Tuesday, January 01, 2013

Taxocalypse

It seems a done deal that the Bush tax cuts will expire. Well, not entirely, but rather for those whose income exceeds $200,000 (filing singly) or $250,000 (filing jointly). [Pre-publication update: Apparently those numbers have gone northward. However, not only does that not change the points I'm trying to make, I put way too much effort into writing this to then bit bin it on a technicality.]

The collectivist justification is that the rich, where richness happens to match numbers that both fall glibly off the tongue, and constitute sufficiently few easily demonized votes to mount an electoral defense, are not paying their "fair share".

Whatever that means.

Like most, I am loathe to discuss personal finances; however, in order to take a whack at what constitutes fair, it is only proper I declare my interest up front: my family income just reaches the upper 2%, about 12% of which comes in the form of military retirement. In 2013 I can expect my tax bill to increase by at least $6,000, on top of the $51,000 I will pay for 2012.

Is this "fair"?

Before trying to crack that nut, there is one notion that needs immediate rubbishing: regardless of fairness, that money is not free, a concept much beloved by collectivists but mugged by reality.

The effect on my household serves as a case in point. Since our savings rate approaches 50% (the sum of Social Security, Medicare, 401k, mortgage principle, and positive monthly cash flow) our consumption habits are not going to change. Being both fortunate and thrifty — heck, I drive a car old enough to get into a bar, and wouldn't that bring a whole new slant on DUI — a six-grand hit over a year isn't going to affect how often we de-trouser the wallet.

That still doesn't get collectivists to free. Putting it another way, that $6,000 increase in our tax bill amounts a nearly 20% reduction in our positive cash flow. Regardless, and this is where the whole notion of "free" takes a beating, there will be two very real consequences.

First, that $6,000 means exactly that much less investment next year, and eventual larger reduction in our net-worth.

So, not free.

I will be the first to grant that hardly amounts to a tragedy, but that's not the question, which is fairness. Given that the upper 5% of the income distribution pays something like 40% of federal income taxes, it doesn't appear the fortunate are under taxed. On the other hand, some very wealthy people, while paying a considerable amount, are yielding a far lower amount than they would if taxed at the same rate as less wealthy people. That still doesn't yield much light. Is rate the appropriate criteria, or magnitude? (It is worth noting that collectivists always refer to rate, and never amount, which to me indicates intellectual dishonesty, because it is more of an insult to assume the kind of mental deficits required for pervasive innumeracy.)

At the most superficial level, even the current amount I pay is unfair — as a family, we do not consume $51,000 of federal government services in a year, never mind $57,000. This disconnect becomes particularly glaring for those who are truly wealthy, rather than merely very comfortably situated. However, I understand the moral argument that those who get more, should give more. In any community, there is bound to be some communism. I have no problem with wealthy New Yorkers or Alaskans transferring some income to poor West Virginians. I accept that the bill society charges the unlucky should be much lighter than that presented to those upon whom fortune positively beams.

On balance, then, despite already paying a substantial absolute amount, I think it is within the bounds of arguably fair that my wife and I pay more. In order to keep the federal government's fiscal situation from further deterioration, we must.

It is worth keeping in mind, particularly since collectivists seem not to, that the fiscal problem belongs to everyone, not just the rich. Furthermore, drawing some artificial dividing line between those who are expected to shoulder more of the burden, and those of whom nothing additional need be expected suffers from several serious problems: the appearance — at the very least — of looting, glaring insufficiency, and a strong disincentive. It is hard to say which is worse.

Clearly, for me, an extra six-grand a year will not impose any hardship, and maybe the new old rate is the rate I should have been paying all along (well, for the last several years, when I finally started living in high clover, anyway). I think that in Afghanistan and Iraq, President Bush made two difficult, but strategically necessary decisions. However, it was a profound mistake to cut taxes instead of the ravenous growth of government. Doing the first and exactly the opposite of the second was idiocy of the first order; he in particular, and the GOP congresscritters in general, should hang their heads in shame at the kind of profligacy exceeding even that of a dissolute trust fund baby.

