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September 06, 2006

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» Tax cuts for the rich?.... from Media Lies
....Just another liberal lie. On September 2nd, the Wall Street Journal published an analysis of the results of Bush's "tax cuts for the rich". Here is some of that analysis.First, the new data show that the bottom 50% of Ameri... [Read More]

» The Rich live lavious lifestyles to spite the poor according to Brad DeLong from Hone Heke Comments September 2006
Some commentary on Brad DeLongs Spiteful Rich comments over at Just One Minute... [Read More]

Comments

SteveMG

Theory of conspicuous, er, contemption?

Well, on first blush one asks how exactly will raising their taxes reduce their spiteful dislike of the poor?

And even if raising taxes removed this spite and, in turn, lessened their consumption, would that be a good idea?

Third, why am I responding to this goofy argument?

SMG

Paul Zrimsek

If we keep needling DeLong enough we may get an account of what drove a utilitarian to write this:

Surely spite is at least as offensive an other-regarding preference as envy, isn't it? Surely public policy should weigh the spite-generated utility the rich gain from their conspicuous consumption as worth less than nothing, shouldn't it?
Bob

They should ask the spiteful Kennedy's why they keep all of their trust fund money off shore... Let's get Fat Ted to pay his fair share first!

doug deeper

Brad's idea sounds like a microcosm of what the UN wants to do on a global level.

One word - communism.

proreive .

'inequality is to make the tax system more progressive, not less. A reality-based government would'

Sounds like Blair's and his Live8 - G8 GDP tax that he doubled the day after the London bombings.

Larry

A national sales tax would be a step in the right direction. The rich would pay more taxes and everyone would be happy?

steve sturm

DeLong proves that liberals just want higher taxes and are desperately searching for some rationale to justify their own bias... a twist off the 'sentence first, verdict afterwards'... and their continuing lack of success drives them to endorse such stupidity as what DeLong is doing.

And why would the rich spend in order to spite the poor, when the rich would just as soon not have anything to do with the poor? It's not as if the millionaires are driving through the inner city slums so the poor can see the fancy car the rich are driving, nor are the rich inviting the poor out to the Hamptons so they can watch the rich sitting by the pool drinking champagne.

jwest

DeLong must be reading my mind.

I just can’t stand to be around clowns, midgets and poor people. This must be why I avoid the circus at all costs.

Joe Mealyus

"Lizardbreath at Unfogged cleverly shifts the topic...."

Note that in an update Lizardbreath writes that Galt is "still living in a fantasy world in which the motivation for policies that reduce inequality is to injure the rich, rather than help the poor."

Delong (singled out by Galt):

"Surely public policy should weigh the spite-generated utility the rich gain from their conspicuous consumption as worth less than nothing?"

It's easy to see (unless you're Lizardbreath, I suppose) why Galt thinks that Delong is suggesting that policies that hurt the rich without otherwise helping the poor might therefore be optimal ... hence her somewhat tongue in cheek (not that Lizardbreath gets that either) analogy of throwing acid in Cindy Crawford's face. (The acid makes Cindy uglier but - this is the point - doesn't make anyone else prettier).

clarice

Personally, I think we should start by really, really taxing skinny, young gorgeous models and see if that helps before proceeding further.I've always been impressed with Dahl and Lindbloom's notion that the pragmatic way to social change requires that we start small, see what works, before initiating gigantico changes.

Joe Mealyus

By the way, note that even if you buy Lizardbreath's (albeit perhaps without understanding what she's disdaining) disdain of the idea that "motivation for policies that reduce inequality" solely by injuring the rich "is to injure the rich, rather than help the poor," Galt really does provide a clever answer:

"It is not that I admire the rich for their gloating, or disdain the poor for their envy. I think that both are distasteful, in exactly the same degree, because *they are both exactly the same emotion*: the rich gloat, and the poor long to be entitled to gloat. The fundamental desire--to Lord it over others--is exactly the same; it is not edified merely because the possessor is unsuccessful at it, any more than the attempted murderer is on a higher spiritual plane than the fellow who actually managed to complete the act."

In other words, if Lizardbreath (or anyone else) wants to say something like "we're not injuring the rich to help the rich, but to help the poor," Galt's idea is that it only helps the poor by rewarding the same thing - "the same emotion" - that the rich is being punished for the first place.

Extraneus

But it does! It makes everyone prettier except the formerly pretty, who become the new ugly.

Seriously, though, it took reading The Road to Serfdom, at least for me, to realize just how wide the gulf between socialism/socialists and classical liberalism/liberals is, and it's pretty wide.

sbw

High altitude pilots can be deprived of oxygen to the point of uselessness. Films show pilots in altitude chambers flailing about. . . a scare tactic to remind us that hypoxia can be deadly, with the pilot unable to save himself, much less his crew and passengers.

Could it be that Brad is suffering from the rarified atmosphere of academia? Is he suffering from a reality-based fantasy that justifies a spite-motivated progressive tax code?

I wonder if the real lesson is that what passes for evidence in academia is often only assertion -- that something said with gravity could just as easily be Ward Churchill or John Kerry talking.

Bob

Great read over at Back Talk by engram

http://engram-backtalk.blogspot.com/>The "Wages and Productivity" Hoax

nicely done engram!

JohnH

Paris Hilton: show-off. High taxes

Andre Aggasi: nice guy. Low taxes

Bill Gates: irritating, even though gives away a lot of money. High taxes

John Kerry: doesn't deserve his money. High taxes

Tom Maguire: maybe not rich. Low taxes

Next?

Patrick R. Sullivan

There are some pretty good comments to 'Jane Galt's ost too, such as:

'Very nice post. If it had been posted as a comment on DeLong's blog, he surely would have deleted it and banned you for life.'

