The use of the term "trickle down" is another example of the left using their verbal virtuosity to completely misrepresent supply side economics. The money doesn't trickle to the workers, in fact it flows rather quickly. Because business has to pay people first, profits are not realized until later if at all. As usual sowell explains it so well.
http://www.capitalismmagazine.com/economics/1115-the-trickle-down-economics-straw-man.html
Monday, August 22, 2011
Income Distribution
Having just completed Thomas Sowell's "Intellectuals and Economics" I want to summarize some of the key empirical evidence he cites in Chapter 3. This is because I'm pretty sure I won't be able to convince most to read the book, but it will at least give me a quick reference into the future. Because now having read his book, I'm clearly seeing how income statistics are used in very misleading ways. This leads one to believe that the "gap between the rich and poor in widening" or "the rich are getting richer, and the poor are getting poorer."
His basic point is that income misunderstandings are caused by the "widespread practice of confusing statistical categories with flesh-and-blood human beings". So lets summarize how this is done, by looking at some statistics from the category standpoint, and then switch to a per person outlook.
Category Viewpoint
The amount of income and proportion of all income in the top 20 percent bracket has risen over the years, widening the gap between the top and the bottom.
Per capita viewpoint
By US Treasury Department data, following individuals over time by looking at tax returns, the incomes of individuals who were in the bottom 20% in income in 1996 rose 91% by 2005, while the incomes of individuals who were in the top 20% in 1996 rose by only 10% by 2005. Those in the top 5% and top one percent actually declined.
So how can these both be true. Because people move between categories over time. The categorical viewpoint simply ignores this fact, and leaves you with a very different conclusion.
Category viewpoint
"Richest are leaving even the rich behind". This belief is based on the fact that income averages in the top 0.1 percent of income earners are rising.
Per capita viewpoint
Between 1996 and 2005 individuals in the "super-rich" category actually had their incomes fall 50%, dropping them out of the super rich. Among the top 1/100 of 1% of very highest income earners in 1996 - only 25% remained in this group in 2005.
Again, the movement of people between categories is completely ignored. In the case of the super-rich, they actually fall back into rich. Most people start at the bottom and work up. In fact, 3/4 of working Americans whose incomes were in the bottom 20% in 1975 were also in the top 40% of income earners by 1991. Only 5% of people in the bottom 20% where still there in 1991, while 29% of those had risen to the top 20%.
Another good fact, is that almost half of the Americans at or near minimum wage are 16 to 24 years of age. Certainly, they don't remain there. But in a country that is growing its population, its stands to reason this age group will continue to grow, giving the category viewpoint fuel for its fire. Just another way we are misled by stats that take the "category" approach.
Category Viewpoint
From 1967 to 2006, median real household income rose by 31%, adjusted for inflation. And in selected time periods the incomes rose less. This has led to the claim that incomes have "stagnated".
Per capita viewpoint
Per individual, income rose by 122% from 1967 to 2005. So more than a doubling is called "stagnation"?
Again, this is by looking at averages in groups or categories, rather than looking at the individual.
Another point Sowell makes is that the number of persons per household has been declining. But stats continue to look at "household" income rather than individual income. This is very convenient because it helps overstate their case. That are 39 million people in households whose incomes are in the bottom 20%, and 64 million people in households who incomes are in the top 20%. So even if everyone in the country had the same income, there would be a huge "disparity" between average households incomes.
One last misleading trend in income stats, is that they leave out income received in kind - such as foods stamps, and subsidized housing, which can also exceed the value of the cash income received in those in the lower brackets. In 2001, this amounted to 3/4 of the total resources at the disposal of people in the bottom.
His basic point is that income misunderstandings are caused by the "widespread practice of confusing statistical categories with flesh-and-blood human beings". So lets summarize how this is done, by looking at some statistics from the category standpoint, and then switch to a per person outlook.
Example #1 - The gap is widening...
Category Viewpoint
The amount of income and proportion of all income in the top 20 percent bracket has risen over the years, widening the gap between the top and the bottom.