But it isn't looting. Yet. However, a recent NYT opinion piece advocates taxing wealth. Well, isn't that special. Thirty years ago, I decided that demographic trends were going to be very unfriendly to Social Security, and that I better provide for my own retirement. So, despite spending most of my adult life with a far less lofty income than what I now enjoy, I have, through thrift and discipline (see 21 year old car, above) accumulated a certain amount of wealth. Now the looters want it. What's more, collectivists want both to raise the amount of income subjected to Social Security tax, and means test. This is looting, pure and simple.

And there you have it: taking more from a demonized group under the guise of "fairness" quickly gets addictive. Because collectivists can't be pried loose from the word "free" they think it is all theirs for the taking, without consequences of any kind.

Beyond the tendency towards theft, there also lies the inadequacy of the whole enterprise. Even taxed at 400% of gross income, there aren't enough wealthy people around to fix the problem.

Here I shall wave yet another single digit salute in the direction of Saez and Picketty. I mentioned above that for us the upshot of a tax increase will be that we give $6,000 more for government to spend (or redistribute), and we will invest $6,000 less. However, there is another immediate and undeniable consequence: my wife will effectively take an immediate 10% pay cut. It is her income that puts us into the realm of those who would sooner use twenty dollar bills to light cigars than to feed the starving. Heck, as far as we plutocrats go, it would be even better to torch twenties while forcing the starving poor to watch, then making them eat the ashes.

Practically speaking, this won't be enough to cause her to put nursing aside, but anyone who thinks there is no disincentive has stepped off the reality train. This tax increase means she will effectively work an entire month in 2013 without pay. I don't remember S & P, or their analytically challenged sycophants, particularly considering that outcome. Shift too much of the tax take onto the successful, and the outcome will be less success. No one wins if the looting gets to the point where my wife decides inactivity is by far the better option.

Unfortunately, by focusing on the "unfairness" of income and wealth distribution, collectivists are once again guilty of arriving at a conclusion without bothering to make an argument. Yes, the economy has changed. Yes collectivism collapsed in China, effectively dumping 300 million workers onto the world economy nearly overnight. But those weren't the only games in town.

Estimates vary widely, but scholars have said that changes in marriage patterns — as opposed to changes in individual earnings — may account for as much as 40 percent of the growth in certain measures of inequality. Long a nation of economic extremes, the United States is also becoming a society of family haves and family have-nots, with marriage and its rewards evermore confined to the fortunate classes. [where "fortunate" is a strangely passive word that stands in place of what is really going on: commitment and self-discipline.]

From my parochial point of view, I am left wondering why it is fair that, in the name of inequality, I effectively fund those who were selfish or incontinent, and the consequences of their selfish incontinence. Whatever its justifications, one of the fruits of the welfare state has been family breakdown. In taking more, the welfare state needs more. It is the perfect self-licking ice cream cone.

While I think the federal government could spend much less money far better, I also doubt that even with a whole lot of both, the remaining spending still wouldn't be supported by existing taxes. Therefore, I think it necessary that I pay more. However, I don't think it the least bit fair, or adequate, that "more" is confined to a group of people defined by a number pulled out of the collectivist rectal data bank, and all too easily subjected to first demonization then theft.

Maybe I'm missing something, but I don't think it the least bit difficult to arrive at both necessary, and fair. If I was the Head Dude What's in Charge, I would implement a specific fiscal balancing tax, starting at fractions of a penny for the poorest, and growing exponentially to 4-5% on the wealthy. Obviously, those numbers are notional, but there is an exponential curve, easily calculated by computers, under which is sufficient area to close the gap between spending and taxation. Moreover, this tax, by specifically targeting the deficit, makes it clear to everyone how much the government is spending (unlike corporate taxation, the sole effect of which is to hide political profligacy). It is unfair, and potentially destructive, for 98% of the population to decide how much they are going to take from other 2%.

Having skin in the game matters. It's only fair.

44 Comments:

Blogger Bret said...

My observation is that only two groups use the word "fair" frequently:

1. Two year old throwing a tantrum yelling, "That's not fair! That's not fair!"

2. Someone looking for an excuse to fleece someone, typically a politician or advocacy group.

Fair has no objective meaning and hardly any useful ones for those more than 5 years old.

