Friday, February 22, 2008

41. Usury

Not that anyone, after the other 40 reforms are implemented, should be a particularly terrible credit risk, but I think that credit cards and other forms of personal credit should have a maximum APR of 15-20%. If a loan can't be profitable at this interest rate, then it shouldn't be made at all. You only ending up letting big credit card companies charge the people least able to bear it massive interest rates to finance purchases that very well should not be made at all.

This would also help curb runaway consumer spending and macroeconomic imbalaces.

Banning Cash

It's interesting to me the opposition that eliminating cash has created (Casey B. and Mike H. have voiced concerns). Cash is already gradually being phased out by market forces. It seems to me that these days, cash is mostly used to evade taxes and to facilitate black market transactions. Specifically, I think it would make it way easier to implement the aggressive tax system I propose.

As part of this, I think there would have to either be a government service or price caps for processing fees, so that vendors don't have to pay outsized fees for processing debit transactions.

But maybe you guys can talk me out of this. It’s not a core belief of mine, it’s more of a practical measure. What are your concerns?

I welcome criticisms of other tenets of The 40 at any time hereafter – it’s never a stale thread.

Olde Hat

I know I'm preaching to the choir on this, but my mom asked be to respond to the right-wing parable below. Since I had to write is out anyway, I figured I might as well post it. I would like it if anyone can come up with any additional barbs to make the retort more effective:

"Subject: READ AND TELL ME HOW TO DEBATE THIS CRAP

I've seen this before, but I still think it's worth sending. A young woman was about to finish he first year of college. Like so many others her age, she considered herself to be a very liberal Democrat, and among other liberal ideals, was very much in favor of higher taxes to support more government programs, in other words redistribution of wealth.

She was deeply ashamed that her father was a rather staunch Republican, a feeling she openly expressed. Based on the lectures that she had participated in, and the occasional chat with a professor, she felt that her father had for years harbored an evil, selfish desire to keep what he thought should be his.

One day she was challenging her father on his opposition to higher taxes on the rich and the need for more government programs. The self-professed objectivity proclaimed by her professors had to be the truth and she indicated so to her father. He responded by asking how she was doing in school.

Taken aback, she answered rather haughtily that she had a 4.0 GPA, and let him know that it was tough to maintain, insisting that she was taking a very difficult course load and was constantly studying, which left her no time to go out and party like other people she knew. She didn't even have time for a boyfriend, and didn't really have many college friends because she spent all her time studying.

Her father listened and then asked, How is your friend Audrey doing?

She replied, Audrey is barely getting by. All she takes are easy classes, she never studies, and she barely has a 2.0 GPA. She is so popular on campus; college for her is a blast. She's always invited to all the parties, and lots of times she doesn't even show up for classes because she's too hung over.

Her wise father asked his daughter, Why don't you go to the Dean's office and ask him to deduct a 1.0 off your GPA and give it to your friend who only has a 2.0. That way you will both have a 3.0 GPA and certainly that would be a fair and equal distribution of GPA.

The daughter, visibly shocked by her father's suggestion, angrily fired back, 'That's a crazy idea. How would that be fair? I've worked really hard for my grades! I've invested a lot of time, and a lot of hard work! Audrey has done next to nothing toward her degree. She played while I worked my tail off!

The father slowly smiled, winked and said gently, 'Welcome to the Republican Party'"

This disingenuous parable is based on the familiar conservative maxim that hard work, diligence, and "merit," distinguish the rich from the poor. This is total nonsense. The extremely wealthy, the demographic whose interests the Republican Party serves, often earn their income in "lazy" ways (for example, from selling financial assets, trust income and jobs their rich parents got them). Even the upper middle class, whose success may well be attributable to hard work and diligence, face higher taxes than the very rich (who get taxed at 15% on dividends and capital gains, which are not subject to payroll taxes) and could suffer total financial ruin if they face an unexpected medical catastrophe (due to our lack of universal health insurance). And like all of us who "work," they are subject to the whims of their employers, and could be fired at any time for any reason. Anyone who has had a boss knows that not all bosses mean well or know what they're doing.