Neo

While taxing the rich has it's (anti-snob) appeal, the overall structure of the current tax system relies so heavily on the rich that when they get a cold, the federal deficit suffers too (as if anybody really cares).

Half of all Americans have no stake in the income tax system because they pay none. The income tax means as much to them as the death tax, it's somebody else's tax/problem, not theirs. When half of all potential taxpayers pay no income taxes at all, and the top 1% pay 38% of all income taxes, any notion of "American people" and equality begins to fray at all the ends. Frankly, I think it would be better if everyone had to pay a minimum tax of $1. This makes them a stake holder in the income tax system, even if it is just symbolic for the most part. They would then have a clearly legitimate claim as a full taxpayer, and an even more legitimate claim to be active in the political system.


One other thing. I suggest that the definition for rich be changed so the threshold is defined as one dollar less that what Congressmen and Senators make. So every time they get a raise, somebody gets an income tax cut. Thus making it doubly hard to justify a pay raise.

clarice

HEH!

clarice

BTW, What's his thought on estate taxes? Rich people who blow thru their dough have lower estates to pay taxes on. While those who simply squirrel it away while living on cat food in one room walkups get smacked when they die--a big penalty for not creating envy. No?

jwest

This type of progressive thinking reminds me of an encounter I had while on business in Malmo, Sweden.

Malmo is a working class town, but infested with socialists-in-training from the nearby university town of Lund. As part of their curriculum, a group of these blond heads full of mush were performing a bit of “street theater” to dramatize the inequities in their society.

The cast included the “rich man” (with accompanying evil mustache), a pillow-stuffed fat banker, a baker and, of course, a poor person. A few others played town’s people to provide the appropriate socialist response to the dialog.

Naturally, the plot opened with the poor man begging for bread from the baker. The baker, although sympathetic, tells the beggar to go away. Nearby, the rich man is bringing yet another bag of money to the banker. The narrator explains that money has hardened the heart of the rich man and that he has failed to see how wrong it was that he had so much money while the poor man had none.

I don’t remember exactly how the rich man reached his epiphany about social justice, but it goes without saying that the play ended with Swedish style income redistribution and everyone dancing with joy.

Since what brought me to that particular street and time was lunch, I asked the group if they would like to join me. (Note to fellow travelers: If you invite a dozen college-age Swedes to eat on your tab, be prepared to see some world-class eating.) We discussed the play and politics in general. Apparently, the young socialist view of the U.S. is a stark contrast between the rich whites and the poor blacks.

As a hypothetical, I asked if it would be a better long term solution if the rich man deposited his money with the banker and, due to his greed, demanded a higher interest rate. The banker, driven by greed and fear of losing the rich man’s business, would be forced to lend the money out to generate the interest. Faced with this dilemma, the banker convinces the baker, also motivated by greed, to take a loan to expand and subsequently the baker hires the beggar to work for him.

Without any prodding, a few of the students caught on that this scenario provided a level of dignity to the poor man that their redistribution model missed altogether.

So, if you travel to Sweden and happen to bump into the only two capitalists in the country, you know who to thank.


Locomotive Breath

I need only refer to the luxury tax that was passed in 1990 and repealed in 1993. To pick just one, it nearly destroyed the recreational boat building industry putting, you guessed it, thousands of working stiffs out of a job. All that "conspicuous consumption" puts bread on the table of working people.

PeterUK

Taxing the rich does not give self esteem to the poor,this can only be done through self help,burglary and robbery should therefore be made legal within certain tax bands.This prevents money being siphoned off by government and frittered away on vast bureaucracies.
Liberals who wished to enable the scheme could put the "Urobme" logo on their houses and SUVs and quick release clips on their Rolexes.Simple.

Extraneus

Yeah, that boat thing was a great example, LB. Ayn Rand would have been proud, speaking of "Jane" Galt.

clarice

PUK, I reallt like the way you think. I understand Blair has some openings to fill.

lurker

Larry Elder explains why taxing heavily against the top wealthy base is the wrong thing to do. PUK is right.

TomB

It sounds like Delong is doing his research by watching "Lifestyles of the Rich and Famous".

But the truth is better described by the book "The Millionaire Next Door". In it, the authors demonstrate the vast majority of "rich" (people with net worth over $1 million) are no different from everyone else. They are not conspicuous consumers.

Yet again another post that demostrates how out of touch Delong really is.

Lew Clark

I'm so anti-egalitarian and so pro-capitalist that I stand up and cheer every time I read that the RICH got even richer. Because, being of modest means, I still live very well. I can afford a nice house, car, good food, etc. etc. because some rich greedy bastard built a quality product and sold it at a reasonable price, then an even more greedy bastard built one and made it better and sold it cheaper, and got even more obscenely rich than the first guy. So I'm the beneficiary of greed, greed, greed.

The only way redistribution of "wealth" has worked, is making everyone poor. Except for the people in control of the redistribution, who seem to do ok despite universal poverty.

So I'll stick with greedy bastards that make my life better, over caring egalitarians that make me as equally miserable as all those around me.

tp

I have a friend who thinks there is a leisure class at both ends of the socio-economic spectrum. Maybe it is leisure that needs to be confiscated and given to the people in the middle. : ^ )

vnjagvet

HTTP, Neal Boortz's Nealz News:

The Democrats, with no small amount of help from Republicans, are making headway on their goal of shifting the entire federal tax burden in this country onto a minority of income earners. In 2004 the bottom one-half of income earners paid only 3.3% of all federal income taxes. That's down from the Clinton years. In fact, that's the lowest share paid by the bottom half ever.

According to The Wall Street Journal, the majority of American families with incomes less than $40,000 pay no income taxes at all! When you factor in the welfare program known as the Earned Income Tax Credit, many of these families are coming close to getting a completely free ride!

OK ... but what about the evil rich?

