29 April 2011

28 April 2011

Keynes v Hayek, Round Two

This is a follow-up to their previous epic battle:

word, Freddy.

27 April 2011

Maybe I am as Think as you Dumb I am.

According to Dana Milbank of the Washington Post, President Obama is just too smart and honest to do his job well. This is probably one of the most nauseating examples of suckling toadyism that I can ever recall seeing.

Milbank seeks "a template to understand the enigmatic president." It is pretty clear from the outset that Milbank is seeking no such thing, he has a template to describe the president. And I don't know were "enigmatic" is coming from. Obama may or may not be any number of things, but he sure as hell isn't an enigma.

We are treated to phrases like:

  • “He is a brilliant social and political analyst, which makes it harder for him to play hardball or to bluff.” (quoting a professor of psychology who, I think it can be safely assumed, never met much less treated analyzed the brilliant social and political analyst-in-chief).

  • Obama’s strengths and weaknesses come from his high degree of “integrative complexity”

  • Though Tetlock hasn’t applied his methodology to Obama, the 44th president would seem to be the very model of the complex thinker. (Tetlock is another of the experts who at least is honest enough to admit he hasn't actually, you know, studied this or anything, but that Obama is still the "very model" of this example).

  • Obama’s capacity for complex thought can become a liability, so, too, can his cool rationality. (So not only is he more intelligent than people dumb enough to disagree with him, he is more sane, also).

  • We also learn in the article that Winston Churchill was simple-minded (who knew!).

Debates about impartiality or bias in the media are tiresome. Yes, there is bias and no, it isn't as bad as anyone thinks. But this sycophantic slobbering is a bridge too far and whoever edits Milbank and the Washington Post really should be ashamed that this was allowed even to run.

Jonah Goldberg chimes in on this as well.

25 April 2011

Funny Math

Glutton for punishment that I am, I was looking over The Universe's Smartest Man's blog and stumbled upon this little gem, titled Zombie Tax Lies (the idea being that the concept should be dead, but it keeps coming back, get it?).

His ire was gotten up, or rekindled anyway, by this post by someone named Jonathan Chait and this little ditty put out by an organization known as Citizens for Tax Justice.

Here's the re-cap: usually about tax time every year, people point out that the "wealthy" pay more in taxes; other people point out that, 1) that's only fair, because the wealthy steal their wealth from the surplus value of the laborers that they exploit and, 2) the wealthy really don't pay any taxes and really should be paying much much more, and the lying cheating bastards really should feel honored to do so.

The Smartest Man in the Universe, Mr. Chait and the Citizens for Tax Justice all fall into the "other people" category, and all throw out the same tortured logic to prove their point.

They do not contest that the top 1% of earners pay 38% of the take on federal income taxes, though none of them repeat the exact statistic because it would rightly disgust anyone of sound mind that 1% of the population would pay more than a third of the income tax collected. They all use the dodge that the federal income tax isn't the only tax paid. That state taxes and the "contributions" made to social security and medicare are regressive and therefore spread the tax burden more equitably...which of course justifies their belief that the rich aren't paying enough and should pay more.

On this, two points. First, the way progressives, liberal, communists, socialists, Marxists and Leninists use the word "regressive" when it come to taxation is fatuous. The thinking that someone making $20,000/year and pays 12.5% in social security taxes pays a higher burden than someone making $100,000/year and pays 12.5% in social security tax is regressive completely disregards what regressive taxes are: a decreasing rate as the base increases. Flat taxes are not regressive. Now, if in the above example the person making $20,000/year pays a $1,000 tax and the person making $100,000 pays a $1,000 tax, that would be regressive. People making more than $109,000 don't have to pay social security and medicare taxes, er, sorry, contributions because the benefits paid out are also capped.

Second, the federal budget is bigger than state and local budgets. Paying 38% of $1,366,241,000,000, which is $519,171,580,000*, is a whole lot more than whatever is paid in state taxes by the two lowest quintiles of income distribution. In the chart (above) that accompanies the three articles by the three "make them pay more" group, the top three quintiles still pay more as a percentage of all tax collected than they collect in total income, even with them gerrymandering the numbers in favor of their own argument.