A closely related idea is that success is open to anyone who "applies themselves." This is bullshit. Many poor people work their asses off at crummy retail jobs with no prospect of advancement, no educational opportunities, no union representation, no (or inadequate) health coverage or retirement provisions, and no means by which to pay for their children's education. Many rich people, like G.W. Bush, have the benefit of many, many, many second chances, can live off the income from their parents' outsized incomes, and gain accolades by going to elite universities that their parents got them into or corporate director jobs their parents "handed out" to them.

In short, there is no meaningful, consistent connection between "merit" and economic success. Moreover, studies consistently show that the U.S. ranks last in the developed world in terms of social mobility (i.e., how often to people born poor end up rich? Answer in the U.S. - "not often"). In other words, success is not just waiting out there for anyone who applies themselves. It is no coincidence that we have a bad social mobility record and we traditionally harbor the most contempt for government programs and redistribution of wealth.

The sort of "government programs" I, and to a lesser extent mainstream Democrats, advocate make success radically more accessible across the board by protecting people from financial ruin from medical and retirement expenses. This will make people more likely to take entrepreneurial risks and start businesses, because the risks of failure are less disastrous. They would also allow people to more affordably gain the benefit of education to make them more successful. And in some cases, government programs in some countries (like free child day care or good public transportation) actually enable them to join the workforce where they would otherwise be unable to do so.

It is also the case that even the upper middle class benefit greatly from government programs and subsidies, like Medicare, Social Security, the home mortgage interest deduction, the exclusion of $500,000 of capital gains from income tax on the sale of a primary residence, the benefit of still somewhat publicly funded higher education, the federally funded national transportation system that lets them travel to work their good jobs, the protection of property by law enforcement and a system of law, and the general government support and protection of the capitalist system that served them so well. The kind of radical free market state that Republicans advocate benefits only the very, very rich who have no need to, and may very well not, work at all.

Moreover, there is much more at stake in having enough to get by on, and access to basic economic rights (like health care and education) than in your college GPA. People deserve whatever symbolic prizes and token awards they get. For instance, I would not ask the local league bowling champion to "redistribute" his fairly won title. But then, no one remains mired in poverty forever and unable to gain needed health treatments because they only got a 2.0 in college or because they were not bowling champs. This may well be the case, however, when it comes to the redistribution of wealth and broad-based access to basic economic rights and government services.

Finally, it bears mentioning that income and wealth inequality have absolutely exploded in recent years. They top 1% now own somewhere around 40% of all the wealth in our country, and the average CEO of a publicly traded corporation makes over 300 times what the average employee at their company makes. Do you really think that these people have "earned" such a towering advantage over the rest of us, such that it is so unfair to ask them to kick in proportionately more to the public treasuries so that others can have a chance in life? I sure don't.

...

Since I posted this it occurred to me that the bit about how she "didn't even have time for a boyfriend" was interesting. Apparently Republicans think it's a good thing to work so hard that you don't even have time to have a basic social life. That is warped.

Thursday, February 21, 2008

Ron Paul: Worst Candidate for Any Public Office, Anywhere in the World, in All of History

Fortunately for all things good and holy, the Ron Paul movement has become all but irrelevant lately. But the support base for Paul was such a strange alliance of totally ignorant hippies and right-wing nuts, that I feel it still bears commenting on. Maybe this way we can prevent such a travesty from ever happening again.

I have taken what follows directly from Paul's website, and I have tried not to quote anything out of context.

“The people know much better how to spend their money than the government."

Even traditional microeconomics recognizes many instances in which government action is more efficient that private sector activity - so called "public goods." Because these goods cannot be denied to anyone if they are provided to anyone, they are subject to free-rider problems and therefore must be funded coercively out of taxes. So returns on public sector investment can be higher than returns on private sector investment in many cases. All this cheap rhetoric about how inefficient government is is really tired. Open up a microeconomics book.

But beyond public goods, redistribution of wealth is a moral imperative. Of course people "know better" how to spend their own money for their own benefit - they'd spend it on themselves rather that give it someone who needs it more. Because they would not willingly do this, the government must make them do it.

Finally, the "people" have more control over, and common cause with, the government, through the democratic process than they do over the massive concentrations of private wealth ammased by select individuals and business entities. The Walton family is not "the people."

Working Americans like lower taxes. So do I. Lower taxes benefit all of us, creating jobs and allowing us to make more decisions for ourselves about our lives.

