of course, you prove the stereotype that “wealth gatherers” leave waste and destruction behind them while pointing to the unintended good in front of them.

    “In fact, US unemployment remained relatively constant over the last decade.”

    It’s also a fact that those numbers keep being cooked and manipulated by the ruling elite so they can keep people uninformed. Knowledge is power, and the ruling elite doesn’t want you smart, or thinking for yourself. For example.. Remember that stimulus package we needed to fix the problem of the right-wing economy? They extended unemployment benefits to those that had already used their time’s worth but still needed money. That is, unemployment only pays for X number of weeks. Those ON the rolls, those GETTING money are reported as “unemployed”. We ignore those that fell off the back. When unemployment was extended, the official rate was 5.9% .. The extension added another 4.1%. Yet, the “official” unemployment wasn’t raised, but CLEARLY, if you look at all the people WITHOUT JOBS that WANT THEM, it was 10%. Now we had another 160,000 net jobs LOST, but unemployment didn’t go up? unless we had a LOT of people die, something isn’t’ being reported properly. … REAL unemployment is closer to 12% at the moment. But to see that, you have to ignore the lies told to you by the CORPORATE MEDIA, and look at the facts that trickle down on occasion.

    “But the point is that wealth is not finite. Your potato example is a known economic model, called the “Lump of labour fallacy”. There is no lump of labour. There is no lump of wealth. A movement of capital from the US to China does not leave the US poorer.”

    Again we have reality that steps on your theory. Wealth (an economic term with lots of room for discussion of its definition) is tied to resources. When you take raw resources and add value to them, you make something “more” than it was and now that that resource has a specific use, someone will TRADE you for it. What we trade today is “money”, but money represents physical resources.. Well, it did until we decided we needed to “create wealth out of thin air”. Labor adds value to resources. Without either, you have nothing. So, for you to “create wealth”, some labor must be expended by SOMEONE. And at some core level, it must be expended on resources. In the modern age, money and information are kind of resources as well. For example, banks hold your money, and loan money, and they take a cut.. The value they add to the resource is safe keeping (in theory).

    In fact, for a more recent example of how you can’t just “create wealth out of thin air”, let’s look at Wall Street. In order to “create wealth”, they bundled together debt after debt, then resold that debt. Each time it was resold, the POTENTIAL was cut down (loans have more value than their principle because of interest payments to be made, right?) by someone chopping off the future interests.

    That has at least 2 distinct problems. First, there’s no penalty to paying off debt early. If I have a mortgage for $100,000 and the terms project a total payment over the life of the loan of $200,000, that’s a potential of $100,000 for the bank.. right? .. So, I take that loan and sell it to Billy for $125,000.. then he sells it to Fred for $150,000 and finally Tommy buys it back (because it’s rolled up into packages that no one can see) for $175,000. … now I pay that off in 2 years instead of 30.. The total gain only ends up being $12,000. Tommy gets screwed, and you “created wealth” in the middle, right? only.. tommy got screwed. What if I default on that loan instead, and all Tommy can get back from the courts is $50,000 on a depressed home value? Now he’s REALLY screwed.

    Welcome to Wall Street 2008 under 6 years of deregulated right-wing free market policies.

    The market fell 40% in a year. Where did all that “created from thin air” wealth go? Back to thin air.

    “Language like this is astonishingly insulting. I earn my money by doing things other people are unable to do. I do not bully other people away from some finite feeding trough and steal from them. I EARN IT! I invent wealth. I create new products.”

    What’s insulting is when people that a statement doesn’t apply to try to use its lack of applicability to defend those it DOES apply to. Do you have 7 houses? Have you started a company in a 3rd world nation, slave laborers barely eating while you drive around in 13 cars? No? then what’s your problem? Yes, perhaps YOU earn it. And I EARN what I have, too.. but let me let you in on a little secret. Most of the people currently in the top 1% have NOT “earned” their money, it was given to them by their parents, as were the cushy jobs running companies and sitting on boards of directors. I don’t begrudge anyone working hard to have a nice life. I fault people willing to kill others and destroy the planet for uncontrolled greed. If that’s not you, then you shouldn’t be insulted by my pointing out realities to you.

    “Poverty is an insult, you’re correct. But you are wrong about where the insult lies. It has nothing to do with the wealthy. They are the lesson you could learn but choose not to.”

    If the poor stay poor because the rich take and take and take and exploit the poor and un[der]educated, then who is to blame? If the rich feel entitled to live lavish lives at the direct expense of others, at the cost of their very lives.. who’s to blame?

    neither energy nor wealth can be created from nothing.

  20. Another issue rarely mentioned about concentrated wealth is that productivity, total wealth, and especially creativity take a deep plunge. A clear look shows that the cause is not a mystery. Those with a great deal of wealth and power do not want to rock the boat, and increasingly any change, especially from below will do exactly that.

    Also with a culture of wealth and class comes an attitude that actually doing something useful is demeaning and below ones class, even where education is great, so insights are not developed by those with the power to do so, while those without the power can expect good ideas to be stolen, if managed to rise at all.

    Even in the recent Dotcom bubble the prevailing idea was to develop an idea like Youtube and then cash out to a Mega corp, in part because they would eat you if you didn’t and in part because cash cows are more profitable as meat than milk.

  21. Brian, wealth has various meanings.. and that’s on purpose.

    From dictionary.com:

    1. a great quantity or store of money, valuable possessions, property, or other riches: the wealth of a city.
    2. an abundance or profusion of anything; plentiful amount: a wealth of imagery.
    3. Economics.
    a. all things that have a monetary or exchange value.
    b. anything that has utility and is capable of being appropriated or exchanged.
    4. rich or valuable contents or produce: the wealth of the soil.
    5. the state of being rich; prosperity; affluence: persons of wealth and standing.
    6. Obsolete. happiness.

    3-a is about the best example of what I mean when I say “finite capacity”. Some resources are renewable, hence perpetual capacity to add wealth.. but that’s not generated from out of nowhere.

    Value is based on relative, or subjective views. Wealth is the amount of things of value you have.

    I think the reason people seem to think wealth is generated out of thin air is because they can, say, start a business and start making money. I had this discussion with brandon in another thread.. That someone shifts things of value to you isn’t the generation of wealth, it’s the moving of wealth. Brandon’s dice game, at $100 a day revenue, requires dice. Resources.. then it requires labor.. someone to roll the dice. more resources. Then some wealth is moved around. His assertion was that he could sell that business for $100,000.. and said that was “creation of wealth”. But it only looks that way.

    Where did that $100,000 come from to pay him? It came from someone elses wealth. It was borrowed (deferred wealth transfer) or had already been accumulated by taking in wealth from other resources.

    Here’s where the conservation of energy bit comes in.. say both Brandon and I want to have a dice game. If he can get $100 a day, and he’s not maxed out on his potential (supply is higher than demand), if I open a shop next to him (requiring more resources, right? more dice) we would not both magically be making $100 a day. We’d be making $50 a day each. Again, demand is less than supply there to begin with.

    Now lets look at competition. If I offer my game for a little less than his, to try and pull people away from his game to mine, the total for both of us goes DOWN.. I’m charging less so either everyone plays my game and I get all “less than $100” in the day, or after some come to me he lowers his price to keep 1/2 of the people.. Good for the people playing the game, bad for the guy wanting your wealth for doing precious little (rolling dice was a bad example). That’s why we have anti trust laws.. we have things in our society we consider “needed things”, that means the value, or wealth transfer demanded, for such activities can be high.. so high that people can’t survive. Forcing competition keeps companies from being able to extort the consumers.

    I guess I’m getting off track here. But it seems to me that the biggest confusion about “wealth” comes from it being tied to value. Value always changes, but the physical things tied to it doesn’t. Land, for example. We only have so much. If you have a bigger plot of land, you have more wealth than the guy next to you. If you’re only using the world wealth as a measure of relative value, then as more and more people need land and the value of land goes up (people are willing to give more and more of their things of value for something), your “wealth” goes up. You’ve done nothing, you’ve not worked hard, you just “own” something.. a resource.. and your wealth goes up magically. Wealth wasn’t created, scarcity of resources cause the relative value of something in demand to go up.