No kidding. This is the evidence used to rebut the argument that the rich don't pay too much in taxes. This is the zombie that the Smartest Man in the Universe, for all of his intelligence, just can't slay. Why? Because you, you dolt, just aren't as smart as he and his friends are.

*numbers are from 2007, via wikipedia here.

22 April 2011

Keynes on Keynesianism

‎"The theory of aggregate production, which is the point of the following book, nevertheless can be much easier adapted to the conditions of a totalitarian state than the theory of production and distribution of a given production put forth under conditions of free competition and a large degree of laissez-faire. This is one of the reasons that justifies the fact that I call my theory a general theory."

--John Maynard Keynes, from the forward to the 1936 German Edition of his General Theory of Employment, Interest and Money

n.b.-this was written in 1936 when some little totalitarian dick named Hitler was running things in Germany. Giving proof that Keynesianism, properly understood, works best in a totalitarian system; where government is the master and the people are the servants.

21 April 2011

When WE do it, it's OK

Imagine a company were publicly to express confidence in its future earnings and ability to meet its debt obligations while privately pressuring one of the major ratings agencies not to downgrade its bond rating. We would have a term for that, and it would be securities fraud. But nary an eye is blinked when Uncle Sam does it.

15 April 2011

15 April

I don't like taxes. Any of them. And I'm put off by people who are either ambivalent about them or think they are a good idea. A necessary evil, perhaps, but the operative word would be evil over necessary. I know government needs revenue in order to function, and though I admire and respect Murray Rothbard, I am not an anarchist. Anarchy may be a fine aspiration (mankind living harmoniously, with respect to human, civil and property rights without the need for government), but I don't think it realistic.

The establishment of government means that we all have to give up some liberty in exchange for order. But since some liberty must be sacrificed, and since liberty is something held dear, we should keep the amount we must sacrifice to the absolute minimum. And this requires keeping government to an absolute minimum. Which would keep the amount of revenue needed for the government to function as low as possible. Which would have the happy consequence of keeping taxes as low as possible.

People who say "I would gladly pay more in taxes" are, to put it mildly, idiots. That means that they quite obviously receive too much compensation for the work they do. Secondly, anyone who wishes to pay more in taxes can. Have your employer withhold the maximum amount from your pay and don't claim any deductions. And don't cash your refund check. It is obvious that anyone who would do these things is not a rational actor. And I don't want irrational people telling me what to do with my money.

Then we have those who say the "rich" should pay their "fair share." I have said it before and I will say it again: the easiest thing in the world to do is to spend someone else's money. Milton Friedman devotes a chapter to this in his book Free to Choose (Chapter 4, From Cradle to Grave, please see the video that accompanies the chapter here). Not only is it easy to spend someone else's money, it is just as easy to waste someone else's money. And government, every single government that has ever existed, proves exceptionally good at this.

So when you couple this almost genetic compulsion to waste money, even when the task at hand is a legitimate function of government and works to the best interest of all participants with no negative externalities, with the propensity to spend more money than taken in, you have what is known as a problem. And folks, we got a big problem. And the problem has gotten as big as it is because government, and people's expectations of government, has become unchained from what its legitimate function is.

In his speech on Wednesday, 13 April 2011, President Obama pointed out that he doesn't care for the spending plan for the 2012 budget laid out by the Republicans because "their vision is less about reducing the deficit than it is about changing the basic social compact in America."


Social Security was started in 1935 and Medicare and Medicaid were started in 1965, 76 and 46 years respectively. The country is 235 years old and the constitution is 222 years old. I don't think a transfer program that is one-month younger than my step-father can be considered a more important social compact than the constitution of the United States.

Realizing that people not only are responsible for themselves, but actually can be responsible for themselves in an anathema to most politicians, because what then would the politician be good for if not taking from the many to give to the few in order to remain in office?