Of course everyone likes lower taxes on them. What an insight! But, according to polls, more people believe that the rich not paying their share is a bigger problem than them paying too much. Lower taxes benefit the people who have their taxes lowered at the expense of those who receive public services that get cut. And in some cases public sector investment is actually way more efficient.

Whether a tax cut reduces a single mother’s payroll taxes by $40 a month or allows a business owner to save thousands in capital gains taxes and hire more employees, that tax cut is a good thing. Lower taxes allow more spending, saving, and investing which helps the economy — that means all of us...

To suggest that these twp scenarios are the same is an insult to our intelligence. Capital gains are taxed at lower rates than single mothers' labor income, which is a joke. Lower taxes are good if and only if the programs that get cut weren't of more social value than the additional private sector activity that flows from a tax cut. This is not an obvious proposition, and requires a case-by-case analysis of the economic and moral pros and cons.

And of course, the supply-side theories that lower taxes lead unequivocally to greater economic growth are demonstrably false.

It is an outrage that waiters, waitresses, and other service-sector employees have to pay taxes on the tips they earn. The IRS makes an estimate of how much service-sector workers will make in tips, and taxes them on it even if the taxpayer did not actually earn as much as the IRS' estimate!

Tips provide a substantial portion of the income of many service-sector employees, many of whom are young people just trying to make a few extra dollars to get through school, or single parents often balancing two jobs while trying to make enough to raise a family. This tax amounts to nothing more than the federal government punishing these employees for working hard and doing their jobs well."


This really may be the stupidest thing I've ever heard anyone say. Tips are obviously compensation for services. Compensation for services is income. Income is subject to income tax. What is the problem? Why should people who earn more of their pay in the form of wages be taxed more than people who earn their compensation through tips? You want to help "working people," increase the sort of public services that make social mobility possible (education, health care, etc.) and make their effective tax rate lower than the tax rate of freakin' billionaires.

...

"In addition, the Federal Reserve, our central bank, fosters runaway debt by increasing the money supply — making each dollar in your pocket worth less. The Fed is a private bank run by unelected officials who are not required to be open or accountable to 'we the people.'”

This is superficially an okay point in the narrow sense that the Fed Chairman and Governors are unelected and are therefore arguably not subject to sufficient public accountability. But Paul is disingenuous. What does he suggest? A "hard money" system, like a gold standard. Right, because central bankers are not responsive to the public, we should use the totally arbitrary price of a precious metal to determine our money supply and interest rates. Gold prices are really responsive to popular demands.

And there is absolutely nothing wrong with even a moderate amount of inflation. It has no negative effect on economic growth until it gets to be over 50%/yr. We're clocking at about 3.5% last time I checked. It's cool, we'll be okay.

...

"NAFTA’s superhighway is just one part of a plan to erase the borders between the U.S. and Mexico, called the North American Union. This spawn of powerful special interests, would create a single nation out of Canada, the U.S. and Mexico, with a new unelected bureaucracy and money system. Forget about controlling immigration under this scheme.

And a free America, with limited, constitutional government, would be gone forever.

Let’s not forget the UN. It wants to impose a direct tax on us. I successfully fought this move in Congress last year, but if we are going to stop ongoing attempts of this world government body to tax us, we will need leadership from the White House."

Besides my plan to create a North American Union, there is no serious plan to unite Canada, Mexico, and the U.S. And pretty much all other first-world countries enjoy civil liberties and non-authoritarian government.

And this guy is seriously playing the "U.N. Card." Yeah, the U.N. is way too powerful. They almost have enough money to hire janitors for the U.N. building. How dare they insist they we pay our arrear dues!!?

...


"The federal government will not suddenly become efficient managers if universal health care is instituted. Government health care only means long waiting periods, lack of choice, poor quality, and frustration. Many Canadians, fed up with socialized medicine, come to the U.S. in order to obtain care. Socialized medicine will not magically work here."

A single payer system does not involve government "management." It involves government reimbursement for services provided by either a private or public health care provider. The government has shown itself to be quite efficient at this, as overhead constitutes 1% of the SSA's budget and 3% of Medicare's budget (compared to 30% for private insurers). And what makes "bureaucrats" so efficient just because you take down the sign that says "The Government" on the building and put out a sign that says, "Freakbone Insurance Co."? You still work in an office crunching numbers and actuarial tables and you still evaluate the same kinds of claims. Big enterprises always have some amount of bureaucracy and inefficiency, but this is not a private vs. public sector thing.

