Free Markets, Free People


Krugman has it all figured out: Tax the Rich

Yes, Paul Krugman has a novel idea that no one has previously thought of … we can get out of this mess we’ve spent ourselves into by taxing the rich.

And by the way, income inequality now makes that both feasible and acceptable:

About those high incomes: In my last column I suggested that the very rich, who have had huge income gains over the last 30 years, should pay more in taxes. I got many responses from readers, with a common theme being that this was silly, that even confiscatory taxes on the wealthy couldn’t possibly raise enough money to matter.

Folks, you’re living in the past. Once upon a time America was a middle-class nation, in which the super-elite’s income was no big deal. But that was another country.

The I.R.S. reports that in 2007, that is, before the economic crisis, the top 0.1 percent of taxpayers — roughly speaking, people with annual incomes over $2 million — had a combined income of more than a trillion dollars. That’s a lot of money, and it wouldn’t be hard to devise taxes that would raise a significant amount of revenue from those super-high-income individuals.

Because you know, “super-high-income individuals” don’t deserve to keep the money they earned, because, well, we’ve gotten ourselves in this awful mess and we need someone to bail us out.

And they have a lot of money, by gosh.  A lot of money.  So “it wouldn’t be hard to devise taxes” that would take most of it on the marginal side.  Because again, we should have first claim when we get ourselves in trouble.  Besides, they have more than enough money and they should pay their “fair share”.

A couple of reminders.  Despite what Krugman says, taxing the top 0.1% isn’t going to make a significant difference.  And even if it did, it would only make that sort of difference once.  The next year, that money would be much less available.  Which would probably mean what?

Well “rich” would have to be redefined, wouldn’t it?   Maybe then it would be the top 1%, because we all know they have more money than they need and they should pay their fair share, right?

As a reminder, the Adjusted Gross Income necessary to be considered a one-percenter is a ‘rich’ $343,927.  And this particular percentage of tax payers are indeed shirking their fair share.  After all, they only pay 36.73% of all income tax collected now.   Surely we can kick that up to, oh I don’t know, at least 50%.  And, of course “we” can, certainly.   For a short time, that will indeed bring in more revenue.  But, again, once the marginal rate goes up those being stuck with the tax bill will go to work finding ways to minimize that hit.   And, they will.

Which means those top 5% suddenly become vulnerable, etc.

A short version of the Krugman solution can be found working so well in Europe right now.  And E21 does a good job of reminding us of Krugman’s unadulterated enthusiasm for the social welfare states to be found there.  E21 also does a great job of eviscerating Krugman’s arguments concerning Europe’s problems:

Paul Krugman insists that the European debt crisis has nothing to do with excessive government spending.  The problem, to him, is a failed monetary experiment that deprives nations like Greece and Italy of the ability to print money to inflate away excessive debts.  The need to create an alternative understanding for the origins of the debt crisis is only natural given the extent to which the current crisis has tarnished the statist ideology that Krugman generally follows.  But his basic claims are nonsensical, as is Krugman’s citation of Sweden and Germany as economic role models.  While these economies have performed relatively well through the crisis, it was because they abandoned Krugman’s preferred economics and moved in a more market-oriented direction long-ago.

He was wrong about Europe and he’s wrong about taxes.  He’s become an economic joke but just doesn’t know it yet.  He’s a one-trick pony who, much like the global warming alarmists, ignores the fact that what he continues to claim is viable and necessary is constantly and consistently being trashed by reality.

The only good news is he remains a source of entertainment.   It’s sort of like a game.  You wonder how long he can go before reality actually grabs him by the scruff of the neck and makes him recognize the error of his ways (my bet?  Never happens).   And, as a bit of side fun, you wonder how long the NY Times will continue to let Krugman push his reality challenged agenda forward before they finally (and, of course “reluctantly”) can him (see first bet – they haven’t a clue).

~McQ

Twitter: @McQandO

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175 Responses to Krugman has it all figured out: Tax the Rich

  • I suggest a 98% tax on Nobel Prizes.

  • “people with annual incomes over $2 million — had a combined income of more than a trillion dollars”

    One trillion dollars wouldn’t cover this years deficit. So really, when Krugman talks about the rich paying their fair share keep in mind that the fair share could be 100% and it still wouldn’t be enough.

    • @tkc Letting the Obama extension of the Bush tax cuts end will yield at most $80 billion a year, but taxing the hell out of the rich will eventually send all professional sports offshore.

      I can see an investment opportunity here. Virtual stadiums where the athletes are all offshore.

  • Hmmm… “Tax and spend”…

    Brilliant!!! Elegant in its simplicity!!! Why hasn’t this been tried before now…???

    Can’t type more now…bitter laughter…overcoming digital coordination…

  • The stunning part of the conference was learning – as part of casual conversation during breaks, meals, and other socializing time – how many rich people are planning for the eventual collapse of European society.

    Not stagnation. Not gradual decline. Collapse.

    It sounds like there is more than a euro-disaster afoot.

    Then on Wednesday, the Federal Reserve rocked financial markets by forcing America’s 31 largest U.S. banks to “stress test” balance sheets to determine their capability to withstand an 8% drop in the economy; which would cause home prices to plunge by 21%, and unemployment rate to jump to 13%.

  • “Folks, you’re living in the past. Once upon a time America was a middle-class nation, in which the super-elite’s income was no big deal. ”
    Yeah. Folks like J.P.Morgan, Andrew Carnegie, John D. Rockefeller never existed and those efforts to breakup Standard Oil were meaningless and vindictive.

  • Krugman’s right and it will be a political winner in 2012. The fact is that in Europe the states who have been doing the best — Germany and the Scandinavian states — all have higher taxes on the wealthy. They are doing better than we are, in part because they don’t fall to the delusion that increased taxes necessarily hurts the economy. For example, the pre-tax and transfer GINI index for the US is .46, while for Germany it’s .51 (meaning we are more equal than Germany pre-tax). It’s similar for the Scandinavian countries. Post-tax and transfer ours lowers to .38, but Germany’s is .30 and the Scandinavians are at about .23. What that means is we have the most unequal post-tax and transfer incomes in the OECD, alongside Poland and Portugal. The countries most equal are also doing the best, often out performing the US! Moreover, our wealthiest are the wealthiest in the world. But our middle class and poor are nowhere close to the best of their cohorts — our poor are alongside Greece and the Czech Republic. Add to that the fact that equality was best in 1976 and has gotten worse since then (as debt has increased dramatically) to the point that we’re like the 1800s, well it’s clear there’s a problem. With OWS, this is getting popularized.

    There should be rich. Innovation and hard work should be reworded. Lazy folk should be poorer. We should have a market economy. The current system is not a true market economy because the wealthy have the capacity to subvert it to benefit themselves — the scandal of CDOs, synthetic CDOs, and the collapse of 2008 is proof. It’s not a call for socialism or income equality. It’s just noting that the wealthier don’t necessarily deserve all of what they have, and in a time of national crisis and a need to pay back debt, should we really make the middle class and the poor face all of the burden while the rich do nothing (even though they arguably helped create the mess)? Shouldn’t they have to contribute to the solution too?

    I have a feeling that message will resonate well in campaign 2012 – and it should. Also note that the start of rising debt is precisely at the point where taxes were cut in 1981 (debt rose from 30% of GDP to 60% of GDP by 1990). Private debt started growing then too, as the middle class slowly collapsed. During the bubble economy easy credit and cheap goods from China covered this up and people put up with it. That’s changing.

    • @scotterb Yep. Constant as the Northern Star. Constantly full of shit. Do you have to wear ear-plugs in public…you know, to keep from having it spill out…???

      • @Ragspierre I give actual statistics to back up my argument. You have rhetorical slight of hand. More: Productivity 1949 – 79 Up 117%, productivity 1979-2009 up 80%
        Average hourly compensation 1949-79 Up 100%, average hourly compensation 1979-2009 Up 8%
        Average hour wage 1949 – 79 Up 72%, average hourly wage 1979-2009 up 7%

        (note compensation takes into account benefits)

        INCOME GAINS, 1949-79

        Bottom Fifth – 122%
        Second Fifth – 101%
        Third Fifth – 113%
        Fourth Fifth – 115%
        Top Fifth – 99%

        INCOME GAINS 1979 – 2009

        Bottom Fifth – -4%
        Second Fifth – + 7%
        Third Fifth – +15%
        Fourth Fifth – + 25%
        Top Fifth – + 55%

        Debt as a percentage of household wealth leveled off under 70% before taking off in the 1980s and is now at 120%. To earn a decent household income 47% of households had two incomes in 1975, while 71% do now. The share of the wealth owned by the TOP 1% reached a high of 23.9% in 1928. Even during the days of the robber barons in the 1890s and on it was under 20%. Then it started to decline, and in 1976 reached a low of only 8.9%. Since then it has climbed steadily higher, at 23.5%. The average income of the top one percent is $713,000.

        • @scotterb Note that your post-war income gains came as a result of Congress FINALLY killing off New Deal wage and price controls, idiot.

          And I don’t use slight of hand. You do. Such as calling for socializing income distribution while saying you are not. Such a liar…!!! But a fine demonstration!

          The fact you even use an old canard like “Robber Barons” tells people you are an ignorant, but stolidly doctrinaire Collectivist boob.

        • @Ragspierre Yet you can’t deny the data, or the fact the European states doing better than us have less control of the economy by the top elite. Nor can you deny the impact deregulation had on allowing shenanigans like CDOs, synthetic CDOs and the use of information by those at the top to sucker investors into buying junk that they were able to get rated AAA. No, you don’t have facts on your side — you just fall for ideology. Ideology is based on simplifying reality to fit easy to understand models. That’s why ideologies are always incomplete and include errors. Those who fall for ideology-motivated thinking interpret reality through their ideology and close themselves off to reality. So when confronted with stats and facts they do things like call names. That can work for awhile, but then people wake up — and they’re waking up now.

        • @scotterb Actually, I deny every “point” you assert. EVERY. ONE.

          I DO have facts on my side. Indeed, ALLLLL the facts are on my side.

          Take, arguendo, your “popular” nonsense. Two word refutation; Bwarny Frank.

        • @scotterb @Ragspierre “European states doing better than us”

          Like which country? Show me the European state with more GDP per capita. And consider that that may take a plunge pretty soon.

        • @scotterb @Ragspierre Yeah, Europe is doin just swell, just swell. Great guns, awesome, incredible, we should be more like them.

          Portugal, Ireland, Greece, Spain, and now Italy. Yes, the British government issuing internal warnings that the Euro may collapse, and making plans to deal with Expats caught in the turmoil on the continent. Yes, great guns, it’s awesome, it’s wonderful, we should be more like them.

          You sir, are beyond foolish.

        • @scotterb @Ragspierre – yep we should be more like Eurpoe – http://www.ft.com/intl/cms/s/0/d29da7fc-19ee-11e1-b9d7-00144feabdc0.html#axzz1f6JRcm7H

        • @looker @Ragspierre Silly guy, I’m saying look at Germany, Sweden, Denmark, and the successful economies of northern Europe. Ireland and Iceland deregulated their financial sector (following the US) and that led to disaster. Greece, Spain and Portugal have severely dysfunctional economies which no one should emulate. The problem with your argument is it only works if someone is ignorant — if someone thinks the southern European problem states represent all of Europe. If look to Scandinavia, Germany and even France you’re seeing states that often are out performing us and are being called on to save southern Europe. Anyway, given our debt levels (wasn’t the right wing comparing us to Greece recently), high foreign debt (public and private foreign debt = 100% of GDP) and lingering current account deficits, we could only wish to be in the position of most Scandinavian states and Germany…even France. In fact, many East European states have low debt and are performing well.

          No, just keep telling yourself that “Europe” is just a handful of problematic southern European states. Close your eyes to reality. That’s the ONLY way to protect your ideological bias.

        • @scotterb France is swirling down the debt drain and Germany is the biggest obstacle to monetizing the PIIGS debt. This is something that the idiot Krugman and his Keynesian fantasy life opposes.
          So, in reality, being like Europe, or just parts of it, is still being like a train wreck. Only someone with their eyes closed to reality would think otherwise. The ideological bias is yours.

        • @scotterb @looker @Ragspierre Erb you fool, Sweden and Denmark deregulated the banks as well and are very much like every other Western country. They were saved because of being smaller and LUCK with their exposures. Please stop making shit up about these banks, as those of us who have mortgages with these banks were ourselves not very complacent, and still aren’t. So you can stop trying to switch from Scandinavia to Iceland and Ireland now as well. You clearly know nothing about how European countries actually function.

        • @DocD @looker @Ragspierre Sigh. You are running around in circles trying to avoid admitting that states can have high personal tax rates and a solid economy. You can accuse me of being ignorant all you want — the fact you feel a need to do so to avoid admitting a glaring fact says more about you than it says about me. Also, I think you need to look into a comparison of banking regulations in Sweden and Denmark with what was happening in Ireland and Iceland. I think you should be wary of casting stones.

        • @scotterb @looker @Ragspierre Ha ha ha ha oh Erb is that some sort of threat? Oh my oh my you are going to have to get better at this bait-and-switch game. One Swedish bank almost collapsed due to exposure to the Baltics. The entire system was within days of requiring a bailout at one point. The banks here are as deregulated here as elsewhere, they just don’t form the backbone of the economy as was puffed up in Iceland and Ireland. But that is because Sweden learnt its lesson during its own crisis in the 90s which almost destroyed the economy and has since been careful to keep spending in check while dropping taxation. But fuck, what would I know about the place other than our moose are bigger than yours.

        • @scotterb @Ragspierre Handful of problematic Southern European states.

          Yes yes, counties like Italy, hardly worthy discussing, there are, uh, (despite what that moron Sawyer on NBC thinks) officially 195 countries, in the world. Italy, one of those to be ignored problematic Southern European states, is rated as the 7th largest economy in the world. So, the cute little hand wave that they don’t mean anything is, ill considered, knowing their collapse will not go well in this cool ‘Europe” that we’re talking about.

          You’re an economic whizbang, you say so yourself, you should recognize you can’t crater the problematic Southern European states you’ve waved off without cratering Europe. Guess where Germany sits. Course it may prove out that the Germans should have invested in markets instead of Messerschmidts back in the 1930′s, but I look at it this way, if the Germans have invested in Italy, Spain, Greece, Portugal, Ireland to any measure, the day of judgement arrives on their investments, and their own accounts, when the problematic Southern European States fall over.

          But you pretend that Germany’s economy will remain strong when half of the countries to their south are falling over and trade/exchange, and investment value goes into the crapper and the European currency model collapses.