Per capita viewpoint
By US Treasury Department data, following individuals over time by looking at tax returns, the incomes of individuals who were in the bottom 20% in income in 1996 rose 91% by 2005, while the incomes of individuals who were in the top 20% in 1996 rose by only 10% by 2005. Those in the top 5% and top one percent actually declined.
So how can these both be true. Because people move between categories over time. The categorical viewpoint simply ignores this fact, and leaves you with a very different conclusion.
Example #2 - Rich are getting richer.
Category viewpoint
"Richest are leaving even the rich behind". This belief is based on the fact that income averages in the top 0.1 percent of income earners are rising.
Per capita viewpoint
Between 1996 and 2005 individuals in the "super-rich" category actually had their incomes fall 50%, dropping them out of the super rich. Among the top 1/100 of 1% of very highest income earners in 1996 - only 25% remained in this group in 2005.
Again, the movement of people between categories is completely ignored. In the case of the super-rich, they actually fall back into rich. Most people start at the bottom and work up. In fact, 3/4 of working Americans whose incomes were in the bottom 20% in 1975 were also in the top 40% of income earners by 1991. Only 5% of people in the bottom 20% where still there in 1991, while 29% of those had risen to the top 20%.
Another good fact, is that almost half of the Americans at or near minimum wage are 16 to 24 years of age. Certainly, they don't remain there. But in a country that is growing its population, its stands to reason this age group will continue to grow, giving the category viewpoint fuel for its fire. Just another way we are misled by stats that take the "category" approach.
Example #3 - Incomes have stagnated or grown only very slowly
Category Viewpoint
From 1967 to 2006, median real household income rose by 31%, adjusted for inflation. And in selected time periods the incomes rose less. This has led to the claim that incomes have "stagnated".
Per capita viewpoint
Per individual, income rose by 122% from 1967 to 2005. So more than a doubling is called "stagnation"?
Again, this is by looking at averages in groups or categories, rather than looking at the individual.
Another point Sowell makes is that the number of persons per household has been declining. But stats continue to look at "household" income rather than individual income. This is very convenient because it helps overstate their case. That are 39 million people in households whose incomes are in the bottom 20%, and 64 million people in households who incomes are in the top 20%. So even if everyone in the country had the same income, there would be a huge "disparity" between average households incomes.
One last misleading trend in income stats, is that they leave out income received in kind - such as foods stamps, and subsidized housing, which can also exceed the value of the cash income received in those in the lower brackets. In 2001, this amounted to 3/4 of the total resources at the disposal of people in the bottom.
Wednesday, July 13, 2011
Stuff my dad tought me
Respect is earned
The problem with the debate is washington that liberals don't get, is respect is earned. So regardless if you think rich people ought to pay more more or not, what I'm thinking is I've given you a bunch of money and you've over extended yourself and spent it unwisely. That's not really a situation where people want to give you more money, cause frankly they don't trust you.
When my grandmother died, she left me some money, not a lot but some. I was a totally irresponsible person at the time. So my parents gave me some, but kept the rest. When I found that out later I was pissed, but you know in hind sight I'd do the same thing. You can't keep giving your children, or the gov't money, and enabling them to make bad decisions sometimes the only way to learn is to show you are accountable, that is how your earn respect.
When you do something stupid, you have to earn back the respect. You have to show you are worthy. The gov't has yet to do that. So from my perspective the republican stance that is getting a lot of bad press is the right one. An austerity ultimatum, is a way the public says, look you over spending irresponsible bastards, we aren't taking it anymore. You created this mess, not us. We trusted you with our money and look what you did. Sorry that means pissing off poor people, or old people, or corporations, or banks, or the defense industry. But those little whining bastards are going to have to grow up and deal with it. Maybe once the gov't can show it can be responsible this won't be so painful but right now, after a long history of being irresponsible its time for some tough love.