Another point. Obama also said in his speech: "Part of this American belief that we are all connected also expresses itself in a conviction that each one of us deserves some basic measure of security. We recognize that no matter how responsibly we live our lives, hard times or bad luck, a crippling illness or a layoff, may strike any one of us. 'There but for the grace of God go I,' we say to ourselves, and so we contribute to programs like Medicare and Social Security[.]" Pleasing rhetoric, no doubt, but utter nonsense.

No one I know "contributes" anything to Social Security, Medicare or Medicaid. It is taken from your pay by your employer and remitted to the government quarterly, along with the employer's matching "contribution" under penalty of law. Things tight this quarter? Need to pass on making that "contribution"? Guess what happens? You won't be discussing the virtues of government mandated compassion with the fellow with the pleasing rhetoric. You will be faced with fines and penalties and liens on any real estate you own. Decide to keep too much of your own money and you're looking at accommodations at some other federally run resorts.

We don't "give" to Social Security, Medicare and Medicaid because we are compassionate towards our fellow citizens. We give to churches, the Red Cross, food pantries. We give our time and effort and money to others. That is charity. That is compassion. Because it is voluntary, it is not good, it is great. It is a very small step towards that Utopia of Anarchy. It is also something people have done since people have been around. It even precedes people. Evidence of altruistic behavior can be seen throughout the animal kingdom. But we "give" to these government entities, the ones that will spend the money foolishly while increasing the soul-deadening bureaucracy, because if we don't we will lose more money, lose our homes, go to jail or all three.

These programs throw the government-liberty balance completely out of whack.

09 April 2011

More Fallacies

This interview with Robert Reich, for Labor Secretary for President Clinton, encapsulates nicely what liberals and Keynesians continue to get wrong about economics. First, the 12 year old host of the program states that we were "brought to the brink" over what amounts to 1% of federal spending. I am becoming more and more amused by this argument, which boils down to "we can't cut this program because it costs too little to make a difference." Well, if it costs so little, then they won't miss the money, right? If what Planned Parenthood or NPR does is so significant, then as private organizations they are responsible for covering their own nut. The conservatives and Republicans use this fatuous line of reasoning when it comes to international aid, pointing out how little it is in the grand scheme of the budget (which if you only count the money distributed through the State Department is true, but what they don't mention is the aid funneled through the Defense Department generally and the CIA specifically, which raises that number significantly). The point for both sides remains that if the amount being cut is so small, then why should we fight it? Not why should we make the cut, no?

Next, we come to the argument made by Reich that attempts to balance the budget are what exacerbated the Great Depression in 1937. This silly notion has been disproved time and again. If deficit spending worked and was actually able to boost "aggregate demand", balancing the budget eight years after the depression started wouldn't have been an issue because there had been nothing but federal intervention and deficit spending since the crash in 1929 (I am surprised that no one brought up Hoover and his alleged do-nothingness for good measure). Government spending can not "make up" for slouching consumer demand. It merely crowds out private investment in less efficient production. Any would-be gain is lost in diminished efficiency and higher borrowing costs, not to mention higher taxes.

Then there is the argument that now is not the time to cut spending. Ostensibly because government is needed to boost demand. This assumes that liberals and democrats would be enthusiastic supporters of spending cuts when things are going well. But of course, the argument then is either "well, we have the money, why not spend it" and "if we don't spend this money on these programs, aggregate demand will sag thus causing a recession." This would appear to be having it both ways, no?

What it boils down to is that congress was given authority to handle a few things. And bribing foreign governments and making sure the folks in some remote corner of Wyoming can hear Morning Edition aren't among them. The responsibility of congress should be to keep spending and taxes as low as possible (and please stop comparing our tax rates to other countries, I don't care if people in Norway are just ducky with an effective 70% tax rate, that doesn't mean I have to). The burden for any new proposed spending measure should be if it falls clearly within congress' authority.

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