In 2004 the top 1% of all income earners earned about 19% of all income. So ... the rich really are benefiting from Bush's tax policies, aren't they? Just 1% earning 19% of all income? Sorry to burst your bubble, but that figure was higher in the Clinton years. During the time Clinton was in office this figure went from 13.8% to nearly 21%. Funny how you didn't read a lot of newspaper stories during the Clinton years about growing income inequality, isn't it? Now, under bush, the share of total income earned by the wicked rich has fallen!

But what about the income taxes! Surely George Bush has all but wiped out income taxes for the nasty rich, hasn't he?

Nope.

In 2004 the top 1% of income earners -- that crowd that earned 19% of all income -- paid 36.9% of all income taxes. The top 5% of income earners paid a whopping 57.1% of all income taxes. That's an increase under Bush. So much for "tax cuts for the rich."

OK .. well how about the super-rich? What about the top one-tenth of one percent of income earners? Lordy, I don't even know how much you have to earn to be in this crowd. From 2002 to 2004, with the hated Bush tax cuts firmly in place, the top 0.1% of income earners saw their share of total income taxes paid go from 15.4% to 17.4%. That's up a full 2% for those of you who went to government schools.

OK ... that's income taxes. But what about capital gains taxes and taxes on dividends? Bush cut those taxes too, didn't he? That's where the rich are making out like bandits, right? Well ... glad you asked. Since Bush's tax cuts the Imperial Federal Government has seen an increase of 79% in capital gains taxes, and 35% for taxes on dividends.

Just remember these figures the next time you see some Democrat whining about income inequality and the need to redistribute income. It looks like we're doing quite a bit of redistribution as it is.

lurker

Raising minimum wage is going to introduce the results opposite of what the democrats think would do.

Barney Frank

From 1932 until 1982 the top tax rate on income never fell below 63 percent. If Mr. Delong can somehow provide a metric demonstrating that the rich were less spiteful toward the poor during this period then he might have an argument.

However, as the rich historically pay a higher proportion of income taxes every time tax rates are cut they may actually be more spiteful toward the poor now because the poor aren't paying their fair share, in which case Mr. Delong should be praising Mr. Reagan and Bush for soaking the rich. Either way, as an economist the guy couldn't paint a sunset on a duck's ass.

Slartibartfast

Analogue: Professor DeLong enjoys an excess of intellectual capital, and spends it in a way that's calculated so inspire spite in those who are not so well endowed.

So, I'm thinking lobotomy.

PeterUK

This is all very unscientific of Mr de Long,first there needs to be an index of spitefulness so that there can be a direct correlation between wealth and spite.
Does spite increase in direct ratio to wealth? Is there a natural spite quotient which is not affected by fiscal conditions?
How are the spiteful poor to be assessed? Or even the spiteful middle classes?
Should there be a system of "Spite Credits" whereby developing classes can be allowed more spite credits than existing spite producing classes?
Perhaps some University Department of Applied Spiteology can provide the answers?
There needs to be a UN Envoy of Envy so that this global problem can be solved multilaterally.

Jane

A reality-based government

Why is it that the very people who wouldn't know reality if they fell over it, want to make everything "reality based"?

Joe Mealyus

"The only way redistribution of "wealth" has worked, is making everyone poor."

But one argument for the redistribution of income is that it makes the wealthy better off. In particular, it allows them to enjoy a more optimal level of "public" goods (like police and military protection, roads, etc etc).

The key is that if you're a rich person, an increase in your own is also an increase in the taxes of other rich persons.

larwyn

I am thrilled that this is out in the open.
It has been an intergral aspect of the ideology
of the LEFT and goes back to tribal cultures,
as Shrinkwapped explains in this insightful
and timely post from July 24th:

A Perspective on Tribes and Anti-Semitism

Throughout most of humanity's tenure on the planet, societies have been organized primarily along tribal lines. Tribes are by their nature based on shared ethnicity and shared religious beliefs. They also tend to have a very limited number of leaders who have first choice of assets with the rest, essentially shared communally. Furthermore, before the very recent past, most societies lived on the edge of subsistence, with very little left over for accumulating material goods. The disparity between those with the most and those with the least was actually fairly small, though this did not keep "envy" from being a significant issue and a great many tribal rules were developed in order to manage such envy. This all began to change when man began his slow march to technology.....
,,,,,,,,,

2) They direct the envy outward toward other tribes. This is one of the reasons the fantasy of the noble savage who lives in peaceful harmony with the environment and with others, is such nonsense. Tribes cannot be pacifistic; they must be war-like since their internal cohesion relies on externalizing their aggression.

From almost the time Abraham entered into the Covenant with God, the Jew has functioned as the ideal "other" tribe upon which to project one's envy. The Jews have maintained a strong cultural and religious identity despite spending two millennia in the diaspora, and have been fairly successful in most nations which have allowed (tolerated) them to flourish. Calling themselves "the Chosen People", a concept conveniently misunderstood by those who hate the Jews, has been an intolerable provocation to those who hate the Jews. Periodically, spasms of envious hatred have been unleashed against the Jews, culminating in the Holocaust, which included not only an attempted genocide, but a not so coincidental confiscation of Jewish assets by the Nazis.

Using Jews as a way to manage envy has continued to be the modus operandi of the Arab world. If anything, the problem had become exponentially more difficult with the founding of the state of Israel. Since the founding of Israel, the disparity between the accomplishments of the tiny Jewish minority in their midst, and the enormous mass of Arab and Islamic peoples surrounding them, has grown by leaps and bounds. This despite the Muslim world being blessed with the possession of a large percentage of the world's energy reserves.

Hope you read the entire post and visit Shrinkwrapped often.

Tom Maguire

In 2004 the bottom one-half of income earners paid only 3.3% of all federal income taxes.

Well... those with a regular job also pay Soc Sec and Medicare - those are pretty large budget items on the Federal revenue side.