        • @looker @Ragspierre By the way, I love Italy, I get there quite often. Yet you’re constructing a straw man, claiming I made an argument I never made. Yes, Germany and other European states will be impacted by ones in crisis. But Germany’s own economy has been doing very well given the recession. They’ve even passed a balanced budget amendment. They’ve also been willing to increase taxes as well as cut spending. I’m a fan of Angela Merkel, I think she’s been doing a very difficult job very well. The point is that countries like Germany and the Scandinavian countries can do very well with high personal tax rates. If southern Europe were to bring them down, it won’t be because of German tax rates but inept governments elsewhere. Germany’s social welfare system won’t bring it down, they can have a good social welfare system and a successful economy. The threat is external to their domestic economic policies, not internal.

          (By the way a great cartoon by someone named Horsey sums it up. A chubby maid labeled ‘EU’ is coming into a room of partially nude beauties. The women are waking up from a party saying ‘Silvio?’ The maid belts out, “Berlusconi’s gone, ladies, get dressed and grab a mop.”)

        • @scotterb @Ragspierre Then you consider 45% to be high. Any evidence the German’s think one should be taxed for one’s undeserved wealth?

        • @scotterb @Ragspierre And how you can externalize the European Union from the German economy and pretend the German’s are operating in an economic vacuum with regard to Europe and the EU is beyond me, but have at it.

    • @scotterb It’s just noting that the wealthier don’t necessarily deserve all of what they have

      >>>> Who the f*ck are you to decide who does and does not deserve what? There’s plenty of poor people who don’t necessarily deserve what that have either, what’s your point?

      • @The Shark @scotterb Well, if those are the new rules, I think Erb doesn’t deserve his current job. He should be fired and go back to work at the pizza joint.

      • @The Shark @scotterb The idea of “not deserving what you have” suggests very strongly an underlying values system, an ideology even. I thought Erb was beyond such systems in this new century. Also note he says THEY… as in not ME. Just how loudly is he going to squeal when someone suggests he pay an extra 20% on his income tax, because he doesn’t “deserve” that money.

        Actually, and I am quite serious, I’d like Erb to spell out exactly how he decides that his income tax is at the correct “deserving” level but that of, say, a pro basketballer is not. Come on Erb, show us the equations.

        • @DocD I don’t decide. I just note that there is no inherent proof that anyone deserves all that the market will give them, especially not if they can manipulate the market and have inside information. Society decides through political processes. My own view is that I am very acceptant of wealth differentials based on market outcomes and that taxation should not be used to equalize outcomes but instead make sure that collective goods are provided and work to give people equal opportunity to succeed (and those who are lazy and don’t try deserve, in my opinion, to be poor). I think the wealthy benefit more from a stable system that allows their businesses to flourish so they can play a bit more of the cost of keeping those collective goods functioning. I think the poor and middle class need education, police protection, health care, and a basic standard of living (especially for children) in order to have an opportunity to succeed. I think too often the left has erred with social welfare programs that don’t truly liberate the poor but make them dependent on transfers. That is psychologically damaging and harmful to the poor — so my criticism is not just of the right, but also of many policies embraced by the left.

        • @scotterb @DocD “I think the poor and middle class need education, police protection, health care, and a basic standard of living (especially for children) in order to have an opportunity to succeed.”

          Opportunity to succeed. eh? What does that mean? Does that mean they should be able to advance until there is no inherent proof that what the market has given them is what they deserved?

        • @scotterb I thought so, no actual way to determine “deserve” other than your own ideology, which basically comes down to someone else’s idea of “from each according to his ability, to each according to his need”. How very firmly ideologically 20th C again Erb!

        • @DocD There’s no objective measure, though people have put together theories. A constitutionally limited democratic Republic is so far the best way to make that determination. That’s not a controversial proposition. Most of us don’t believe “from each…blah blah,” so that’s another straw man.

        • @scotterb @DocD “I just note that there is no inherent proof that anyone deserves all that the market will give them, especially not if they can manipulate the market and have inside information (yes, there are NOT millions of people who can do that, so let’s pretend the very small percentage who can are the ONLY ones we are talking about, eh?)
          versus –
          “Most of us don’t believe “from each…blah blah,” so that’s another straw man.”

          And yet you’ve decided that by your objective measure some people have more than they deserve from the market. Who determines who has, and who has not. Shall we put it up for a vote then?

          Was the cast of Friends worth $1,000,000 a episode in the last two seasons? Ridiculous, the market was clearly wrong to pay them that much, I vote they have that cut to the $75,000 per episode they made in season three!

          Is Diane Sawyer really worth $12 million? I think not, DOWN with her pay!

          Is a professor at the U of M Farmington really worth $75k a year? Hah, you make me laugh, pay cuts sir pay cuts!

          Get the idea yet? Of is the principle truly lost on you.

        • @looker @DocD Not at all, I believe in market economics. I also believe that they must be regulated and that a progressive tax system makes sense. (A mildly progressive fair tax would be best, IMO). The wealthy have benefited most and live the best lifestyles because of the stability of the US system and its government. Asking them to pay a slightly progressive tax with fewer loopholes is hardly Marxist! Heck, I’m not even arguing to go back to the rates under Reagan!

        • @scotterb @DocD They already pay a slightly progressive tax rate, you want to go back to the well.

        • @scotterb @DocD – regulated – ah, so we have to ‘regulate’ the pay of certain people then. I see, that’s different, of course, what was I thinking. Shall we allow them to make the money before we take it, or just regulate them down to a more reasonable salary?

        • @DocD I think you need to go back and read my posts. I said there was no objective method to determine what’s proper, anyone claiming to have that is wrong. I’ve certainly claimed no such thing. Go back and read carefully — seriously. I have also said that this is a political decision, done within the framework of a constitutional democratic republic. That’s the only way that society decides what it considers the correct level of taxation. My own view is that in a time of national crisis over debt and budgets, when cuts are being made that hurt the middle class and poor, that the wealthy can easily afford to have some loop holes closed and pay a bit more — not even up to Reagan era levels. That’s an opinion. I’ll vote based on my opinion as will others. Then Congress decides the right level. No formula or equations, those things don’t exist for a question like this (or if one makes them up, there is no reason for someone else to accept them).

        • @looker @DocD You don’t know what equal opportunity means? I think we should strive for a situation where success is primarily determined by hard work, intelligence and innovation, not by status of birth. Class mobility in the US is now low. Your position in society is the best determinant of where you’ll end up. If you’re born in a wealthy suburb, you’re more likely to be successful. If you’re born in a poor ghetto or in rural poverty, chances are you won’t rise out of it. Rather than try to equalize outcomes, I’d like to see us work to make sure that tools and education (as well as community support) made status of birth less important to ultimate success. I think we do that, but it would require a new approach to social welfare programs than just handing out money, and would emphasize community organizers and the building of community solidarity. I could see incentives to bring the private sector into this so it’s not all government.

        • @scotterb @DocD No, you still don’t get it, you still approve of other people getting to vote how much money they take from you because they envy what you have, and for that reason only, and that’s what you’re talking about here and masking it as ‘justice’ or ‘equality’ or ‘fairness’, or ‘compromise’. And there’s no need to TAKE more money, when the answer is to SPEND LESS.

          And CT Phil is right, deep down inside you think and when unaware of what you are writing say, wealth is zero sum. So most of your thoughts and arguments become questionable as a result. You back pedal when it’s pointed out, and take shelter in half measure comfort words.

          Principles don’t need weasel words. Taxes are a necessary evil to run a country, they are NOT a method of establishing a level playing field by taking from those who have more to redistribute to those who have less. Invariably the number of those who do not have will always eventually exceed those who do, we may take our sane, rational Mexican neighbors as a demonstration. They have little in their own land, so they come to ours, by hook or by crook, they are here, and they want a piece of the pie that our taxes pay for.

          My taxes should go to roads, bridges, a defense force, not feeding you, or your children, or paying for a Gender Studies major’s college loan. The last three items were largely voluntary, and involved choices people made at a personal level. Now the community is expected to pay for those choices. You don’t just want us to pay for a level field, you want us to level the field, build them a house, mow their lawn and deliver their groceries because of the personal choices they made. More to the point you want to punish US for the wiser choices we made with our labor or wealth to subsidize others who weren’t just making poor choices, but consciously made them, and continue to make them.

          The spending needs to stop, the class war fare needs to stop, the handouts need to stop. Taxes don’t need to be raised to accomplish those goals.

        • @scotterb @DocD “I could see incentives to bring the private sector into this so it’s not all government.”

          Ah, government disguising itself as non-government by offering government incentives via loans, regulation and tax policy to business to do what may otherwise be un-profitable (but will make you, Scott Erb, all warm and fuzzy and feel good inside as you end your day thinking of your good deeds done with other people’s money). Welcome to GM, welcome to Solyndra, welcome to the government picking winners and losers. You say words, you don’t follow where they will lead.

          You’re a doctrinaire socialist without bothering to change your doctrine by observing the mechanisms of failed socialism and progressiveism for over a century. You’re what you use to teach, a text book, with no practical field experience, and an unwillingness to use the lab of history to recognize the experiment is consistently a failure.

        • @looker @DocD Looker, you are absolutely wrong that wealth is zero-sum. The fact that the economy grows means that everyone can gain, that’s the advantage of free trade and specialization. To say that wealth is zero-sum shows a lack of understanding of the basics of economics. You don’t really believe that, do you?

          As far as taxes and spending are concerned, you have your opinions, I have mine. The opinions you claim I have are not mine, they’re from your fantasies. We each vote based on our opinions. That’s politics. You’ll never be able to simply force your point of view on everyone else, neither will I nor anyone. And that’s good!

        • @looker @DocD You’re fantasizing again. Do you even know what a ‘doctrinaire socialist’ is? You’re lost in a world of fantasy, imagining me as an image of someone you oppose without actually reading what I write, responding and discussing. That’s a good way to protect your ideological bias, but a bad way to learn and grow in terms of understanding both the world and how others think. Instead of listening you quickly categorize and dismiss. Protect your world view at all costs!

        • @scotterb @DocD No, Scott, you think it’s zero sum, it shows in your posts. I do not.

          “And CT Phil is right, deep down inside you think and when unaware of what you are writing say, wealth is zero sum.”

          My statement, YOU think it’s zero sum, you don’t say it and deny it when confronted, but your thought’s as expressed in writing show you do.

        • @scotterb @DocD Let me ask you, is the state a servant to your children, or are they servants to the state. It’s pointless to discuss economics with you because you believe our rights stem from the state we created, not from what we are born into regardless of the state. Now you will say the state is our servant, but your writing indicates you think otherwise. If the State grants us our rights, we are it’s servants. Wealth is most often a product of our labor, you would claim that the state is entitled to our wealth for it’s purposes, we are therefore it’s servants.

          “ou’ll never be able to simply force your point of view on everyone else, neither will I nor anyone”
          But that is precisely what you advocate, a concession to politicians and people who want to spend more wealth they did not create. Rather than taking a stand against increased spending you will compromise by claiming we must have increased taxes in order to cut spending. Look at how foolish that statement is. If you don’t vote for people who want to increase spending, you should be against it and not whine about how we have to compromise with spenders. If you vote for spenders, you need to let them know you, their alleged boss, don’t want any more spending and don’t want increased taxes.

          The fact that you can’t do that tells everyone where your true stand is, despite your hand waving to the contrary.
          That’s the point though, not to convince you, but to use you as a stalking horse for people who can still be convinced.

        • @scotterb @looker @DocD “We each vote based on our opinions. That’s politics. You’ll never be able to simply force your point of view on everyone else, neither will I nor anyone. And that’s good!”

          Voting IS forcing your point of view on everyone else. In a two party system, an election is two armies showing up for battle, counting the number of troops on each side, and the smaller army conceding defeat without drawing blood.

          Some of us respect the rights of others too much to participate in that farce. It’s not up to me to decide how your money is spent, how you pay for doctor visits and X-rays, what kind of food you should eat. That’s your business and I’ll never give any “representative” proxy to force my opinions on you.

          Elliot

        • @scotterb @looker @DocD “I think we should strive for a situation where success is primarily determined by hard work, intelligence and innovation, not by status of birth.”

          It’s completely impertinent for you to tell others what you think they should strive for, when there is such a huge gulf dividing our values with respect to economics.

          I think you should strive for YOUR values (within the constraints of not using aggressive force against others). When others decide to strive for other values, you should respect their right and mind your own business.

          I don’t share your values with regard to egalitarianism. If a rich person’s offspring have more opportunities than a kid in the ghetto, simply because the parents have connections via their country club and send their children to expensive schools, that’s their prerogative. You can complain about that all you like, but it is unethical of you to forcibly take from the rich in pursuit of your egalitarian values.

          In many of your arguments for the past several months, you continue to commit the error of interpreting the technical statistical term “distribution” as a verb, employing such analogies as dividing up a pie or other such departures from reality. Wealth is created. It doesn’t grow on trees and no evil cabal divides it up. As a corollary, wealth is not a zero-sum condition. If one group increases production and has an increase in income as a result, that doesn’t mean that there will be a decrease in income for others.

          Also, the stats of the increase in HOUSEHOLD income over the past several decades, comparing middle class to wealthy, dishonestly hides the INDIVIDUAL income, which doesn’t support the asserted conclusion from cherry picking data.

        • @myweeklycrime @looker @DocD But if the rich can do that for their kids, that means success is more due to position in life than work and innovation. That also creates classes, and if there is too much class division you will get political unrest or authoritarianism. And if a group of wealthy use their wealth and power to protect their position and limit the opportunity of others, then I’ll support political action to change that — I have that right and responsibility. If I see the world differently than you do, I have no reason to act under the limitations you think people should act.

          In comparing wealth, I’ve used a variety of statistics (and actually have done a number of public talks about the current crisis). GINI comparisons are one (and they can compare households or individual — the distributions are similar), as are looking at income levels, relative change over time, and a variety of factors. The US stands out as having the least taxed and wealthiest top 1% and top 20%, though in comparison to others the lower quintiles don’t do so well. This has gotten worse since 1976 when there was much more relative equality.

          I do believe that market mechanisms are best and intervention should be: a) for the general welfare — stability, some infrastructure, basic collective goods (police, fire, roads, parks, etc.); and b) to try to assure that citizens have true liberty. I see your willingness to accept the wealthy giving their kids advantages the poor don’t have as an attack on the liberty of the poor. To have true liberty you have to have everyone having a relatively equal shot at success. I’m critical of a lot of social welfare programs because if they create dependencies (people get dependent on aid) that’s often worse than getting no aid. I actually think we could spend much and get more if we focused on working on community building rather than direct transfers.

