10.16.2009

For My Liberal Homies

In the interest of spurring another round of pretend-debate on economic order, I'm willing to mention that I've been listening to Limbaugh lately. Driving home from Philadelphia last week, I heard this clip, which features a pair of very brief interviews, conducted by a WJR reporter in Detroit:



Yes, picking on mentally handicapped people isn't very nice, but I think the reporter's line of questioning is actually fair: where does money come from? How can monetary policy -- printing or refraining from printing money -- "save the financial system," as so many NPR reports have suggested? What is money?

I think I won't be wrong to suggest that a majority of conservatives think of money as a real reflection (in a market economy) of subjective values. To the question, "where does it come from," a conservative answers, "from mutually agreeable exchanges -- from profit." I have $20.00, and you have a pair of old bowling shoes that I want. You'd rather have $20.00, and I'd rather have bowling shoes. You probably would've sold them for $10.00, but I was happy to pay $20.00, because they were worth at least $30.00 to me. Both sides win, and new value is created in the process. You have a day and good health to labor for ten hours? I'll give you $50.00. Want the job? No? Got a better option back in Mexico? Both sides win; new value is created.

It's much less clear to me what progressives think of money. Where do they imagine it comes from? What is the source of money? Is it "labor-hours," as Marx suggested?

Yesterday, in response to a question from a New Orleans resident asking why there was not a hospital in a particular part of the city, President Obama said, "I can't just write a check--" (here people cheered and yelled, "why not?") and Obama continued, "There's a little thing called the Constitution."

Apparently, Obama thinks the only thing keeping him from writing big fat checks for everybody is the Constitution -- he assumes that "reality" would have no objections. This is where I differ most severely with what I perceive to be Obama's economic attitude: money cannot be created out of thin air. The answer to the WJR reporter's question is very clear and easy: any checks given to the citizens of Detroit comes from the IRS's revenue -- i.e., from collected taxes. If you've ever seen the videos of people in the Weimar republic carrying wheelbarrow's full of money to the market to buy a loaf of bread, you'll understand why printing money is bad policy. [the same, in my view, goes for creating jobs with public money; it's a net-zero project, at best. If it were anything other than that, Obama could simply end the 9.8% unemployment problem with a bill.] Then, here's a problem:

Here's the source for that chart. It's a fairly conservative estimate; I've heard that the number is actually closer to 50% -- in any case, we're approaching the point where half of Americans will pay no Federal income tax. Will not contribute to the IRS revenues.

What's the problem with that? It's a problem identified a long, long time ago: "The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money." --Alexis de Toqueville, Democracy in America, 1835. If half of the people are not burdened by taxes, there is literally nothing but thin air and "morality" (yeah right) keeping them from taking as much as they want from the minority (<49%) population.

Conclusion: money is a symbol for really-existing value... until it's not. And when it's not, make sure you know where all of your gold is buried.

11 comments:

Wishydig said...

i know this doesn't address the meat of your post, but the site incometaxfacts.org is (from what i understand) a richard berman joint.

your conclusions might be ok. and i have to look again at your path to them before i address them.

but i don't trust richard berman. he's a shill. and he plays with statistics. and the heritage foundation has obvious ideological motivations. the only thing this means to me (at this point in my observation) is that even if we accept that a certain level of tax freedom is a tipping point to something else, the case has not been made that we're really that close to that place.

Casey said...

I'll try to find a better source. I don't know Richard Berman...

Casey said...

It occurs to me as I search for a better source that I'm unlikely to find a source at, say, huffingtonpost.com -- you'll concede that it doesn't need to come from that far toward the (ahem) "center," right? It's not the kind of statistic liberal sources would be very proud of...

The Urban Institute, which is new to me, describes itself as doing "nonpartisan economic and social research," suggests that 47% of "tax units" (Gretchen and I, filing together, would count as one tax unit) will pay no federal income tax this year. If you open the .pdf file, you can read a nice description. A link:

http://www.urban.org/publications/1001289.html

But I'll keep looking in case this becomes a real sticking point in my argument.

Casey said...

