Comcast leaving the Bay Area

The movie said “if you build it, they will come it.”  More and more California businesses say, “if you tax it, we will go“:

Comcast announced Tuesday that it would shutter three Northern California call centers and consolidate them into other western U.S. centers in a few months, a move that will affect as many as 1,000 jobs.

Operations at the cable company’s call centers in Livermore, Morgan Hill and Sacramento will be shifted to centers in Oregon, Washington and Colorado at the end of November, Comcast said.

[snip]

The company’s announcement of the consolidation cited the “the high cost of doing business in California” as the impetus for the decision.

If you haven’t already, please buy yourself a copy of my friend Laer’s book, Crazifornia: Tales from the Tarnished State – How California is Destroying Itself and Why it Matters to America.  It will explain everything you need to know about Comcast’s decision.

The Romney tax returns and other financial information

Well, Romney nicely pulled the rug out from under the Progressives/Democrats when he released all of his tax information.  This is a relief to me, because I was getting sick and tired of seeing my liberal Facebook friends repeat ad nauseum nasty statements about those missing (per Harry Reid, “unpaid”) taxes.  Turns out that, not only did Romney pay taxes, he paid lots and lots of taxes.  His effective rate was more than 20%, and that doesn’t even take into account the fact that all of these dollars were capital gains, meaning that they’d already run through the government tax mill once.  In addition, he gave almost 30% of his money to charity.

Harry Reid slipped further into dementia by denying that any of this was possible:  “He’s hiding something. He’s hiding something! It is so evident he’s hiding something!”

I’d like to say to Reid, “Stay classy, Harry,” but it’s unkind to issue instructions like that to crazy people.

Now that Romney’s financial information is out there, I know that my Facebook friends are going to start criticizing what’s in the documents.  Thankfully, Yid with Lid prepared a handy-dandy list about the information.  Chock-full-o facts, including facts about Obama, Reid, Biden, Pelosi, and Debbie Whatser-her-name-shmatta, it will give me all the snappy come-backs I need to reorient those silly people away from the dark side and back to the real world.

Second and third thoughts about the ObamaCare decision, which does have some saving grace

I was driving along in the car and, suddenly, the phrase “Roe v. Wade” popped into my head.  In 1973, the Supreme Court waded into what should have been a state-by-state legislative matter, and created the most vicious 39 year fight in America since the Civil War.  One side found the decision completely invalid, while the other side became so invested in its validity that it almost became a one-issue party — and, moreover, a one-issue party that became ever more extreme in its defense of its victory.  By parsing the decision as he did, Justice Roberts prevented another American civil war.

When I returned home and turned on my computer, I discovered that Charles Krauthammer was thinking along the same lines.  If I’m in sync with Krauthammer, I’m clearly in good company.

Krauthammer’s view is that Roberts wears two hats.  The first hat is the constitutional conservative, which kicked in to prevent him from allowing a vast expansion of the Commerce Clause.  The second hat is as the Supreme Court’s custodian.  That second hat requires Roberts to protect a Court that’s been under a shadow since the decisions in Roe v. Wade (favoring the Dems) and Bush v. Gore (favor the Republicans).  So, after wearing his conservative hat to deal with the Commerce Clause, Roberts still had some work left to do:

That’s Roberts, philosophical conservative. But he lives in uneasy coexistence with Roberts, custodian of the Court, acutely aware that the judiciary’s arrogation of power has eroded the esteem in which it was once held. Most of this arrogation occurred under the liberal Warren and Burger Courts, most egregiously with Roe v. Wade, which willfully struck down the duly passed abortion laws of 46 states. The result has been four decades of popular protest and resistance to an act of judicial arrogance that, as Justice Ruth Bader Ginsburg once said, “deferred stable settlement of the issue” by the normal electoral/legislative process.

More recently, however, few decisions have occasioned more bitterness and rancor than Bush v. Gore, a 5–4 decision split along ideological lines. It was seen by many (principally, of course, on the left) as a political act disguised as jurisprudence and designed to alter the course of the single most consequential political act of a democracy — the election of a president.

Whatever one thinks of the substance of Bush v. Gore, it did affect the reputation of the Court. Roberts seems determined that there be no recurrence with Obamacare. Hence his straining in his Obamacare ruling to avoid a similar result — a 5–4 decision split along ideological lines that might be perceived as partisan and political.