          But the bottom line is that I and people who think like me define liberty differently than you do, and also see society as having attributes that go beyond just individuals interacting (the agent-structure issue). To me that’s good — disagreement is good, that gets people discussing and at best learning from each other. In a democratic republic ultimately no one can claim they have “the TRUTH” and that others are wrong (I’ve found such arrogance to be a sure sign of delusion!), but we compromise and learn from our mistakes. We’ve made some doozies, but overall the industrialized West has performed pretty well.

        • @myweeklycrime @looker @DocD But if the rich can do that for their kids, that means success is more due to position in life than work and innovation. That also creates classes, and if there is too much class division you will get political unrest or authoritarianism. And if a group of wealthy use their wealth and power to protect their position and limit the opportunity of others, then I’ll support political action to change that — I have that right and responsibility. If I see the world differently than you do, I have no reason to act under the limitations you think people should act.

          In comparing wealth, I’ve used a variety of statistics (and actually have done a number of public talks about the current crisis). GINI comparisons are one (and they can compare households or individual — the distributions are similar), as are looking at income levels, relative change over time, and a variety of factors. The US stands out as having the least taxed and wealthiest top 1% and top 20%, though in comparison to others the lower quintiles don’t do so well. This has gotten worse since 1976 when there was much more relative equality.

          I do believe that market mechanisms are best and intervention should be: a) for the general welfare — stability, some infrastructure, basic collective goods (police, fire, roads, parks, etc.); and b) to try to assure that citizens have true liberty. I see your willingness to accept the wealthy giving their kids advantages the poor don’t have as an attack on the liberty of the poor. To have true liberty you have to have everyone having a relatively equal shot at success. I’m critical of a lot of social welfare programs because if they create dependencies (people get dependent on aid) that’s often worse than getting no aid. I actually think we could spend much and get more if we focused on working on community building rather than direct transfers.

          But the bottom line is that I and people who think like me define liberty differently than you do, and also see society as having attributes that go beyond just individuals interacting (the agent-structure issue). To me that’s good — disagreement is good, that gets people discussing and at best learning from each other. In a democratic republic ultimately no one can claim they have “the TRUTH” and that others are wrong (I’ve found such arrogance to be a sure sign of delusion!), but we compromise and learn from our mistakes. We’ve made some doozies, but overall the industrialized West has performed pretty well.

        • @scotterb “But if the rich can do that for their kids, that means success is more due to position in life than work and innovation.”

          If you can’t use your success to give your kids a good position in life, then what good is the opportunity to succeed? I have zero problem with inherited wealth. Zero. Those advantages were won by parents or grandparents for their personal posterity, which is their children and grandchildren. If a thief came to take that away from a serious man, he’d get his head blown off.

          Class envy, which socialists promote constantly, is the most disgusting, self-abasing thing to cultivate in people. It’s pointless and it’s vile.

        • @myweeklycrime @looker @DocD Practically, I don’t see another system that can function as well. But you have to make your life choices based on your view of how reality works, and I make mine based on my view. My view leads me to very different conclusions about proper ethical action.

        • @martinmcphillips Given that we earn very good money in my household, I guarantee I do and will do all I can to help my kids succeed. I would be a hypocrite to say that is wrong, and I do not. I’m not against inheritance. But I don’t mind being taxed a little more and having that money used to help assure that the children of poorer folk get access to education and an opportunity to succeed. Moreover, I think that is self-interested since wealth and success are not zero-sum, and the more we have successful, innovative hard working folk in our economy, the better it will be for all of us.

        • @scotterb If you think that giving them your money will help the poor, there are plenty of charities, college funds, volunteer organizations to give it to. Go ahead. No one is stopping you. Personally, I would encourage an end to minimum wage laws and onerous employment costs so that teenagers and low-skilled workers are affordable to employers. As far as schooling goes, I would recommend that people stay away from colleges unless they have a very specific and good reason to need what they can get there. Otherwise, go to work and start thinking about various ways to make money and starting their own business. Stop looking to government to “do things” to benefit you because government hasn’t had its thumb out of its own ass for seventy or eight years, at least. Not in this country. The best it can do for you is cultivate your dependency on it, and get you in the ranks of people who vote for a living.

        • @scotterb @looker @DocD “But if the rich can do that for their kids, that means success is more due to position in life than work and innovation.”

          Statistically, the more money parents have to give their children advantage, the smaller the percentage of the population. So, the number of people with significant advantages is relatively small. Thus, for most people, hard work and intelligent ideas play a much greater role. Not that it’s any of your business to prevent a small number of people from possibly getting special advantages, by pushing your leftist “solutions”. I don’t see that as a problem, per se. By ignoring more relevant ethical factors, your one-size-fits-all blueprint for how to reorder society based upon a progressive redistribution, to force people to fit your grand vision of egalitarianism, sacrifices the rights of good people in a shotgun approach to dragging down the people you see as “bad guys”.

          The same applies for parents who are smart, athletic, socially dynamic, or otherwise superior to their neighbors in ways which benefit their children. You don’t stymie your children’s intellectual development in an attempt to level the playing field for children with dumb or dysfunctional parents. No, you exploit your intelligence and your position to give them advantages. (To keep this analogy simple, I’ll refrain from delving into the apparent lapses of mental acuity of your on-line political discussions.)

          “That also creates classes, and if there is too much class division you will get political unrest or authoritarianism.”

          The fact that there will be jealous people and provocateurs like you to try to con them into class warfare without making pertinent ethical distinctions, in now way justifies using force to attempt to “narrow” the gap between classes. Such ideological pursuits have led to mass murders in socialist nations (have to crack a few eggs to make your omelet) or an erosion of the human spirit in more democratic countries.

          I see it as moral cowardice to cave in on principles for fear that evil people and their useful idiot minions will use force.

        • @scotterb @looker @DocD “And if a group of wealthy use their wealth and power to protect their position and limit the opportunity of others, then I’ll support political action to change that — I have that right and responsibility.”

          They are acting unethically IF they employ aggressive force to do so, which is most commonly done by leveraging the power of the government (a wonderful argument for opposing your government-based solutions and stripping the agents of the state of power). But only spending money on good schools, social clubs, and the like does not constitute aggressive force, in which case you have no right to intervene. As I said, the “solutions” you always endorse (either directly or through your advocacy/opposition to political candidates, legislation, and battles in the court of public opinion) are the shotgun approach. You don’t distinguish between ethical use of justly acquired wealth in a peaceful manner and the use of political influence (rather you increase the power of government, thus making that exploitation even more useful).

          “If I see the world differently than you do, I have no reason to act under the limitations you think people should act.”

          You have an obligation to not violate the rights of others by employing force against people who are not doing harm to others. You can pull out your book of collectivist fallacies, redefining words to suit your purposes, but you can’t escape reality, or the consequences. (Ultimately, you end up at the Might Makes Right appeal to authority/force fallacy.)

        • @scotterb @looker @DocD “…they can compare households or individual — the distributions are similar…”

          See second chart in the Pethokoukis article http://bit.ly/udeTCc cited in the QandO article, “Is middle class income stagnation a myth (created by the income inequality crowd)?”

          They are not the same. Your statistics are cherry picked.

          Not that it matters, at the end of the day, mind you. If rich people are getting more wealthy, good for them. I only care that they do so honestly, without using rent seeking or other political exploitation. (Again, another reason to oppose your support for more government power to meddle in the economy.)

          “But the bottom line is that I and people who think like me define liberty differently than you do….”

          I know. You can call a bologna sandwich a vehicle, if it’s to your advantage. But rational people see through your equivocations.

          “In a democratic republic ultimately no one can claim they have “the TRUTH” and that others are wrong (I’ve found such arrogance to be a sure sign of delusion!)”

          I know you’re wrong on many things. I would be delusional not to see that. But, contrary to your straw man, I don’t presume to decide that how you spend your money, how you pay for doctors and X-rays, or what you eat is my business. I don’t get to decide if you are wrong on any of that. My only interest is whether you’re doing harm to others, directly or through proxy.

          “…but we compromise and learn from our mistakes.”

          I have no interest in “compromise” with the likes of you. You never learn from mistakes. You’re still pushing ideas long since debunked by history.

        • @myweeklycrime @scotterb @DocD And Compromise in his case means doing what he wants you to do. Dressed up in his morality suit, carrying his signs about ethics and rights, and followed by a crowed of enforcers to make sure his ethics and rights prevail.

        • @looker @scotterb @DocD “And Compromise in his case means doing what he wants you to do.”

          Absolutely. In media parlance, “compromise” always means Republicans agree to move the ball half the distance to the Democrat goal line, instead of just letting them run the ball in for a touchdown. It never means moving the ball one inch in the opposite direction.

          Similarly, Erb’s idea of compromise is for individualists to agree to allow some violations of individual rights. It never means that collectivists agree to relinquish one iota of power. Once they have their hooks in your retirement or doctor visits, you’re a crazy radical extremist to suggest rolling back such government programs. You’re throwing old people over the cliff, sending sick children to die in the street.

        • @martinmcphillips @scotterb “If you think that giving them your money will help the poor, there are plenty of charities, college funds, volunteer organizations to give it to. Go ahead. No one is stopping you.”

          Of course he won’t do that. He’s not actually interested in paying the price of helping them out. He wants to use YOUR MONEY to pay to help them out and then step back and claim credit.

          And, while you don’t demand to use HIS MONEY, he keeps pretending that democracy is the best way to sort out a “compromise” between your position and his, as though his thievery deserves equal consideration to your values. As you pointed out above, the proper response to a lone thief is a head shot. Erb, however, prefers to hide behind his proxies, to let them do the dirty work.

        • @myweeklycrime @martinmcphillips I’ll let you guys have the last word on this thread, but history shows leaving things to volunteerism doesn’t work. That’s why we’ve chosen a system of taxation which almost everyone agrees is legit, even if they’d prefer it reformed. When someone starts calling taxation theft I just shake my head and move on, it’s a completely absurd notion — and one you take on faith, your own subjective whim. It does follow from your beliefs about reality, but I find those beliefs completely unpersuasive and not credible. You don’t, so go ahead and live by your beliefs. Don’t expect me to live by your beliefs and assumptions, though!

        • @scotterb @martinmcphillips “…history shows leaving things to volunteerism doesn’t work.”

          Doesn’t work FOR WHOM? For those with in an interest in having political power, first and foremost. They scare people into ceding their (and their neighbor’s) liberty for the false promise of security, with the obvious results.

          “…we’ve chosen a system of taxation…”

          WE did nothing of the sort.

          “…which almost everyone agrees…”

          Appeal to popularity fallacy.

          “When someone starts calling taxation theft I just shake my head and move on….”

          No, you keep serving those who are doing the plundering, continue to enable them to steal from your neighbors. I’m sure many of your neighbors would prefer if you just walked your greedy self away from their paychecks, but you don’t do that.

          “…it’s a completely absurd notion…”

          Forcibly taking what someone else produced is theft when done by one person or a gang of thugs. I challenge you to dispute that. Start by entering a neighbor’s house and helping yourself to his wallet. I recommend you pick one who has NRA stickers on his truck.

          You can’t do that as an individual, because you lack the right to take your neighbor’s money, so you may not grant such authority to anyone else as proxy. Hire one of your students with a rap sheet to go do the stealing and he’ll probably get his head shot off, and you’ll be justly charged with conspiracy.

          Extend that to the farce of elections, which are nothing more than large groups of people choosing a proxy to do the very same dirty work.

          Looking at this rationally, it’s absurd to conclude that taxes are not theft. They have all of the necessary components to fit the definition.

          “…one you take on faith, your own subjective whim.”

          I just demonstrated that’s exactly wrong. Objective, rational argument by induction. Your impertinent use of the word “faith” where it makes no sense makes me suspect that you’re under the illusion that, as an atheist, I’m frightened of being accused of doing something on faith, as though the mere accusation will send me running away. As usual, I just demonstrate you’re wrong, again.

          “…I find those beliefs completely unpersuasive…”

          You can pretend to be unconvinced by any argument. I long ago quit caring whether you claim to be persuaded, since you’re such a dishonest person.

          “Don’t expect me to live by your beliefs and assumptions, though!”

          I’ll never give any politician permission to take what you produced or dictate to you how you pay for your children’s doctor visits. I’m better than that.

          I just wish you were more confident in your beliefs and assumptions to try doing your own dirty work, without relying on proxies, as a simple way for you to learn the consequences of your ideology.

        • @scotterb
          In reality, volunteerism worked very well for the vast majority of the immigrants that came to this country. There is a large didvide between having volunteerism as part of the equation and eliminating taxes completely.

        • @myweeklycrime @martinmcphillips OK, one more post: it is faith because you are simply positing definitions and making assertions. One can posit different definitions and categories. I find your definition to be subjective and overly broad if you include taxation with representation as the same as breaking in someone’s house. Those are very different acts, you subjectively define them as the same. It’s faith because ideologies are the equivalent of secular religions, and those who give their lives to them are in essence ‘true believers.’ Ideologies are always vast simplifications of a very complex reality. The main fallacy in ideological thinking is the definition-game you play, broadening definitions to include very different acts, and using word games to cast things within your ideological framework. You also have a radically individualist ontology which I reject (for an example, see here: http://scotterb.wordpress.com/2011/01/23/particle-or-wave-individual-or-collective/ ) Disagreements on issues like this are not provable by science or by reason along as the core assumptions are not testable. Therefore your ideology only leads to your conclusions if one believes it. If one believes differently, the conclusions are different. A wise person understands ideologies are based on vast simplifications of reality and treats them with skepticism. In any event, if you use government issued legal tender for your exchanges, that is a service the government provides to make economic activity easier. If you use that tender, then the tax is a fee that you are morally obligated to pay. If you refuse, you are a thief.

        • @scotterb @martinmcphillips “…it is faith because you are simply positing definitions and making assertions.”

          Inigo Montoya (The Princess Bride): “You keep using that word. I do not think it means what you think it means.”

          Faith is the belief in something in the absence of evidence or in opposition to contradictory evidence. I have plenty of evidence. Unless you advocate burglary or organized crime, you already agree to most of the evidence I present. You’re simply disputing how I connect the dots at one point.

