Category: Contrarian Economics

The Richest of the Rich, Proud of a New Gilded Age – New York Times

The Richest of the Rich, Proud of a New Gilded Age – New York Times:

“The new tycoons oppose raising taxes on their fortunes. Unlike Mr. Crandall, neither Mr. Weill nor Mr. Griffin nor most of the dozen others who were interviewed favor tax rates higher than they are today, although a few would go along with a return to the levels of the Clinton administration. The marginal tax on income then was 39.6 percent, and on capital gains, 20 percent. That was still far below the 70 percent and 39 percent in the late 1970s. Those top rates, in the Bush years, are now 35 percent and 15 percent, respectively.

“The income distribution has to stand,” Mr. Griffin said, adding that by trying to alter it with a more progressive income tax, “you end up in problematic circumstances. In the current world, there will be people who will move from one tax area to another. I am proud to be an American. But if the tax became too high, as a matter of principle I would not be working this hard.””

Yes, I know I will NOT drag my ass out of bed for less than 100 Large a day!
[Mr. Griffin made a billion dollars last year.]

This is an astounding article, however and well worth the read. One more bit:

In contrast to many of his peers in corporate America, Mr. Sinegal, 70, the Costco chief executive, argues that the nation’s business leaders would exercise their “unique skills” just as vigorously for “$10 million instead of $200 million, if that were the standard.”

As a co-founder of Costco, which now has 132,000 employees, Mr. Sinegal still holds $150 million in company stock. He is certainly wealthy. But he distinguishes between a founder’s wealth and the current practice of paying a chief executive’s salary in stock options that balloon into enormous amounts. His own salary as chief executive was $349,000 last year, incredibly modest by current standards.

“I think that most of the people running companies today are motivated and pay is a small portion of the motivation,” Mr. Sinegal said. So why so much pressure for ever higher pay?

“Because everyone else is getting it,” he said. “It is as simple as that. If somehow a proclamation were made that C.E.O.’s could only make a maximum of $300,000 a year, you would not have any shortage of very qualified men and women seeking the jobs.”

Cheers,

Household Income, US Census Data

Household Income-2005–Part 1:
“Table HINC-05. Percent Distribution of Households, by Selected Characteristics Within Income Quintile and Top 5 Percent in 2006

[Source: U.S. Census Bureau, Current Population Survey, 2007 Annual Social and Economic Supplement. Numbers in thousands. ]

I always get confused when I hear people talking about middle income families/households, and it alwasy seems to me that if you are in the DC or other elite groups, $100K or even $200K puts you squarely in the middle class.

As you can see by the table (if you can’t read it, follow the link to the Census Bureau), the true middle, is between $37K and $60K for the true middle quintile and between $20K and $97K for the 3/5 in the middle.

Now, just to follow up on something I heard McCain (and the usual propogandists agains National Health Insurance systems of any kind) say is that you’ll be taxed to death. Now, if you are in the middle 3/5, and you are paying, for argument’s sake, $12K for healthcare (either out of your wages or paying it yourself), how, again, do you lose by adopting a single payer or Bismarck style insurance plan?

And I guess I learned something from Frontline and Uwe Reinhardt: I have to add “Bismarckian Insurance Plan,” to my categories/tags.

Cheers,

What McCain Could Do About Taxes – Ben Stein NYTimes.com


Even Ben Stein concedes the point! Finally.

[Sorry that this is off-blog-topic, but I have to put these somewhere.]

“All politicians campaign on the promise to cut federal spending by identifying hitherto unfound waste, fraud and corruption. None of them ever do so in a meaningful way. Total federal spending has not once fallen noticeably since 1954, no matter the party or the promises of the incoming chief executive.

That is the first thing you need to know. The next thing is that the Republican Party (my party and yours) has for the last 30 years or so been operating under a demonstrably false and misleading premise: that tax cuts pay for themselves by generating so much economic growth that they replace the sums lost by tax cutting.

This would be a lovely thing if true, and the best of all ideas, the “something for nothing” idea. In fact, tax cuts lower federal revenue and generate federal deficits. It is also true that they do stimulate the economy and after a long period of years, federal tax receipts go back to where they were before the tax cuts.

For example, when President Bush enacted his tax cuts in the early 2000s, income tax receipts fell dramatically. It took almost six years for them to reach the level they had been in the last year of the Clinton administration, while G.D.P. in that period rose by roughly 30 percent. In the eight years Ronald Reagan was president (and I love and worship him), tax receipts did not fall anywhere near as much, but they rose more slowly, on a percentage basis, than they did in any other comparable eight-year period after World War II.

