Thursday, January 17, 2013

The Repression Shoe is on the Other Foot

Having been told more than once that management is engaged in nearly unceasing violence upon angelic unions, which are never thuggish or corrupt, this very nearly used up every bit of gast in my flabber:

PHILADELPHIA — It was several weeks ago when vandals struck the building site, setting fire to a crane, cutting deep gashes in steel columns and loosening the bolts that anchored them. The episode resulted in about $500,000 in damage and was, the authorities believe, apparently an attempt to halt the construction of a Quaker meeting house.


Four union members visited the site during the week before the overnight attack on Dec. 20-21, asking questions about who was doing specific construction tasks, said Robert N. Reeves Jr., the president of E. Allen Reeves Inc., the contractor. The company operates an “open shop” that does not employ union members but may work with unionized subcontractors, Mr. Reeves said.

Each of the union members left the site after being told by employees that they could not give out information about the construction, Mr. Reeves said. The fourth told the site manager on Dec. 17 that “I’ll do what I have to do,” said the manager, who spoke on the condition of anonymity.

Gee, I wonder why.

But wait, there's more:

The episode is the latest in Philadelphia to prompt allegations that trade unions engage in violence and intimidation in an effort to secure work for their members.

In mid-December, an employee of Post Brothers Apartments, a local developer, was attacked with a crowbar by a member of the Ironworkers Union, according to Michael Pestronk, chief executive of the company. Post Brothers is in a dispute with local unions over its refusal to hire all-union labor to work on an apartment building in central Philadelphia


Post Brothers initially wanted to hire 40 percent union labor on the project, converting a factory into 163 loft apartments, but is using all nonunion workers after unions withdrew their members in protest at the company’s position, Mr. Pestronk said.

“They told me, ‘If you don’t make this project 100 percent union, we are going to do everything in our power to stop this job,'” Mr. Pestronk said in an interview. Picketing of the Goldtex site began in December 2011 and employees have been harassed and attacked in episodes that have been captured on video and posted on a company Web site, he said.

Remember, look for that union label.

Tuesday, January 01, 2013


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.