Economics for idiots

[SasaS]

6 minutes ago, AngryofTuebrook said:

The higher rate of tax (75% or whatever) would only apply to the highest incomes.  We're talking about progressive taxation. 

 

I categorise income from work (especially where there's a relationship whereby the more work you do results in more pay) as earned.  If you own shares, the amount of dividend income you receive can go up or down irrespective of anything you do; it's unearned. 

You'd be needlessly disincentivising people from owning shares, you should motivate them to own shares in companies they work in. In fact, I think it should be made mandatory for the employers to pay everybody partly in stocks, along the lines of Labour's proposal that profit sharing is mandatory, but with ownership instead of profit. That would do more against inequality than constantly trying to increase tax for highest earners they don't even pay at a lower rates. 

[AngryOfTuebrook]

8 minutes ago, A Red said:

Where do you see the level being that is a disincentive for investing in shares or rental homes? 

I've not done the sums; I'll leave that to the economists.

 

The general principles still stand, though.

[Jose Jones]

1 hour ago, SasaS said:

You should tell that to the Eastern "New" Europe countries, where there is statistically less inequality  than in the West.
 

Why are you deliberately posting stupid?

[A Red]

4 minutes ago, AngryofTuebrook said:

I've not done the sums; I'll leave that to the economists.

 

The general principles still stand, though.

I understand what you mean by unearned income. In order for you to suggest a 75% tax rate for return on investment,  surely you must know or can quote somebody who can tell us where the line is between being the policy being a success or failure.

[deiseach]

4 hours ago, AngryofTuebrook said:

Wow!

 

How many miles of railway track did Carnegie lay? None. He got thousands of desperately poor people to work in appalling and dangerous conditions for fuck all pay, while he grew massively wealthy off their sweat and blood. That type of broken society is what minimal rates of tax will get you.

 

It's a myth that low taxes give you more autonomy.  Low tax/low public spending economies just leave the vast majority of the population losing their autonomy to the private sector.  (For example, I would argue that people in countries with free healthcare and education have a lot more freedom in many important respects than people in countries where those things are not provided. )

 

As for taxes on wages, nobody is talking about 75% or anything like it.  Those rates of tax are only to be applied to unearned income. The sources of income of people who would be subject to those sort of tax rates are, primarily, the things they own (rental properties; shares; IPR; etc.) rather than any work they do. Higher tax rates on that sort of income does nothing to disincentivise productivity; on the contrary, it can be used to invest in education, infrastructure, incentives for innovation, etc.

Your excellent post reminded me of this. Pretty much my manifesto by now. One less bell to answer.

Quote

Socialism: Converting Hysterical Misery into Ordinary Unhappiness

 

BY COREY ROBIN

The Left wants to give people the chance to do something with their lives, by giving them time and space away from the market.

In yesterday’s New York Times, Robert Pear reports on a little known fact about Obamacare: the insurance packages available on the federal exchange have very high deductibles. Enticed by the low premiums, people find out that they’re screwed on the deductibles, and the co-pays, the out-of-network charges, and all the different words and ways the insurance companies have come up with to hide the fact that you’re paying through the nose.

 

For policies offered in the federal exchange, as in many states, the annual deductible often tops $5,000 for an individual and $10,000 for a couple.

 

Insurers devised the new policies on the assumption that consumers would pick a plan based mainly on price, as reflected in the premium. But insurance plans with lower premiums generally have higher deductibles.

 

In El Paso, Tex., for example, for a husband and wife both age thirty-five, one of the cheapest plans on the federal exchange, offered by Blue Cross and Blue Shield, has a premium less than $300 a month, but the annual deductible is more than $12,000. For a forty-five-year-old couple seeking insurance on the federal exchange in Saginaw, Mich., a policy with a premium of $515 a month has a deductible of $10,000.

 

In Santa Cruz, Calif., where the exchange is run by the state, Robert Aaron, a self-employed 56-year-old engineer, said he was looking for a low-cost plan. The best one he could find had a premium of $488 a month. But the annual deductible was $5,000, and that, he said, “sounds really high.”

 

By contrast, according to the Kaiser Family Foundation, the average deductible in employer-sponsored health plans is $1,135.

 

It’s true that if you’re a family of three, making up to $48,825 (or, if you’re an individual, making up to $28,725), you’ll be eligible for the subsidies. Those can be quite substantive at the lower ends of the income ladder. But as you start nearing those upper limits (which really aren’t that high; below the median family income, in fact), the subsidies start dwindling. Leaving individuals and families with quite a bill, as even this post, which is generally bullish on Obamacare, acknowledges.

 

Aside from the numbers, what I’m always struck by in these discussions is just how complicated Obamacare is. Even if we accept all the premises of its defenders, the number of steps, details, caveats, and qualifications that are required to defend it, is in itself a massive political problem. As we’re now seeing.