          Furthermore, I’m not “simply positing definitions and making assertions.” I made a clear argument by induction, without any controversial vocabulary. This reaction of yours appears to be a knee-jerk repetition of a rote comeback, without regard to whether it applied in this particular case. The definition of theft is not in dispute when you’re breaking into your neighbor’s house. I do not make an argument by changing that definition. On the contrary, you attempt to alter the definition as a special pleading, to try to excuse particular circumstances. Continuing…

          “…you include taxation with representation as the same as breaking in someone’s house.”

          You insert the qualifier “with representation” as a red herring, attempting to change the discussion from taking things by force to the phrase we’ve all heard from childhood. The so-called “representation” is only valid when the people who are presumably being represented actually agree to this. As Spooner pointed out in “No Treason”, long-dead politicians never had the standing to bind us to a contract before our birth, nor even to bind other residents of the fledgling US who took no part in the constitutional convention, or who disagreed outright.

          When taxes take money from your neighbor’s paycheck to pay for programs they don’t want, they don’t use, and to which they have moral objections, like war, prohibition, solar energy scams, and walking guns into Mexico to arm the murderous drug cartels (using “stimulus” money, no less), those people are not being “represented”. They are being exploited. When unions get special exemptions from the ObamaPelosCare taxes everyone else has to pay, or get to steal value from GM stockholders by fiat, they may be represented, but the victims of this graft are not.

          “…you subjectively define them as the same.”

          No, I make an inductive argument that increasing the number of people involved, all of whom lack the moral authority to steal from others, is merely multiplying a larger and larger number by zero. There’s no magic which makes X * 0 > 0 for a big enough value of X.

        • @scotterb @martinmcphillips “…it is faith because you are simply positing definitions and making assertions.”

          Inigo Montoya (The Princess Bride): “You keep using that word. I do not think it means what you think it means.”

          Faith is the belief in something in the absence of evidence or in opposition to contradictory evidence. I have plenty of evidence. Unless you advocate burglary or organized crime, you already agree to most of the evidence I present. You’re simply disputing how I connect the dots at one point.

          Furthermore, I’m not “simply positing definitions and making assertions.” I made a clear argument by induction, without any controversial vocabulary. This reaction of yours appears to be a knee-jerk repetition of a rote comeback, without regard to whether it applied in this particular case. The definition of theft is not in dispute when you’re breaking into your neighbor’s house. I do not make an argument by changing that definition. On the contrary, you attempt to alter the definition as a special pleading, to try to excuse particular circumstances. Continuing…

          “…you include taxation with representation as the same as breaking in someone’s house.”

          You insert the qualifier “with representation” as a red herring, attempting to change the discussion from taking things by force to the phrase we’ve all heard from childhood. The so-called “representation” is only valid when the people who are presumably being represented actually agree to this. As Spooner pointed out in “No Treason”, long-dead politicians never had the standing to bind us to a contract before our birth, nor even to bind other residents of the fledgling US who took no part in the constitutional convention, or who disagreed outright.

          When taxes take money from your neighbor’s paycheck to pay for programs they don’t want, they don’t use, and to which they have moral objections, like war, prohibition, solar energy scams, and walking guns into Mexico to arm the murderous drug cartels (using “stimulus” money, no less), those people are not being “represented”. They are being exploited. When unions get special exemptions from the ObamaPelosCare taxes everyone else has to pay, or get to steal value from GM stockholders by fiat, they may be represented, but the victims of this graft are not.

          “…you subjectively define them as the same.”

          No, I make an inductive argument that increasing the number of people involved, all of whom lack the moral authority to steal from others, is merely multiplying a larger and larger number by zero. There’s no magic which makes X * 0 > 0 for a big enough value of X.

        • @scotterb @martinmcphillips “It’s faith because ideologies are the equivalent of secular religions…”

          And again, you indict the use of ideas (root of “ideology”) to make decisions. You implicitly deny that your leftist, post-modernist arguments are ideological, even that your “ideologies are bad” mantra is not, in and of itself, an ideological statement. Worst of all, you refuse to distinguish between ideological arguments based upon good ideas and those based upon bad ideas.

          Ideologies based upon evidence and reason are nothing like religion. They are not faith-based.

          “Disagreements on issues like this are not provable by science or by reason along as the core assumptions are not testable.”

          You already agree with the majority of the argument concerning theft. Again, you’re just quibbling by trying to weasel out of being consistent in the application of the defining characteristics.

          I don’t need to perform any experiments to test whether taking something by force from someone is theft any more than you need to perform an experiment to see if chopping off the head of a little child is murder.

          “…if you use government issued legal tender for your exchanges, that is a service the government provides to make economic activity easier.”

          If I attempted to use a non-governmental currency, the government would put me in prison. That’s a rather lame argument on your part.

          “If you use that tender, then the tax is a fee that you are morally obligated to pay. If you refuse, you are a thief.”

          So when the mafia uses violence and intimidation to drive out competitors for widgets (some commodity vital to your survival) and you are forced to buy your widgets from them, you have a moral obligation to pay the mafia for the other “services” it claims to do for your benefit?

          Your arguments are just pathetic.

        • @scotterb @martinmcphillips “It’s faith because ideologies are the equivalent of secular religions…”

          And again, you indict the use of ideas (root of “ideology”) to make decisions. You implicitly deny that your leftist, post-modernist arguments are ideological, even that your “ideologies are bad” mantra is not, in and of itself, an ideological statement. Worst of all, you refuse to distinguish between ideological arguments based upon good ideas and those based upon bad ideas.

          Ideologies based upon evidence and reason are nothing like religion. They are not faith-based.

          “Disagreements on issues like this are not provable by science or by reason along as the core assumptions are not testable.”

          You already agree with the majority of the argument concerning theft. Again, you’re just quibbling by trying to weasel out of being consistent in the application of the defining characteristics.

          I don’t need to perform any experiments to test whether taking something by force from someone is theft any more than you need to perform an experiment to see if chopping off the head of a little child is murder.

          “…if you use government issued legal tender for your exchanges, that is a service the government provides to make economic activity easier.”

          If I attempted to use a non-governmental currency, the government would put me in prison. That’s a rather lame argument on your part.

          “If you use that tender, then the tax is a fee that you are morally obligated to pay. If you refuse, you are a thief.”

          So when the mafia uses violence and intimidation to drive out competitors for widgets (some commodity vital to your survival) and you are forced to buy your widgets from them, you have a moral obligation to pay the mafia for the other “services” it claims to do for your benefit?

          Your arguments are just pathetic.

        • @scotterb @myweeklycrime @martinmcphillips “If you use that tender, then the tax is a fee that you are morally obligated to pay. If you refuse, you are a thief.”

          No it isn’t, if it were that obvious we wouldn’t be having this discussion and there wouldn’t be an issue because everyone using it would be paying the same fees. As it is your argument is crap because 50% of the people available for taxing pay nothing and yet they use the currency. So, by your definition that makes them all thieves.

          Furthermore tax is not a moral obligation, it’s a legal obligation.

        • @myweeklycrime @martinmcphillips “Myweekly” if you want to discuss this we should do so elsewhere. Ideologies themselves are not bad, it’s only that they cannot be anything more than crude simplifications of reality. They should not be taken as dogma, and always rest on assumptions about reality that can be questioned. That means no one can “prove” an ideology “correct,” and in fact different ideologies may shed light on different aspects of reality. The danger comes when people grab an ideology and interpret reality through it, thus losing their capacity to critically assess their own beliefs. Instead they have a simplistic lens through which to understand reality; it all makes sense to them because the lens is clear and explains everything within the terms of their beliefs.

          One error you make is you get squishy with terms. Your main argument is appeal to popularity – everyone agrees cutting a child’s head off is murder – and then jump to something there is no mass agreement on — that taxation is theft. That shift has no rational basis, it’s simply how you’re defining it, your interpreting acts as morally equivalent that can also be seen as quite different.

          In short, you do not have any rational basis for your beliefs, they are your own subjective choices for how you wish to view the world. You have found an ideological dogma that gives you a clear way to try to categorize actions and understand the world. It’s comfortable to you, and you’ve held it for so long there are strong psychological reasons you refuse to give it up or even apparently consider the possibility that you may be wrong. To me that’s the biggest sign of irrationality — that fallible human beings hold dogmatic beliefs and do not entertain the possibility that those beliefs may be fundamentally wrong. You can’t defend that by saying you’re sure cutting a child’s head off is wrong — that’s argumentum ad populum and only says we have strong societal agreement that this is condemned. We don’t have agreement on the ideological dogma. There is a reason why so few people share your beliefs — it is akin to a religion, you have put your faith in an ideology that gives you a clear world view and you’re comfortable with it, just as a Christian is comfortable with a sense that God is in charge and heaven awaits after death. You have tried to remove uncertainty and doubt (suggesting that your personality is such that you may feel a need to think you are right about things — dogmatic types usually don’t like uncertainty and paradox. I have no problem with uncertainty and paradox, that’s my personality).

        • @scotterb @martinmcphillips “My weekly crime” (from a line in the Rush song “Red Barchetta”) is the name of my weblog and twitter handle. I’m Elliot and I used to post on Usenet as “Eagle Eye”. I’ve mentioned this before and put up links to our past discussions, just in case you’re unclear on who I am. (For interlopers, that means Scott and I have been “discussing” politics since the 1990s. No, he hasn’t learned a thing in all that time. He’s added a few buzzwords here and there, but his basic arguments and debate tactics are the same. This anti-ideology indictment of ideas is not new, though the particular phrases he is currently repeating ad nauseum are just the latest minor revision to his mantra.)

          I’ve already debunked most, if not all, of the arguments concerning “ideology”, “faith”, etc. in your latest comment many times before. If I have the time and inclination, I’ll respond more fully.

        • @myweeklycrime @martinmcphillips Well, I did not know you were “Eagle Eye,” I do remember you from way back when, glad you’re doing well. I recall the 90s, being amazed at this odd assortment of really interesting but misguided ideologues posting to ‘alt.clinton.whitewater’ or some group like that. It was fun, and unlike blog comments there was more variety in posters (now people tend to segregate to like minded blogs and mutually reinforce each others’ views, back then you had more of a mix). Alas, you haven’t debunked my arguments, you simply make assertions based on your own definition of terms and your assumptions about reality. I never knew some of the fringe thinking until I started reading those news groups…it was entertaining and I enjoy (and still do) the give and take. I just find I lack time these days…(I can’t keep up this level of responding…everything from work to the PTA grabbing my time…)

    • @scotterb
      “I have a feeling that message will resonate well in campaign 2012 – and it should. Also note that the start of rising debt is precisely at the point where taxes were cut in 1981 (debt rose from 30% of GDP to 60% of GDP by 1990).”

      Not really. Revenue went up. Spending went up even more. The debt problems of America do not come from tax cuts. They come from spending too much.
      http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=200

      • @tkc @scotterb Note ALSO that the Obami have ABANDONED the white, middle-class voter, according to the NYT.

        Heh. “Popular” Erp’s little, pink ass…!!!!

        • @Ragspierre Right now the biggest enemy to the middle class is an ever expanding government that caters to the people with the best K Street boys. Only a fool would give these drunks more booze. Queue the OWS crowd and/or Krugman.

      • @scotterb
        Here is another interesting chart.
        http://www.davemanuel.com/median-household-income.php
        Note how nominal income went up but inflation adjusted income has stagnated. Inflation is, at its core, a monetary problem.
        Monetary policy of late (QE) has been horrific, once again, making the apparatus of government the most dangerous thing to the financial well being of the middle class.

        • @tkc Fair points on inflation, though I’m not sure how you get your conclusion by pointing out inflation and bad monetary policy. Given the high current account deficits we were running and massive increase in debt (private debt rising as fast, even faster than government debt) I think the only reason we didn’t have far more severe inflation is the dollar’s role as the main global reserve currency. We’ve been able to avoid what normal countries would experience with such poor fiscal and monetary policies. But if the dollar’s role is weakening, that might mean a much weaker dollar in the future — far more inflation.

      • @tkc That’s a chicken and egg question. If you are going to spend more than you take in, you either have to increase revenues or decrease spending. The fact is that from 1980 to 1990 the government increased spending dramatically while cutting tax rates. I don’t care if we spent less or taxed more, we should not have let the debt start getting out of control. The interesting column is the GDP %, since that takes into account economic and population growth. There revenues as a % of GDP went slightly down, while spending stayed pretty constant. If we had kept the GDP % what they were, that would have avoided a lot of the debt. Of course, the ratio really falls off the tracks after this recession hit in 2008. Revenues as a % of GDP go way down, and spending goes up! I say: move both towards their historical position through a mixture of tax increases on the wealthy and spending cuts, including entitlement reform. The US taxes the wealthy at extremely low rates (and they have massive loopholes). Close some of those loopholes and you don’t even have to raise marginal rates. Have the GOP agree to that while the Democrats agree to entitlement cuts and spending cuts and soon things move back towards where they should be.

        • @scotterb Higher tax rates do not equal fiscal responsibility. Historically, especially in Europe, which you’re so fond of, higher taxes have lead to bigger government.

          The problem is spending. It has outpaced revenue by a large margin. Higher taxes won’t fix this. The revenue will just be spent.

          “Fair points on inflation, though I’m not sure how you get your conclusion by pointing out inflation and bad monetary policy.”
          Econ101. Inflation is a monetary problem. The rest of your post points this out. The expansionist government policies are being funded via fiat currency. This doesn’t hurt the rich as their disposable income, not to mention that some have dibs on the newly printed money, protect them from inflation. The middle class and the poor have no such opportunities. Higher taxes on the rich won’t fix this. A return to fiscal sanity via controlling spending is the best possible course.

        • @tkc I disagree — spending and revenue compared to GDP have not shown that spending has outpaced revenue. In fact revenue has declined. You have to look at the % of GDP to take into account the growth of the economy and population. Econ 101 does not lead to the conclusion that this is all a monetary problem, that’s in fact a pretty radical position on your side. Moreover, inflation has been pretty low since the 1980s, so blaming inflation doesn’t make much sense. Yes, cut spending — but that won’t happen without tax increases. Politically, you’ll need both given our system of divided government and divided power.

        • @scotterb @tkc And you seriously believe that increasing taxes will go hand in hand with cutting spending.

          How old are you? You’re approaching the half century mark and you genuinely believe that Washington DC will increase revenue via taxation AND CUT SPENDING?

        • @looker @tkc Theoretically they could limit spending growth and as the economy grew it would cut deficits. But both sides have to give something. I think entitlement reform is necessary. And if they can’t make the hard calls then the US falls.

        • @scotterb @tkc And we are increasing spending, why?

