- Austerity really means raising taxes—Wednesday, May 15th, 2013
The neat thing about Paul Krugman’s Humpty-Dumpty austerity (“a word means just what I choose it to mean—neither more nor less”) is that he can choose countries whose austerity is raising taxes, and then claim that since austerity means cutting spending, those countries’ failures mean we should raise taxes rather than cut spending.
The true solution, says Krugman, is to raise spending. That’s how to get out of a bad economy. Michael Tanner describes the conundrum at RealClearPolitics:
Which brings us to the question of European “austerity.” Krugman continues to insist that European countries’ austerity has been devastating, and that spending cuts must therefore be resisted. The “case for keeping [the U.K] on the path of harsh austerity isn’t just empirically implausible, it appears to be a complete conceptual muddle,” he wrote this week, and “austerity policies have greatly deepened economic slumps almost everywhere they have been tried.”
But there have actually been few spending cuts in Europe, so it makes little sense to blame them for poor performance. A new study by Constantin Gurdgiev of Trinity College in Dublin compared government spending as a percentage of GDP in 2012 with the average level of pre-recession spending (2003–2007). Only three EU countries had actually seen a reduction: Germany, Malta, and Sweden. Not surprisingly, two of those three, Germany and Sweden, are among those countries that have best weathered the economic crisis. Those countries that have suffered most, Greece, Italy, Spain, and Portugal, have all seen spending increases.
And what about Great Britain, which has been Krugman’s No. 1 exhibit for the dangers of austerity? Compared with pre-recession levels, British government spending is up by 2.5 percent of GDP, a 29 percent increase in nominal spending.
Krugman belittles those who cite countries such as the Baltic nations or Switzerland, whose governments really have cut spending and seen robust economic recoveries. But how does he account for Iceland, considering he himself once called it “a post-crisis miracle?”
Iceland actually slashed spending from 57.6 percent of GDP in 2008 to 46.5 percent in 2012, a nearly 20 percent reduction. Yet, while Iceland was one of the countries hardest hit by the international banking crisis of 2008 and the recession that followed, the economy started growing rapidly again in 2010.
What most of Europe has seen in abundance is tax increases—exactly the sort of thing Krugman has advocated in the United States. In fact, overall, European countries have raised taxes by $9 for every $1 in spending cuts.
One might conclude that it was these tax hikes, rather than nonexistent spending cuts, that are responsible for Europe’s economic slowdown. Something to keep in mind the next time Paul Krugman—or President Obama, for that matter—calls for yet another tax hike on the rich.
- Austerity is not the only answer—Thursday, May 2nd, 2013
Austerity in Europe is a lot like electricity privatization in California. If you redefine privatization to mean “a lot more government control”, it turns out privatization fails. And if you redefine austerity to mean “raise taxes and continue government bloat” it turns out austerity fails as well.
After seeing so much about “austerity failing” and then reading in to find out that by “austerity” they meant “raise lots of taxes”, I was moderately interested to see what the Financial Times considered to be alternatives to austerity. Maybe cut taxes and cut government bloat?
But I didn’t read it, because austerity, to me, means being thrifty with where I put my contact info, and the Financial Times is behind a paywall.
Interestingly, the “Annual” button shows a weekly price; and the monthly price is more expensive than the weekly price even times five. Which is nothing against the Financial Times, but since this is the first time I’ve seen this paywall screen I’m guessing I have no need for the Financial Times. Certainly not a $325 per year need. So, austerity has already saved me $325 this year alone! If I visit more of these paywalls, I can really rack up the savings. I should go buy something for a few grand with that money. Maybe a nice new car.
See, when you define success without regard to reality, you can fail in amazingly spectacular ways.
Meanwhile, those places that use the alternative to austerity of reducing taxes and spending see growth.
You can see part of the problem with the “raise taxes” form of “austerity” in the other tab I had open: there’s a meme running around the net right now that 401(k)s are bad, that most people are too stupid for them, and that government should step in. Why are 401(k)s bad? Because they’re honest. A 401(k) is a defined contribution plan; you have in it what you contribute to it. The contrast to 401(k)s in these articles is always social security: a defined benefit plan that’s going bust because it’s a lie. It doesn’t have in it what we contributed to it. The same with other government pensions: they lie about benefits, but the lies are all coming due.
Those fully-funded 401(k)s must look awfully tempting to politicians who can’t understand austerity to mean anything except raising taxes.