January 03, 2013 10:57 AM  
Blogger Hey Skipper said...

Would "equitable" be better?

I'm not being sarcastic, and I get your point about "fair", but there has to be some notion of what constitutes a fair, or equitable, tax burden.

Unfortunately, most (and particularly collectivists) assume the conclusion without providing any sort of argument.

January 03, 2013 1:26 PM  
Blogger Bret said...

There's no objective notion about what constitutes a fair tax burden.

Many deals that involve parties that voluntarily agree to those deals are subjectively fair (since the parties agree).

But as soon as it changes from cooperation to coercion, then for the most part, there is no notion of fair. It really becomes take what you can get.

I do not pay taxes because I think they're fair and will never think that taxes are "fair". Necessary? Sure. Fair? A meaningless term in this context.

I pay them because I have to under the threat of force. (Again, I realize that that threat of force is necessary).

I would much prefer that the false notion of fairness was cast aside and that we all admitted that "might makes right" is the root of the debate and how much each of us should pay.

January 03, 2013 1:44 PM  
Blogger Susan's Husband said...

"No representation without taxation".

The USA's income tax is already extremely progressive. That it needs to be be even more so is to me laughable. I agree with Bret that "fair" translates to "I'm not getting enough of your stuff".

January 04, 2013 7:34 AM  
Blogger Hey Skipper said...

Bret:

But as soon as it changes from cooperation to coercion, then for the most part, there is no notion of fair. It really becomes take what you can get.

I do not pay taxes because I think they're fair and will never think that taxes are "fair". Necessary? Sure. Fair? A meaningless term in this context.


Meaningless in the sense that it is entirely beside the point whether I think it fair when SWIPIAW tells me to wash the car.

However, I think most people have a notion of "fair" taxation. Those notions vary, obviously. I think (obviously I have no way of proving this) that most people think the current spreading of the tax burden is approximately fair, and that getting entirely rid of, or limiting, most deductions would make it fairer still.

Many individualists think a flat tax is the only way to go (I with regard to our mildly progressive income tax, I feel strongly both ways).

Collectivists simply want to confiscate. There is an obvious difference between the two, fairness aside. The latter will wreck the economy — but hey, everyone is equal, if dirt poor. The former, if perhaps vulnerable to some moral considerations, would do the opposite.

Maybe instead of "fair", we should think in terms of "optimum". French income tax rates, for instance, are hardly optimum.

SH:

The USA's income tax is already extremely progressive.

I don't know about "extremely", because there is still a heck of a lot of room for confiscation between where we are, even for the wealthy, and 100%.

It's also worth noting that many elements of the entire tax structure are flat — corporate and sales taxes, for instance.

January 04, 2013 3:49 PM  
Blogger Bret said...

Hey Skipper wrote: "I think most people have a notion of "fair" taxation."

Perhaps. I do not.

I think that most collectivists have the notion that fair taxation leads to equality of outcomes.

January 04, 2013 7:00 PM  
Blogger Harry Eagar said...

In the context of the Norquist pledge and Republican dogma, I cannot make head or tail out of this.

January 09, 2013 9:52 PM  
Blogger Hey Skipper said...

Bret:

I think that most collectivists have the notion that fair taxation leads to equality of outcomes.

Which is symptomatic of the problem with collectivists. Society can have either equality of opportunity, or equality of outcome.

Only the former is consistent with freedom.

Harry:

In the context of the Norquist pledge and Republican dogma, I cannot make head or tail out of this.

Then perhaps you shouldn't read it in the context of either, since they don't make a particularly prominent appearance.

Unfortunately, for whatever reason, I couldn't quite get my head around this post, probably because I was trying to both raise questions and make points. Perhaps reiteration is in order.

So start with the questions.

Is it unfair that some of the rich pay a lower rate than those far less well off? Or is it unfair that the upper 5% pay 40% of federal income taxes? Why is it that collectivists always mention rate, but not amount? Is it fair that the increased tax burden start at some arbitrary income?