    I don’t know if that’s coming across right.

  22. Figures, just below that def at dictionary.com are alternatives from various authorities.

    —————————————————–
    wealth (wělth) Pronunciation Key
    n.

    1.
    1. An abundance of valuable material possessions or resources; riches.
    2. The state of being rich; affluence.
    2. All goods and resources having value in terms of exchange or use.
    3. A great amount; a profusion: a wealth of advice.

    ————————————————-
    wealth
    noun
    1. the state of being rich and affluent; having a plentiful supply of material goods and money; “great wealth is not a sign of great intelligence” [ant: impoverishment]
    2. the quality of profuse abundance; “she has a wealth of talent”
    3. an abundance of material possessions and resources
    4. property that has economic utility: a monetary value or an exchange value
    ——————————————————————————————–
    Wealth
    Wealth, n. (Econ.) (a) In the private sense, all pooperty which has a money value. (b) In the public sense, all objects, esp. material objects, which have economic utility. (c) Specif. called personal wealth. Those energies, faculties, and habits directly contributing to make people industrially efficient.
    —————————————————————-
    Wealth, n. [OE. welthe, from wele; cf. D. weelde luxury. See Weal prosperity.]

    1. Weal; welfare; prosperity; good. [Obs.] “Let no man seek his own, but every man another’s wealth.” –1 Cor. x. 24.

    2. Large possessions; a comparative abundance of things which are objects of human desire; esp., abundance of worldly estate; affluence; opulence; riches.

    I have little wealth to lose. –Shak.

    Each day new wealth, without their care, provides. –Dryden.

    Wealth comprises all articles of value and nothing else. –F. A. Walker.

    Almost all of those definitions are tied to physical items. Matter.. Energy in solid form.

    That someone can create a new way to use resources, create a new demand for items, find new ways to shift wealth/money to themselves is what industry (even the service industry) is about. Without industry, you have nothing. Well, unless you have resources that are in demand, like oil.

  23. Savantster, November 4, 2008 at 11:07 am :
    You say cutting taxes for the rich will give more prosperity to the middle class. The middle class is at its worst in 80 years, the rich are at their best. You say free markets regulate themselves, but we see that free markets require human action, presence.. that presence corrupts the theory, the ideology, and we have one of the biggest market crashes in centuries.. The theory suggests the “business types” know best, yet they just caused the entire globe to convulse and shrink economically.

    I did not say that and actually agree with you on this mostly. In point of fact I see little difference between how a person uses power, as a part of government, as a part of Industry, or even as a part of industry buying a member of government. In every case decisions are made and large groups of folk are affected by them. If that group cannot hold the deciders accountable by firing them for stupidity, or arresting them for criminality, then tyranny is the result, even if for no more than the one decision.

  24. DOH!.. Sorry, Freedem.. I was not directing that at you, I was directing it at those that hold the theory model.. I was acting in the person of your post, and I apologize. I figured we were on the same page and took liberties and failed to be exacting in my own post.

  25. Brian, the definition of wealth is a good question, and a word that should be clearly defined before use because people use it to mean different things.

    i’m going to cut to the chase. When i look around me, i see and hear many people blaming our load of troubles on many things. This is the fault of the heartless corporations. That is the fault of poor people wanting a handout. It’s all the fault of the dumb-ass politicians who “represent” us.

    No, it is our fault. If you think all the way through things you find that every act is a political act. There is no such thing as independent origination. The decision you make at the grocery store is as political as the decision you make in the voting booth. And the former, in aggregate, probably has a more profound effect than the latter.

    We expect politicians to make the difficult, but right, decision while we expect no such thing of ourselves. Yet we get all bent out of shape when they fail to “represent” us as we think they should. Maybe they do represent us…like a mirror. If we don’t like the reflection should we smash the mirror or change what is reflected?

    Call it the paramita of politics.

  26. Lex,

    There’s at least one fallacy in what you’ve proposed..

    “The decision you make at the grocery store is as political as the decision you make in the voting booth. And the former, in aggregate, probably has a more profound effect than the latter.”

    That is, you need to eat, and if most of the food out there is cut with corn because the government subsidizes it to the point that other staples can’t compete, then you either eat or don’t. Hardly a choice. If you need to get to work 20 miles away, you need fuel. You can’t just opt out (as a rule).

    I agree that there is impact to be made with your shopping choices, but one also has to consider that the reality we live in is being manipulated around us… and that’s not by “us”, that’s by “them” .. being the Corpratocracy. Did you know, for example, that some school districts are so starved for funding that they are letting companies play commercials on the buses while children are driven to school? Seriously, children are being indoctrinated as consumers by people who don’t care about anything but gathering more wealth. Does that reflect “you”?

    “We expect politicians to make the difficult, but right, decision while we expect no such thing of ourselves. ”

    I have to disagree with this as well. The second half is the “blame the victim” meme. While it applies in some cases, it’s not a truism. What IS a truism is we DO elect people to do job for us, and we pay them pretty well to do it. If you pay a doctor to remove your appendix, do you suspect you should be able to remove your neighbor’s?

    Our society is complex and vast. We understand that we need “experts” in various fields, people who spend the bulk of their time working on specific tasks because there’s simply too much out there for any one person to do it all. We also want to live our lives, not toil 24 hours a day trying to manage everything for everyone. Hence, we hire people to do various jobs for us.

    And the job we hire politicians for is to create laws that protect us from things we don’t even know about some times. They need to be the experts who commission studies and make policies that help people live free productive lives.

    I don’t “blame” corporations, I simply see their influence in every aspect of our lives, and most times it’s not all that beneficial. They are “things”, tools, and should be used as such. The world has become accepting of them as some kind of authority, and the _humans_ behind the companies are using them, and their influence, to shape reality in a way that greatly benefits them (both company and human behind it) at the expense of others. And the single point of convergence between citizens, reality and corporations are our politicians. And their job, their only job, is to protect us.

    “The tree of Liberty must, from time to time, be refreshed with the blood of Patriots and Tyrants” — Thomas Jefferson.

    The public has been lulled to sleep by that magic glowy idiot box and the rest of the comforts of modern society. It’s time to wake up and throw off our bindings.

    By the way, the media has become a puppet for the ruling elite. The reality of most people in this country is fed to them via the media. If it’s not on TV, it’s not real. And since Knowledge is Power, the media keeps most people pretty well in the dark, and thus fairly powerless to do anything about the current situation. While its true they have the power to change that, they don’t know that. Why do you think the Fairness Doctrine was removed? .. the Internet seems to be filling that knowledge hole.. and the right-wing wants to let companies “charge more for access to specific places”, they want to make knowledge more restricted.

    The game is rigged. Fixing it isn’t an easy thing.

  27. @Ann: Got it in one. State-subsidised education to ensure that poverty isn’t a limitation on ability (for example) … someone has to pay for it. So, because they can afford to pay more, the people who have more to tax, are taxed more. For the most part, this is beyond debate.

    The debate about fairness, though, is more nuanced. Some people think that it is “fair” to tax the rich more because they are using up more of the “finite” wealth available… that’s Savantster’s approach. Then you get my approach, which is that wealth is limitlessly expandable and – beyond a certain point – the rich are being taxed too much. Remember that redistribution (like subsidised education, or transport, or primary healthcare) is not usually of benefit to the rich (although roads benefit everyone). So the rich don’t always benefit for the things they pay for. A middle-class person who is taxed to pay for public schools and puts their kids into private schools probably feels that they pay for their kids education twice. A person who doesn’t even have kids may feel even worse.

    That said, the rich do benefit from educating the poor since this enlarges the pool of skilled workers and so creates more opportunities, and more wealth.

    As Lex so rightly points out, the decision about the future is made by people at the point of payment. Parents who can afford to, who flee public schools and place their kids in private schools, leave those public schools worse-off. But their “selfishness” is to look after their kids, and accusing them of being evil and that they should deny their kids opportunities is a passage to lose their vote.