- The least child-oriented society ever—Thursday, April 25th, 2013
“…what makes us adults is not stomping our little feet and ‘expressing’ ourselves. Any kid can do that with finger paint and a free hour. It is assuming our place in civilization and in the march of generations through time: it’s shouldering the burden and moving on and doing our best for the next ones in line; it’s assuming responsibility for those weaker or in peril and doing our best for them too. Your obligation might be to a child of your blood, or to a sick friend. It might be to the person you love with all your heart, or to some old relative wished on you because no one else would take him/her.”
“It is still your obligation. Being human means having obligations to those around you. We are social apes.”
“Government or impersonal bureaucrats are not the means to help our brothers and sisters. We are. In recognition of our common humanity; in recognition that there might be a life after in another world, but there will surely be one here, after we’re gone, we pay our dues to those who came before and build for those who come after.”
- Senate about to pass Marketplace Unfairness—Tuesday, April 23rd, 2013
A long time ago, I wrote that I expected Amazon to come around in favor of forced collection of state and county sales taxes pretty much as soon as they realized they were big enough to handle the added expense and time—because it would help block competitors from starting up.
And that politicians like the proposal because it “levels the playing field” for high-tax, high-red-tape states, who would no longer have to compete as hard for businesses with no-tax states or states that enact simpler tax codes.
The Senate has just begun debate on The Marketplace Fairness Act, which is anything but fair. It’s most likely to pass now that it’s entered debate, because Democrats control the Senate and the one thing they don’t like is the ability of businesses and consumers to choose what tax system they’re burdened with.
We know that’s the case, because, unlike previous versions of this bill, the so-called “fairness” act specifically removed any requirement that states simplify their taxes:
Eight years ago, Sens. Mike Enzi, R-Wyo., and Byron Dorgan, D-N.D., introduced legislation that would have allowed Internet sales taxes to be collected—but only after states simplified and standardized their tax systems…
The current version of S.743, however, lacks those protections. Small sellers with no profits could be subject to audits in dozens of states. Each of the nearly 10,000 local tax jurisdictions could specify a different tax rate. Businesses would also have to figure out how to handle the complexity of integrating as many as 46 state government-supplied software packages into Web ordering systems.
Of course, mandating such a complex scheme also means mandating that every seller in every state that does any business on the Internet purchase software and legal advice to help them navigate this bureaucracy event horizon. It’s a bureaucratic win-win-win: the federal government gets everyone’s purchases tracked because the tax categories vary from state to state; large retailers like Amazon don’t have to compete as hard because they don’t have to worry about a new startup eating their lunch; and the bureaucracy navigation industry wins thousands of new customers.
There is a solution, however, that is both fair and adds very little overhead. I would actually have no problem with requiring sales tax collection—as long as the location used for determining taxes is the location of the seller, rather than the location of the buyer.
- All your income is the government’s—Monday, April 8th, 2013
According to “Martin J. McMahon, Jr., a tax-law professor at the University of Florida”, that which is not taxed is a federal grant. He’s complaining that the free food that Google employees get from Google is paid for by the federal government1:
He wants the IRS to send auditors out to determine the worth of what Google employees eat, because if the government isn’t taxing it, the government must be paying for it. This is the same mentality that says, if the government doesn’t pass laws against it, the government approves it.
It’s utter bullshit. Your taxes are subsidizing lots of crazy things—such as, for example, the University of Florida—but they do not subsidize free meals for Google employees. The money you pay to use Google products—whether directly or through advertisers—pays for free meals for Google employees.
Whether it’s free parking, free lavatory soap and toilet paper, open gyms, or free food, employers provide all sorts of amenities to help keep employees on site. Employees and customers pay for these amenities, through lower wages and higher prices. Some employees use these amenities more than others. It is not a given that these amenities need to be taxed as employee income.
But while it may or may not be right not to count free meals as part of their compensation package, not taxing it doesn’t make it a federal grant—not unless you believe that all incomes are the federal government’s, that federal employees dole out our portion to us according to their whim.
When did the left take over the old Puritan fear that some employee, somewhere, might be having an untaxed good time?
- April fools came early at the Washington Post—Monday, April 1st, 2013
April Fools’ Day came early at the Washington Post. That was my first thought on reading this thought experiment by Charlotte and Harriet Childress:
Imagine if African American men and boys were committing mass shootings month after month, year after year. Articles and interviews would flood the media, and we’d have political debates demanding that African Americans be “held accountable.” Then, if an atrocity such as the Newtown, Conn., shootings took place and African American male leaders held a news conference to offer solutions, their credibility would be questionable. The public would tell these leaders that they need to focus on problems in their own culture and communities.
But when the criminals and leaders are white men, race and gender become the elephant in the room.