National health care has been a liberal dream for a hundred years. It is clearly the most significant piece of social legislation in decades. Roberts’s concern was that the Court do everything it could to avoid being seen, rightly or wrongly, as high-handedly overturning sweeping legislation passed by both houses of Congress and signed by the president.

I think Krauthammer’s analysis is correct.  Roberts didn’t rule as he did because of his seizure medicine or because he was blackmailed.  He ruled this way because, perhaps rightly, he was keeping a legislative problem in the legislative sphere.  The American voters, by putting Democrats into Congress and the White House, broke the American system.  They now own that broken system and it’s up to them to fix it.  In this case, if the voters are smart enough, they’ll elect Republicans by a large majority.  If they’re not smart enough, we’re in for a lot more breakage.

Viewed this way, Roberts did the right thing.  He protected the Supreme Court’s integrity and he made the American people responsible for their own stupidity.

The best bet for the coming months is that Obama’s base will go home happy, and that he will not be able to rally them for the election.  They’ll be like the person who ate too much at dinner and sits there in a stupor, even as the roof falls on his head.  Unfortunately for Obama, Romney will be able to rally his base.  If you thought 2010 was the year of the Tea Party, wait until you see the summer of 2012.  Like 2012, Tea Partiers are up in arms; and unlike (and better than) 2012, this time they’re already organized with mailing lists, data bases, and vast amounts of political and protest experience.

Even better, after Americans suffered through months of the drug-addled, filthy, violent Occupy movement, the media is going to find it impossible to paint clean, polite, educated, employed Tea Partiers as crazed radicals.  This summer, the Tea Party will have traction, especially because the Supreme Court, in ruling in Obama’s favor, put a name on Obama’s conduct:  taxes on the middle class.

That’s all good.  What’s bad is that, as I noted in my original post on the subject, the Supreme Court has managed to allow taxes to have the scope of the Commerce Clause:  From this day forward, Congress can not only tax activity, it can also tax inactivity.  Long after Obama is gone from office, that legacy will remain.  The only saving grace is that taxes require simple majorities.  Easy come, easy go, one might say — except that taxes never go away easy, do they?

 

Congress not only can tax anything that moves, it can tax anything that doesn’t move

The Supreme Court opinion on ObamaCare runs to 193 pages.  It is the size of a book, only more boring than any book anyone would ever want to read — and that is true despite the fact that Ruth Bader Ginsburg, the worst writer on the court, didn’t write it.  I’ve been making a valiant effort to read it, but because I have other things to do with my life, I abandoned the darn thing about one-third of the way through.  For now, bottom line is sufficient.  Per the Supreme Court, ObamaCare imposes a tax on people who refuse to buy a product from a third-party. An example of that includes the Affordable Care Act which forces a penalty on those who do not take part in the newly-appointed health insurance marketplaces. That imposition is consistent with Congress’s power to impose taxes.

Ed Morrissey managed to encapsulate my immediate reaction to this, frankly, bizarre outcome:

It’s an interesting argument, but one that should have Americans worried.  Basically, this is a tax that you have to pay to private companies.  For all of the screaming the Right did over single-payer — and for good, outcome-based reasons — at least the money paid by taxpayers would go directly to government [see update II].  The Supreme Court has signed off on what is, in very practical terms, a tax levied by the insurance industry on Americans simply for existing.  It’s an amazing, and fearsome, decision that really should have both Right and Left horrified.

Nevertheless, this is the law of the land.  We can now look forward to taxes levied by the auto industry for not having bought a new car in the last seven years, the liquor industry for buying too few bottles of wine to maintain your health, and by the agricultural industry for not buying that damned broccoli after all. We might even have Obama attempt to impose a tax for not buying enough contraception; we can call that the Trojan tax.

Taxes have traditionally been levied to enable the government to buy and build things.  This is the first time in history, so far as I know, that a tax is being levied as a penalty against citizens who refuse to buy products from private vendors.  Taxes normally tax activity.  Sure, you pay taxes on a product when you buy a product but those are (a) state taxes, which are a different animal from federal taxes; and (b) taxes on a voluntary transaction.  That’s the important thing.  The transaction is voluntary.  You can opt to sit it out and the government cannot reach you.  Here, though, we are being told that the government can exact an onerous tax for inactivity.