    The point I’m making – and people can get as angry as they like about it – is that everyone who can pay less, and enjoy more benefits for less expense, will do so. When you choose to go to a major discounter over a small corner store that can’t gain the price advantage that WalMart can, you’re making a decision that has implications.

    Are you evil for seeking a discount that may put another business into liquidation? Just as evil as when you buy a Mac over a Dell or a HP.

    What the wealthy do with their tax money is the same as what people do when grocery shopping … they look for the best deal.

    But here’s the interesting part. Money – unless you keep it under your bed – always works. Rich people’s money is available to others always. If it’s not available to you through taxes, then it is available through credit.

    Just whose money do you think you’re borrowing when you get a loan from a bank?

  28. Thank you – I was afraid my question was too elementary to address.

    So in order for a taxation system to function at all in a country where citizens can influence its workings, enough people, who tend to think in the short term whatever their pocketbook holds, must feel that their particular share of the tax load is not unduly burdensome… while at the same time, the goals and best use of the taxes collected can only be understood by thinking in the long term (such as educated workers, growth of business, etc.)?

    No wonder it’s so complicated.

  29. “Remember that redistribution (like subsidised education, or transport, or primary healthcare) is not usually of benefit to the rich (although roads benefit everyone).”

    I was going to comment on this, and I suppose I still am in a fashion, but you sort of covered it with this:

    “That said, the rich do benefit from educating the poor since this enlarges the pool of skilled workers and so creates more opportunities, and more wealth.”

    So, we have a problem. You “assert” they pay for things they don’t benefit from, then show that there are hidden, long term things to consider. Yet, the argument is also made, in conflict with the previous, that educating the poor does NOT benefit them.

    Which is it. It does, or it doesn’t. It does and they don’t see it, hence taking their money and telling them to shut up is reasonable, or it doesn’t and we let the masses go uneducated. Yet, at the same time the rich are complaining that we don’t have enough engineers in America so we should let Indians and Argentinians and Pakistanis come in and do our smart work. In other words, the rich simply don’t want to invest in this country and its future. Or, that’s one take on the above.

    “The point I’m making – and people can get as angry as they like about it – is that everyone who can pay less, and enjoy more benefits for less expense, will do so.”

    Which is A) why we force taxes on people. and B) have to change people’s attitudes.

    B) is trickier. See, the system as it is today is depressing wages causing people to HAVE to find ways to cut corners. That increases traffic at Wal-Mart and puts mom-n-pops out of business. People don’t “want” to do that, they have not a lot of choice in many situations. Then, you look deeper and find that Wal-Mart is engaging in illegal activities in some cases to keep its costs down (hiring illegals and locking them in the stores over night). People get pissed off and WANT to do something about it, but don’t have the “wealth” to. Yet, the family that owns walmart is absorbing a LOT of “wealth” in the meager needs of the poor, and the shutting down of mom-n-pops stores.

    Personally? Since I can “kind of” afford it? I avoid Wal-Mart at all possible costs. Yet, there are times I don’t have a lot of choice (practicably.. I could always just not consume some things.. suffer a little more). My mother, who lives on a VERY tight budget? Shops there and good will almost 100%. She’ll hit Fleet Farm for specials on occasion, but not all that often.

    So, what makes it so Wal-Mart shuts down grocers and department stores alike? They were allowed to expand into multiple markets using the same idea on two fronts (food and other goods). Leveraging their size to corner markets.

    the down side is that the folks that were making an ok wage at the mom-n-pops are now out of a job and can only afford Wal-Mart. That’s called a vicious cycle. The rich certainly don’t have any desire or need to stop that, do they? So we just force more and more people to the only thing available, then blame them for being too greedy and wanting cheap stuff… while the guy paying substandard wages for his Wal-Mart employees lives in a huge mansion and drives luxury cars from around the world. …. oh, did we mention that Wal-Mart would rather close a store than let workers organize a union to protect themselves?

    I think the idea of “everyone wants to keep as much as they can” is one that’s over played and over simplified. When you don’t have much and you’re neck deep in debt and not sure how you’re going to get alone, keeping as much as you can is a tad different than when you make millions a year off the backs of others, mostly by not giving them a living wage or not keeping their wages in pace with overall inflation. One is reasonable, the other being coy.

    “Just whose money do you think you’re borrowing when you get a loan from a bank?”

    And that’s another perfect example of the broken system. It USED to be that people put their OWN money in a bank, and the banker would loan out money from a collected pool. He’d take some of the interest for himself, but other interest went to those with money in the bank. So, you’re right.. when I go to GMAC for financing, I’m no longer using a traditional banking system.. In fact, our collapsing economy is based on those banks playing games with their books to make it look like a good idea for the rich to put money there. And, as mentioned, that just cost most of them 40%. .. Oh, except we bailed them out with a trillion dollars.

    The other major problem with all this “lending” is that we no longer accumulate real wealth. We have a lot of what we have on debt, borrowed money… and no solid means to pay it back (increasing unemployment shows we have few jobs, but those people’s debt doesn’t go away.. and with production jobs being replaced with service jobs that pay less, overall wealth by the masses goes down but their spending is expected to keep going up.. that makes no sense).

    There’s no question at all that we’re in trouble. But we’re in trouble because the very greedy are allowed to abuse the masses. For example, the predatory lenders that gave out BAD loans, then hid them in packages and sold them to the big dogs. No oversight means abuses to the system and the people, every time, period. 20% of this financial mess (not enough to collapse things on its own, but certainly a huge weight adding to the problems) is bad mortgages made by people who got paid to people that couldn’t pay. The big banks bought that up in their desire to “create wealth out of thin air”. … the problem is, it’s not just Joe the [not a] Plumber that lives like that, the government and big business lives like that too, so 80% of the crisis is simply bad debt and BAD practices combined. And WAY over a trillion dollars was siphoned out of the system. Who’s paying that bill?

    So, simply raising the tax rate on the richest 5% back to where it was when the system wasn’t falling apart in only a SMALL part of this discussion (even though it’s the full scope of this article).

    The same anti-tax people who caused this mess are also anti-regulation people, and that was the much bigger contributor.. no oversight. Same party, same people, two dysfunctional ideas meant to make things better for the rich, not the public.

    And like you stated in the very opening paragraphs.. “Much of modern economic theory has been about reducing the gap between rich and poor, and making a more equitable society. ” …. so, pandering to the rich while ignoring the poor doesn’t make sense.

    and one last note.. like educating our populace helps overall, even in ways we can’t exactly see right away, keeping the poor from rioting in the streets is important too.. But beyond that, the more stable your economy in general, and the more level the field in general, the less overall strife you have in that society. Life isn’t perfect where the class gaps are small, but there are a lot more people leading much happier lives and engaging in more self actualization than when significant portions of the population are fighting over food.

  30. Savanster,

    There was no fallacy in what i said. You don’t have to go to the grocery store to eat. And you certainly don’t have to chose processed food stuffs at the grocery store.

    You’re trying to make excuses, and the point of my post was: no excuses…for any of us.
    Besides, i didn’t point that post at any person or group (or i pointed it every person and group).

    Who’s “blaming the victim”? We’re not “victimized” by corporations, we give them our money freely. It is our money that gives them the great power that they have. You may be surprised that they use that money to further their own ends, but i’m not. What they do makes perfect sense from their perspective.

    I didn’t put any value statements about how individuals should approach their everyday political decisions. I’m not real big on telling other people what they should do. But your argument that people have no choice because they made previous choices that were not in their best, long term interest is circular.

    My only point was that we should actually think about the effects of our decisions.

    But apparently i inadvertently knocked the chip off your shoulder. So come on, let me have it. Let the anger flow, it makes you feel stronger, doesn’t it?

  31. Savanster said,
    “Now, investing off shore. You DO realize that we have in our tax code a means to exempt certain amounts of wages derived from work overseas, right? Now, since I’ve not had any major investments in foreign companies, I can’t tell you how much, if any, of that return might be considered exempt.. but I can tell you this. No matter where you try to “put” your money, if you’re an American and you make money, you pay your income taxes. Even on money made in foreign investments.”