Be responsible for your actions
Look, blaming this situation the rich, or past administrations is getting old. This is America. Our wealth is ours first. Its about private property, that is what this country was founded on. We all recognize the need for a social net or to cure social inequalities, but the fact we are spending .40 cents of every dollar on a debt is not sustainable. This is largely the fault of politicians pandering to more power, and a public not willing to stop them. The time has come to recognize that they need to fix this, and that is ultimately going to mean making some decisions that people won't be happy with. But you put yourself in that situation. And I'm pretty sure the 2010 election proved that we are sick of it. So I applaud the republicans for the hard line, because I think its necessary. You reap what you sow. I didn't ask for the wars or the social hand outs, I don't see why its my problem to fix it. You have the revenue you have, just like I do in my personal finance. I have to make some hard decisions, and so do you. If that means the some people are pissed so be it. Time to stand up and be responsible.
Frankly, Obama is trying to play just as much as a political card as the anyone else, b/c he's knows a longer term debt ceiling pushes this past his re-election. A 4 trillion reduction in 10 years is a start but not really the end game. It going to come down to major tax reform, the likes of which is only solved by a flat tax or something that is broader and fairer. So I say pass 100 billion debt ceiling with a 100 billion cut every month until there is political will for more. That will keep it going until we can have real reform, which isn't going to happen in the next 2 weeks. It's only going to really happen when some people are in office that don't care about getting re-elected, and right now its seems that Obama's worried about another term and the Republicans are worried about getting in the white house. The earliest we will even begin to deal with this is in 2013, or when the sky falls.
The problem with the debate is washington that liberals don't get, is respect is earned. So regardless if you think rich people ought to pay more more or not, what I'm thinking is I've given you a bunch of money and you've over extended yourself and spent it unwisely. That's not really a situation where people want to give you more money, cause frankly they don't trust you.
When my grandmother died, she left me some money, not a lot but some. I was a totally irresponsible person at the time. So my parents gave me some, but kept the rest. When I found that out later I was pissed, but you know in hind sight I'd do the same thing. You can't keep giving your children, or the gov't money, and enabling them to make bad decisions sometimes the only way to learn is to show you are accountable, that is how your earn respect.
When you do something stupid, you have to earn back the respect. You have to show you are worthy. The gov't has yet to do that. So from my perspective the republican stance that is getting a lot of bad press is the right one. An austerity ultimatum, is a way the public says, look you over spending irresponsible bastards, we aren't taking it anymore. You created this mess, not us. We trusted you with our money and look what you did. Sorry that means pissing off poor people, or old people, or corporations, or banks, or the defense industry. But those little whining bastards are going to have to grow up and deal with it. Maybe once the gov't can show it can be responsible this won't be so painful but right now, after a long history of being irresponsible its time for some tough love.
Be responsible for your actions
Look, blaming this situation the rich, or past administrations is getting old. This is America. Our wealth is ours first. Its about private property, that is what this country was founded on. We all recognize the need for a social net or to cure social inequalities, but the fact we are spending .40 cents of every dollar on a debt is not sustainable. This is largely the fault of politicians pandering to more power, and a public not willing to stop them. The time has come to recognize that they need to fix this, and that is ultimately going to mean making some decisions that people won't be happy with. But you put yourself in that situation. And I'm pretty sure the 2010 election proved that we are sick of it. So I applaud the republicans for the hard line, because I think its necessary. You reap what you sow. I didn't ask for the wars or the social hand outs, I don't see why its my problem to fix it. You have the revenue you have, just like I do in my personal finance. I have to make some hard decisions, and so do you. If that means the some people are pissed so be it. Time to stand up and be responsible.
Frankly, Obama is trying to play just as much as a political card as the anyone else, b/c he's knows a longer term debt ceiling pushes this past his re-election. A 4 trillion reduction in 10 years is a start but not really the end game. It going to come down to major tax reform, the likes of which is only solved by a flat tax or something that is broader and fairer. So I say pass 100 billion debt ceiling with a 100 billion cut every month until there is political will for more. That will keep it going until we can have real reform, which isn't going to happen in the next 2 weeks. It's only going to really happen when some people are in office that don't care about getting re-elected, and right now its seems that Obama's worried about another term and the Republicans are worried about getting in the white house. The earliest we will even begin to deal with this is in 2013, or when the sky falls.