(OK, those are "earned benefits" programs, and they get the money back later... ahhh!)

Liberals who wished to enable the scheme could put the "Urobme" logo on their houses and SUVs and quick release clips on their Rolexes.Simple.

LOL. I thought that was mandated in Britain,or at least, home defense is not allowed.

So, I'm thinking lobotomy.

Insert cheap shot here...

richard mcenroe

So when jillionaire Hollywood trust baby Steve Bing campaigns to take away the poor folks' gasoline (Prop. 87), he's just being spitefully rich?

sbw

DeLong seems to be looking a static, Newtonian universe. My intuition (FWIW) says that the velocity of money is more important than a snapshot of who has what at any given instant. Rich people either spend money or invest it -- either one contributes to the economic engine that benefits us all. Rich people do not stuff cash into a mattress. So far as velicoty is concerned, a private enterprise transaction stokes the economic engine. A transaction of confiscation and redistribution does not. So, do I have more smarts than DeLong or do I just act that way?

sbw

Doh! velicoty s/b velocity ... not so smart after all. ;-)

Rick Ballard

SBW,

All adherents to economics as expressed within Das Kapital believe economics is a zero sum game more strongly than a sheltered four year old believes in Santa. We shouldn't complain - it's cheap amusement.

Even funnier is the fact that there are undoubtedly parents writing checks to the institution which employs DeLong in the hope that their progeny will be educated. One can't say that DeLong has not done his part to soak the spiteful rich.

Slartibartfast

Enjoy your double-barreled Instalanche, Tom.

Seerak

I'll always be amazed at how many people insist on dismissing property rights as a mere convention or "disposable" idea, but then proceed to elevate emotions such as "spite" and "envy" to the status of immutable absolutes which should form the basis of public policy.

PeterUK

TM,
We avoid nasty little scenes by filling our tribute baskets and leaving them out alongside our carefully sorted waste,makes it easier for the lads to pick up on the way back from the boozer of a Saturday night,much safer for them too,obviating falls from climbing,or cuts from broken windows.
Personally,I find it more efficatious to let my leopardess Phoebe and her cubs have the run of the grounds,amazing how fast the poor can run.

Rick Ballard

Peter,

You're right, of course. Proper incentivation can motivate even the most witless dullard.

That reminds me, where's Tic?

clarice

PUK--Rick--good to be online when you two are..

John Blake

test

PeterUK

Rick,
Septic is on a march "The Witless Dullards against" the rest of it had too many adjectives and sub-clauses to fit on the banner.

John Blake

Libertarian or bureaucratic State socialist, "rational choice" in economics makes no behavioural assumptions: Spite and malice by the rich are no more relevent than envy and class-hatred by the poor.

Thorstein Veblen addressed "conspicuous consumption" of this nature in his classic "Theory of the Leisure Class". When one realizes that Carnegie, Rockefeller, Ford et.al. ended school at fourteen --acquiring thereby the self-evident equivalent of MBAs today-- uniformly rising from impoverished origins, one marvels at how titanic industrial accomplishments have come to be, as our lumpen-academics attest, "spitefully and maliciously" ignored.

Barely ten years ago, Google's gang of geeks rode bicycles to work in warehouses. Now 747s with double queen-size bunks barely contain raging libidos. How spiteful towards we poor peasants can you get?

When "motivation" (sic) becomes an indice of economic progress, we're back to "he failed, but his intentions were honorable." For decades now, Leftist malingerers have portrayed Stalin, Mao, and other serious mass murderers in that light. Old whine in new bottles... maybe we need a new sommelier.

Burt

It may be instructive to note that the Ten Commandments have no objection to "showing off", but they come down firmly against envy.

Rich

Forget taxing the rich.

Tax Liberals. After all it is liberals who cause the common sense man to have to COW BARN hose out all their self-serving proclaimatory (1) bovine-processed grass daily in order to sort out the news in a meaningful way.

Tax liberals.

Think of the treasure that is spent sandblasting off their political grafitti from the daily discussion.

I also propose a "Nevermind" tax on liberals. See the Plame-blame game. If they wish to indulge in engineered 'corruption club' multi-year tax-payer funded election talking points commercials.. let them PAY!

And, while we are at it, I think we need a "DO IT and blame others of doing it" tax. This one would be like a luxury tax. If you do it, then accuse others of doing it to divert suspicion from yourself? .. you PAY!

Finally, a ‘those who want it’ tax. Where by if you want a neat new tax-payer funded program? We tax those tax-payers who want the program and not those who don't. Think of this one as a "Put your tax dollars where your mouth is" tax.

As usual, it’s not the rich, it’s the liberals.

Rich

(1) the act of saying something and thinking by doing so it is true.

Twok

Brad DeLong also made the extraordinary comment that 'Nobody who is an immigrant of desendant of immigrants has any business voting Republican. Nobody.'

The Futurist challenged DeLong to a debate over the statement. DeLong performed weakly even by leftist standards.

JM Hanes

I'm afraid I haven't had a chance to read through the comments; I've been trying to rustle up a comment posted to the WaPo forums some time ago in a discussion about progressive taxation. Turns out it was a few years back (hence the slightly dated stats)! Hope it hasn't already been rendered redundant above:

While I despise the specific attitude which dismisses the shiftless poor or abandons addicts and teen-age mothers, among others, to live with the consequences of their own “bad choices,” I have, in fact, argued for progressive taxation without vilifying the rich. In an attempt to free further discussion from the distraction of perceived or assumed ill-will on my part, I offer the following brief

Defense of the American Rich:

On top of the wealthy’s involuntary contributions to the quality of American life via taxes, we should probably add the huge sums of both money and time they voluntarily ante up on a yearly basis as well. How many of the most cherished institutions we take for granted were created, and how many continue to be sustained, by private contributions? Symphonies & museums, mental health and cancer research facilities, scholarships and community crisis centers, historic sites -- in the 1999 Foundation Directory, for example, the North Carolina section alone takes up 46 pages (3 columns to a page). Then there’s the Red Cross, the United Way, Colleges & Universities....