    Actually, I could name about 50 legal ways an American can go offshore and not pay any income tax on income earned. In fact, I know of many perfectly legal ways an American can go offshore and end up with tons of tax credits.

    That being said, Savanster, you complain a whole lot about the rich, taxes, and weave your tale of hard luck, complete with job changing and the monkey of student loans on your back. The rich are your personal bogeymen.
    Perhaps if you spent less time pontificating on this blog, worked a little harder, maybe got a second job, your money problems would disappear. Give a little to charity, just a little, and you’ll see less self loathing. Then, as a productive member of society, you’d have a lot less to complain about, and wouldn’t have to resort to using such bombast and invective. In the time you waste trying to prove a point, and you are a point prover, you could probably make a couple hundred dollars.

  32. “worked a little harder, maybe got a second job, your money problems would disappear. ”

    yes, 60% of Americans should get a second job to pay their bills while 1% continues to rig the game, never work, and live on the coattails of their ancestors work.

    Oh, and never mind the near 12% unemployment we have now, I should have no problem getting a part time job making $6 or $7 an hour leaving me with no time to actually enjoy life, but BOY, I’ll be helping some people make some good money for work I’m doing. Sounds like a plan to me.. And, while I’m buys working 2 jobs while the entitlement class does nothing for generations, we’ll ignore the fact that for every person that has to work 2 jobs, someone else must sacrifice a job.

    “and you’ll see less self loathing”

    A cute little jab, if not totally off base. I happen to like myself very much. Interestingly, that’s partially because I don’t need stuff or external validation to like myself. But, feel free to continue to make baseless attacks and insinuations while avoiding discussing any of the topics at hand or giving any consideration to the long term and broader implications of your “solutions” that do nothing to _really_ address the issues.

    “Then, as a productive member of society, you’d have a lot less to complain about”

    Hmm.. Seems to me that I’m doing a job that directly helps people and isn’t functioning in a for-profit context. Based on my expressed views, and the direct benefit to those in need that I support and facilitate, I’d say I’m already a “productive” member of society. And being that I pay taxes, I’m supporting my society as well. Baseless attacks…. again?

    Bombastic? project much? .. invective? well, on occasion, but it’s not my general course. Unless, of course, I’m deriding someone that much deserves it.

    “In the time you waste trying to prove a point, and you are a point prover, you could probably make a couple hundred dollars.”

    Yes, because it’s WRONG to simply make a point and try to further a larger good .. better I should get back to the business of simply gathering baubles and coins.. right? … Only, I’ve explained several times that I have no interest in such things. I’m content to put in an honest day’s work, I just find it insulting that 10s of millions are asked to give so much for so little while those that do the least have the most, and normally not by anything they have done (old money is rampant in the top 1%).

    I’m surprised you even addressed me.. what, with my lack of manhood for using a moniker (the same one, or variation of since the internet exploded and my base moniker was hard to reserve, the entire time I’ve been on the internet.. some 15 years) and all. Are you going to insult my penis again, too?

  33. Savanster

    You said:
    “Personally? Since I can “kind of” afford it? I avoid Wal-Mart at all possible costs”

    How come you can “Kind of” afford not to shop at Wal-Mart”, yet you won’t donate a cent to charity?

    Rather selfish, indeed.

    Jeff

  34. “My only point was that we should actually think about the effects of our decisions.”

    And I agree 100% with this “analysis”, however, you’re still making some statements that while “literally true” aren’t practical (in my mind). For example:

    “You don’t have to go to the grocery store to eat. ”

    There are not enough non-grocery store avenues for everyone in the country to use as a source of food. Individuals can try to sustain from non-grocery sources, but that would require significant time (virtually a life style unto its self) in tracking down that food. Part of what a society is about is making life easier for everyone, so everyone can enjoy their lives more. Suggesting individuals should spend almost all of their time trying to track down the resources needed to live as a means of protest isn’t something that sounds reasonable to me. Another alternative would be “grow your own food”, but again, that’s regressing, not progressing, as a society.

    It seems to me to make more sense to look at ways to change things for the betterment of all instead of individuals dedicating their lives to individual choices of protest that leave them no time to actually enjoy their lives.

    Unless, of course, you meant “you can just not eat.. that’s a choice”. I’ll presume you did not imply people can just let them selves die instead of try to make a better world.

    “We’re not “victimized” by corporations, we give them our money freely. ”

    Again, while that’s literally true, to a certain degree our entire society is a large organism, and the corporations are a part of it. …… ……. I still don’t know how to respond to that since just about everything in modern life is tied to corporations in some manner. Your suggestion is that people can just check out of modern society, and if that seems a _reasonable_ course of action to you, then I’m at a bit of a loss. Again, literally true, but suggests those that want a better world for everyone should just “go away” if they find problems in how things are done. So, if we’re to live in a modern world and participate in any meaningful way, we are kind of victimized by the corporations (currently) and we have the power to change that (by all deciding we’re done letting them treat us this way and putting politicians in office that will help protect us).

    “It is our money that gives them the great power that they have. You may be surprised that they use that money to further their own ends, but i’m not. What they do makes perfect sense from their perspective”

    Again, while literally true, their legal powers comes from laws. Those laws are passed by men. We give them power by letting them, and the men they buy, lie to us and convince us their way is better. We just need to be better about not letting those men and companies lie to us. We need to band together and tell them “enough”. We DO have that power. I just don’t understand why so many people are content to let corporations get away with the things they do. I suppose, though, it’s back to education and critical thinking thing. Most people don’t know what’s going on and ignorance is bliss. I happen to know some of the abuses foisted upon us and I don’t like it.

    “But your argument that people have no choice because they made previous choices that were not in their best, long term interest is circular.”

    My argument is that because we live in this society, because this is what we have to work with, our choices are very limited. Everything is a choice and you almost never have literally “no choice”. Some things are typically considered off the table. For example, if someone puts a gun to your head and tells you to kill that bunny or they will kill you.. for most people, they have no choice but to kill the bunny.. yet, there’s maybe die and attack the guy with the gun, or just say “no” and get shot in the head. For a rabbit, most people would weight their own life on a scale that doesn’t compare, so they have “no [acceptable alternative] choice”.

    Your position seems more on the avoidance tack than the looking at problems tack. Saying people can just check out and leave avoids the topic.

    “So come on, let me have it. Let the anger flow, it makes you feel stronger, doesn’t it?”

    No, I don’t think it does. Though, when frustrated, it relieves stress. “Letting anger flow” is simply an aggressive venting directed at the source of the frustration. And unless someone is intentionally attacking me, I don’t tend to “let the anger flow” all that often. And given the general tone of most of your posts, I’m kind of curious as to why you’re taking a swipe at me (I suspect it’s because of the hostility you’ve seen me direct at others when provoked, and you misinterpreted my intent when I suggested you used a fallacy in your reasoning.. it wasn’t meant as an attack, but I can certainly see where it looked that way, and for that I apologize).

    Anyway, this is pretty much a dead thread.. and, interestingly, it’s the second I’ve seen from the same guy that ended up circling the same issues.. In the other thread I was sparring with brandon about wealth creation, and we ended up in the near same discussion here. And, not all that surprising to me, it turns ugly when you question what people hold as accepted truths. But, since there’s not really much more to say, unless there’s a legitimate point to discuss, I’ll just let this thread rest. (as in, I’m done responding to jeff’s attacks, but I had missed your response before and thought I’d offer some banter on it).

  35. Jeff said: “How come you can “Kind of” afford not to shop at Wal-Mart”, yet you won’t donate a cent to charity?”

    Maybe because some of us feel that supporting our local businesses helps our communities more than donating to a charity where most of the money goes out of the community or is eaten up by administrative costs?

  36. I think I need to approach the whole wealth thing in a separate post, because I suspect how we define what “wealth” is determines whether it’s limited or limitless, or both at the same time.

  37. Its own thread might be helpful.. Though, I pasted the dictionary definitions above, and from an economic standpoint, wealth is tied to physical goods.