Now the points.

There is no such thing as free. Collectivists treat exacting more from the "wealthy" as if there was no opportunity cost at all. That is delusional. There are tradeoffs between the government spending money now, and individuals spending it now, or investing for later. Collectivists never, so far as I have seen, acknowledge, or even notice, that.

Having arrived arrived at a conclusion without an argument — another hallmark of collectivism; what is so darn special about $250,000, anyway? — a notionally defendable conclusion that the well off should pay even more quickly leads to unabashed theft. Even you should find a wealth tax very troubling. Although, maybe not. The NYT editorial board obviously thought it hunky dory.

And finally, taxation is the price we pay for civilization. It is the only way around the free-rider problem. But limiting an increase in taxation to those who do not obtain in benefits anywhere near what they pay in taxes, while leaving untouched those who do, reintroduces free-riding.

The only way out of the problem is to confine government to those classes of problems that government is in the unique position to solve, then keep the solutions within bounds. Norquist's point, which collectivists haven't bothered to refute, is that the government already has enough money to do what needs doing. (For instance, why do collectivists insist on using the most flagrant measure of inflation to calculate changes in Social Security?)

Then, having done that, distribute the tax burden fairly — which means (in my personal, notional, opinion) both progressively and continuously — so that we are, in fact, paying for the government we want.

Which, I suppose, gets to Republican dogma. Collectivist dogma, on the other hand, requires infinite amounts of free money, while penalizing virtue and success.

January 10, 2013 9:56 AM  
Blogger Susan's Husband said...

"Collectivist dogma, on the other hand, requires infinite amounts of free money"

I disagree with - I think you had the gist of it earlier with "There is no such thing as free [...] Collectivists never, so far as I have seen, acknowledge, or even notice, that". The presumption isn't infinite money but that collecting and spending more tax money never has any negative consequences.

January 10, 2013 12:49 PM  
Blogger Harry Eagar said...

I seem to recall a bunch of posts saying you couldn't really soak the rich because they would just offshore their assets.

(Skipper, your problem is that you're not rich enough to do that yet, apparently.)

So, the question of 'fairness' hardly arises, does it?

January 16, 2013 12:30 PM  
Blogger Susan's Husband said...

Yes, it's just another example of how government intervention destroys the middle class and creates greater wealth disparities.

January 16, 2013 1:17 PM  
Blogger Hey Skipper said...

Harry:

I seem to recall a bunch of posts saying you couldn't really soak the rich because they would just offshore their assets.

Here.

The post was referring to an NYT lauded paper by a couple of French collectivist economists (yes, I know, I repeat myself) advocating truly extortionate taxes upon the well off. One of the assumptions of their paper was the ruthless and extensive imposition of their confiscatory regime because, no matter how enamored they are of their collectivist fever dreams, they weren't quite so stupid as to completely ignore the Depardieu effect.

When you suggest that since I am insufficiently lucky to have offshore worthy assets, "the question of 'fairness' hardly arises, you have quite missed the entire point of the post.

Social Security, for instance. Is it fair that the Federal Government continue to use the CPI to calculate changes in benefits? Collectivists (aka every Democrat) insist that it is, without any regard to the manifest problems with the CPI overstating inflation, a compounding problem.

I think it isn't, or at least if it is, then collectivists had better put forth some sound argument, because the effect of Social Security is to take money away from people who are working so as to give it to those who are not. Picking a high number for the CPI will have the effect of taking even more money from workers, which must, at least, have the effect of reducing the returns on work. So beyond unfair, it may well become self-defeating.

Would it be fair to increase the amount of income subject to FICA?

Charles Murray, in Coming Apart, notes that 12 times as many working age men are on disability now than 50 years ago, despite vastly safer workplaces and more effective health care and physical therapy. Is it fair that those of us who are working pay others not to?

Does it make sense to become more like the EU, which uses extremely high tax rates to pay for inactivity?

Obama's intransigence on the debt ceiling is proof that collectivists haven't even bothered considering any of this. Instead, they simply assume that the money is there, free for the taking, and that their sanctimonious hand wringing stands in for reality.