          Look at the numbers, it’s in give aways completely apart from military or social security (and that’s generous, as it allows that the government really IS responsible for your health and retirement, which it is NOT).

          So, we can cut, rather than increase spending, and yet despite the dire circumstances, we cannot ween ourselves from wanting to spend more.
          When your own household runs out of money, do you spend more or do you spend within your means?
          I suppose you continue spending increases and consider looting your neighbors because they have undeserved gain?

    • @scotterb

    • @scotterb “… the Scandinavian states … are doing better than we are, in part because they don’t fall to the delusion that increased taxes necessarily hurts the economy.”

      That isn’t even true but I always get a chuckle from Krugman and others holding up Scandinavia as some sort of example of the benefits of higher tax. The real reasons that the Scandinavian countries are doing better is:

      Protestant work ethic is still quite strong. Strong individual views, activities like hunting are hugely popular. Quite active populations, although declining, means that the health system is not quite yet burdened with those “lifestyle” diseases. Despite immigration still fairly homogeneous ethnic profiles with not so big underclasses along racial lines to allow the emergence of overt vote buying along those lines. They are ALL VERY SMALL countries… it is pointless to compare them to the USA as a whole since the USA is far more diverse ethnically, religiously, politcally and historically. If anything you could maybe compare them to individual states in the mid West that are at least historically and ethnically similar. Virtually none have much of a military to spend money on, although Sweden has a big defense industry making tanks, aircraft, systems etc. They are all close to their biggest market (Germany) and the Germans have a romantic view of Scandinavia which makes the place wildly popular for spending Euros in.

      • In addition:

        Norway
        Not on the Euro, not in the EU. Large welfare state mostly bought and paid for with nationalized oil revenues. Extremely high taxes, but the citizenry benefit from the flood of oil money in return. Banking system and other sectors not as exposed to the global crisis due to an insular and nationalist attitude to most things.

        Denmark
        Not on the Euro. Deregulated markets during the 1990s and now the freest market in the EU. Quite high personal taxes but easy travel to Germany to obtain lower priced goods. Fairly low corporate tax.

        • @DocD That’s my point — you can have high taxes more equal wealth distribution and a functioning market economy. I’m in favor of free market economies, it’s just a falsehood to say that increasing taxes harms that — you are admitting that’s not the case. Germany also has higher taxes, and most Danes don’t go to Germany to shop. Not only aren’t things cheaper, but from most of Denmark it’s a costly haul to Germany. Yet the point is clear: higher taxes are not incompatible with a free market economy, nor do they make strong economic performance impossible. Thank you!

        • @scotterb Actually Erb Danes very often shop in Germany. It is a very short drive to get to the border from most places in Denmark. Even Swedes regularly go on shopping trips there, with ferries promoting tickets for the purpose. And Germans on holiday in Sweden will often take extra cheap alcohol to sell to Norwegians they meet up with in the forests. Much stuff is cheaper in Germany making the trips profitable, unless you plan on claiming we are all too dumb here to figure out prices. Yet another fine example of comparative Euro bullshit from the Prof, at complete variance to the lives of actual Europeans.

        • @DocD I live in Maine. New Hampshire has no state sales tax and alcohol is much, much cheaper. Mainers often go to New Hampshire to shop and buy alcohol. But overall it’s not enough to really harm the Maine economy. The fact people “go there to shop” means nothing. You’re so funny, trying to hard to shift and weave only to avoid admitting the obvious: STATES CAN HAVE HIGH PERSONAL TAX RATES AND STILL DO WELL ECONOMICALLY. Why is it so hard for you to admit something so clearly true! I mean, do you really want to claim that masses of Danes do so much shopping in Germany that it fundamentally alters their economy? Seriously?!

        • @scotterb Erb your ignorance is showing again. Not five minutes ago you were claiming that it was too far to drive from Denmark to Germany to shop. Now you are claiming that Danes and others do not bother to shop there in any meaningful amount. Again, you are plain dreaming up a reality that does not exist. Shops in Germany have advertizing/notices in store in Danish and Swedish for the benefit of the large amount of traffic that goes there explicitly to shop. Swedes will go down there and buy an entire year’s worth of alcohol because they save a truckload of cash on the deal, even with fuel, the toll on Öresundsbron etc. Many items are consistently cheaper in Germany, such as cars, electronics, other high value items etc. So yes it does impact the economy because all that sales tax goes to Germany instead of Denmark or Sweden and the sales margin goes to German retailers. The same thing happens on the border between Sweden and Norway. The border towns of Sweden make a huge amount of money from Norwegians who actually buy groceries in Sweden because it is cheaper. If you go to these towns you’ll see more Norwegian cars parked there than Swedish. And the only reason this happens is because of the comparative levels of tax. So yes it is economy altering because it changes the behavior of millions of people.

      • and…

        Sweden
        Not on the Euro. A welfare state paid for by the luck of avoiding material damage in WW2 and supplying vast amounts of timber, metals and other manufactured products during the rebuilding of Europe. The welfare state has been in serious decline however with many costs and services cut over the past 20 years. Markets deregulated in the 1990s, ongoing deregulation of various sectors. Taxes have been lowered regularly for the last couple of terms of government. Low company tax rates. High marginal personal taxes are avoidable with careful planning. Considered to be one of the most right-of-center states in the EU now. The banks survived mostly unscathed since 2008, mostly by luck in some cases. No serious “stimulus” has been spent. People expect to work their own way out of this mess. The economy has stayed buoyant due to a concentration of profitable “tech” industries and a resurgence of the mining sector. Most manufacturing jobs had already moved elsewhere so those jobs were already effectively lost before the crisis. Considered to have one of the safest currencies in Europe now, precisely because spending was brought well under control before the crisis.

      • So what you have really is two countries (Denmark and Sweden) who have dramatically liberalized most sectors since the 90s, have low corporate tax and small but high-tech and profitable industries that survive this crisis reasonably well. They have not “stimulated” the economy in any meaningful way and the high personal taxes can be avoided with sensible care. The third country, Norway, spends money like there is no tomorrow, but it is all oil money which continues to support them (you should here Swedes bitch about how they missed out on getting a cut of that back when it started to flow). Sweden has been lowering taxes for years now.

        So tell me someone, how EXACTLY does the virtually irrelevant matter of high but avoidable personal taxes prove that the USA (or anyone) should raise their own taxes rather than follow the lead of Sweden and liberalize markets, lower taxes, start cutting down on the welfare state, reduce spending and so forth?

        Or are you going to follow in Norway’s path and hope that some stroke of luck will provide you with a huge natural resource sufficient to buy off the population for a few decades?

        • @DocD No, I point out that countries who have been performing very well and don’t have the troubles we have are economically sound and in fact have higher taxes and lack the massive relative wealth gap we have. The claim that higher taxes on the wealthy hurts the economy or that you can’t have a strong economy and a solid social welfare system (and in no way are Sweden, Denmark, Germany, Norway, etc., giving up the basics of their social welfare system — I agree that they need some liberalization) has been disproven. The only way one can “win” with those arguments is if people are ignorant about the rest of the industrialized world! Although many European banks do have serious exposure to sovereign debt (and had bought CDOs back before 2008) in general regulation helped them avoid the worst of what happened to the US.

          The countries that followed the US down the de-regulation path the most fervently were Iceland and Ireland. Iceland was held as an example by so-called “libertarians” a few years ago as proof that deregulation and markets work best. Let’s see, any news from Iceland lately? Compare to other countries, that’s the only way to really test these ideas. Otherwise it’s just theory and ideology. Ideological thinking is weak thinking.

        • @scotterb I did not say these countries are giving up their welfare systems. I said that Norway props it up with its unique flow of oil money. Sweden and Denmark are slowly cutting these down and have been for 20 years. How do I know this? I live in the Swedish welfare system. The Swedish banks did not survive because of stronger regulation. If you had any conneciton inside the banking system here you would know that the system came to within a day or two of collapse and survived mostly through sheer luck of what the banks were exposed to in the Baltics. Here I am talking Swedish banks, not suddenly switching to European banks as is your wont. Sweden deregulated its entire market much more than Iceland and has cut tax rates much lower than Iceland. How do I know? Because I run a business in Sweden and do the payroll and have to know the tax rules. Why the sudden switch to Iceland anyway, is Scandinavia not proving your point now?

        • @scotterb If Norway’s oil ran out tomorrow it would face similar collapse. Sweden is in a better position because its industry is more solidly founded in timber, metals, technology and defense, all with a lot of foreign export. Don’t you think it interesting that these countries that are faring the best have not increased taxes but continued to cut them and that they have not thrown ever more money at “stimulus” but are reducing the costs on keeping businesses open? You can only compare countries if you understand the country and you clearly do not understand the business, tax or banking systems of Scandinavia. You sir clearly have no understanding of Scandinavia and you can’t get away with it by parroting that ideology nonsense again.

        • @DocD To be sure, if Norway was about to run out of oil they’d have made changes in their economy to prepare. Sweden’s total tax burden in relation to GDP is double ours. Yes, they have made cuts (and I think they did get too high), but the fact remains: you can have high taxes and a healthy society. You’re throwing out other factors to distract from that point. You can have high taxes and a healthy vibrant economy. Sweden has very low corporate taxes and a business friendly environment, which is good. I also think the regulations of the banking industry in Europe (which didn’t embrace the disastrous US free market deregulation of the banks) is very good.

          But the point remains: you can have high personal taxes and a functioning vibrant economy. That doesn’t mean you should — that’s a political choice for the voters. It does give lie to the claim that high taxes would destroy the economy. My specialities are European politics and comparative/international political economy. I assure you I understand the similarities and differences. There is no one ‘right’ way to run an economy, there are many possible ways. Some are almost always going to lead to failure (e.g., Soviet style planned economies) but there are a variety that can succeed, including ones with high personal taxes.

        • @scotterb It’s like talking to a goldfish. Every new comment is unrelated to the past except to squirm out of previous claims. Proof that he knows nothing about Scandinavia is met with some nonsense about tax per GDP as if that somehow means that taxes aren’t being cut and spending curtailed. By the way my specialty is running a business in Scandinavia, paying taxes in Scandinavia and banking in Scandinavia. You clearly DO NOT KNOW anything about Scandinavia apart from what you’ve read in your ideological pamphlets. And now we are back to him quoting his education, which I believe is the equivalent of Godwin’s law hereabouts.

        • @DocD Do you admit my point: you can have solid economic performance with higher personal tax rates. THAT was my point, you’re the one squirming around trying to change the subject or avoid it. That Sweden drops from 70% of GDP for taxes to 60% doesn’t change that one iota. I agree completely that their tax rates had gotten too high and that cutting them is good. However, they are still performing very well with high tax rates, as is Germany and many other countries. That is my point! That’s the thing – you can’t bring yourself to admit something that is obviously true, that many countries are doing very well despite taxing the wealthy at higher rates than the US. And I agree that Sweden’s business friendly environment is important (and we can learn from that). I’ve not said anything ideological here, I’ve stuck to the facts — and one fact you seem unable to bring yourself to admit: COUNTRIES CAN HAVE HIGH PERSONAL TAX RATES AND DO VERY WELL ECONOMICALLY. That’s it. It’s not just Scandinavia, it’s Germany other continental states. Admit it. This is the point when a weak person simply throws insults and runs away. A person with integrity admits the point, and perhaps raises a counter point. What kind of person are you, DocD?

        • @DocD Oh, one other thing. I reject your claim of special authority because you’ve done business there — that seems to be the kind of claim you’d dismiss as Godwin’s law. Also, note that the ideological person would say there is one right approach. I note that many approaches can work, ranging from an embrace of a social welfare state to a more libertarian philosophy. If you’re disagreeing — and you seem to want to avoid the clear fact that states can have effective social welfare systems, high personal taxes and be economically vibrant and healthy — then you seem to be the ideological one, saying one system is superior to all others.

        • @scotterb @DocD “Oh, one other thing. I reject your claim of special authority because you’ve done business there”

          Fine, then stop trotting out your degrees as evidence that your own arguments are somehow more valid.

        • @scotterb Oh my God full circle. Scandinavia is made up of three continental states Erb, so not sure what your point is. The point is you and Kruggers want to emulate the Scandinavian experience while blindly ignoring the historical, ethnic, demographic and even geological factors that allow these states to maintain the economies they do. If the USA tried it it would not work. I would suggest you look to Australia for inspiration… similar outlooks, similar societies, similar economies and Australia is doing roaringly in the crisis without very much tax.

        • @scotterb @scotterb You can reject what you like. But after having dinner with my wife, who along with her staff manages billions of dollars as a senior finance manager for one of Sweden’s largest industrial concerns, I found your ideas rather amusing. I showed her your comments and she sniggered briefly. I guess I could show your comments to other Scandinavian business-people and bankers, but I’m not sure it is worth the effort for the amusement. So really I actually reject your claims. You see you study “comparative European whatever” at some backwoods community college half-a-world away, but we live here doing “comparative European whatever” every single day and our livelihoods depend on it. You show an insultingly ignorant knowledge of the country of which I’m a citizen yet presume to lecture us on what actually happens here. It’d be like me lecturing some Texan rancher on the best methods to raise cattle because I have eaten steak on occasion. You get the most basic elements of Scandinavian economy wrong and start muttering about Ireland (the Texan rancher would wonder why I started on about growing pine trees at this point). And then you bring out your degree again, as if that proves you understand Swedish (here the rancher would think I am a complete dick because I showed him my doctorate in physics but still insisted I know the ass-end of a camel from a cow). Outstanding!

        • @DocD No, I’m only saying that in principle it’s possible to have high personal tax rates and a very effective economy. That’s it! And you can’t seem to admit that such a point has been made. Now, if you said, “yes that’s true, but it won’t work in the US the same way because…” you’d have an argument. I think there are real cultural differences that assure the US won’t have a Scandinavian style economy; but those differences are not such that it’s impossible to have higher tax rates and economic success!

        • @DocD LOL! You’re trying too hard – do you realize how over the top that sounds? All this to avoid admitting an obvious point – that you can have high personal tax rates and economic success. You just can’t bring yourself to admit something extremely obvious. Now if you want to discuss real issues involving the European political economy or in Scandinavia, we can — so far we haven’t been, making your post even sillier! My ideas? I’ll definitely put my knowledge on European economics and comparative political economy up against yours any time. But so far we haven’t been discussing that because you can’t admit a point that is irrefutable: You can have high personal tax rates and economic success at the same time. There is nothing impossible about that!

        • @scotterb Erb I doubt you can even locate Scandinavia on a map of “continental” Europe, nevermind the next spot you’re going to rocate the goalposts to.