And please, our system is so much worse than Canada's. You know what the problem with Canada's health system is? They don't fund it enough, so its too much like our system. But they have far better access and far better outcomes than we have, at a fraction of the overall cost.

...


"My commitment to ensuring home schooling remains a practical alternative for American families is unmatched by any Presidential candidate.

Returning control of education to parents is the centerpiece of my education agenda. As President I will advance tax credits through the Family Education Freedom Act, which reduces taxes to make it easier for parents to home school by allowing them to devote more of their own funds to their children’s education.

I am committed to guaranteeing parity for home school diplomas and advancing equal scholarship consideration for students entering college from a home school environment.

We must have permanency in the Department of Defense Home School Tier 1 Pilot Program, providing recruitment status parity for home school graduates. I will use my authority to prevent the Department of Education from regulating home school activities.

I will veto any legislation that creates national standards or national testing for home school parents or students."


This silliness speaks for itself. But I think its funny that a "libertarian" is going to somehow force the private sector to give equal weight to a home school diploma.

...

"It is the federal government that most divides us by race, class, religion, and gender. Through its taxes, restrictive regulations, corporate subsidies, racial set-asides, and welfare programs, government plays far too large a role in determining who succeeds and who fails. Government "benevolence" crowds out genuine goodwill by institutionalizing group thinking, thus making each group suspicious that others are receiving more of the government loot. This leads to resentment and hostility among us.

Racism is simply an ugly form of collectivism, the mindset that views humans strictly as members of groups rather than as individuals. Racists believe that all individuals who share superficial physical characteristics are alike: as collectivists, racists think only in terms of groups. By encouraging Americans to adopt a group mentality, the advocates of so-called "diversity" actually perpetuate racism.

The true antidote to racism is liberty. Liberty means having a limited, constitutional government devoted to the protection of individual rights rather than group claims. Liberty means free-market capitalism, which rewards individual achievement and competence - not skin color, gender, or ethnicity."

Okay. Once again, this gibberish is so nonsensical that it doesn't really need a retort. But I will fashion one anyway.

It sounds like Paul is saying that, by using the federal government, a little bit, and only intermittently, over the last 40 years to help poor people and minorities out, it has hurt them. That's truly Orwellian in its ass-backwards reasoning. There have surely been some bad policies over the years that operated to the detriment of minorities, but the solution to this is to replace bad policies with good policies, not to repudiate government altogether. And without the federal government we'd still be in the Jim Crow South, so there's that.

...

"The key to sound environmental policy is respect for private property rights. The strict enforcement of property rights corrects environmental wrongs while increasing the cost of polluting. "

I get it. Wait till someone has done the damage (rather than prevent it to begin with through environmental laws), and then let someone sue them in court. So you will need to be able to hire counsel competent to take on big shot corporate lawyers in order to vindicate your rights, and we will leave the whole thing to the murky concept of "nuisance" in tort law. Eminently sensible.

...

"The United States invaded Iraq under false pretenses without a constitutionally-required declaration of war. Our Founders understood that how we go to war is as important as when we go to war, which is why they vested the power to declare war in the Legislative Branch. The resolution passed in Congress authorizing the president to use force in Iraq said nothing about the U.S. Constitution, but it mentioned the United Nations a dozen times. The United States should never go to war to enforce UN resolutions!"

No one in their right mind thinks the Iraq War was a good idea anymore. But it was a bad idea because it was a bad idea, not because it the Constitution doesn't say, "Article XXI: Congress Shall Have the Right to Invade Iraq at All Times and for No Reason." This thread of Constitutional fundamentalism runs deep throughout all of Paul's positions, and it's just about the strangest form of anachronism worship I can think of. The Constitutional Framers were not even close to all-knowing, and they could not have possibly foreseen the needs of government 200+ years later. Let's use our own judgment about what we need and not try to divine what Thomas Jefferson would have had us do after he was done screwing slaves.

And I like the U.N. dig. Good call

Fidel

What do people think about a post-Fidel Cuba? My hope is that they can retain a socialist economy but loosen up a few things economically, recognize basic civil rights, and hold elections. It certainly would help if they could export to the most voracious consumer market on the globe, the U.S. of A.