    I think the implications of wealth can have limitless outcomes or be applied in limitless ways.

    let’s simply exclude the term wealth. It’s not needed for the discussion, and is mostly an economic term, if not largely ambiguous.

    If you exclude “wealth”, the reality is there is only so much “stuff” to go around. So much food, so much water, so much land, so much meat, so much iron, so much aluminum, so much wood.

    If one guy has 5 million acres of land and 10 million other people are standing on 50,000 acres, clearly there is only 5,050,000 acres.. the guy with the much bigger land has much bigger opportunity and much more room to do “stuff”.

    In today’s society, we’d call him wealthy, I think. But if those 10 million other people want food, at some point they will have to take some of that one guys 5 million acres. If you want those people to have room to do “stuff”, too, you have to redistribute that land, or wealth.

    I guess I don’t fully get what the question is.

  38. Not that I expect this to be helpful, but I’ll always remember Chris Rock’s explanation of the difference between being rich and being wealthy. Shaquille O’Neal is rich. The guy who pays Shaquille O’Neal is wealthy.

  39. Let me put it this way, Savantster – is information a source of wealth? If so, then the creation and understanding of information can create “wealth” just as the creation and understanding of physical objects can. That’s where I sorta agree with Whythawk’s idea that “wealth” can be created out of nothing.

    But even an information-based economy is based on physical objects – computers that store and sort the information, the energy required to run the computers, the means used to disseminate that information to people who use it, and so on – and those objects are finite. Which is where I sorta agree with you that “wealth” cannot be created out of nothing, and that there’s an upper limit to “wealth”.

  40. The idea of information “creating wealth” is the fuzzy bit, I think. You don’t actually create wealth, you create a way to have wealth transferred. That is, if I have a secret and you want to know what it is, you give me some of your stuff so I tell you what I know.

    So, “source” of wealth, from the perspective of the person with the information, sure… kinda. But the wealth I “created” in my bank account was really a transfer from someone that already had wealth but wanted to trade some of that for my information.

    I guess I can see how it can get fuzzy depending on how close to the end location you place wealth.. but at some point, it had to come from some place. While we can come up with lots of new ways to transfer wealth, it’s still tied to that fuzzy concept of “demand”. It’s also tied to “value”, or how much “stuff” we move.

    See, along with wealth is the idea of value. That is another shifting target because value changes for a given thing based on demand, which is also a shifting thing. I guess, if demand goes way up on a limited resource, the value goes up.. and if you own some of that resource, your “wealth” just went up. Something can be unique and still have no demand at all (say a 2nd grader’s turkey hand made of craft paper).

    Really, wealth is a measure (in dollars, normally) of the things of value you have. If you have stuff that has it’s value go up, your wealth goes up with it. In terms of information… well, now I lost my thought again.

    I think the biggest problem is when money was tied to gold, there was no question at all what wealth was. Now that we can create money out of thin air, we have this resource that’s limitless. Most things are tied back to physical things in the world, but because they are all measured by this infinite resource, it crosses the boundaries from physical to theoretical. I think it’s that crossing that is causing all the problems. Without some kind of anchor in physical items, you have this sense that you can magically “create wealth”, but if more dollars are printed to do that, what have you gained? The more dollars in print, the more of them it takes to buy the same physical thing… The overall value of things becomes lost in the ambiguity of the melding of physical and theoretical.

    See, if we stopped just printing money out of the blue, then passing dollars around for stuff (which is how we transfer wealth) would be tied directly to physical stuff to back it up.. but since you can convert trees to paper, then give some arbitrary “transfer amount” to it simply by printing higher numbers on it.. you kind of destroy the base principles of economics.. In a sense, fiat money seems to undermine all of economic theory (as I understand it).

    it’s complicated, but on purpose. Say we toss all those dollars tomorrow.. no more paper money.. The only thing left that matters is what you have physically. That we physically pass dollars around (you get the idea) shows our intent to be involved with the physical. Those that add more dollars to the system simply increase the numbers of paper you need for the same thing. Which is why the Government wanted Congress to regulate money, and they abdicated that to the private bankers at the Federal Reserve a while ago. I’m sure there’s some oversight and rules that apply, but something sure stinks with that setup.

  41. I guess that last paragraph is trying to say that we originally made “dollars”, or notes, to make it much more convenient to use our gold to pay for things. Along the way we decided to have that same paper mean something arbitrary but still be used to shift physical things around between people.

    Money went from being physical to being abstract.. but we live in a physical world. And using that abstract money still has impact on the amount of physical stuff you can get, and that is a limited resource. The more people want/need stuff, the more money they pay, and if people can’t come up with enough dollars to trade, they print more.. I guess I don’t see that as actually “creating wealth”.

  42. So Brian,

    You don’t give to charity either?

    What about charities with no overhead? Would you give to them?

    Savanster said:
    “Oh, and never mind the near 12% unemployment we have now”

    Could you give an accurate source for that figure. It doesn’t jibe with any unemployment figures in this country, and I’m a student of unemployment and productivity figures.
    .

  43. I didn’t say I didn’t give to charities, Jeff. I give away everything I can that’s in shape to be donated to groups like Lupus, ARC, et al. I gave my old car to the Alzheimer’s Association instead of trying to trade it in. But as for cash, no, I don’t give to charities except for the UU church my wife and kids attend (and that I go to on rare occasions).

    But I don’t shop at WalMart because I disagree with most of it’s social and political stances. That’s why I don’t drive a Mitsubishi or buy Panasonic products either whenever I can avoid them. And it doesn’t help that, with only a few exceptions, every product I’ve purchased from WalMart was crap and quickly fell apart on me (in one case literally).

  44. Brian,

    The way you worded it, I thought that you said you didn’t give to charities. Sorry.

    I agree 100% about Wal-Mart, as I don’t wish to support Chinese slave labor. As much as I hate Wal-Mart(due to their poor treatment of their employees, etc.), one can only admire their near-perfect business plan.

    Jeff

  45. Wading in here again. I see four kinds of “wealth” in the terms it is created by commerce.

    Firstly I can make a tool that makes stuff, thus becoming a fountain of stuff that each one continues to provide service.

    Secondly I can manufacture “stuff” that can save you time, make life better, etc. If the “stuff” is relatively non volatile, you can use it today, and then use it again tomorrow, and continue to gain from it for an indefinite period.

    Thirdly I can offer a service. You gain the benefit but only the once. If you want it again you have to buy it again.

    Fourth I can sell Financial service, you get the benefit but you have to continue to pay, sometimes many times the benefit. Renting money or stuff.

    #1 is a fountain of stuff and thus the greatest (theoretical) value of all

    #2 produces wealth in the society, creating (semi)permanent benefit, as the number of stuff grows. (there are issues of obsolesce, breakage, upkeep, etc but I am trying to simplify)

    #3 Transfers wealth, and may maintain the value of wealth, but the next day has not accomplished anything beyond getting to the next day.

    #4 Transfers wealth but ceases to provide benefit of any sort beyond putting off the day of reckoning returning the stuff.

    Engage in the first thing and you are investing, creating the ability to create wealth but not useful wealth in itself. An economy focused here is not benefiting its people yet but will eventually. Building a factory benefits the factory owner more than those actually building the factory.

    Engage in the second and you build a better life as increasing stuff “spreads the wealth around” with this as the center creates so much wealth that even poor folk can get the “trickle down” castoffs of the rich. Automobiles of the 50’s and 60’s are a classic example of this.

    An economy focused on the third is coasting at best, and on a downward slope, more folk do more but receive less benefit over time. There is no “trickle down”.

    An economy focused on the fourth pays an ever increasing amount just to stay neutral, and like a person in the grip of a loan shark, circling the toilet bowl.

    That is largely why loan sharking used to be illegal, and ultimately the path to redemption for the US economy. I can only hope that Obama and the Democrats can find the smartest way to get there before we are completely flushed. That is the real difference between 30 years of Antisocialism, and actual Socialism. Not the Soviet model that claimed democracy as well as Socialism, but the Socialized Child model that folks work well together and nobody tries to run away with all the marbles.