January 17, 2013 10:38 AM  
Blogger Hey Skipper said...

this NYT item is making all my points for me.

January 17, 2013 4:55 PM  
Blogger Harry Eagar said...

My brother=in-law collected Social Security Insurance -- it's insurance, a point you could live a lifetime among rightwingers and never hear.

It started when he was about 24. Big, fun-lovin' Cajun, 6-3, 260 pounds. When he stopped collecting, 13 years later, he weighed 75 pounds and had been deaf and blind for about 5 years.

Fair?

Since the haves told us, I think you'll find the posts in this circle, years before depadieu, that they just wouldn't pay at some point X they considered too much, I have ignored all fairness arguments.

The only question of principle is, can they pay? The rest is politics.

January 18, 2013 8:26 PM  
Blogger Hey Skipper said...

My brother=in-law collected Social Security Insurance -- it's insurance, a point you could live a lifetime among rightwingers and never hear.

Social Security, in its original incarnation, and in the form that will break the budget is not insurance, it is pure income transfer from those who are not retired to those who are.

In subsequent incarnations, it has morphed into "insurance", in the sense that SS also transfers income from those who can work, to a risk defined (as opposed to certainty defined) subset of those who don't.

The problem, which you fail to acknowledge, but all individualists have long since taken on board, is that some subset of those who don't is not those who can't.

Once upon a couple lifetimes ago, I was the chief of safety at an Air Force Base. The aircraft maintenance operation at this base was not military, but civil service. The number one agenda item at every maintenance staff meeting was the number of people claiming SS disability, and the fact that nearly all of them were not those who can't work. The problem was catching them at it (house painting and jet skiing were two dead giveaways that caught a couple guys out).

My fairness argument remains. Since we are all at risk of the unforeseen, put that way, the vast majority of people are in favor of government extracting rather more charity than enough people would be willing to perform on their own in order to provide for the truly unfortunate.

What is unfair is asking only "can they pay?"

At that point you have stopped any notion of rewarding virtue, and stepped right into thievery.

Without once considering that while many people can pay once, if you charge them enough, they will never pay again.

Collectivists could extract a great deal more from me in taxes. But if they do, my wife will stop working, because it won't be worth it.

And my wife of ten years ago, transported to the here and now, would not make the decision to invest a substantial amount of money in a BSN.

Its funny how close collectivists and parasites are.

They both kill their hosts.

January 18, 2013 8:53 PM  
Blogger Harry Eagar said...

I have been wondering about your recent jihad against collectivism.

The Founders were collectivists. 'hang together or hang separately'; Articles of Confederation; 'We the people . . .'

The slow-acting poison of radical right ideology?

January 19, 2013 9:49 AM  
Blogger Susan's Husband said...

"The Founders were collectivists" - that's precisely the kind of thing that renders moot your claims of understanding and knowledge of history.

January 19, 2013 10:21 AM  
Blogger Hey Skipper said...

I have been wondering about your recent jihad against collectivism.

What is recent is my jihad (which will no doubt be utterly futile) against language. The terms "left" and "right" in a political sense are meaningless, as are the terms "liberal" and "conservative". The trashing of the latter terms can, IMHO, be put right at the feet of "progressives", who seem to have absolutely no capacity for irony.

Again IMHO, the single distinguishing dimension is the spectrum between collectivism and individualism. Your comment about the founding fathers suggests you perhaps haven't considered the distinction between "We the people" and the dictatorship of the proletariat.

To the extent I have recently cast disparaging glances upon collectivism is that its adherents routinely misuse the word "free", are immune to the concept of opportunity cost, engage in class warfare, and a la Saez & Piketty, are immune to history.

I have taken on board that the state must engage in various forms of redistribution. Private charity is invaluable, but it also lacks sufficient uniformity. I get that a most of the reasons I am awash in swag and relishing the immiseration of the lower orders are due to luck, luck, and luck (in that order).

But not all the reasons.

Collectivists are nearing the point here (and have passed it already in Europe) of destroying personal responsibility and initiative. And they never apologize for their disasters, nor worry about consequences.