Oh, here:

CNN puts the number at 43%... so let me get away with calling it "approaching 50%":

http://money.cnn.com/2009/04/15/pf/taxes/who_pays_most_least/index.htm

Mark said...

How about this from the Tax Law Prof blog

"In 2009, roughly 47% of households, or 71 million, will not owe any federal income tax, according to estimates by the nonpartisan Tax Policy Center."

link: http://www.taxgirl.com/wp-content/uploads/2009/09/Tax-Policy.pdf

Casey is right. This is not a good situation. If I could buy things and someone else had to pay for them, would I tend to be careful or excessive in my spending? Or would I care if the money was wasted? No, of course we are much better stewards of our own money.

Insignificant Wrangler said...

I read this, Casey, and thought of you.

Casey said...

Very funny, Wrangler. I like that. BTW: could I have gone to school to be a "conceptual artist?" Do they have MFA's in that?

Kevin said...

http://www.ntu.org/main/page.php?PageID=6

Here's a nice table. Yes, it's on NTU's site, but the numbers are IRS. Quintiles/population percentages are misleadingly static, but what can you do...

"A government who robs Peter to pay Paul can always count on Paul's support." And once there are more Pauls than Peters...

But I think you under-make your point, Casey. The worrisome number is not the 50 percent that pay no taxes, but the far larger percentage who gain on net, when taxes they pay are subtracted from benefits promised/rendered. THAT is the 'tipping point' we have long since past, way past 50%. All that matters is that voting produces a net profit, via direct payments collected from his fellow man, for the voter, not whether he pays at all. Not that payments aren't already out in the open (the proposed 250$ credit to seniors just before the health-reform vote springs to mind).

Let me add one further wrinkle--point up a population that does not appear in these charts, but affects them drastically: What I find really twisted is that the population that serves as the tax base increasingly includes the unborn. To cover what some call 'generosity', people are being put into impossible debt who are, strictly speaking, not yet included in 'we the people'. Taxation without representation of the purest sort. One taxes persons who not only do not yet vote, but who do not yet exist, in order to pay people who do exist (and so may vote). Intergenerational redistribution...ok. But what is extraordinary is that this transfer of wealth from the most powerless (the non-existent) to the powerful (the existing person of voting age) is passed off as a MORAL triumph.

The children may or may not be our future. But they're funding it.

Casey said...

I'm with you, Kevin. But as my title suggests, I'm loosely aiming at friends of my who tend to associate with the left's economic strategies. To simply come out and say "A flat tax is the only thing that makes sense, and the only moral thing" would inevitably cause them to tune out.

One more thing: would you agree with me, Kevin, that the patterns you are describing are very close to inevitable developments? Toqueville was able to predict this outcome -- and Marx suggested the transition to centralized authority was inevitable. That's not to say we should be pleased with them... but only to allow the Zen response, which is to say your prayers, love your family, and not worry about it too much?

Kevin said...

I appreciate and share your desire to talk across the usual lines, but my appeal was not to a flat tax (though perhaps it might justify such); rather, it is to a notion of justice that is violated when we consider the kind of rampant indenturing of the young to serve the old ('intergenerational redistribution'), in the name of 'generosity' or 'compassion'. The argument calls into question the right of present politicians and voters of good conscience to offer up, as largess, or collect as their own, the earnings and efforts of the unrepresented--'the least of these'. And as far as political line-crossing, I don't think there is any other than an ETHICAL basis to make such a rapproachment. Do you?

As to your question: no--I think economics is ultimately driven by ethical arguments, making economic development exceedingly 'evitable'. Am I an outlier here? I get the impression that economic eschatologies are presently out of fashion. Perhaps you are the rogue 'inevitabilist' here.

Casey said...

Right, well... this line of "inevitablist" thinking has not occurred to me until recently. But your comment about intergenerational redistribution and the questionable structure of the tax code made me think that, once the government starts tipping scales (in any direction), large-scale bribery becomes the norm. A moral precedent is set when the government begins catering to one group over another (and of course, perspective will dictate who we think is receiving the short end of the stick -- but no one will argue that there hasn't been a short end for a long time).

That's why I suggested a flat-tax. It seemed implicit in what you were saying, though now I think I was sort of just "riffing" on your ideas.