  46. Sure, I can give you an accurate source. The news.

    When the stimulus packages were being handed out this past summer, unemployment was being listed at 5.9%. I read an article (can’t find it now) that said the unemployment extension that was part of the stimulus package added another 4.1% (it was worded something like .. the extension of benefits accounts for an unemployment rate of 4.1% on it’s own, or some such..) The numbers who had fallen off the back of the normal 26 week unemployment rolls (5.9%) but became eligible for the extension under the stimulus was “another” 4.1%. Adding 5.9% and another 4.1% and you have 10%.

    The unemployment numbers that are published are those on the rolls. Once you fall off the back (i.e. no job but not receiving benefits), you’re no longer reported in the unemployment rates.

    So, if in June or July when that was in effect we had “real” unemployment of at least 10%, and we’ve lost hundreds of thousands of jobs a month since then and reported unemployment is still at 6.1%, I have to figure the “we’ll just not report those since we can’t be sure they don’t have jobs” unemployment rate is closer to 12%.

    I get the 12% from starting at 10% as what looked like “real” unemployment (defined as those wanting jobs but not being able to get them).. then reading an article that said we lost 160,000 jobs for the month, but unemployment didn’t go up from 6.1%.. then we’ve had another 160,000 jobs lost since then, and still unemployment is being reported as not really changing. With a net job loss each month and more people being born than dying and more people getting older each month, you have a need for a net gain of jobs to keep unemployment static. If we’re losing, then we’re not static as reported.

    So, I estimate closer to 12% instead of the 6% who are “on the rolls”.

    Though, I’ve poked around on google and with so many articles covering the “stimulus package”, first and the proposed, I can’t find the critical article. it was on Raw Story’s front page for about 6 hours a few months ago.

  47. Jeff, you should watch “Wal-Mart, the high cost of low prices”.

    I’m not the only one that sees how many many many people must suffer so the corporation can prosper. Allowing that kind of thing to survive in America is a slap in the face to all those people who would love to go to work for a small American business, but can’t because the mega-corps are allowed to shit on us while becoming enriched by globalization.

    Oh, and watch “The Corporation” and tell me what you think when the CEO says that “he’s not responsible for the decisions he makes for the company, he’s acting as the company, not a person”.. when confronted with the fallout from the company’s actions.

  48. So if i understand correctly, growing one’s own food is “regressing”. Yet buying the processed packaged food of modern convenience and agriculture is is terrible too. In other words, somebody fix this mess for us…but fix it as we want it fixed.

    Growing one’s own food is hardly regressing…it is freedom at its highest form. And it is only a terrible toil if you’re not good at it. It is hard work, but would you rather work hard for yourself or hard for someone else? And while one might end up “wasting” a weekend in late summer to put up tomatoes for the winter, that means all sorts of time during the winter when one doesn’t have to waste time buying a jar of spaghetti sauce or read the label to find out what kind of food chemicals are in it. And it is a lot, lot cheaper.

    And it hardly means withdrawing from society. It can, i suppose, but it certainly doesn’t have to mean that. When my friend decides that the days of the chickens have come to an end, he invites a fair number of people over for the day. Everybody spends all day slaughtering, gutting, plucking, etc the 300 chickens in an act of community. There’s a big dinner at the end…though generally not chicken. And all who helped out get to take home some chickens.

    Getting involved in a community garden will put food on the table in return for a few hours/week working the garden with friends and neighbors. Hardly seems like withdrawing from society to me.

    And there are many ways to make a dent in a food budget or just get off a grid or two for the fun of it. After the convenience purchase of a breadmaker, i can eat better than bakery bread for like $1/loaf and it requires something like 15 minutes of my precious time to do the prep work.

    A $6 bag of sprouting seeds(1 lb)goes a long way when less than 2 Tbls fill up a big Mason jar with fresh nutrition for the whopping time investment of rinsing the sprouts twice per day.

    At $.07/Kw, a 250W horticultural lamp costs about $10/month to operate running 16 hours per day (more than you really need). That lamp will illuminate a 3’x3′ area with primary lighting and an extra foot all around with a lower level. Give the outside foot to lower light plants like greens and the interior to tomatoes, peppers and even cucumbers. Once the learning curve is taken care of, a set up like that requires probably 15 min/day…not counting picking fresh food to eat. If you’re good, you can bring lettuce from seed to harvest in 16 days and tomatoes in under 50 – and they’ll produce heavily for several months – which means you may find yourself giving food away to friends and neighbors. (And you’ll be able to close the heat register to the room with the lamp in it.)

    Even at grocery store prices you’ll come out ahead. And that’s not a fair comparison. The comparison should be to purchase high-end organic produce from your local food co-op, and even that doesn’t compare because the stuff from home is actually fresh. Then there’s the intangible benefit of having a place to read a book that smells like spring, is bathed in oxygen, and has light that will chase SAD away in no time.

    It’s not about withdrawing, it’s about being conscious and conscientious. It is all about finding pleasure in the small things, and i can tell you that biting into a tomato that tastes like August in the depths of February is not really a small thing.

    but that’s just me. I can afford to buy my food from the grocery store, i just prefer to grow it because i prefer to know what goes into it and on it…because i prefer that some poor Mexican isn’t slaving away for pennies to feed me…because i prefer to not use a shit ton of energy to grow, transport and store food that i can do better for less environmental cost…because i prefer not to be dependent on other people.

    Other people may prefer different things, so be it.

  49. jeff watson, November 5, 2008 at 4:22 pm :
    Savanster said:
    “Oh, and never mind the near 12% unemployment we have now”

    Could you give an accurate source for that figure. It doesn’t jibe with any unemployment figures in this country, and I’m a student of unemployment and productivity figures.
    .

    As a student of unemployment figures you should be aware of the BLS data they call U-1 to U-6U-3 is the official unemployment data and U-6 includes a lot more but still misses folks in jail, “retired”, Military, under 18 teens, and many others not in the work force often counted in other countries, or other times in this one. But in any case U-6 is still at almost double U-3 and certainly a measure of those hurting.

  50. Lex

    I’m glad to hear you enjoy growing your own food. That’s not something I would enjoy at all. I tried growing Bonsai trees, from seed, about 12 varieties (tropical almond, balboa, ginkobaloba, star fruit, dragon’s blood, several others). All I had to do was water them twice a week.. I had (have) grow lights set up for them on custom wood frames in a spare bedroom I had. I got to forgetting about them every now and again, and pretty soon I only had about 4 specimens left.

    Could I manage to keep plants watered if my life depends on it? sure.. but, again, it’s just not my thing. Couple that with a distinct lack of room at this house (unless I dispose of something.. my kid’s room, my bedroom, my office that is shared by both me and my kid, my living room, or try to get it all set up in the basement, which kind of floods a little when it rains hard, and was under 5′ of water this summer when the river broke).

    I also understand the drive for some to get involved with community gardens and the like. That’s not for me either.

    I like the conveniences of modern life. I understand that we have associated costs that go with that. The issue for me is, a lot of the costs we _have_ are costs we don’t have to have if we would demand companies do business differently. Again, the government is supposed to be protecting us from those profiting if that means hurting in the process. The government is supposed to vet various chemicals and compounds to make SURE they are not a threat. But the system is broken, and it seems people that want to fix it are derided by those that benefit from it being broken.

    And when talking about food, you’re talking about a small subset of what exists in modern society that comes from corporations. Your sprouting seeds come from a company, I’m guessing. I know your bread maker does..as do the jars you use for canning. At SOME point, we have precious little choice but to interact with companies simply to have the things we do in modern society. .. like grow lights and timers (unless you use the switch by hand, but that switch was made in a factory, as was the heating vent you get to close in that room.. the vent that has air blown to it from a furnace that was built in a factory).

    I grant you that people doing small things can make them feel better, but you will never get enough people doing enough small things to make a huge impact, nor will that remove the need for companies and factories in modern society. The next thing in line of things to do, from what I see, is to try and fix what amounts to the next point of failure. Companies and corporations. Clearly, those running the companies and corporations don’t want to do anything just like “most people” aren’t wanting to do those things you point out.