        • @DocD In Poli-Sci we differentiate Scandinavian states from what are referred to as continental states when talking about Europe. But that’s the best you got — to avoid admitting an obvious fact that you’ve been flailing away with insults and attempts to shift the subject you end up with a geography flame!! It’s so funny! You can’t even bring yourself to admit that it’s possible to have economic success and high personal tax rates. You dodge, weave, insult, do everything you can to avoid admitting something obvious. Pathetic. I sort of wonder if anything you’re saying is true.

        • @scotterb That was the *point*, goal-post head. As a loyal subject of Her Majesty Queen Elizabeth the Second I refer to continental Europe as anything joined to the continent and not an island. As a loyal subject of Konung Carl XVI Gustaf I prefer to think of continental Europe also as anything contiguous to the mainland, although sometimes it excludes Sweden and Norway. Your definition is the arrogant Germanocentric view. Scandinavia is regarded as Sweden, Norway and Denmark by most people including the Finns. We reserve the term Norden for Scandinavia plus Finland and others. You seem to think poli-sci pontifs have some special claim to authority over, say, the 2 billion people inhabiting the British Commonwealth or the millions under the yoke of the house of Bernadotte. I’d say that was cultually insensitive and yet another illustration of your insular arrogance.

        • @DocD LOL! So now I’m an arrogant Germanocentric type, eh? You just fall all over youself trying to evade simply admitting that my point is correct: you can have high personal tax rates and economic success. I can call things what I want, and you can consider them arrogantly Germanocentric if you want. I really don’t care, a rose by any other name. But it’s funny how off topic you’ll go to avoid admitting the clear fact that I’m right on the point that caused this discussion: it’s possible to have high personal tax rates and economic success.

        • @DocD LOL! So now I’m an arrogant Germanocentric type, eh? You just fall all over youself trying to evade simply admitting that my point is correct: you can have high personal tax rates and economic success. I can call things what I want, and you can consider them arrogantly Germanocentric if you want. I really don’t care, a rose by any other name. But it’s funny how off topic you’ll go to avoid admitting the clear fact that I’m right on the point that caused this discussion: it’s possible to have high personal tax rates and economic success.

    • @scotterb “It’s just noting that the wealthier don’t necessarily deserve all of what they have, and in a time of national crisis and a need to pay back debt, should we really make the middle class and the poor face all of the burden while the rich do nothing ”

      Ah, did the Rich run up the debt and now they should pay? They get better police? Better fire departments? they have a better army, navy, air force? They have better roads? Better cities? Better subways? Their social security benefits are better? Pray, tell me, how did the rich cause more of the national debt?

      Or is that not a necessary criteria, and you have just decided, in your wisdom, that some people have too much stuff, and you have taken it upon yourself, like a wise and benevolent ruler, to redistribute their wealth ‘appropriately’, Herr Marx.

    • @scotterb “With OWS, this is getting popularized.”

      The fact that you can even consider using these tools as a credible basis for economic discussion with a straight face says a lot about you.

  • Tax the rich – because after Bush cut taxes on the rich, the amount of income taxes collected by the government went down so much. No wait, income taxes collected went up by about 40%. The facts say Krugman is wrong.

    • @CT Phil Only during the bubble economy — but that was a fake economy. Both Bush and Clinton benefited from their bubbles, for awhile. Now tax revenues are down in both real terms and as a percentage of GDP. Look at the stats I’ve posted; these figures and ones like them will become common knowledge during the 2012 campaign, from what I hear. The lower rates simply fed a bubble. Trickle down theory said that lower rates would get the wealthy to invest and create jobs. Instead they chased bubbles and that lead to economic crisis. Theories work only in the abstract; in the real world things get messy.

      • A) The point is government income doesn’t correspond directly with taxes on the rich, so increasing taxes will not do much (if anything) to help revenue. Krugman’s theory has been disproven by the real world.

        B) The stats you posted only show that creating more disincetives to work has led to a larger number of people that don’t work. Only the bottom fifth lost wages relative to inflation, the other 80% saw gains. Coincidantally, spending on welfare went up 500% from 1979 to to the height of the bubble

        • @CT Phil To “A” – the only way to answer this is in a comparative perspective, to look at countries with higher tax rates on the wealthy and determine if they get higher revenues. I’ve done that before and found the answer is yes — in Europe increasing taxes can yield higher tax rates (both in real terms and as a percentage of GDP) and thus can help off set higher spending. Until we get our spending under control, that’s something we should consider. Once we get spending and debt under control, tax rates could go back down (and I’m not even envisioning tax rates near as high as in most European countries — we could close loopholes and increase tax rates on the wealthiest slightly and still have the lowest tax rates on the wealthiest in the industrialized world). If you doubt that European countries have proven that increasing taxes can increase revenue I can go look that up again, though it may be a couple days (and I’ll probably make that a blog post on my own blog too). To B: where do you get welfare spending going up 500%? Given the welfare reform under Clinton and the GOP Congress, I’m surprised by that. Also unemployment benefits became limited. You can’t draw your conclusion directly from the numbers — the numbers clearly show that average wages and compensation did not go up to meet productivity increases (unlike the previous time) and that only the top fifth had significant wealth gains. Most of these people were working and middle class. So I’d need to see evidence that supports your claim on B. (That said, I do think there is a strong argument against welfare spending as it has occurred — it does tend to create a dependent under class, and the goal should be to liberate people by getting them into the work force — I’ve written on that: http://scotterb.wordpress.com/2011/06/30/social-welfare-programs-should-liberate/ )

        • I already proved point A for the US, lower tax rates don’t equal lower revenues. The topic is the US economy.

        • @CT Phil No, you proved nothing, especially when you go to the real comparison — % of GDP. But do you really mean to say economic laws are different in the US than elsewhere? Most economists would reject that, as it would be a radical departure from economic theory. If you’re going to that strange a place, you’re essentially admitting defeat!

        • @scotterb @CT
          “Until we get our spending under control, that’s something we should consider.”
          Higher taxes is a disincentive for this. It is like throwing booze at drunkards and hoping they’ll sober up later.
          The reality is that higher taxes don’t equate to fiscal responsibility. Higher taxes lead to bigger government which, as shown, is the biggest danger to the middle class.

        • @scotterb @CT “You can’t draw your conclusion directly from the numbers — the numbers clearly show that average wages and compensation did not go up to meet productivity increases (unlike the previous time) and that only the top fifth had significant wealth gains.”

          As shown, wages did go up. They were nullified by bad monetary policy that chewed through those gains via inflation. If you want to pretend that the Fed is not an unaccountable government agency then you can play with such a scenario. In the real world the government’s bad fiscal policies are the biggest danger to the financial well being of the middle class. OWS and Krugman are barking up the wrong the tree.

        • @tkc @CT You need to prove that bad monetary policy meant the top earners grew by 55% while the poorer earned little. There was inflation from 1945 to 1979 as well. I think you’re just trying to avoid admitting that there has been a shift of wealth from the middle class to the wealthy. You’re asserting its monetary policy, but that’s a weak and unsubstantiated assertion. I certainly agree that fiscal policy since 1981 has been bad — we’re amassed huge debts. Moreover, the private sector has been as bad if not worse than the government, it’s a societal thing — it’s become ‘something for nothing’ culture, and that’s given us these problems. I think we do have to cut spending and reform entitlements — and the wealthiest can pay a little more taxes too. Moreover, the only politically feasible way to get the former is to embrace the latter, otherwise we’ll just continue in gridlock as the problems get worse.

        • @scotterb @CT
          Will you take this as proof of bad monetary policy?
          “Phil Only during the bubble economy — but that was a fake economy. Both Bush and Clinton benefited from their bubbles, for awhile. Now tax revenues are down in both real terms and as a percentage of GDP. Look at the stats I’ve posted; these figures and ones like them will become common knowledge during the 2012 campaign, from what I hear. The lower rates simply fed a bubble. Trickle down theory said that lower rates would get the wealthy to invest and create jobs. Instead they chased bubbles and that lead to economic crisis. Theories work only in the abstract; in the real world things get messy.”
          One of the things that fed the housing bubble was easy money policies from the Fed.

        • @tkc @CT Yes, Greenspan’s approach was horrible. Yet I don’t think that explains away the shift of relative wealth towards the wealthiest and away from the middle class. I also think that closing loopholes could raise some revenue. Word is Obama and Boehner were close to a deal that would cut spending 85% and raise revenue 15%. That would have been a good balance for the GOP to accept, especially since the tax ‘increases’ would be loophole closing. To me it’s a no brainer – GOP agree to slight tax increases, the Democrats agree to entitlement reform.

        • @scotterb @CT Who gets first crack at all than newly minted fiat currency?
          The fat cat bankers. Look at the results of QE1 and QE2.
          To me it is a no brainer that the overwhelming driving force behind the government’s debt problem is spending. A return to the classical liberal idea of limited government would solve this but neither the GOP or the DNC is all that interested in devolving their power.

        • @tkc @CT OK, here I can agree with a lot of what you say. Big business and big government have a good thing going for each other. Devolution of power to states is something I support. Moreover, one can devolve power and still debate whether one wants a classically liberal approach, a stronger social welfare system or various tax rates. Different states could reflect the cultural beliefs within them, and as states experiment with different policies, they could learn from each other. If we want to end this discussion on a point of agreement, it could be devolution of power and weakening the central “federal” government.

        • @tkc @CT When you’re in massive debt tax increases have to part of the solution. Politically, no real reforms in spending or entitlements will happen without tax increases. You can oppose them, but if the GOP does they’ll be on the losing side of that argument. You can already see the political winds shifting. It’s time to be pragmatic rather than ideological — the founders created a system where pragmatism and compromise were not only desired but required to get things done. Obama’s only talking about closing some loopholes, and even modest increases in taxes on the wealthiest would still leave our wealthy the lowest taxed.

          Moreover, tax CUTS sure don’t create fiscal responsibility either — but they helped create larger debt (fewer revenues, more debt — borrow and spend) and so I think your rationale is misguided here.

      • If there weren’t any jobs created during the fake economy bubble, none would have been lost when it burst. Once again, the real world directly opposes your argument.

        • @CT Phil Oh, there were jobs — mortgage brokers, real estate agents, whole bunches of short term jobs. And because of high debt (especially people using houses like ATMs as values rose to artificially high levels) consumption rose as well. Savings went to zero in 2006, so with debt increasing and savings declining people were spending. Trouble is, in a bubble economy those are unsustainable and when it crashes those jobs not only go away, but you’re left in worse shape than you would have been in otherwise.

        • And yet, you don’t criticize the liberal policies that caused people to use houses as ATM’s or vote against the Democrats that supported them. Shocking.

        • @CT Phil Yet it’s not “liberal” policies that caused that (remember, this bubble occurred from 2002 to 2006 — who was in power those years?) The reason the bubble arose is because big Wall Street banks were buying up mortgages (mostly Refis) to bundle into CDOs that were really junk, but sold as AAA bonds. They thought they were passing on risk so they didn’t care about the quality of the mortgages. Mortgage brokers and subprime companies threw away lending standards because they could sell the mortgages right away to Wall Street, profit off the fees and have no risk. This was a private sector free market crisis driven by the fact that OTC derivatives were not regulated. That was due to both parties — Clinton’s free traders stopped Brooksley Borne from even trying to record the level of OTC derivative trade in 1998. To blame the bubble on the Democrats is mindless partisan silliness. There is no way you can do that, unless you’re in complete denial of reality. Or perhaps you haven’t really educated yourself about what happened and instead just believe the talk radio silliness that blames this all on Fannie Mae. Educate yourself — there are a number of good books out there that detail the crisis in objective factual analysis. I’d recommend Nocera and McLean’s “All the Devils are Here” (which spares punches against neither party — neither the Democrats nor Republicans come out looking good).

        • @scotterb @CT I love to make you my punk, Erp. And it is SOoooooo easy.

          One chart, one topical piece from a Collectivist rag, telling the entire story.

          So fun!!!

        • Let’s review:
          You go a long way to show that an economy can survive raising taxes because several Northern European countries have done it. But as you yourself have shown , there are differences of approach among Northern Europe’s countries, and just a few days ago in this blog it was shown that all of Northern Europe is doing better than the South, even with a variety of tax policies. (http://www.qando.net/?p=12055).
          Furthermore, it doesn’t matter if an economy CAN succeed despite high taxes; the question at hand is whether higher taxes are NEEDED to help our economy or the government’s budget. The answer is conclusively NO, based on the fact that neither the economy or government revenue has a direct relationship with personal income taxes.

        • @scotterb
          You claim there has been a “shift of wealth” to the rich, as if the economy is a zero sum gain, and that extra money for the wealthy means less money for everyone else. In fact the numbers you posted show that 80% of people made gains from 79 to 09. But you claim that those results are unacceptable. You claim to support a system that rewards hard work and punishes laziness. THAT IS EXACLTY WHAT HAPPENED – AND YOU PROVIDED THE EVIDENCE.
          You claim to be opposed to banks giving out risky loans, and yet you continue to support the reelection and the economic policies of the one federally elected official that went so far as to sue a bank because they weren’t giving out enough of them.
          Facts have no effect on your way of thought. Conclusive proof that you are in either denial or unwilling to educate yourself. Anyone that believes what you write both politically and economically ignorant. If you actually do believe what you are posting, you need to take a basic geometry class to learn the basics of logic and reason. Then you need to open your mind and allow facts to trump your theories, no matter how emotionally satisfying a viewpoint is.

        • @CT Phil A shift of relative wealth is an objective measure, it can happen even if the economy is not zero sum (and I don’t think it is). You seem to have missed my use of the word “relative.” I do not support suing banks for not making risky loans. That wouldn’t be a ‘voting issue’ (I wouldn’t not vote for someone just for that issue) though. Your last paragraph is silly. Rather than pontificate, it might be good to answer the questions and make points, as I have. Insults are for those who are losing arguments.

        • @CT Phil Yes, my point was that the argument that higher taxes would necessarily harm the economy is objectively false, it is possible to have very high taxes and economic success. So far, despite the obvious truth of that fact, people have been resistant to admitting it. In fact, my point was also that you can have success with a variety of different policies, which you also now seem to agree with. So that’s progress. Are higher taxes needed? Clearly they aren’t absolutely necessary in theory. I would argue that: a) they are needed in the sense that you won’t get a political agreement to cut spending or reform entitlements without tax reform, especially closing loopholes and small increases on taxation of the very wealthy. So in that sense it’s a political necessity. Second, I would argue that even if unneeded it is the right decision. Budget cuts harm the poor and middle class the most, people who are struggling. Here in Maine poor folk will have less assistance on home heating, which could lead even to some deaths. Wealthy folk have benefited the most from the stability of the system and when we’re in economic crisis, they can afford to pay a little more — not drastic reform (I’m not suggesting things like OWS). That is the right thing to do. Moreover, if the GOP is resistant, you’ll likely see this issue work very well for the Democrats, already there seems to be a political shift taking place.