Their answer? Another question: "can they pay?"

Not "should they pay?", nor "is their a better way?", nor "what the hell are we going to do when the only thing they have left is their labor, and they decide to keep it?"

January 19, 2013 12:00 PM  
Blogger Harry Eagar said...

'Can they pay' seems to be at least as cogent an action concept as 'you must reduce X's taxes so he can make the economy go faster.'

I don't see ANY doubt about the goodness of that idea on the right. (And I don't think l-r distinctions are meaningless, although to that subset who believe that Italian Fascism was collectivism, you might have a point.)

February 06, 2013 1:30 PM  
Blogger Harry Eagar said...

This comment has been removed by a blog administrator.

February 06, 2013 1:30 PM  
Blogger Susan's Husband said...

There's the moral difference between the two, the impetus of "can they pay?" being primarily spite, and "make the economy go faster" one of beneficence. But you seem to have entirely missed that Skipper's argument was a morality based one.

February 06, 2013 3:16 PM  
Blogger Harry Eagar said...

I don't agree that it is.

It is not as if those who pay low or no income tax pay no tax at all.

The reason the poor in England did not have glass windows before the window tax was repealed was not that the tax was too high.

Repealing the tax did encourage the wealthy to grow pineapples, though. The doubtful morality of a man contemplating a fruit that cost 3 or 4 years' wages for his gardener was commented on by some at the time.

February 06, 2013 10:30 PM  
Blogger Harry Eagar said...

This comment has been removed by a blog administrator.

February 06, 2013 10:30 PM  
Blogger Susan's Husband said...

You're confusing anecdotes with proof again. As usual, a single failure on one side discredits the entire argument, but no number of failures the other way matter. For instance, the "Stimulus" package from Obama's first term - can I use that to discredit stimulus efforts in general just like your example about glass windows here?

February 07, 2013 6:49 AM  
Blogger Harry Eagar said...

Well, since it was accompanied by a huge and simultaneous de-stimulus program, no, you can't.

Can I use ancien regime France, where the rich paid no taxes and the government insisted, nevertheless, on expensive wars? Why, yes, that's exactly apposite.

February 07, 2013 10:01 AM  
Blogger Susan's Husband said...

What huge de-stimulus program? You are the first person I have ever heard claim that.

Yes, you can use the ancien regime in France to discredit the regulatory state. I agree it is quite apposite to compare to the kind of government regulators like you want to create.

February 07, 2013 11:21 AM  
Blogger Hey Skipper said...

'Can they pay' seems to be at least as cogent an action concept as 'you must reduce X's taxes so he can make the economy go faster.'

AOG's response was pretty much on the money — there is a significant morality component here. According to a long NYT article from last summer, something like 40% of the increase in the "wage gap" is due to the corresponding increase in single parents at the expense of married households.

So in what way is it moral for my family to have less in order to subsidize those who failed to do the things I did in order to have more?

As for your "cogent concept", the funny thing about collectivists is they seem to have insuperable antibodies to economic thinking. To wit: remember the luxury tax?

Surely those who buy "luxuries" (and I will ignore for the moment the class-warfare inherent in the notion and the definition) can pay a luxury tax.

Do you remember the consequences?

So there are both utilitarian and moral components. Clearly, there are problems that are solvable only through collective action. Clearly, people are born with vast differences in luck, within which perhaps it is possible to include things like self-discipline. But unless you are willing to buy into the notion that we are all (absent collectivists) complete automatons, then at least at the margin, people make decisions based upon incentives.

Unfortunately, the incentives collectivists invariably create are those encouraging dependency.

… although to that subset who believe that Italian Fascism was collectivism, you might have a point.

Can you name one significant difference between Fascism and collectivism? (I can, but it is one that doesn't matter.)

Z The reason the poor in England did not have glass windows before the window tax was repealed was not that the tax was too high.

I lived in England for quite some time. It was surpassing odd how many large houses there were with windows that had been obviously bricked over. Also, it is worth noting that England had (and may still have) a hose-pipe tax. That is on the things we have on the outside of our houses to make washing cars and watering lawns easier.

In England, they are vanishingly rare.