 

More important than the politics, that byzantine complexity is a symptom of what the ordinary citizen has to confront when she tries to get health insurance for herself or her family. As anyone who has even good insurance knows, navigating that world of numbers and forms and phone calls can be a daunting proposition. It requires inordinate time, doggedness, savvy, intelligence, and manipulative charm (lest you find yourself on the wrong end of a disgruntled telephone operator). Obamacare fits right in with that world and multiplies it.

 

I’m not interested in arguing here over what was possible with health care reform and what wasn’t; we’ve had that debate a thousand times. But I thought it might be useful to re-up part of this post I did, when I first started blogging, on how much time and energy our capitalist world requires us to waste, and what a left approach to the economy might have to say about all that. It is this world of everyday experience — what it’s like to try and get basic goods for yourself and/or your family — that I wish both liberals and leftists were more in touch with.

 

The post is in keeping with an idea I’ve had about socialism and the welfare state for several years now. Cribbing from Freud, and drawing from my own anti-utopian utopianism, I think the point of socialism is to convert hysterical misery into ordinary unhappiness. God, that would be so great.

 

There is a deeper, more substantive, case to be made for a left approach to the economy. In the neoliberal utopia, all of us are forced to spend an inordinate amount of time keeping track of each and every facet of our economic lives.

 

That, in fact, is the openly declared goal: once we are made more cognizant of our money, where it comes from and where it goes, neoliberals believe we’ll be more responsible in spending and investing it. Of course, rich people have accountants, lawyers, personal assistants, and others to do this for them, so the argument doesn’t apply to them, but that’s another story for another day.

 

The dream is that we’d all have our gazillion individual accounts — one for retirement, one for sickness, one for unemployment, one for the kids, and so on, each connected to our employment, so that we understand that everything good in life depends upon our boss (and not the government) — and every day we’d check in to see how they’re doing, what needs attending to, what can be better invested elsewhere. It’s as if, in the neoliberal dream, we’re all retirees in Boca, with nothing better to do than to check in with our broker, except of course that we’re not. Indeed, if Republicans (and some Democrats) had their way, we’d never retire at all.

In real (or at least our preferred) life, we do have other, better things to do. We have books to read, children to raise, friends to meet, loved ones to care for, amusements to enjoy, drinks to drink, walks to take, webs to surf, couches to lie on, games to play, movies to see, protests to make, movements to build, marches to march, and more.

 

Most days, we don’t have time to do any of that. We’re working way too many hours for too little pay, and in the remaining few hours (minutes) we have, after the kids are asleep, the dishes are washed, and the laundry is done, we have to haggle with insurance companies about doctor’s bills, deal with school officials needing forms signed, and more.

 

What’s so astounding about Romney’s proposal — and the neoliberal worldview more generally — is that it would just add to this immense, and incredibly shitty, hassle of everyday life. One more account to keep track of, one more bell to answer.

 

Why would anyone want to live like that? I sure as hell don’t know, but I think that’s the goal of the neoliberals: not just so that we’re more responsible with our money, but also so that we’re more consumed by it: so that we don’t have time for anything else. Especially anything, like politics, that would upset the social order as it is.

 

We saw a version of it during the debate on Obama’s healthcare plan. I distinctly remember, though now I can’t find it, one of those healthcare whiz kids — maybe it was Ezra Klein — tittering on about the nifty economics and cool visuals of Obama’s plan: how you could go to the web, check out the exchange, compare this little interstice of one plan with that little interstice of another, and how great it all was because it was just so fucking complicated.

 

I thought to myself: you’re either very young or an academic. And since I’m an academic, and could only experience vertigo upon looking at all those blasted graphs and charts, I decided whoever it was, was very young. Only someone in their twenties — whipsmart enough to master an inordinately complicated law without having to make real use of it — could look up at that Everest of words and numbers and say: Yes! There’s freedom!

 

That’s what the neoliberal view reduces us to: men and women so confronted by the hassle of everyday life that we’re either forced to master it, like the wunderkinder of the blogosphere, or become its slaves. We’re either athletes of the market or the support staff who tend to the race.

 

That’s not what the left wants. We want to give people the chance to do something else with their lives, something besides merely tending to it, without having to take a thirty-year detour on Wall Street to get there. The way to do that is not to immerse people even more in the ways and means of the market, but to give them time and space to get out of it. That’s what a good welfare state, real social democracy, does: rather than being consumed by life, it allows you to make your life. Freely. One less bell to answer, not one more.

 

[SasaS]

19 minutes ago, Jose Jones said:

Why are you deliberately posting stupid?

 

Because I have recently seen the chart which shows that the poor Europe is more equal than rich Europe.

Also, I remember reading the chart showing where in Europe people would benefit the most if the wealth held by the richest (1% or something) would be distributed to all citizens, the chart was topped by Sweden. Another one, with most millionaires per thousand people or something, was topped by Germany.

[deiseach]

2 minutes ago, SasaS said:

Because I have recently seen the chart which shows that the poor Europe is more equal than rich Europe.