There is hardly a capital campaign going which isn’t jump started by a very small number of mega contributions. For every business maneuvering to advantage, there are businessmen spending millions and soliciting others to preserve our national treasures, support our cultural accomplishments and alleviate the burdens of our people.

Although I suppose tax deductions do represent one way to redirect one’s tax dollars toward causes one finds worthy, they are a modest tool which doesn’t even begin to explain the full measure of philanthropy which we enjoy. Anyone who cares enough to google can check the stats.

For decades, and probably longer, charitable giving in the U.S. has hovered at a level roughly equal to 2% of the GDP. The same held true (even without a $1.8 billion 9/11 boost) in 2001 where the breakout was:

Individual donors - $160.72 billion, Bequests - $16.33 billion, Corporations - $9.05 billion, Foundations - $25.90 billion

70% of American households make contributions, but in this, as in the spread of tax obligations, the top percentiles contribute disproportionately, if not uniformly. Private institutions can funnel $$ more efficiently than government, although it’s worth noting that anyone who has debated accepting a bricks & mortar gift without the concomitant resources to maintain it can tell you, relying solely on donors’ judgment as to how they want their contributions used is the proverbial road to nonprofit hell. One could almost argue that progressive taxation is simply the standardized compulsory reflection of a uniquely American system of patronage. I won’t attempt to do so, however, I just offer it up for perspective.

Comment was originally posted back in 2002.

Kang

Of course, it also has empirical implications for the theory that the rich engage in proportionately more conspicuous consumption in order to ward off alien abduction.

Curses! The Earthlings have discovered our plan, Kodos!

David Hardy

An interesting parallel is the 16th century laws .... sumpturary something or other ... that outlawed very fancy clothing. It'd seem that something like that (expanded to large estates, whatever) would be better targeted than a more progressive income tax, which would hit the frugal as well as the overly-fancy. Altho I am conservative, the thought of Hollywood types losing it over the tax on their expenditures is rather amusing.

Slartibartfast

The Futurist challenged DeLong to a debate over the statement.

The Futurist always speaks of The Futurist in the third person? Slartibartfast is annoyed by this kind of behavior. That, and blogwhoring. Slartibartfast is most annoyed by persistent and shameless blogwhoring.

tcobb

You can say whatever you want, but you are never going to convince anyone who fits into the current definition of the "left" that inequality of income is other than an evil thing anymore than you can convince mainstream Christians that Jesus was not the son of God. Its an article of faith that simply cannot be challenged; anyone who does so is a filthy heretic. Its wholly immune to rational argument.

Any framework or theory, however silly, that tends to show that such inequality is bad will be trumpeted as a justification for imposing measures intended to bring about that condition. Its kind of like the stories of people seeing the Virgin Mary's image in a taco or whatever. Its proof that the One True Faith is correct, no matter how ridiculous such claims may be to someone who doesn't buy into the core of the belief set with which they view the world.

LZ

Delong makes a persuasive case- rich people spend much more than poor, and therefore the tax code should adjust to better equalize spending among rich and poor.

However, spending is not the only measure of a person's activity on earth. Some people live longer, some become more famous, some more beloved, some happier, some more powerful, and some whinier. Shouldn't we also equalize these outcomes? Why should spending be singled out for equalization through government action? Many of the other factors above are functions of personal choices. One may choose to forgo higher income as a corporate attorney to become a whitewater rafting guide, thereby becoming happier than an attorney. Rather than obligating the attorney to boost the rafter's income to acheive "equality", why not obligate the rafter to become an attorney and work 100 hour weeks drafting memorandums, getting ulcers, and ultimately a divorce? This seems ***equally*** fair.

Why should Brad Pitt be so much more famous and beloved than I, even if we were equally wealthy? Sure he may have various attributes or abilities that I lack, but isn't this where we need the government to step in and make things fair for me? The government should put me on the cover of People magazine everyweek and bar Brad Pitt until I have an equal number of star actresses fawning over me. If they still refuse, the government should find other coercive means to make us equal.

And why should one person be entitled to whine much more than another? Shouldn't the government shut them up after they exceed some threshold of whining?

sphinct

Slartibartfart,

What kind of name is Slartibartfart?

topsecretk9

--Delong makes a persuasive case- rich people spend much more than poor, and therefore the tax code should adjust to better equalize spending among rich and poor.--

WRONG...it's the priorities folks don't want to accept. Saving and investing are NOT gov't controlled. To assume that all lower income do not have priorities with what money they have is insulting.

There are people who are poor just not victims, who would prefer to NOT spend but save.

Mike G in Corvallis

Robert A. Heinlein had this to say on the subject:

Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded — here and there, now and then — are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty.

This is known as "bad luck."

bbwhit04

To quote Extraneous, "Yeah, that boat thing was a great example, LB. Ayn Rand would have been proud, speaking of "Jane" Galt."

And to Quote Francisco D'Anconia, a chatacter in Ms. Rand's Atlas Shrugged, "Run for your life from any man who tells you that money is evil. That sentence is the leper's bell of an approaching looter."

newc

My thoughts: Thou shalt not covet.

Slartibartfast

What kind of name is Slartibartfart?

I have no idea. Probably one contrived by someone with few (if any) abilities in reading or spelling.

boris

Indeed it is the applelation of "The One"

Tom Maguire

Probably one contrived by someone with few (if any) abilities in reading or spelling.

There goes my theory that it was contrived by a spelling master out to vex (or spite) the rest of us.

Eric Blair

I think we should tax all foriegners living abroad.