Can I use ancien regime France, where the rich paid no taxes and the government insisted, nevertheless, on expensive wars? Why, yes, that's exactly apposite.

No you can't, because it isn't.

In stark raving contrast to pre-revolutionary France, there is practically nothing, especially in the realm of what we now consider as necessities, the rich have that the poor do not.

And, in even starker — and even more surprising contrast — as opposed to the ancien regime, the rich pay considerable taxes. ($51,000 in federal income taxes alone isn't exactly chump change. That the top 5% of earners pay something like 40% of federal income taxes exactly ignorable.)

With regard to our fiscal problems, if it was war alone, we wouldn't have a problem.

February 07, 2013 7:10 PM  
Blogger Harry Eagar said...

The window tax in England was repealed over 150 years ago. What was interesting is that during the period when the tax was imposed, rich Englishmen preferred to live in the dark, rather than pay a modest tax, but spent the equivalent of the price of a car today for a pineapple.

Which they would not eat.

I guess 'necessity' is open to interpretation.

February 08, 2013 9:57 AM  
Blogger Harry Eagar said...

This comment has been removed by a blog administrator.

February 08, 2013 9:57 AM  
Blogger Bret said...

Harry wrote: "I guess 'necessity' is open to interpretation."

Yes, that would be the concept behind liberty and freedom, that each person can decide for himself what is necessary and/or desirable instead of having someone else do it for them.

February 08, 2013 10:36 AM  
Blogger Harry Eagar said...

' there is practically nothing, especially in the realm of what we now consider as necessities, the rich have that the poor do not.'

I doubt that. How would you like to give up your bank account?

February 09, 2013 10:31 AM  
Blogger Susan's Husband said...

As far as I can tell, any poor person can (and most do) have bank accounts.

February 09, 2013 12:55 PM  
Blogger Hey Skipper said...

... that the poor do not.

I doubt that.


Well, then, let's examine the assertion.

Do the poor (absent the deranged) have houses that exclude the weather? Do those houses have heat? Air conditioning? Places to safely store and prepare food? Clean hot & cold running water? Indoor bathrooms?

Do the poor have enough food?

Do the poor have cars? Telephones? Televisions? Cell phones?

Do the poor have adequate clothing?

Clearly, the poor do not have enough money (where "enough" is a concept rendered almost useless by progressives, in yet another conclusion absent an argument); otherwise, they wouldn't be poor.

So, putting that bit of circularity aside, what necessities do the rich have that the poor do not?

Your appeal to the ancien regime collapses under the briefest examination.

February 09, 2013 5:42 PM  
Blogger Harry Eagar said...

30% of Americans do not have a bank account.

Almost all of these are so poor they don't 'need' one, so, yes, a majority of America's poor do not have bank accounts.

We are talking here about the working -- but mostly unpaid poor -- you know, the ones who are expected to take jobs that just about cover carfare.

February 11, 2013 10:47 AM  
Blogger Harry Eagar said...

This comment has been removed by a blog administrator.

February 11, 2013 10:47 AM  
Blogger Bret said...

23.7% of americans are under 18 so 30% not having bank accounts is neither surprising nor useful for this discussion.

February 11, 2013 10:54 AM  
Blogger Susan's Husband said...

Let's not neglect to point out that even if we accept Mr. Eagar's claim, most of those who don't have it do so by choice. One might also ask how what percentage of the poor having a bank account is sufficient to (in Eagar's view) justify permitting the rich to have them?

February 11, 2013 11:28 AM  
Blogger Harry Eagar said...

30% of adults.

Not by choice, really. Accounts aren't free. If you don't have disposable income, you cannot have one. If you do not have one, you get dinged again and again.

February 13, 2013 8:40 AM  
Blogger Susan's Husband said...

So, these poor can afford to get "dinged again and again" but can't afford the minor fees of a bank account?

Moreover, my own children have no disposable income but they have bank accounts, so your claim there is simply false. I have never had a bank ask or even check if I had disposable incoming when opening an account.

February 13, 2013 8:51 AM  
Blogger Bret said...