    The difference is, we have a right and vehicle to make demands of companies, to force them to do the right thing.

  51. I actually have been growing as much of my food as I am able, but it is neither cost or labor effective as yet. The winged beans have been the most successful, and at the height of the season I get 5-8 bean pods a day for a couple of weeks

    I have Lychees, longans, bananas, peaches, pear, sapote, and plums. The peach had a dozen fruit and died, the banana fruits every few years, and the Longan actually had two grocery bags of fruit one year and then rested. Similarly the plum manages 1 to 8 fruit a year, The lychee, pear and sapote flower occasionally but there is not yet a fruit. There is also a mulberry that has enough fruit to graze for a couple weeks a year. A Natal Plum also kicks out a fruit now and again.

    Cashew, Macadamia, dragonfruit, cinnamon, and Jabodacaba.are all too young yet to disappoint, but I might not live long enough to enjoy them. The allspice is doing well , but is male, and the one that the salesman swore was female has never flowered. I still use the leaves in soups , stews etc like bay leaves, but they are not edible beyond that.

    I have a lot of herbs, though many types I cannot keep alive. Only Basil, Culantro, chives, and parsley are reliable enough to garnish every meal I would care to use them on for most of the year, and Ginger, Galanga, and Turmeric give a reliable annual crop but there is just so much to do with them.

    If you add up what looks like a large number of plants, you can see that while there are treats and garnish in fair amount none of it is enough to make a dent in a food budget, and is not even a net positive cash flow, as I have to buy starter plants, potting soil etc and If I did not attend them for a week most would die.

    A highly knowledgeable subsistence farmer might survive on an acre or two, as many around the world do, with full time backbreaking labor, but despite my large 1/3 acre I am neither young enough, or knowledgeable enough to do that. While there are urban situations where folk have their act together enough to make a dent in their food bills, the idea that one is not at the mercy of their Supermarket chain, energy company, ISP, etc is for the most part totally bogus, and especially so if they are not already financially successful enough to even start to think about such things.

    Meanwhile the local Supermarket chain bought off their competition and doubled the cost of what I am able to buy (4-10 times for what I am not) and the quality has nose dived. And on the energy front for $5 worth of natural gas there is $2.50 in taxes but a $10 fee for sending the bill and a $5 fee for paying it and a $60 fee if you are late. If the NGO taxes are not beyond outrageous I do not know what is.

  52. Btw I don’t spend $6.00 for the quarter or 1/8 lbs of seed to sprout. I bought some once and tossed them in the ground to grow. Some are growing but it will be several months before I can think it a success (I saved most for spring as well). What I do buy from the grocery are lentils and from the local Chinese store Adzuki and Mung beans all for a dollar a pound or less.

    The Chinese grocery also has dried shallots that I use in most cooking, but more important they come in plastic jars that are perfect for sprouting, I drill a batch of holes in the plastic lids smaller than the seed and have a foam cylinder around the hose head that seals against the lid making it easy to run a lot of water through the jar and then letting it drain.

    In the summer twice a day would allow rot to set in so I wash them 3-5 times a day, but they will sprout full out in three days where now they take a week. At the moment that is the only thing making a reliable dent in the food budget by adding low cost bulk that is not all starch. and yes the volume from dried bean to sprout is over 20 fold and perhaps 10 in weight..

  53. Freedom,

    Then you should arbitrarily make unemployment around 50% because of all the babies, kids, and senior citizens. Then you should add the people that work for the government and agencies, as they are paid by our tax dollars. Therefore, probably only 20% of us actually work as the result of profits.

    You can spin whatever you want, but I’ll stick with the official figures that the market watches, and they’re nowhere near 12%. Give it a few years with the new administration, and 12% will seem low.

    The S&P has gone down 10% since Obama’s election. The market has never had such a violent reaction to an election in the history of the country.

    Jeff

  54. Jeff

    The market uses the government figures you’re claiming don’t hold weight. The U3 is what everyone accepts as the “unemployment rate”. It’s based strictly on the people of working age, the “work force”. You trying to distort and distract by including “kids and babies” is pretty ridiculous and sleazy.

    As for the Stock Market in turmoil.. It’s lost 40% over the past year, long before the election. In fact, it crashed because of how Republicans view the Market.. that is, they figured crooks and liars would never do anything nefarious. Turns out they were wrong.

    So, the market (DOW) spiked down to a low of 7773 not all that long ago, and it’s volatility has had it bouncing up 500 to 700 a day on occasion, and falling that much on other days as well. The DOW closed today at 8695, so we’re still 900 points OVER what the recent historic low was BEFORE the election. Your allegation that the market is some how unstable or “falling” because of Obama is not rooted in REALITY. In fact, we’ve shown over and over that your economic predispositions aren’t reality based, but that doesn’t stop you from making laughable assertions.

    And I stand behind my LOGICAL and REASONABLE assertion that REAL unemployment (defined as “people of typical working age that would like a job but can not find a job”) is close to 12% based on reported statistics from the agencies that reports such things. Just because it wasn’t spoon fed to you doesn’t mean it’s not real. And if you need everything spoon fed to you, it would explain a lot about where you get your misguided, incorrect, and counterproductive (from an overall bettering of the world standpoint) opinions from.

  55. Oh, and did we forget to mention that this current mess, this 40% drop in overall market value, this recession, this global calamity happened under a Republican White House and majorities in the Senate and House? The deregulation that allowed the crooks and liars to cook the books without oversight was passed by the right-wing? The “free marketers” who don’t have the sense to understand that corrupt people might commit crimes and/or do bad things if not watched?

    It’s simply amazing to me just how deluded you have to be to blame Obama for this crisis and he’s not even in office yet. I bet you’re already signed up on several of the “Impeach Obama” facebook sites, aren’t you, Jeff. The Shrub can lie us into an illegal TRILLION dollar war and kill over a million people, but you’re already trying to pin the Shrub and the right-wing Congress’ failures on those “evil socialist Dems!”..

    pathetic.

  56. Just because the market falls doesn’t mean that it’s because of the election, Jeff, as you of all people should know.

    Just as an example, the price of oil fell the day after Bush eliminated the executive ban on drilling in the OCS – but if it had been Bush’s comments that made the price of oil fall, how come oil opened flat that day and didn’t fall until after 11 AM EST? Maybe it’s because Fed Chairman Ben Bernanke was testifying before Congress at 11 AM and said that he expected oil demand to fall as a result of high oil prices.

    There are LOTS of things that drive the markets around. The fact that the Bureau of Labor and Statistics saw manufacturing productivity fall for the second straight quarter and released that data today probably had something to do it. So too does an expectation of bad news in tomorrow’s unemployment figures, and the weakest October retail sales performance since Goldman Sachs started tracking performance in 1969 probably didn’t help either.

    I don’t doubt that the election had some impact on stocks. But the overall economy has a far, far greater impact than any election does.

    For comparison, the day after the 2000 election, the Dow dropped 120 points. The day after Bush II was reelected, it rose about 70. It rose about 100 points after Clinton was reelected in 1996 and fell about 160 points after Clinton was elected the first time. There was almost no change at all after Bush I was elected, or after Reagan was elected and reelected. If anything, this suggests that the markets fall on transitions from one president to another, not because of a transition from a Republican to a Democrat.

  57. Savanster; Your quoting the dow is as an example of your market ignorance. Market professionals use the S&P as the benchmark. I don’t need a lecture from you on the how’s and why’s the market moves, because I’m in the middle of those moves all day long. Don’t take second hand info from CNBC, WSJ,BLOOMBERG and try to get pertinent info, because it doesn’t happen. Everything happens across traders desks, and for the past two days, the Obama effect has been the prime mover…..remember, we’re coming off a rally. Savanser, you can cite every statistic in the world, and it will be a waste of time because you will never make money trading. Probably would be a good time for you to find a new hobby like ornithology. Here’s a good deal, you stop pontificating about something that you know less than zero, the economic system and markets, and I won’t talk about ornithology,

    Jeff

    Brian,

    Right now at this very minute, I’m staring at 12 screens of real time data. The data is moving because of two main forces right now. The big rate cut in England and Obama’s election. I talk to traders all day and that’s what everyone is talking about. Things don’t look good for equities right now, and I’d give Obama 90% of the last 10% drop in the S%P. Adding it up, about a trillion dollars erased because of Obama.