Extraneus

John Galt's oath:

I swear by my life and my love of it that I will never live for the sake of another man, nor ask another man to live for the sake of mine.

boris

The problem with ...

attitude which dismisses the shiftless poor or abandons addicts and teen-age mothers, among others, to live with the consequences of their own “bad choices,”

... isn't so much what's NOT DONE for them, but what in their name IS DONE to the rich. The fable of the golden goose comes to mind.

Accumulations of wealth are generally the result of successful economic activity, which is good for everybody. Any POV that seeks to limit that success is ultimately counterproductive.

noah

The looming solution that will be embraced by the Left...wealth confiscation of the undeservedly rich which will be determined by political leanings. When $100,000/year wil barely support a family in some areas of the country yet puts you in the top bracket the futility of taxing "the rich" becomes apparent though I suppose a bracket for the "really rich" could be added. But that is not what the Dems are proposing.

Not to worry for a couple of years though.

ray_g

A huge problem with any "soak the rich" plan is that most people's definition of rich is "anyone who makes more than I do." I've had arguments about progressive taxes with liberals who actually make fairly good money, and when I point out to them that a family of 4 near the poverty line would consider them filthy rich, so they should pay more, they deny that they are rich. I can't remember who said it, but it always seems to come down to "don't tax me, don't tax thee, tax the man behind that tree."

Karen

David Hardy,
The sumptuary laws of the Renaissance actually did not work as intended. The nobility wished to distinguish themselves from those involved in business--and the businessmen wished to look like the nobility. The businessmen won. They wore the exact things they were forbidden to--the laws were either unenforced or the fines paid.

Slartibartfast
Probably one contrived by someone with few (if any) abilities in reading or spelling.
Indeed it is the applelation of "The One"

*cackle*

jag

Apparently DeLong doesn't know any "rich" people.

I've known quite a few. Most have been just like those described in the book "The Millionaire Next Door".

Of the rich I've known who flaunt their wealth the people they are trying to impress are OTHER RICH PEOPLE. Actually, most of the people I've known who drive expensive cars, dress expensively and such have been frauds. They didn't have the wealth to support their spending.

Finally, as someone note above, DeLong isn't too "tolerant" of criticism. I posted something once, a purely economic subject, and was permanently banned.

DeLong is coward and a joke. He's made up his mind that the "rich" are "bad" and he'll contort whatever evidence he can find to conform to his prevailing mindset. Typical illiberal, liberal.

JM Hanes

PeterUK: "This is all very unscientific of Mr de Long,first there needs to be an index of spitefulness so that there can be a direct correlation between wealth and spite."

John Blake: "When 'motivation' (sic) becomes an indice of economic progress...."

Back to future! The Motive Index is, and has been, a staple of leftist politics across the board -- whether we're talking economics or Plamegate. Cheney's guilt & Armitage's innocence are directly tied to their spitefulness ratings, for example. Clinton's religiosity was unremarkable, while Bush is condemned for theocratic intent. Motive, of course, is almost always presumed, for it is exceedingly difficult to prove. In leftist hands, that becomes an advantage, for it cannot be disproved either. Indeed, in many quarters, it is actually the argument of choice, as the original column under discussion so clearly demonstrates.

The "touchy feely" DeLong concludes that if the working poor and middle class are less content, it's because the rich have acquired (at their expense!) the resources to become more overtly spiteful. DeLong chooses to ignore the central points of the very Krugman article he's just quoted at length: real wages have dropped, benefits have declined, and bargaining power has been eroded. Aside from the logical fallacy inherent in the zero sum emotional game DeLong proposes, the idea that punishing or putting a stop to conspicuous consumption is a viable remedy to the real (and measurable) problems cited by Krugman is archetypal voodoo economics.

Projection, of course, is not confined to the left, but it's certainly clear that DeLong is offended by conspicuous consumption. I suspect he might be among the first to deny that the flamboyance of others makes him feel bad about himself.

Joe Mealyus

"He floated an idea, people had fun whacking it, that's life.

My secret hope is that he will be goaded into coming back to the question of income inequality. I am reasonably convinced there is some sort of a problem and it would be interesting to see an analytical framework to think about it. That said, spite-based economics probably is not it."

In fact in his comments at Unfogged I don't think he was really defending the "spite" thing at all - he was halfway admitting the idea was toast. (Most of the other comments at Unfogged amounted to the usual "Jane Galt has to be a bad person, so I don't have to address her argument fairly" type of comments).

But he should come back to this:

"The easiest and most important thing the government can do to neutralize the adverse consequences of rising inequality is to make the tax system more progressive, not less."

This is a statement with which I, a non left-winger, would completely agree. Yet I don't believe that many Democrats really - in a thoughtful way, not just eat-the-rich reflexively - buy into it or understand why Delong thinks it's so important. It's not an issue the Democrat party, as an institution, has put any muscle into selling. My guess is 99.9% of right-wing JOM commenters would disagree with it, but that they haven't been exposed to all of the arguments either.

Joe Mealyus

"DeLong is coward and a joke. He's made up his mind that the "rich" are "bad" and he'll contort whatever evidence he can find to conform to his prevailing mindset."

That's completely unfair. Actually if you read his blog carefully, you'll see he has quite a nuanced view toward wealth creation. He's no Adam Smith - hater.

He does run his blog comments in a certain way, for certain reasons - mainly to avoid what I think he sees as pointless argy-bargy - that's his prerogative....

Joe Mealyus

"I've had arguments about progressive taxes with liberals who actually make fairly good money, and when I point out to them that a family of 4 near the poverty line would consider them filthy rich, so they should pay more, they deny that they are rich."