Wrong. From CNN:

"From Perhaps one of the biggest revelations of the study was that approximately 7.7% of all U.S. households, or 17 million Americans, were considered "unbanked," meaning they did not have any sort of a checking or savings account."

Definitely nowhere near 30% of adults, no matter how you slice it.

Nice try though.

February 13, 2013 8:53 AM  
Blogger Bret said...

Umm. The "Wrong" was directed at Harry, not SH who managed to slip a comment in between mine and Harry's.

Oops.

February 13, 2013 8:54 AM  
Blogger Hey Skipper said...

Harry:

Do care to to defend Can I use ancien regime France, where the rich paid no taxes and the government insisted, nevertheless, on expensive wars? Why, yes, that's exactly apposite.?

Perhaps, though, on re-reading there might be a typo: where you wrote apposite, you meant opposite. In that case, it makes complete sense.

30% of Americans do not have a bank account.

Once again you make the mistake so typical of collectivists — you cite a characteristic without so much as a nod at composition. Which, in turn, will make it very unlikely to ask some very important questions.

Okay, let's take as given that some percentage* of Americans do not have a bank account because they don't have enough money to put in one, or that the service charges are a significant disincentive to those upon whom fortune has not positively beamed.

[* Apparently much smaller than the one you cited; but for my purposes it doesn't matter. I can believe 30% of poor Americans do not have bank accounts. Quick head math gets to 5% of Americans, which is very close to the number Bret cited.]

There's your characteristic: some number Americans are poor and unbanked. What is the composition of that group?

I'm going to hazard some guesses. There is an overrepresentation of the mentally ill among the unbanked. I have no idea what plausible taxation policies, no matter how confiscatory, will have any effect on them. I'll also bet a non-trivial number earn their income through drug trafficking; that they are unbanked is unrelated to tax rates, but might, just might, have something to do with drug laws. And I'll bet a significant proportion are concentrated in majority black communities, with very high rates of male incarceration (see drugs, above) and women choosing to have children outside of marriage with multiple, absent, men.

As for that latter group, certainly we could shovel even more money their direction, but that begs some serious questions. Such as: Have various "entitlements" [richly deserved scare quotes] enabled consequences leading to the characteristic of being unbanked? If so, and I think it is at least plausible, then shifting income from one group to another has had, at least in part the consequence of requiring even more income shifting. I would have thought our experience with a lifetime "entitlement" to welfare easily bad enough to give progressives pause. Apparently not.

That, in turn, raises another, moral question: In what sense is it moral to penalize activity in order to subsidize inactivity? Obviously, inactivity can be due to factors beyond a person's control, and to them we owe what should be viewed as an insurance payout. But much activity is penalized to subsidize willed inactivity: public employee pensions, welfare to women who chose to need it (thereby letting men off the hook), or social security disability payments (remember: the claimant rate has increased by 12 times over the last forty years).

But since collectivists never consider composition in citing a characteristic, they completely fail to come to terms with underlying moral questions and utilitarian consequences.

Instead, it boils down to "gimme".

February 13, 2013 4:14 PM  
Blogger Harry Eagar said...

Lots of free-floating assumptions there. You might not think them so likely if you worked in a pawn shop.

I don't think CNN is the most obvious source. Academic studies of fringe banking, often relying on federal reserve studies, usually estimate 25-30%. Our inquiries locally support this.

There's no reason any of you would have encountered this personally, but some groups are bank-shy. Filipinos, for example.

And the US Filipino community very much does NOT match your guess as to what an unbanked person would be like.

It's true that Filipinos are not unbanked because of poverty

February 14, 2013 9:36 AM  
Blogger Susan's Husband said...

"Lots of free-floating assumptions there" - not that you would deign to enumerate them. I presume it's so you can't be called on it.

"It's true that Filipinos are not unbanked because of poverty"

Hmmm, would that be one of your free floating assumptions shot down?

I'm still waiting for the free floating assumption of what percentage of the poor not having something counts for this discussion to be brought down to the earth of actual numbers. Is only 70% of the poor having something enough to make it "unavailable" to the poor?

February 14, 2013 10:00 AM  

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