The chart is lying to you.

[Strontium]

3 hours ago, Duff Man said:

It's really weird that the super rich are almost always against raising taxes, but can't wait to tell you about their new foundation. It's a real mystery.

 

Doubtless many billionaires feel that they can distribute their money better than the government does. For instance, Bill Gates donates hundreds of millions to family planning and reproductive health in the third world, which is not something you can imagine a Republican-led government doing.

[Spy Bee]

46 minutes ago, A Red said:

In this thread?

 

I'm really not that arsed, but yes.

[A Red]

2 minutes ago, Spy Bee said:

 

I'm really not that arsed, but yes.

You are arsed, you're moaning about a neg from 2 1/2 years ago. Fucking hell, fair play to you.

[Spy Bee]

3 minutes ago, A Red said:

You are arsed, you're moaning about a neg from 2 1/2 years ago. Fucking hell, fair play to you.

It was today, not two and half years ago. I thought I'd already made that clear.

 

You're the one going on about it.

[A Red]

7 minutes ago, Spy Bee said:

It was today, not two and half years ago. I thought I'd already made that clear.

 

You're the one going on about it.

Oh, I see, sorry! You still shouldnt let it worry you. I'll give you a rep to cancel it out.

[SasaS]

30 minutes ago, deiseach said:

The chart is lying to you.

Possibly. The more I read and think about the issues surrounding equality the more I realize how simplistically it is generally approached, is it assets, is it income, is it global, or is it in individual countries, is it the lowest incomes or is it the Western middle class saying goodbye to the post-war prosperity. I get who the 1% are, but what do we have in common within the 99% group?

[Spy Bee]

9 minutes ago, A Red said:

Oh, I see, sorry! You still shouldnt let it worry you. I'll give you a rep to cancel it out.

He's probably did it because I mentioned Rothschild and that makes me an antisemite - thing is, this was 2.5 years ago, when nobody thought mentioning the name of a Jewish person in a manner which could be construed as negative was antisemitic.

[Duff Man]

16 minutes ago, Sixtimes Dog said:

 

Doubtless many billionaires feel that they can distribute their money better than the government does. For instance, Bill Gates donates hundreds of millions to family planning and reproductive health in the third world, which is not something you can imagine a Republican-led government doing.

Yes I'm sure that's the primary motivation. Also funny how they seem to have the same feelings about wealth distribution regardless of who's in government.

[Strontium]

1 minute ago, Duff Man said:

Yes I'm sure that's the primary motivation. Also funny how they seem to have the same feelings about wealth distribution regardless of who's in government.

 

Do you have any specific examples, because I'm finding the insinuations a little too vague to meaningfully address.

[deiseach]

28 minutes ago, Sixtimes Dog said:

 

Doubtless many billionaires feel that they can distribute their money better than the government does. For instance, Bill Gates donates hundreds of millions to family planning and reproductive health in the third world, which is not something you can imagine a Republican-led government doing.

Dude, read some fucking Dickens. Jesus Christ.

[Strontium]

Spoiler Alert: Ebenezer Scrooge isn't a real person.

[Numero Veinticinco]

1 hour ago, A Red said:

No, further to the right than you

So, you're not right-wing? 

[Duff Man]

35 minutes ago, Sixtimes Dog said:

 

Do you have any specific examples, because I'm finding the insinuations a little too vague to meaningfully address.

Of what?

[A Red]

26 minutes ago, Numero Veinticinco said:

So, you're not right-wing? 

Probably not

[Strontium]

39 minutes ago, Duff Man said:

Of what?

 

Of these rich people who are dead against tax rises, but who are keen to tell all and sundry about their charitable foundations.

[moof]

2 hours ago, deiseach said:

Your excellent post reminded me of this. Pretty much my manifesto by now. One less bell to answer.

 

Interesting post, cheers

[AngryOfTuebrook]

2 hours ago, A Red said:

I understand what you mean by unearned income. In order for you to suggest a 75% tax rate for return on investment,  surely you must know or can quote somebody who can tell us where the line is between being the policy being a success or failure.

Someone else mentioned 75%; I just said "why not" because it's downright moderate compared to the top rate of tax that the Beatles sang about.

 

More important than identifying the line between failure and success is defining the criteria for those things. I would say that you'd have to find a level that maximises the tax take - to allow for investments to reduce poverty and inequality - while minimising any negative impacts of taxation. 

[A Red]

7 minutes ago, AngryofTuebrook said:

Someone else mentioned 75%; I just said "why not" because it's downright moderate compared to the top rate of tax that the Beatles sang about.

 

More important than identifying the line between failure and success is defining the criteria for those things. I would say that you'd have to find a level that maximises the tax take - to allow for investments to reduce poverty and inequality - while minimising any negative impacts of taxation. 

There has to be a point in which the maximisation of tax revenue line meets the now harmful to private investment line. Has this worked anywhere before where unearned income such as property rental and share dividends are taxed at around 75%?