What's even weirder (and not uncommon where I live) are liberals who worship at the altar of stock options - who can bash Bush 24/7 but who adopt a more "Lionel Barrymore in It's a Wonderful Life"-ish approach to the questions of stock options and personal wealth.

cathyf
In 2004 the bottom one-half of income earners paid only 3.3% of all federal income taxes.
Everyone else has already devastated the silly spitefulness argument, so I'm going to nitpick about this silly canard.

The tax that you pay on income is the sum of three different taxes schemes: a seven-step progressive tax (called "the income tax" because it was the first income tax), a flat tax (called "the medicare tax" or "the self-employment tax"), and a two-step regressive tax (called "the social security tax" or "the self-employment tax"). Because the seven steps and the two steps don't line up, the marginal tax rate swings wildly up and down. For example a single person who makes $90,000/year pays a significantly higher tax rate than the single person who makes $200,000/year. Because the functions are step functions (which means that the derivatives are discontinuous) their actual behavior is quite different from the sort of straight-line sloping up or straight-line sloping down that people tend to have in mind when they talk about "progressive" or "regressive." The tax rate is progressive in some places, regressive in others, and flat in other places.

The argument that the poor don't pay taxes is just as much lying demogoguery as all the various envy-based soak-the-rich arguments. Anybody who works pays a lot of taxes.

The spitefulness argument is just crap, but there is a reasonable utilitarian argument that can be made in favor of having a mildly progressive tax scheme. The argument is simply that since poor people value money more highly than rich people (part of the definition of money as being a good is that it has a downward-sloping demand curve) then you have to take more money away from the rich person to equalize the harm that taxes do to the poor and the rich. If you take the utilitarian position that the better tax creates less harm to the productive capacities of the economy for each dollar collected, then you would expect a mildly progressive tax to be better than a flat tax and a flat tax to be better than a regressive tax.

Note also that just like "The Income Tax" is deceptively named as if it were the only income tax, "The Flat Tax" as pushed by people like Steve Forbes is a two-step progressive tax, not a flat tax at all. Given my utilitarian argument, which is about demand curves sloping downward, we know that demand curves are not step functions, and so creating a progressive tax by using a step function is a crummy technique -- if I were going to create a flat tax the rate would be constructed so it had a shape like the cumulative-normal function. I would want something smooth and continuously-differentiable. Going from seven steps to two steps just makes the function more badly behaved. The attraction of the misnamed "Flat Tax" is that it eliminates most deductions, so that it eliminates the record-keeping and mind-numbing complexity of the tax law. And there are many of us who would be happy to pay a little more if it was easier to pay.

I have my own utopian tax policy. It looks something like this:
1) Use the Forbes-style Flat Tax but with more rates. Instead of zero and 20%, have zero, 1, 2, 3, 4, ..., 19, 20 percent, and it goes up smoothly;
2) The flat "Medicare Tax" stays exactly the same;
3) The "Social Security Tax" becomes completely flat rather than regressive. The difference is that your tax payments on income less than $90K go into a personal account which is owned by you, while the "Social Security Tax" on income above $90K go into general revenues. (The $90K number would be indexed exactly as it is now.)

JM Hanes

Joe Mealyus

"My guess is 99.9% of right-wing JOM commenters would disagree with it, but that they haven't been exposed to all of the arguments either."

And you base this presumption on precisely what? There's really not much that's more annoying that the oft touted idea that conservatives swing right out of ignorance. It's most obvious in Democratic incredulity at poor southerners who supposedly don't know enough to realize that a vote for Republicans is a putative vote against their own economic interests.

Personally, I believe the statement in question is entirely spurious -- and I happen to believe in progressive taxation. Even stipulating to his framing of the problem, DeLong is trying to fix it at the wrong end of the equation.

Ex post facto equalization is not the simple add-on he implies, it will effectively alter the operative incentives for wealth creation across the board and ultimately domino through the marketplace in any number of ways that could easily work against the poor/middle he purports to assist. We've seen this happen time and again on multiple fronts.

As an aside, I'd suggest that being able to improve your own circumstances does considerably more for self-esteem than standing in line for a government check ever will.

noah

cathyf, as has been true for so many threads, you are "the one"! (Does that mean you are "slartibartfast"?...I hope not!)

Thanks for the clear analysis.

Cathy for President!!

Joe Mealyus

JM Hanes:

"There's really not much that's more annoying that the oft touted idea that conservatives swing right out of ignorance."

I think I agree with the general drift, but if you like Republican victories, is it that "annoying?" IMO the "what's wrong with Kansas" idea is one that Republicans (of which I'm not) should approach with a certain solemnity and thankfulness.

"Even stipulating to his framing of the problem, DeLong is trying to fix it at the wrong end of the equation ... equalization is not the simple add-on he implies, it will effectively alter the operative incentives for wealth creation across the board and ultimately domino through the marketplace in any number of ways that could easily work against the poor/middle he purports to assist."

By "fix it at the wrong end of the equation," I assume you mean that it's more important to increase the productivity of poor workers than to alter the progressivity of the tax system - I'd agree, and I'm guessing Delong would too. But Delong is specifically talking about "the adverse consequences of rising inequality," which kind of assumes that policies to increase the productivity of poor workers aren't happening, for whatever reasons. I think the Bush administration has totally fumbled the ball on fiscal policy (see Samwick's blog), the consequences of which (as we go through the business cycle) will be felt much more by those on the bottom of the income distribution than those on the top.

Of course a big question is, are we dealing with "wealth creation" or "wealth extraction?" I believe that that too much of "wealth creation" nowadays is simply taking advantage of the political process in various ways....

"....being able to improve your own circumstances does considerably more for self-esteem than standing in line for a government check ever will."

Well sure. But in this case weren't not talking about a government check, we're talking about the shape of the lifetime tax burden on different income classes.

boris

the adverse consequences of rising inequality

Since all income levels are better off today than 50 years ago, what exactly is the "adverse consequence" of the economic advance responsible? Envy? Because economic growth benefits the successful more than those just along for the ride? How could it be otherwise?

