Monday, March 09, 2009

Tax Increases

Just posting a comment I made to a post by Matt Yglesias here. Matt's post was a response to the conservative meme that the tax increase on folks making over $250k is unfair because these folks are so hardworking and necessary for society. My comment is in response to a bunch of other comments there where folks were comparing the difficulty of work done by lawyers and financiers on the one hand and roofers and movers on the other.

I agree that it is pointless to argue who actually works “harder”. Both because it is not really possible to assess who works “harder” and because it is hardly the government’s job to figure out who is worthy and unworthy and reward the former and punish the later. But given that, the anti-Obama argument takes the bigger hit. Conservatives are arguing that the folks making more than $250k are too worthy to be taxed. If we can’t really assess that, how do they make the argument?

But the free market argument against Obama’s policies is also problematic. First, in my opinion, because the government already seriously distorts the price of things by providing extensive services to the wealthy at absurdly low prices. How valuable is copyright protection to Disney, Microsoft television networks and the like? Do we really charge full market value for that service? I doubt it. How about the value of sharing risk with the community via incorporation or having guaranteed sole use of a frequency of the radio spectrum for broadcasting? I would argue that these are only a small portion of the services provided by the federal government for which we charge very low rates. How much then of the high income of the finance and legal folks here complaining of Obama’s tax policies in turn depends upon the government providing these services at the extremely low rates it does?

But the higher rates on the salaries of folks making over $250k can, I think, be defended even more directly. If the mover roofer had to rely solely on cash for his pay and transactions, he would still be able to do his job and earn the salary he does. But how many of the folks in law or finance depend upon the trustworthiness of many other people to handle large sums of money. A trustworthiness that can no doubt be accounted for to a great extent by peoples natural sense of morals, but which ultimately relies heavily too on the existence of the FBI, the Justice Department and the Federal Penal System, to keep everyone focused on right and wrong? Indeed, if given the choice how many of you in finance would forgo paying the taxes you do now, plus those proposed by Obama, at the mere cost of giving up any such federal protection to your assets? If no one would actually take that deal, then you are not being overcharged.

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Thursday, March 05, 2009

Incorporation is Social Insurance

Strictly speaking the title is not true. A well accepted definition of social insurance can be found here at Wikipedia, and incorporation would not quite meet the definition. However, I will argue that the incorporation is essentially a type of insurance supplied by the government, and therefore should be considered the same sort of thing as social insurance. The reason for making the connection is the right wing's supposed horror at the existence of social insurance while at the same time adoring incorporation.

When a business is incorporated only the assets of the business are subject to being seized to pay off creditors or to satisfy other debt and payments. But the debts and payments still exist, they are effectively paid off by some other members of society. Generally they are not paid off by the government itself, rather by various members of society who get caught by the falling company. The various assets of the owners of the company are not subject to paying off the debts, with the exception of the money invested in the corporation. Essentially, if you are an owner or part-owner of a corporation, due the intervention of the government you are insured against the failure of the company, with your investment being the deductible.

While not strictly "social insurance" according to the Wikipedia definition, it is, in substance, a government run insurance program.

My point is to note that this then is really the first major government insurance program created by the U.S. government, far predating Social Security, unemployment insurance, or any of the other bugbears of conservative angst. The implication of this observation is that the main dispute between conservatives and liberals is not whether the government should provide social insurance, but rather whether it should be supplied only to a select group of privileged individuals. The liberal position is that government is well suited to provide insurance like incorporation, as well as the others, that are valuable to people throughout the entire income scale. The conservative position is that it should be reserved only for a special, privileged portion of society. I am not a conservative.

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Monday, March 02, 2009

Rush Rules

This is amazing. (For the original see here). It would appear that Michael Steele has already caved-in on his criticism of Rush Limbaugh on Saturday. No one, it would seem, dares to criticize the great Rush Limbaugh, who now clearly is the voice of and intellectual (as it were) center of the Republican party. What is truly increadible about this is that Rush has never commanded, or spoken for, more than a large fraction of the Republican party. He might well have been, over the years, the effective leader of the largest faction within the Republican party, but I doubt that it has ever been that a majority of Republicans identify with him as the effective leader of the Party. Additionally, of course, to be effective the Republican party needs to capture the support of a fair number of non-Republicans. In spite of this the party is now effectively welded at the hip to Rush Limbaugh. No part of the part, nor its leadership, dare cross his will. I think that the Republicans will once again, in 2010, go with a crazed right winger. We shall see.

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Financial Crisis Timeline

A timeline of the financial crisis can be found here.  Very useful source.  I found this on the blog Later On, a very good source.  There is also a link to an RSS feed for getting updates as the crisis unfolds.  No need to miss a minute of the agonizing holocaust.