Monday, April 16, 2012

Robert Reich: Taxing the Wealthy Essential to Growing Economy

Robert Reich attacks the perceived tradeoff between increasing the progressiveness of the income tax and economic growth. tax and economic growth. I would nitpick that he fails to note the difference in real income between the lower end of the top marginal tax rate in the post-WWII era and now (~$2 million vs. ~$400,000 in today's money). I also wonder whether the comparison with Germany is truly apt, given the broader state of the Eurozone. However, I can't help but agree with the basic point: progressive taxation used to provide public goods and stimulate the middle class will benefit the economy more than having surplus wealth concentrated in the hands of a few speculators and investors.

Thursday, April 5, 2012

Another Day, Another Bull in Our Online China Shop

The Cyber Intelligence Sharing and Protection Act is the latest attempt by government to protect the online community from cyberattacks, and it's beginning to receive attention on par with the previous Net frenzy about SOPA. But as with SOPA, CISPA goes way WAY overboard. In order to create a system of corporate cooperation against cybersecurity threats, the bill gives companies broad authority to track your Internet usage and share that information in black envelopes with other public and even private entities. There's little in the way of oversight, and as 'piracy' is listed as one of the legitimate cybersecurity concerns, this has broad implications even before considering possible abuses of the law.

A list of the bill's Congressional co-sponsors is a short way down in the comments here; I just sent an email to my representative, who co-sponsored the bill. I encourage you to check if your representative is a co-sponsor, and if so, to contact him or her about this issue. I'll provide my letter as a template.

Dear *Representative*,

I write to you as a member of *District*, after learning of your cosponsorship of the Cyber Intelligence Sharing and Protection Act. I am one of many citizens who are concerned about the broad authority given to corporations and the government to collect and share proprietary information about their users in the name of 'cybersecurity', with little oversight or transparency to ensure that these tools are not misused. While I recognize the challenges posed by our open networks, this is a clumsy and overreaching method of developing cybersecurity. I would like to request that you withdraw your support of this bill.

Thank you for your time,

Wednesday, April 4, 2012

Grade Averaging as an Allegory for Liberal Politics? Think Again

This is an oft-repeated story, and I'd like to take some time to cut it down to size.

‘The Obama Experiment’ Causes Economics Professor to Fail Entire Class
An economics professor at a local college made a statement that he had never failed a single student before, but had recently failed an entire class. That class had insisted that Obama’s socialism worked and that no one would be poor and no one would be rich, a great equalizer.
The professor then said, “OK, we will have an experiment in this class on Obama’s plan”. All grades will be averaged and everyone will receive the same grade so no one will fail and no one will receive an A…. (substituting grades for dollars – something closer to home and more readily understood by all).
After the first test, the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy. As the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too so they studied little..
The second test average was a D! No one was happy. When the 3rd test rolled around, the average was an F. As the tests proceeded, the scores never increased as bickering, blame and name-calling all resulted in hard feelings and no one would study for the benefit of anyone else. To their great surprise, ALL FAILED and the professor told them that socialism would also ultimately fail because when the reward is great, the effort to succeed is great, but when government takes all the reward away, no one will try or want to succeed. It could not be any simpler than that.

First, let's address the central fallacy of the allegory: the dichotomy between equal opportunity and equal outcomes. Do you believe that the current state of income inequality is a problem in the United States? I'm guessing most people answer in the affirmative. Now, do you believe that NO ONE should be poor and NO ONE should be rich? Far fewer hands raised. Do you believe that everyone should receive the same income regardless of work done and value added? Nary a "yes" to be found. Yet this is the premise of the allegory. A false premise: that "Obama socialism" implies entirely equal outcomes.

Let's look at the lessons we're supposed to draw from this allegory.

"1. You cannot legislate the poor into prosperity by legislating the wealthy out of prosperity." Fortunately for everyone, we're not trying to do either.

"2. What one person receives without working for, another person must work for without receiving." Blatantly false. If one person is taxed and two people use the resulting road, both benefit.

"3. The government cannot give to anybody anything that the government does not first take from somebody else." But that’s certainly not a reason to never take anything from anybody. Sometimes, “He needs it more” is a valid argument. Then, too, the government is also capable of creating value. From research funding to education to infrastructure, society is littered with examples of this.

“4. You cannot multiply wealth by dividing it!” Disregarding the technical innumeracy of regarding division and multiplication as fundamentally different, I would counter by saying that multiplying the wealth of the wealthy alone is not the best solution.

“5. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and the other half gets the idea that it does no good to work because somebody else is going to get what they worked for, that is the beginning of the end of any nation.” There’s rather a gap between eliminating all incentives to work and eliminating all stopgap measures for those who cannot work, or cannot feed themselves, or can’t receive adequate medical treatment (the factors that contribute to absurd American healthcare costs are a subject I’ll discuss another time). I’d like to think we should fall somewhere in between.

I don’t agree with everything Obama does. Hell, I don’t even agree with most of what he does. But that’s all the more reason not to make up nonsensical stories upon which to base my disagreement. No?