Wednesday, July 6, 2011
More poop
Read this, 47 % employment rate
My take is that there are a lot of people making money that aren't paying in at all. I guess there are a lot more drug dealers, thieves, under the table workers, etc. that pay nothing to the IRS, because you can't live on nothing. Solution flat tax. The problem isn't the rich, the problem is spending. The revenue problem is that a whole bunch of people pay nothing. If you are a W2'er you are getting screwed, the middle class is where most of the money comes from, and you are the ones who will continue to pay. The only solution is broad tax reform, get rid of all the stupid tax loopholes, tax structure, and replace it with a fair flat tax. You get revenue from everyone that way, and its fair. The rich pay more, because they consume more. The poor stop paying very regressive payroll taxes, and those who don't pay anything, start paying.
Now read this: Cut corporate jet loophole, in 5,000 years you'll cover Obama's run up of one year
So again the current administration thinks you are stupid, and wants to blame rich people, when really the problem is Cronyism and that too many people don't contribute and just take. There's so many examples of continued Cronyism in the current administration I'm not even going to bore you with that. More on how laughable Obama's speach was here:
Obama’s Declaration of Dependence
He help create the damn loophole, LMAO.
My take is that there are a lot of people making money that aren't paying in at all. I guess there are a lot more drug dealers, thieves, under the table workers, etc. that pay nothing to the IRS, because you can't live on nothing. Solution flat tax. The problem isn't the rich, the problem is spending. The revenue problem is that a whole bunch of people pay nothing. If you are a W2'er you are getting screwed, the middle class is where most of the money comes from, and you are the ones who will continue to pay. The only solution is broad tax reform, get rid of all the stupid tax loopholes, tax structure, and replace it with a fair flat tax. You get revenue from everyone that way, and its fair. The rich pay more, because they consume more. The poor stop paying very regressive payroll taxes, and those who don't pay anything, start paying.
Now read this: Cut corporate jet loophole, in 5,000 years you'll cover Obama's run up of one year
So again the current administration thinks you are stupid, and wants to blame rich people, when really the problem is Cronyism and that too many people don't contribute and just take. There's so many examples of continued Cronyism in the current administration I'm not even going to bore you with that. More on how laughable Obama's speach was here:
Obama’s Declaration of Dependence
He help create the damn loophole, LMAO.
Tuesday, May 10, 2011
Stupid or they think we are stupid ?
Hopefully I can stop laughing for long enough to actually type after reading this article
Here's the laughable part
...
Their bill, which could come to a vote by next week, proposes to save $21 billion over 10 years in tax breaks to Exxon Mobil, Shell, BP, Chevron and Conoco Phillips.
"We're serious about reducing the deficit," Senate Majority Leader Harry Reid said a few hours after the bill was introduced by fellow Democrats Robert Menendez, Claire McCaskill and Sherrod Brown.
"It's really a no-brainer," Reid continued. "Let's use these savings from the taxpayer giveaways to drive down the deficit, not drive up oil companies' profits."
...
So look, I'm not for oil company subsidies, but how does a $21 billion savings over 10 years show you are serious about the deficit.
My interpretation is that you don't know the difference between million, billion, and trillion and are stupid. Or you are playing political games because you think we don't know the difference, in which case you think we are stupid. I'm not even sure which way this goes.
I'm really beginning to think some of these politicians really don't understand numbers. There is over a trillion dollar budget issue this year alone. Do you even understand what a trillion is ? Let me explain it, start with one million, like this: 1,000,000. See how that has 6 zeros. Ok now, add three more zeros, like this: 1,000,000,000. Now you have a billion. Ok now, add three more zeros, like this: 1,000,000,000,000. That's a trillion.