    Jeff

  58. Keep blaming everything but the source, that will get you far. You’re not only deluded, you’re in denial.

    “Savanser (sic), you can cite every statistic in the world, and it will be a waste of time because you will never make money trading.”

    I have no interest in “trading”, or the market, or any other fabrication/bastardization created by the ruling elite to bring wealth to themselves. I’m well beyond lying and manipulating to get money, and you’re right.. I’ll never be rich because of that. I pointed that out before, and you pretended like being a greedy selfish abusive prick wasn’t required. You’re wrong, but that’s ok.

    And you’re right. I can cite reality all day long, and it won’t matter to you because you have on thing on your mind. Making money. That’s pretty sad, and I pity you.

    I’d be interested to hear what kind of logical reasoning goes into the assertion that it’s “because of Obama”. You keep saying it, but have yet to offer one logical, sound, reality based reason for it. …. not to worry, I’ll not hold my breath for anything sounding like sanity from you on the topic.

  59. Jeff, I believe that you, and your fellow traders, believe that. And I’ll grant you that some of the movement is probably because of the election. But in 10 years of watching the market’s long-term trends (not daily trends like you, though, I’ll admit), I’ve never seen significant, long-term movement based on the actions of a president. Markets care more about what the Congress does than what the President, or president-elect, says. Employment, sales figures, productivity, quarterly growth rates, inflation, interest rate changes by central banks, Treasury yields, subsidies and legislation, and a host of other factors I can’t even remember right now matter far more over the long run than anything a President says or does with one notable exception – war.

    You may well be right that the S&P’s fall is partly a result of the election. Many big businesses are concerned about an Obama presidency. Financial companies that are getting bailed out are concerned that the bailout money will evaporate. Energy companies are worried that Obama will successfully push for carbon taxes or trading or will force the EPA to regulate CO2 emissions, or that Obama’s EPA will get serious about New Source Review. Mineral extraction companies are worried that Obama will push to boost separation fees and will prevent or roll back rules changes that let them ignore the Endangered Species Act, Clean Water Act, etc. And frankly, they should be concerned about these things.

    But every new president that comes into office makes changes that create winners and losers in the market. New regulations that could drive Xcel Energy or Peabody Energy out of business or off the S&P500 could also create opportunities for smaller companies to move up into the vacated spots.

    Frankly, I’m surprised that you’re blaming Obama’s electoral win when it’s actually more likely that the market is responding to Democratic gains in Congress. They’re linked this time around, but Congress has always had a significant day-to-day impact on markets due to their budgetary and taxation authority, control over subsidies, their ability to approve or reject treaties, and even pork spending to some degree.

    Just saying that you and your fellow traders believe that it’s Obama isn’t enough for me, Jeff. Show me the data, and prove to me that there weren’t other effects like employment and productivity concerns acting at the same time, and then I’ll believe you.

  60. Question for ya, Jeff.

    On Oct. 27 the S&P was at 848… 56 points below where it is today. What caused that?
    On the 10th of Oct. it was at 899.. what caused that drop?
    26 Sept. it was at 1200 or so, and has been falling since, until it started bobbling around the mid 800s and lower 900s. All before the election.

    Was all of that Obama’s fault, too?

    And, if you look at the DOW, it’s been tracking the S&P pretty closely. Saying it’s not a valid estimation of whats going on economically is laughable, and shows your elitism in this matter more than anything. You don’t care to inform, you care to insult and fabricate faux blame.

    I think it’s time to let you have your last word. Gawd knows you’re not saying anything worth listening to; might as well walk away from this tread all together.

  61. Savanster pontificated:
    “Keep blaming everything but the source, that will get you far. You’re not only deluded, you’re in denial.”

    Hey, I’m in denial, but I’ve had the best money making year in 20 years. How are you doing in the market.

    Brian,

    You might want to revisit the effect of presidential elections on the market, especially during the 1800’s. Nothing changes. Remember that although the markets perform better under Democrat presidents, the real number is the performance of the market under Republican Congress.
    However, I’m not going to argue markets with y’all, as you’re non professionals, and what’s the use. I know the causes of declines, embrace them, and I make a lot of money selling into the declines. Frankly, I don’t care if the market goes up or down, just so that it moves and I get a crack at the move.

    Savanster, You really have an opinion about everything. You ought to put your money where your mouth is and step up to the big leagues and try to trade on your vast knowledge of everything under the sun. Who knows, you might escape your crushing debt, stop the chronic job hopping, and contribute something to society. Many traders have anti-social tendencies, and you might be a natural, provided that you’re willing to admit you are capable of making a bad decision.

    Good luck in the future, and keep your government job….your lack of interpersonal skills don’t translate very well to the private sector.

    That’s my last word…..until you feel the urge to one-up me.

  62. Jeff, good thing we’re blaming Obama for th e market, it regained almost 3% today.

    And you really do have a problem with reading comprehension. I’ve said it before, and I’ll say it again. I have NO interest in making my money in the stock market. That’s as bad as making my money in porn. See, both require the exploitation of people for riches to be made.. and I have more scruples than that.

    “Who knows, you might escape your crushing debt, stop the chronic job hopping, and contribute something to society.”

    My debt isn’t crushing, but I understand how volitile debt is in this economy where the leeches are around every corner looking to make a buck, not giving a shit if they destroy thousands of families in the process.. MONEY MONEY MONEY!! that’s all you can think about, and all you desire. I pity you. .. but knowing that debt is bad, and knowing I’ve worked hard for a long time to have what I do, I chose to pay off that debt to form some security from my hard work. If you want to fault me for that, that’s on you.

    Chronic job hoping? 4 professional positions in 10 years? One for 6 years which I left by choice to deal with family matters (I know, how stupid, huh? losing money over caring about your family? I must be a real schmuck!), one I had until I made some greedy prick [not unlike you] boss a program he could sell for $1 mil, so he tossed me aside like he’d done dozens of other people that worked for him? .. I know, my fault.. I should have known he would never keep his word, do the right thing. right? I should have not taken that job and just lived in the woods some place. Then I’d not be a “chronic job hopper”. And the only job I’ve had in my profession that was left untimely was one I was driving 45 minutes each way to, and during the winter in Wisconsin on small highways in an economy under the Republicans that had fuel prices over $4.50 a gallon, and working for a company that might be put out of business in months.. what was I doing looking for a better paying job closer to home that offered more security, especially when I was trying to provide a home for my kid?

    Contribute to society? what do YOU contribute, besides sucking the fruits of other people’s hard work off the top for doing pretty much nothing?

    And I’ve made plenty of bad decisions. The difference is, when I fuck up it’s my time, my money, my problem. Sounds like you’re fucking up with other people’s money to learn your mistakes.

    And my interpersonal skills are fine, as long as I’m not dealing with complete morons. Interestingly, the most ignorant people I’ve ever had to deal with are the right-wing fringe superstitious types.

    you’ve proved just about every stereotype there is about “money first” kinds of people. You don’t mind making baseless attacks once you run out of points and facts have backed you in a corner. You brag about your money to people that find that laughable. You think it’s super to shit on the masses for your own gain. You defend companies and policies that are destructive, mostly because you leech of both up and down sides..

    I can’t one up you. You’re way to far up there in your castle in the sky.

  63. Savanster.

    I thought I was going to get the last word…That is impossible with a guy like you, as you’re obsessed with being a point prover.
    The move up today was short covering in front of the weekend, nothing more.

    I will say this, you aren’t just full of BS, you’re so full of so many different kinds of BS, you’re the one that’s laughable.

    The time you waste on this blog………unbelievable.

    Can you even quantify the loss in productivity, or are you bloviating from work, on the taxpayers dime.

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