Double everybody's income and the inequality also doubles, guess that makes that a bad thin huh.

2 times 0 = 0

2 times X = 2X

Look at that increased inequality, from X to 2X !!!

Bad bad bad.

sbw

Hah! The Adam Smith Institute Blog points to this, saying, "Alex Tabarrok has I think the best idea, by reminding us of Coasean equivalence:"

The solution to envy is not to tax the rich but to tax the envious. To be envied is unpleasant. People want to be admired but not envied. To be envied is one step from being hated. (Consider how much crime is motivated by envy.) It's envy which imposes an externality on the rich. Make the envious pay for their ugly preferences.
Surprising analysis? Not really - should gays be taxed because they make some people uncomfortable? Hell no. Tax the bigots for making gays feel unwelcome.

JM Hanes

Joe Mealyus:

I get the drift of your first paragraph, though it doesn't appear to make much actual sense. I'm a split ticket voter, myself, and "annoying" was the tactful version of how the attitude in question strikes me.

"Of course a big question is, are we dealing with "wealth creation" or "wealth extraction?" I believe that that too much of "wealth creation" nowadays is simply taking advantage of the political process in various ways...."

Let me get this straight: increasing taxes on the rich with a view to equalizing income is not wealth extraction via political process? Surely, you jest!

Slartibartfast

By "fix it at the wrong end of the equation," I assume you mean that it's more important to increase the productivity of poor workers than to alter the progressivity of the tax system - I'd agree, and I'm guessing Delong would too.

I'm certainly no economist, but I don't get how you're going to achieve productivity gains in lower-income jobs. I'd guess that most of those jobs are hand labor, and hand labor doesn't benefit from technology-driven productivity gains in the way that professional/technical occupations do. This is not based on anything other than my own common sense, which may very well be wrong.

sbw

Sphinct: What kind of name is Slartibartfast?

The answer is 42.

boris

42 ??? no no no it's The One

Tom Maguire

"The easiest and most important thing the government can do to neutralize the adverse consequences of rising inequality is to make the tax system more progressive, not less."

Does it bother anyone that Clinton raised the top income bracket in 1993 yet ineqiality rose through the 90's?

Obviuosly, not all else was held constant, but shouldn't Team Reality at least offer a bit of evidence that a more progressive tax code will "neutralize" the problem? How progressive are we talking about, anyway - my guess is that if we go back to the pre-Reagan 70% bracket, incomes of the rich will fall as they substitute (free) leisure for highly taxed work. Is that really the solution we are looking for?

On a good day, we might even get Team Reality to explain just why inequality *is* a problem, and develop a few metrics to see if we are moving towards a solution.

SIDEBAR: I assume everyone worried about inequality also opposes state lotteries - aside from being a tx on the players, who are disproportionately poor, clearly the process of pooling ticket revenues and picking a winner raises inequality.

And the marketing! In NY, it is a dollar for a dream, and the dream is always a house, car, boat, fancy vacation, etc.

What about dreaming that you will send your kid to college, or that you will have time to read a great book (or start a blog!)?

As I said, I have no doubt libs are troubled by this.

ScurvyOaks

So what would DeLong think of replacing the income tax with a consumption tax that achieved some degree of progressivity (I realize that isn't easy, but let's ignore difficulties of implementation for the moment)? What we're at it, let's get rid of the estate tax. There would be strong incentives to create wealth and invest it, rather than conspicuously consuming it.

Joe Mealyus

"Does it bother anyone that Clinton raised the top income bracket in 1993 yet ineqiality rose through the 90's?

Obviuosly, not all else was held constant, but shouldn't Team Reality at least offer a bit of evidence that a more progressive tax code will 'neutralize' the problem? How progressive are we talking about, anyway...."

It's not a simple thing to defend Delong's statement. Part of my point was that he says something like this but hasn't, so far as I know, put a lot of energy into explaining his own reasons for saying it. (A small fraction of the energy he devotes to criticizing just one media outlet, the Washington Post). And I don't think the Democratic Party puts much (if any) energy into justifying to voters its philosophy in this area.

I'm not on Team Reality, but I'll try to make a stab at a few points.

1. It doesn't hurt to start, I think, with two basic pieces of background information. One is the "Bush fiscal policy kind of crazy" point. This is the idea that the Bush tax cuts have been in a sense phony ones - since spending didn't fall, at some point the money to pay for current spending will have to be collected in taxes. The other is that Clinton raised taxes on top earners and the economy boomed (or bubbled, sure), while Bush lowered the same taxes and the economy has performed not quite so well.

2. In an era when the wealthy seem to making a lot more money for doing the same work (CEO's, tort lawyers, New York Yankee third basemen, etc), it's hard to see how less progressive taxes are going to yield any sort of "incentive" bonanza with respect to those high-earners. Or vice-versa, more progressive taxes won't lead to incentive catastrophe.

3. If you believe point 2, then in an era when pre-tax progressivity is rising - regardless of the causes - you can use the tax system to turn the higher level of inequality from a minus into a plus. You can say (and I believe, from the occasional Delong tidbit which has come along, but which I can't reference just now, that the Clinton folks had some alert sense of this): Hey, instead of trying to "fix" the income distribution, let's let the wealthy make their dough, but keep tax progressivity high enough so that we achieve one Very Good Thing for the economy - a balanced budget.

This is win-win so far. You get the balanced budget, but you also get low taxes on the middle class. But there's more: the economy gets to toodle along doing its thing with less "populist" pressures for various sorts of intervention. In other words, if you keep tax progressivity high enough, you can have 1) a balanced budget; 2) low taxes on the middle class and 3) avoid political pressure for Bad Things like anti-free trade policies, anti-globalization policies, more regulation of the economy, et al.

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