So lets see, over 10 years you'd save 20 billion. The deficit is around 14.3 trillion:
14,300,000,000,000 - 20,000,000,000 = 14,280,000,000,000
The National Debt has continued to increase an average of $4.03 billion per day since September 28, 2007. To let's see that is 20/5 = 4, that is five days of spending. Oh yeah, you are serious all right. Or what about 20/14300 * 100 = 0.13986014%. Well gee, that is serious, you are really making progress there buddy, you are going to shave off .13%. Wow, you know how to get it done.
So fine, pass this, I don't really care. But do you have to sound like such a dumb ass when you talk about it, sheesh. What a piece of crap.
Here's the laughable part
...
Their bill, which could come to a vote by next week, proposes to save $21 billion over 10 years in tax breaks to Exxon Mobil, Shell, BP, Chevron and Conoco Phillips.
"We're serious about reducing the deficit," Senate Majority Leader Harry Reid said a few hours after the bill was introduced by fellow Democrats Robert Menendez, Claire McCaskill and Sherrod Brown.
"It's really a no-brainer," Reid continued. "Let's use these savings from the taxpayer giveaways to drive down the deficit, not drive up oil companies' profits."
...
So look, I'm not for oil company subsidies, but how does a $21 billion savings over 10 years show you are serious about the deficit.
My interpretation is that you don't know the difference between million, billion, and trillion and are stupid. Or you are playing political games because you think we don't know the difference, in which case you think we are stupid. I'm not even sure which way this goes.
I'm really beginning to think some of these politicians really don't understand numbers. There is over a trillion dollar budget issue this year alone. Do you even understand what a trillion is ? Let me explain it, start with one million, like this: 1,000,000. See how that has 6 zeros. Ok now, add three more zeros, like this: 1,000,000,000. Now you have a billion. Ok now, add three more zeros, like this: 1,000,000,000,000. That's a trillion.
So lets see, over 10 years you'd save 20 billion. The deficit is around 14.3 trillion:
14,300,000,000,000 - 20,000,000,000 = 14,280,000,000,000
The National Debt has continued to increase an average of $4.03 billion per day since September 28, 2007. To let's see that is 20/5 = 4, that is five days of spending. Oh yeah, you are serious all right. Or what about 20/14300 * 100 = 0.13986014%. Well gee, that is serious, you are really making progress there buddy, you are going to shave off .13%. Wow, you know how to get it done.
So fine, pass this, I don't really care. But do you have to sound like such a dumb ass when you talk about it, sheesh. What a piece of crap.
Monday, May 2, 2011
Don't feel bad about being happy OBL is dead
This is a reaction to the reactions I've witnessed today on facebook and other social media outlets. You know the, the Martin Luther King quotes about fighting darkness with darkness, or why are people celebrating a murder or killing of another human etc, etc.
There's a lot of stuff that is either depressing or negative about America right now. A lot of things to be pessimistic about: we've got out of control debt, a polarized political environment fueled by extreme opinions and damn near class warfare, a few expensive and confusing wars on our hands, a recession, pending inflation, the list goes on and on. Maybe it's a little twisted, but I think its ok to feel good about the US finally getting OBL. It's something we can unite around. However, creepy and twisted you might think that is, I'm ok with it.
Symbolically, it says don't screw with us. That's how this whole mess started anyway. One of the main reason OBL was able to rally support was because of the perceived weakness of the US in Somalia. There have been failed terrorists attacks, but never justice. There hasn't been any justice regarding the banking fiasco, I'm still waiting for that. This is one thing we can all look at and say, we got it done. Maybe it took 10 years and cost a bazillion dollars, but hey... (damn it, I think you debbie downers already go to me)
Now I don't know if this will change anything, maybe it won't, but I'm not going to feel bad about it. It's a testament to the elite forces, and a new way of doing business, that doesn't involved nation building or costly invasions. It's about getting a job done, closure, and feeling united. Those are things I can get behind.