I read this at Ace of Spades HQ, and I had to double-check that Andy hadn’t gotten that wrong, that maybe he pulled it from the Onion, or maybe March was already over with. Imagine if African American men and boys were committing mass shootings month after month, year after year…
It is happening, and the worse it becomes the less they report on it. They know there’s a race elephant somewhere, but they can’t see it. And they want to proclaim their lack of vision as loudly as possible. As Andy points out,
A couple of Newtowns worth of people, almost exclusively African American people, die on the streets of gun control-loving Chicago every month, yet the media flood the authors suggest would happen simply hasn't.
Not only hasn’t the media flood happened, anyone who tries to bring it up in the media is labeled racist. That elephant isn’t the color they think it is. Gun control began as racism and it remains racist today.
No, the public is not “telling these leaders that they need to focus on problems in their own culture and communities”. Certainly, the media isn’t. But that’s not the elephant. The elephant is that the culture of gun control itself isn’t held accountable for its racism at all.
For god’s sake a little girl who sang at Obama’s installment was gunned down just days later and it was media crickets.
It wasn’t media crickets on the reason for the shooting because a gun was used, they would normally have blasted that for weeks. It was media crickets because of who did it and where it happened.
There’s an elephant in the room, and it’s bloody, and the Post refuses to see it.
- Simplifying taxes into complexity—Wednesday, March 27th, 2013
Our taxes are far too complex. Even the Treasury Secretary can’t understand our tax law. Every year about this time, people start writing about solutions to make taxes simpler.
I’m sure this solution has come up before, because it apparently is all the rage in Europe, but this is the first time I’ve seen the recommendation that we keep the tax system incomprehensible and just have our local, state, and federal governments tell us what they think we owe and bill us:
It's already a reality in Denmark, Sweden and Spain. The government-prepared return would estimate your taxes using information your employer and bank already send it. Advocates say tens of millions of taxpayers could use such a system each year, saving them a collective $2 billion and 225 million hours in prep costs and time, according to one estimate.
That’s the response of a dependent mind: Daddy, my taxes are too complicated. Can’t you just tell me what I owe?
The intelligent reaction is, if taxes are too complex and too expensive to calculate, make them simpler.
First, because the obvious next step is for the government to take that “estimate” and withhold it from your paycheck. The mechanism is already there, and they already know what you owe, so why not just keep it? If you think they missed something, you can file an appeal.
But second, because hiding tax calculations just makes cronyism that much easier. Who is for such a plan? Big government proponents such as “Austan Goolsbee, who served as the chief economist for the President's Economic Recovery Advisory Board”. Who is against it? Tax reformers such as “Conservative tax activist Grover Norquist”.1
This proposal violates one of the three bedrocks of fiscally sane taxes: simple, obvious, and unobstructive. By making the tax calculations even less obvious, it becomes easier to engage in cronyism, hiding special tax breaks for political benefactors and hiding special tax barriers for their competition. Making taxes less obvious makes it easier to make them more obstructive.
- Michelle Shocked and political boycotts—Thursday, March 21st, 2013
If you believe in math, or if you believe in good and evil, you’re always at odds with the popular culture, for whom the consequences of math are far too absolute, and absolutism is the replacement for evil, regardless of whether it comes from a person or the laws of reality.
If you believe in math and morals, you either don’t listen to popular music and don’t watch Hollywood movies, or you learn to live with other viewpoints. I’ve been to a Michelle Shocked concert. She uses them to make impassioned speeches about leftist2 and anarchist3 causes she thinks are important; she seems to time them to be after you’ve gotten into listening, i.e., around the transition between first and second set.
So I wasn’t surprised to hear that Michelle Shocked angered some people at a concert a few days ago. I was surprised to find it was in San Francisco.
She said she was tired of Christians hiding behind the cross. “When they stop Prop 8 and force priests at gunpoint to marry gays, it will be the downfall of civilization and Jesus will come back,” she said. Loud gasps were heard from the audience. Many fans walked out. “I believe the Bible is the word of God,” Shocked continued… In response to audience reaction, Shocked offered a Spanish prayer that “God loves you. God loves us. God loves us all everywhere.” Later, in English, she said: “God bless us everyone.” Many fans questioned the singer out loud: “What are you saying?” With a broad smile, Shocked said “You are going to leave here and tell people ‘Michelle Shocked said God hates faggots.’” That comment produced more gasps and more departures. Two-thirds of the audience had walked out by this point.
In this case, I’m with those who disagree with her—but not to the point of walking out of the concert or boycotting her albums. I didn’t walk out of her concert at Brick By Brick here in San Diego when she went on a rant about inclusion; I’m not going to stop listening to her now, either.