        • @scotterb
          “Your last paragraph is silly. Rather than pontificate, it might be good to answer the questions and make points, as I have. Insults are for those who are losing arguments.”

          “There is no way you can do that, unless you’re in complete denial of reality. Or perhaps you haven’t really educated yourself about what happened and instead just believe the talk radio silliness that blames this all on Fannie Mae. Educate yourself..”

          Maybe you should actually read your own posts before commenting

        • @scotterb @CT
          “I think you’re just trying to avoid admitting that there has been a shift of wealth from the middle class to the wealthy.”

          I didn’t MISS the the word relative. You didn’t use it until after your argument was shown false.

          Now you claim that economic policy (or even a basic understanding of economics) wouldn’t be a voting issue for you. I guess that part is true – your have consistently shown reality has no effect on your support for any issue.

        • So your arguments for higher taxes are: a) Democrats won’t cut spending without raising taxes on the rich and b) we shouldn’t cut spending anyway

          a) Guess what – It’s already been proven taxes don’t correspond directly to revenue, so the actual problem is that the Democrats are disconnected from reality.
          b) In other comments you have said that we need to get spending under control, so I guess you want to wait unitl unemployment is back down near 5% to do that. Those would have to be civilian jobs, not government ones; otherwise cutting the budget leads back to unemployment. That won’t happen without pro-business policies – like approval of the XL pipeline, repeal of the ACA (which would also prevent thousands of deaths each year) and not raising taxes on people that succeed.

        • @CT Phil First, there are many countries with higher taxes as a % of GDP, and that gives them higher revenue as a % of GDP. It is objectively wrong and even non-sensical to argue that higher taxes can’t give you higher revenue. I’m not against the XL pipeline and I’m drawing a blank on what the ACA is. Many things can be discussed. I am absolutely convinced that in our system neither side can really get their way for any length of time. Long term solutions require compromise. There is no other way in our system. I think that’s a good thing — and one reason I vote Republican in most US Senate elections, I trust my Republican Senators will be more willing to compromise than their Democratic opponents.

        • @CT Phil @CT I’ve been blogging about this for some time and I always use the word relative, and I’ve used it here. My post in fact cited numbers that showed absolute growth for all but the bottom fifth, if I wasn’t talking about relative wealth I certainly wouldn’t have posted those figures! I also have never claimed that a basic understanding of economics would not be a voting issue for me. Economic policy can indeed be a voting issue for me (it depends on the policy and how important it is) In the last couple posts you have a “convenient” method of restating my argument as something it is not, and then attacking your restatement. That’s usually a tactic not used by someone with facts on their side.

        • @scotterb

          I provided an exact quote – you did not use the word relative until after your point was proven false. You have a “convenient” habit of ignoring anything that goes against your claims – even your own posts.

          “I also have never claimed that a basic understanding of economics would not be a voting issue for me.” You directly stated that forcing banks to make low-quality loans wasn’t a voting issue for you. Giving out a large number of risky loans is obviously a bad policy, which explains why the banks didn’t do much of in the 80′s and early 90′s, even though they were legally allowed to. As Ragspierre showed, the bubble didn’t really expand until the Federal government changed the regulations in the late 90′s.

        • @scotterb

          I never said higher taxes can’t lead to higher revenue, just that they aren’t needed to get higher revenue. It’s nonsensical to argue that higher taxes are the only way to higher revenue when actual revenues rose dramatically after taxes were cut.

          As for the ACA, I guess I shouldn’t be surprised you don’t remember what it is (despite the fact you defended it tooth and nail, even though it was proven to increase the deficit and kill thousands) because it’s not in this month’s handout.

        • @CT Phil I’ve been using relative for a long time on my own blog, and I used it here, and the stats I posted clearly pointed to a relative shift. When was I “proven” wrong, and where did I ever claim it wasn’t relative? I think you know you’re wrong on that one.

          I did claim that supporting one law suit is not a voting issue. That’s different than stating having not having a basic understanding of economics or general economic policy would not potentially be a voting issue. You shift to say “giving out a large number of risky loans is bad policy” but that’s weaseling, that’s not one law suit. The bubble expanded with the arrival of OTC derivatives and the involvement of the big banks. I suggest you read one of the many good histories of the bubble, the best being “All the Devils are Here” by Nocera and McLean.

          There is something dishonest about twisting “I wouldn’t vote against someone for supporting one particular lawsuit” to saying that’s akin to supporting someone with “no basic understanding of economics” or that I’d never take “economic policy” into account in voting. I mean, you’re really clutching at straws here Phil.

        • @scotterb

          Print out the this comment and follow the directions:
          1. Refresh the page.
          2. Go to the top of the reader’s comments and click on the word “Oldest”. The first 50 comments will be on the page. This includes the comment where you posted statistics and at least ten other comment from you.
          3. Near the top of the screen, select “Edit”; then select “Find on this page..” A new box will appear on the screen.
          4. Type the word “relative” in the box, then click on “Next” just to the right of the box.

          You will find the only time the word relative is used in the whole page is in the original post. It does not appear in the comment where you posted the statistics or any of the dozen comments that follow.

          Extra credit: Check how many times you used the word “wealth” during those first 50 comments.

        • @CT Phil You’ll also see I never said anything else — I never implied I was talking about absolute wealth. Anyway, I can point you to my blog which I consistently talk about relative wealth. But look what you’ve dipped to – you’re not denying my argument, you’re just saying I wasn’t making it clearly earlier. It appears you know my argument is valid but you don’t want to admit it.

        • @scotterb

          I see that you repeatedly lied. Your argument was invalid from the beginning, and when that was pointed out you tried to change it. You distincly implied actual weath by the use ‘shift OF’ instead ‘shift in’ wealth and the fact that you did not once, in over a dozen comments, use the term relative, or any other modifier on the term wealth. There was no reason to go any farther discussing your argument when you are just going to lie about what your argument was every time it’s proven incorrect.

        • @CT Phil You are lying. My evidence was clearly talking about relative wealth because I very openly put that 80% of the data had absolute wealth growth after inflation. Since I posted that, you are lying if you say that I claimed there was any change in absolute wealth. My data makes clear we’re talking relative wealth! How pathetic — you attack someone with blatantly and clearly false claims, and then use that as an excuse to run away. That kind of dishonesty on your part is your admission of defeat on the substance of the argument. It never ceases to amaze me how unable people are to admit someone else may be right about something. Instead people shift arguments, fall into insults, or in your case make a charge that is obviously false since I clearly posted data that shows a relative shift! I mean, it’s so obvious! Sheesh!

          Oh, and I did go back to see if I ever inadvertently made a claim about absolute wealth. I didn’t, nor did I imply it. You can’t show any place I did because you know I didn’t. Shame on you.

        • @scotterb @CT “I think you’re just trying to avoid admitting that there has been a shift of wealth from the middle class to the wealthy. “

        • @looker @scotterb @CT

          You are going to great lengths to avoid admitting you lied when you posted this-
          “You seem to have missed my use of the word “relative.” ”

          Since even you admit that the middle class did not lose weath, it’s obvious that wealth did not shift FROM them, yet that is exactly what you wrote.

          “I very openly put that 80% of the data had absolute wealth growth after inflation … Oh, and I did go back to see if I ever inadvertently made a claim about absolute wealth. I didn’t, nor did I imply it.” You can’t even keep your story straight for one paragraph – did you openly mention absolute wealth or did you make no claim about it?

      • @scotterb @CT , GDP fall lags tax revenue drop off.

        There are degrees of this but the extreme example is when a company goes bankrupt. There’s no corporate profits to tax and there’s not employees to tax, but the company’s goods still go to market and are sold adding to the GDP. A lighter version is a company having to slash sale prices. Those cuts go directly to profits and employment/wages since raw material, energy, etc. are generally fixed and are expenses. So a 10% cut in sale price gets concentrated in reduced profits and wages reducing tax revenues much more than 10%.

      • @scotterb
        @scotterb
        Let’s review:
        You go a long way to show that an economy can survive raising taxes because several Northern European countries have done it. But as you yourself have shown , there are differences of approach among Northern Europe’s countries, and just a few days ago in this blog it was shown that all of Northern Europe is doing better than the South, even with a variety of tax policies. (http://www.qando.net/?p=12055).
        Furthermore, it doesn’t matter if an economy CAN succeed despite high taxes; the question at hand is whether higher taxes are NEEDED to help our economy or the government’s budget. The answer is conclusively NO, based on the fact that neither the economy or government revenue has a direct relationship with personal income taxes.

      • @scotterb
        You claim there has been a “shift of wealth” to the rich, as if the economy is a zero sum gain, and that extra money for the wealthy means less money for everyone else. In fact the numbers you posted show that 80% of people made gains from 79 to 09. But you claim that those results are unacceptable. You claim to support a system that rewards hard work and punishes laziness. THAT IS EXACLTY WHAT HAPPENED – AND YOU PROVIDED THE EVIDENCE.
        You claim to be opposed to banks giving out risky loans, and yet you continue to support the reelection and the economic policies of the one federally elected official that went so far as to sue a bank because they weren’t giving out enough of them.
        Facts have no effect on your way of thought. Conclusive proof that you are in either denial or unwilling to educate yourself. Anyone that believes what you write both politically and economically ignorant. If you actually do believe what you are posting, you need to take a basic geometry class to learn the basics of logic and reason. Then you need to open your mind and allow facts to trump your theories, no matter how emotionally satisfying a viewpoint is.

      • @scotterb No, Scott, an “economic bubble” is not a “fake economy.” Bubbles occur naturally in free market capitalism and are subject to market corrections. The housing bubble of the 2000s, however, was not a free market bubble. The market corrects housing bubbles on its own. This housing bubble was a mega-bubble created by government policies, most prominently the debauching of lending practices in the Fannie and Freddie secondary mortgage market. The normal market practices were suspended because of the government. So when the bubble created by that finally burst it blew everything else up with it. Then a long came the Obama-Pelosi tyranny of 2009-2010 which kept the arterial bleeding going, with the Stimulus (biggest heist ever), Obamacare, and Dodd-Frank, along with various and sundry other wet blanket attacks on recovery. Krugman was a cheerleader all the way, even wanted the Stimulus Heist to be bigger, etc.

        • @martinmcphillips No, the bubble was not created by government policies. It was created by private banks on Wall Street buying mortgages (bypassing Freddie and Fannie who had become irrelevant) and bundling up into AAA rated bonds (by private market ratings agencies who wanted the business) that were full of subprime mortgages. While Fannie and Freddie had standards, the new subprime loaners abandoned them because the big banks would buy them. The banks didn’t care about the mortgages because they were passing the risk on as bonds, creating systemic risk. The best of the many histories of this is Nocera and McLeans “All the Devils are Here.” They don’t take the mindless “one side good one side bad” approach of the partisans and instead detail mistake by all sides and both political parties.

          • Don’t know why I even bother, but that’s not at all how it worked. You can see the process for yourself as laid out by HUD (pdf). Note that Fannie, Freddie and Ginnie created and still dominate the business of securitizing loans and selling them on the market — the secondary mortgage market (in fact, the first MBS, the Mortgage Participation Certificate, was created by Freddie Mac in 1970). They also attract capital from all over the world to essentially subsidize interest rates on mortgages. And it was through Freddie, Fanny, Ginnie and the rest that CRA and the like were forced on to lenders, even where those lenders were not specifically covered by the CRA, etc.

            This is really just another example of government creating distortions in the market through its public/private partnerships and then leaving the “private” side to hold the bag when it all comes crashing down.

        • @scotterb @martinmcphillips “(bypassing Freddie and Fannie who had become irrelevant)”

          Which is of course why the Federal Government has lent $158 billion tax dollars to keep Freddie and Fannie solvent (and counting). Because they were solid on this. And what do Fannie and Freddie do? Why Looker, they insure, what? Mortgages. Irrelevant? $158 billion?

          Speaking of fantasy.

        • @scotterb No, that is completely wrong. The megabubble began with government literally ordering financial institutions to make loans to people who were not qualified borrowers and then debauching the Fannie/Freddie secondary market. The lenders and financial institutions were attempting to adapt to these new false market conditions. And certainly there was collusion between some institutions and the government, but this was a government-inspired catastrophe.

          This goes back to Clinton’s administration, in 1994 (although there are deeper roots as well, but this was the turning point) See this IBD article describing the “smoking gun” document issued by the Interagency Task Force on Fair Lending:

          http://news.investors.com/Article/589858/201110311638/Housing-Crisis-Obama-Clinton-Subprime.htm

          “[L]enders were directed to “make changes in marketing strategy or loan products to better serve minority segments of the market.” They were also advised to “change commission structures” to encourage brokers and loan officers to “lend in minority and low-income neighborhoods” — a practice Countrywide Financial, the poster boy of the subprime scandal, perfected…”

        • @scotterb These were actually Chicago ACORN’s tactics (Cf. Kurtz, “Radical-in-Chief”) turned into federal policy. More from that article:

          “For the first time, Washington’s bank regulators put racial lending at the top of their checklist. Banks that failed to throw open their lending windows to credit-poor minorities were denied expansion plans by the Fed in an era of frenzied financial mergers and acquisitions. HUD threatened to deny them access to Fannie Mae and Freddie Mac, which it controlled. And the Justice Department sued them for lending discrimination and branded them as racists in the press.

          “‘HUD is authorized to direct Fannie Mae and Freddie Mac to undertake various remedial actions, including suspension, probation, reprimand or settlement, against lenders found to have engaged in discriminatory lending practices,’ the official policy statement warned.”

        • @martinmcphillips I read the link, but it really has nothing to do with the dynamics of the 2002 onward bubble, which was not due to mandated loans or even Freddie and Fannie. What happened was the advent of the use of CDOs in an unregulated market of OTC derivatives. Subprime lenders got rid of all standards and even started lying to make it appear people should get loans in order to make massive fees. The biggest scoundrels were Ameriquest, Countrywide, New Century and others. They were wiling to do this because they knew Goldman, Lehman, Bear Stearns, Washington Mutual and others were yearning to buy any mortgage they could get their hands on and turn them into bonds. Most importantly, about two thirds of these were refis — meaning it wasn’t about getting people into homes, but refinancing existing loans. Others were speculators, “flipping” real estate.