For you conspiracy theorists out there who think OBL was already dead, or is being kept alive, or whatever. I'm ignoring you, so you don't mess with my feel good moment. I'm pretty happy with the thought that we got him, and how we did it. Didn't ask for permission from Pakistan, didn't go through some lengthy and annoying trial, just quick and dirty. I like believing that. So I choose to believe it for now.
There's a lot of stuff that is either depressing or negative about America right now. A lot of things to be pessimistic about: we've got out of control debt, a polarized political environment fueled by extreme opinions and damn near class warfare, a few expensive and confusing wars on our hands, a recession, pending inflation, the list goes on and on. Maybe it's a little twisted, but I think its ok to feel good about the US finally getting OBL. It's something we can unite around. However, creepy and twisted you might think that is, I'm ok with it.
Symbolically, it says don't screw with us. That's how this whole mess started anyway. One of the main reason OBL was able to rally support was because of the perceived weakness of the US in Somalia. There have been failed terrorists attacks, but never justice. There hasn't been any justice regarding the banking fiasco, I'm still waiting for that. This is one thing we can all look at and say, we got it done. Maybe it took 10 years and cost a bazillion dollars, but hey... (damn it, I think you debbie downers already go to me)
Now I don't know if this will change anything, maybe it won't, but I'm not going to feel bad about it. It's a testament to the elite forces, and a new way of doing business, that doesn't involved nation building or costly invasions. It's about getting a job done, closure, and feeling united. Those are things I can get behind.
For you conspiracy theorists out there who think OBL was already dead, or is being kept alive, or whatever. I'm ignoring you, so you don't mess with my feel good moment. I'm pretty happy with the thought that we got him, and how we did it. Didn't ask for permission from Pakistan, didn't go through some lengthy and annoying trial, just quick and dirty. I like believing that. So I choose to believe it for now.
Monday, April 18, 2011
The rich don't have enough money to fix the deficit problem
I just did a little math to illustrate this point. If you look at the top 1% earners in the US. They make on average $1,117,000. Now the population of the US is 311,191,103. I figure maybe only half of those people work, that is probably a super aggressive assumption, in reality its probably much lower. But for the sake of this argument, lets assume (311,191,103/2) * .01 * 1,117,000. This number is $1,738,002,310,255. This is the total income per year by the top 1% earners in the US. Right now they pay a 38% tax rate. If you charged them 100% rate, (cause screw them, those greedy bastards!) the government could take in $1,738,002,310,255 which is $1,077,561,430,000 more revenue.
In 2010 the budget deficit is estimated to be 1.29 trillion. So there is still a 212 billion dollar problem here.
Not even getting into any of the moral issues about how taxing someone 100% is wrong (obviously that revenue would dry up pretty fast as people leave the country), or anything emotional about how the rich should pay more. You can see that the numbers don't add up, and what we have here is fundamentally a spending problem, not a revenue problem.
Now we can get into all sorts of debates about where we should cut spending as I'm sure we will be in the next few months. But can we all just agree that its a spending problem, the facts are pretty obvious.
Interesting read on how California got into trouble by relying on taxing the rich too much,
The Price of Taxing the Rich . In a nutshell they are not a consistent revenue stream, especially during recessions.
In 2010 the budget deficit is estimated to be 1.29 trillion. So there is still a 212 billion dollar problem here.
Not even getting into any of the moral issues about how taxing someone 100% is wrong (obviously that revenue would dry up pretty fast as people leave the country), or anything emotional about how the rich should pay more. You can see that the numbers don't add up, and what we have here is fundamentally a spending problem, not a revenue problem.
Now we can get into all sorts of debates about where we should cut spending as I'm sure we will be in the next few months. But can we all just agree that its a spending problem, the facts are pretty obvious.
Interesting read on how California got into trouble by relying on taxing the rich too much,
The Price of Taxing the Rich . In a nutshell they are not a consistent revenue stream, especially during recessions.
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