In other words, tax cuts do not pay for themselves, at least not on any basis I can see. Certainly, they are not worthless. They make taxpayers feel good and they generate growth. But basically, they shift the tax burden from us to our progeny and add immense amounts of interest expense to the federal budget. At this point, taxpayers shell out about $1 billion a day just for that item. “

And there’s even more! Ben Stein finds his inner Keynes. Or Krugman?

Jeff Weintraub: Teddy Roosevelt & Adam Smith on inheritance taxes (Susan Dunn & Sam Fleischacker)

Again, I’m off topic here, but I just love to collect interesting pieces on economics and this one is very interesting: thoughts from TR, Adam Smith and the founders on the inheritance of wealth.

Jeff Weintraub: Teddy Roosevelt & Adam Smith on inheritance taxes (Susan Dunn & Sam Fleischacker)

Tax Cuts Don’t Boost Revenues – TIME

Sorry, not directly a single-payer post, but I have to keep track of this stuff somewhere!

Tax Cuts Don’t Boost Revenues – TIME: “If there’s one thing that Republican politicians agree on, it’s that slashing taxes brings the government more money. ‘You cut taxes, and the tax revenues increase,’ President Bush said in a speech last year. Keeping taxes low, Vice President Dick Cheney explained in a recent interview, ‘does produce more revenue for the Federal Government.’ Presidential candidate John McCain declared in March that ‘tax cuts … as we all know, increase revenues.’ His rival Rudy Giuliani couldn’t agree more. ‘I know that reducing taxes produces more revenues,’ he intones in a new TV ad.

If there’s one thing that economists agree on, it’s that these claims are false. We’re not talking just ivory-tower lefties. Virtually every economics Ph.D. who has worked in a prominent role in the Bush Administration acknowledges that the tax cuts enacted during the past six years have not paid for themselves–and were never intended to. Harvard professor Greg Mankiw, chairman of Bush’s Council of Economic Advisers from 2003 to 2005, even devotes a section of his best-selling economics textbook to debunking the claim that tax cuts increase revenues.

The yawning chasm between Republican rhetoric on taxes and even informed conservative opinion is maddening to those of wonkish bent. Pointing it out has become an opinion-column staple. But none of these screeds seem to have altered the political debate. So rather than write yet another, I decided to find out what Arthur Laffer thought.”

He found out that Laffer still believes reagan’s tax cuts paid for themselves in spite of subsequent evidence and recantments.

When Self-Interest Isn’t Everything – New York Times

Not exactlydirectly related to the subject of single payer, but sort of…

When Self-Interest Isn’t Everything – New York Times:

“Researchers at the intersection of economics, psychology, sociology and other disciplines have had interesting things to say about the anomaly inherent in collective action. Albert O. Hirschman, an economist at the Institute for Advanced Study at Princeton, was one of the first to grapple seriously with it. In his 1982 book “Shifting Involvements,” he acknowledges that self-interest indeed appears to be the dominant human motive in some eras. But over time, he argues, many people begin to experience disappointment as they continue to accumulate material goods. When consumption standards escalate, people must work harder just to hold their place. Stress levels rise. People become less willing to devote resources to the public sphere, which begins to deteriorate. Against this backdrop, disenchanted consumers become increasingly receptive to appeals from the organizers of social movements.

Eventually, Mr. Hirschman argues, a tipping point is reached. In growing numbers, people peel away from their private rat race to devote energy to collective goals. The free-rider problem ceases to inhibit them, not only because they now assign less value to private consumption, but also because they find satisfaction in the very act of contributing to the common good. Activities viewed as costs by self-interest models are thus seen as benefits instead.”

The article ends with a description of Milton Friedman’s dismissal of JFK’s “Ask not” sentiments. Not being an economist, I’ve not read Friedman, and, apparently haven’t missed much…

I do not think it means what you think it means…

Was Adam Smith really a promoter of greed?




An excellent book chapter giving a more complete picture of Adam Smith’s economic and moral philosophy that is not as conservatives would have you believe. Greed is not good. Laissez-Faire is not absolute.

“In reality, as Adam Smith argued, one of the main functions of government, beyond that of securing the order that allows markets to operate effectively, is that of intervening to ensure that the unwarranted excesses of commercial society do not entirely destroy the social order or the moral foundations of behaviour. As we have seen in his arguments regarding the role of publicly funded education in redressing the worst of the degrading and demoralising effects of the division of labour and reducing the possibility of revolutionary protests against an unjust social order, Smith argued that in effect ‘…the visible hand of the state would counteract the potentially stultifying effects of the invisible hand of the market’ “