          Here’s a bit from Nocera and McLean: Nocera and McLean, p. 181 (in a chapter that details how Fannie and Freddie operated): “In 2003, Fannie Mae’s estimated market share for bonds backed by single family housing was 45%. Just one year later it dropped to 23.5%…There was no question about why this was happening: the subprime mortgage originators were starting to dominate the market. They didn’t need Fannie and Freddie to guarantee their loans, and for the most part didn’t want the GSEs mucking around in their business. The subprime originators sold their loans straight to Wall Street which, unlike the GSEs, didn’t really care whether they could be paid back.”

          So it’s when the big banks pre-empted Fannie and Freddie to make big bucks on derivative trade that the bubble grew — Fannie and Freddie would later try to emulate the big banks, but they were following the private sector. Nothing in government policy led to this, the main mistake the government made was believing in free market ideology which said that OTC derivative trade did not need any regulation, not even reporting standards. This was NOT about getting people into homes by that point. Moreover, the reason the crisis hit so hard was all the bonds and leveraging. It was a private sector market creation.

        • @martinmcphillips But none of that had anything to do with the bubble. The private subprime lenders as my quote notes were bypassing Fannie and Freddie because they had standards — the Wall Street banks didn’t. Most of these were refis and the subprimes did not need to be ordered to loan — they went out of their way to make ANY loan they could because they knew they could collect fees and sell the loan to the big private banks. Those banks created CDOs (later CDSs, and bundled those as synthetic CDOs) to make loads of money. They got these rated AAA regardless of the value of the mortgages (nobody checked them). The drive to Alt-A or No doc mortgages did not come from the government; the government simply fell behind the big banks and didn’t know what was happening. The actions of the big banks magnified the risk and led to systemic breakdown. Again – this wasn’t government mandated, it was NOT about getting poor people into homes (the majority were refis) and it was all private sector. Freddie and Fannie started to emulate the bigger banks by 2008, but that’s when the big banks were bailing and it lead Freddie and Fannie to essentially collapse. Either the Nocera and McLean book, or “The End of Wall Street” by Lowenstein are very good analyses. You could also read “House of Cards” about the fall of Bear Stearns, it’s also got some good history of that firm. Entertaining but less comprehensive is Michael Lewis “The Big Short.”

        • @scotterb @martinmcphillips “Subprime lenders got rid of all standards”

          And you think that happened in a vacuum, it was just a policy they started on, had nothing to do with any government mandates. Though for decades no one would lend to unqualified candidates, suddenly one day, they all threw out the standards and decided to roll with it.

        • @looker @scotterb

          Even Freddie Mac employees realized they were causing the bubble in 2004.

          “Donna Cogswell, a colleague of Mr. Andrukonis [Chief Risk Officer], warned that Fannie and Freddie’s decisions to debase underwriting standards would have widespread ramifications for the mortgage market. In a Sept. 7 email to Freddie Mac CEO Dick Syron and others, she specifically described the ramifications of Freddie Mac’s continuing participation in the market as effectively “mak[ing] a market” in no-doc mortgages “

        • @scotterb Yes, and who got the ball rolling? And kept it rolling? To say that these changes that were mandated and enforced by federal agencies were not the source of this change in the mortgage markets is absurd.

          And Fannie and Freddie were the big players. They underwrote the mortgage market. Encouraged by Congress throughout. (Your selective choice of “mortgage backed bonds” doesn’t say anything about the secondary mortgage market, which became the foundation of the whole thing.)

          And just invert the matter and look at it from the point of view of sound lending practices: Where was the government when this was at full momentum? Answer: Continuing to encourage it. The private institutions that went down this path got on it because it had been paved by the federal government. And the idea that the government was “Shocked, Shocked!” that there was gambling going on in the casino is hypocrisy unto madness, but hypocrisy unto madness is baked into the nature of the federal government now, and it is incontrovertible that it enabled the entire hosing market catastrophe. Normal bubbles are corrected by market forces well before they ever get to what this one got to, and the difference with this one is that the government was spinning the roulette wheel.

          For decades Fannie and Freddie, as bad as they are in their very conception, maintained strong and sane practices, until the 1990s.

        • @martinmcphillips While I certainly don’t defend Fannie and Freddie in all they do, or Congressional policy, this is a case where the private banks not only went beyond anything they did, but completely did away with lending standards. Moreover, it wasn’t to get poor into homes, they didn’t care about that. In fact, the Bush Administration’s preoccupation with GSEs early on caused them to turn a blind eye to the real culprits — Wall Street banks and OTC derivative trade. At best you could argue the government created a culture, both out of support for home ownership and deregulation of the financial sector, that helped spur this on. But Fannie and Freddie were surpassed by the private banks, and their bizarre financial products caused the bubble.

          The path taken by Wall Street was not paved by the federal government; the government was ignorant about what was going on due to its misplaced faith in the market. The CDO trade and what it spurred was not a result of any government policy, it was done to make money believing risk to passed on. I gave you a set of books to read. The attempt to blame it all on government or on Fannie and Freddie is post-modern ideological effort to create an alternative narrative to the truth to avoid admitting realities which contradict the right’s ideological premise. I never thought the conservatives would emerge as the true post-modernists, where reality is irrelevant and all that matters is what kind of interpretive narrative they can spin. The reality is there is blame on many levels. Freddie and Fannie deserve a lot of criticism for many of their policies (especially in 2008 when they became more aggressive as the big banks started to fall), Wall Street deserves the lions’ share of the criticism, government refusal to regulate OTC derivatives (Clinton’s administration passed on this) also deserves a share of the blame, and the financial media which simply parroted what the CEOs wanted them to say helped keep the public believing that the insanity of the housing bubble was real. If you want truth and not ideological narrative, there is blame all over the place to share.

        • @scotterb “The path taken by Wall Street was not paved by the federal government; the government was ignorant about what was going on due to its misplaced faith in the market.”

          Nonsense. The government laid the tracks and forced the mortgage lenders to run their trains on them. They knew what was going on because they *set* the standards, or, rather, removed the standards. You cannot then turn around and say that the government didn’t know what was going on because it had a misplaced faith in the market. On the contrary: It had insufficient faith in the market. That’s why it intervened with its ACORN-inspired activism to force lenders to give mortgages to unqualified borrowers. There’s no valid claim that it didn’t know that “Wall Street” (a ridiculous abstraction) was running trains on the track it had ordered lenders to use.

          All it takes here is a look at the before and after photos of the mortgage industry.

          The government re-made the market on its preposterous terms and it exploded in everyone else’s face. It’s very clear why the government class would like to blame shift this to “Wall Street.”

        • @martinmcphillips The problem is that metaphors make bad arguments. The government “laid the tracks?” They didn’t. The removal of standards when the big banks started turning these into bonds was not from the government. As my quote above showed, subprime lenders liked the fact they could avoid Fannie and Freddie because Fannie and Freddie had standards and Lehmans, Goldman, et al. did not. No one was forcing lenders to give mortgages at that point, in fact, most of the lending was refis.

          Your argument, built on a metaphor, amounts to this: because the government supported giving mortgages to those who might have trouble paying them back, therefore any future activity, even if it went far beyond that, must be blamed on the government. That is wrong factually — the big banks were driven by their own greed, not government policy — and whitewashes choices made that led to disaster, including faith in the market. The government didn’t demand that subprime lenders eliminate all standards, they did not demand they pursue refis, they did not demand that big banks issue bizarre financial instruments, earning bonuses of tens of millions to people involved in issuing what was ultimately junk bonds. The government did not force the rating agencies to rate AAA bonds they didn’t understand, and which in reality were deeply flawed.

          When one tries to ignore all those errors and blame government completely via metaphor (they ‘laid the track’ by promoting home ownership by the poor who maybe shouldn’t get a loan), you make it easy to ignore all the crimes and deceits done by big money on Wall Street. That’s why a focus on the truth rather than ideological convenience forces people to see the complexity of the situation. Skewer Freddie and Fannie where they deserve it, but don’t use that to ignore the impact of de-regulation (Greenspan admitted his ‘world view was wrong’ that ‘markets get it right.’), monetary policy (cheap credit made this worse than it might have been) and Wall Street deceit.

        • @scotterb I can build my argument twenty different ways. How about this: The government started the sub-prime mortgage market by forcing financial institutions to make loans to people who were not good risks. It did that with threats and intimidation. It used Chicago ACORN tactics, making them federal policy. That changed the fundamental nature of the residential mortgage market. It led to the debauching of the previously sound standards of Fannie and Freddie. These were not separate events. And financial institutions found ways to work with these new standards, to lay off risk, and live with this foolish intervention and still find ways to make profit. The conditions that made this market were established by the federal government. There is no question about this. None whatsoever. And this sort of thing is nothing unusual for the government; its interventions are always disasterous. That’s because market forces have natural discipline. They will correct bubbles by their nature. Even where there is bad practice. But when compulsion is a key element in making a market, the market will adapt only as best as it can and will not be able to change the policy that compels the market to step away from its disciplines. That is as basic as it gets.

        • @martinmcphillips But what Wall Street did was throw away all standards, and not even care about getting people in homes. Arguing about ‘setting conditions’ is tricky. Did WWI set the conditions that allowed the Nazis to rise? Did the Versailles Treaty make Nazism more likely, “laying the tracks” for fascism? One can make that argument, probably convincingly. But that does not take away responsibility of the National Socialists for their actions, how they got to power, or what they did. You can say the federal government helped set up a warped mortgage market. But that didn’t make CDOs, synthetic CDOs and an unregulated OTC derivative market inevitable, nor did it mean the government couldn’t regulate these financial products and prevent the total erosion of standards. Certainly nothing was compelling lenders to make these loans, or to sell these bonds. Again, I recommend Nocera and McLean, or Lowenstein, as two of the better histories of this. For how the left sees this, read Matt Taibbi.

        • @scotterb The government made the market, established the conditions, It’s not tricky. They opened the door to debauched standards. They opened the door and shoved lenders through it. You say nothing was compelling lenders to make these loans? Then you didn’t read the IBD story at the link I posted. They most certainly did compel them to make these loans. They threatened them with investigations, accusations, and denial of access to the secondary market — in other words they threatened their institutional survival.

          And they are still doing it:

          “Clinton’s task force survived the Bush administration, during which it produced fair-lending brochures in Spanish for immigrant home-loan applicants.

          “And it’s still alive today. Obama is building on the fair-lending infrastructure Clinton put in place.

          “As IBD first reported in July, Attorney General Eric Holder has launched a witch hunt vs. “racist” banks.

          “‘It’s a more aggressive fair-lending enforcement approach now,’ said Washington lawyer Andrew Sandler of Buckley Sandler LLP in a recent interview. ‘It is well beyond anything we saw during the Clinton administration.’”

        • @scotterb And when you are forced into such risks, of course the more inventive risk abatement strategies are inevitable. And the private sector isn’t in the charity game. Compelled to lend money to people who can’t pay, it will find ways to turn it into a silk purse. It will go to market with all sorts of strategies. But the markets aren’t at fault here; they will correct abuse *in* *the* *market.* This was government abuse, using compulsion, of the mortgage markets. That is the beating heart of this catastrophic scandal.

        • @martinmcphillips But no one was being compelled to lend; Ameriquest, Countrywide and others lent because the big banks wanted to buy their mortgages. This went far beyond anything the government was promoting, this was another universe. If it had been just bad loans to people who couldn’t pay it would have been a minor problem, that could not have caused the bubble. You can say the government helped set the conditions, but for Wall Street there was no compulsion, no one wanting them to make the loans and refis, and the big damage was done by the derivative trade which magnified the problem.

        • @scotterb Yes, that’s the point, they were compelled to lend, and so when you say that Countrywide, for instance, went far beyond what the government wanted, what you are saying is that they found a way to make money by doing precisely what the government had *demanded* that they do and then some. Do you recall who Countrywide was in bed with, among others? None other than Chris Dodd, who found his way to the exit of his political career not long after the whole thing blew up. Perfect bedfellows.

          And what you seem to want to do here is to somehow diminish the undiminishable: The gargantuan role played in this catastrophe by Fannie and Freddie. They became the centerpiece of the whole thing. The ultimate enabler. The really big whorehouse.

          When the government creates an environment where it is using lenders to service its client class, i.e., stealing from lenders by compelling them to give money to people who can’t pay it back, then of course they have created an environment where the crooks like those at Countrywide will work every angle. But that was just the fallout. That was extra gas in the balloon. So you found the writers who told you about the ‘Orrible “Wall Street.”

          I hate to tell you this, but anyone paying attention knows where this came from.

        • @martinmcphillips @scotterb
          “But no one was being compelled to lend”
          Martin, you fail to acknowledge that just because the federal government mandated that every company HAD TO make a certain percentage of their loans high-risk AND gave companies a method for lowering their companies exposure, doesn’t mean they were forced to continue in the mortgage business. Every company had the option of not giving out any loans at all, and then there would have been no crisis.

        • @CT Phil @martinmcphillips @scotterb And no mortgages to people who couldn’t afford them? As soon as it became clear that was happening you know the government would have jumped right back in with both huge feet and found a way to mandate it, because they were busy buying votes and getting back door deals like Dodd. Amazing that people would remember the media based hammering on the financial institutions and the forget the non-hammering that occurred over the Bush administration attempts to stop Fannie and Freddie (to the point now where some people are merrily following the long pattern of Blaming Bush).

  • Warren Meyer easily demonstrates that the problem is spending, not revenue: http://www.coyoteblog.com/coyote_blog/2011/11/help-for-the-super-committee-is-it-a-tax-or-spending-problem.html

  • The more private wealth there is (and the more public spending is cut), the more adapatability the economy will have. More capital to invest (or saved or spent) means more things will be tried. More innovation. More growth in the private economy. More real businesses. More real jobs.Cut public spending. Don’t provide more tax revenue to it except as a volume product of private sector growth. Eviscerate public employee unions by drastically reducing the things government has a monopoly on (like education). Stop supporting prices; let the market set them. End both Social Security and Medicare (and of course get rid of Obamacare ASAP) through privatizing them. Don’t continue to use compulsion to financed these stupid and worthless plans. Decrease employment costs: make it easier to employ people, including getting rid of minimum wage laws. That will help employ teenagers and unskilled workers, allowing them to acquire skills. Krugman is a knee-jerk socialist who of course wants to take more from successful people.

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