The decision constitutes a radical redefinition of what constitutes a tax.  It is exactly what opponents said it was:  the biggest tax in history and one, moreover, that Americans cannot alter their behavior to avoid.  I am therefore at a loss to figure out why Roberts signed on to this decision, let alone authored it.  It is a staggering constriction on individual freedom.  The closest analogy to this tax is the poll tax of 1380, a tax that saw one of the biggest revolts in medieval British history and one that almost toppled the monarchy.  Poll taxes are flat taxes but, more importantly, they tax someone just for being.

Okay, that’s the bad news and it’s very bad in the long-term.  There are some potential short-term benefits, although they’re only possible, not probable:

Because ObamaCare is a tax, it’s easy to repeal the tax aspects, which leaves the whole thing unfunded.  Still, unfunded doesn’t mean vanished.  All the bits and pieces, the obligations, impositions, panels, etc., live on, unless Congress can gather itself together and formally repeal the whole darn thing.

The other short-term benefit is that it might galvanize those Americans who hate ObamaCare, leading them to vote for Romney.  That’s so not a sure thing, though.  It’s a great victory for Obama, and might finally put the wind at his back.  His signature legislation is a good thing, said the United States Supreme Court.  For many Americans, that might fall into the category of “that’s all she wrote.”  The fat lady has sung.  The opera is over.  It’s time to go back home and get on with your life.  If Roberts had some strange idea that he’d help a Romney election, he was taking a mighty big gamble with the American people, their freedom, and their money.  (Speaking of money, it’s no coincidence that the market plummeted once it received word that Congress not only can tax anything that moves, it can tax anything that doesn’t move.)

I am disheartened, but disheartened is not the same as defeated.  It is now imperative that Republicans take back Congress in its entirety and win the White House.  Jim Carville and others may proclaim the Tea Party dead, but I suspect they’ll see a Zombie Tea Party taking to the streets this summer.

Others blogging:

Kim Priestap

Maggie’s Farm/Bruce Kesler

American Power

The Anchoress and The Anchoress again

The Volokh Conspiracy (was Roberts somehow forced to uphold the law?)

Jay Cost (this may harm Obama more than he thinks in the long run)

Slate (Obama wins battle; Roberts wins war)

Noisy Room

 

Stop the OPUEM trade!

DQ raise very important points about the power of language. The examples of “austerity” and “stimulus” certainly need to be addressed. But, let me address another problematic term: “government spending”. Far too many people seem to equate government spending (syn. taxes, benefits, welfare, rebates, investments, stimuli, grants, outlays, funding, etc.) with “free” money.

All these terms that reference government spending also generate warm fuzzies with large portions of the population that cannot or will not equate such activities with government expropriation of the labor, sweat, money and intellectual capital of “other” people without their express permission.

Thus, I would like to propose a new word, “opuem”, an acronym for “Other People’s Unfairly Expropriated Money”.

It’s a far more efficient use of language to distill so many different terms into a single, comprehensive concept and thereby change the nature of public discourse in very positive, enlightening ways, as for example:

“The Democrat Congress, with the support of the President, voted to drastically increase opuem for dispersal to favored but potentially restless constituencies in order to keep them quiet, loyal and dependent. The Republican opposition voiced its concerns that there is far too much demand for opuem by society today, and that excessive opuem dependency will prove detrimental to economic productivity and societal well-being.”

This term, opuem, should not to be confused with a similar term, “hopium”, conceived by Chicago Tribune columnist John Kass as a descriptor for current White House emanations.

Redistribution for thee, but not for me

Students, not normally a personally wealthy group, are all for redistributing other people’s money.  Apparently, though, they draw the line at redistributing the fruits of their own labors:

The next step is to get the students to listen to Jon Lovitz’s F-Bomb laden rant and understand that, whether we’re talking grades or money, it is always wrong for a coercive government to force people to part with the rewards they earned:

We all recognize that people must contribute some sum towards a functional society, for roads, national security, etc. But that is quite different from having your elected government suddenly decide to play at Robin Hood.

Why higher taxes are not the answer

Victor Davis Hanson hits it out of the park with his post explaining why higher taxes are not the answer.  Some of his twelve reasons are better than others, but all are worthy of your consideration.  This is my favorite of the twelve, but I think you’ll like them all:

2) Inequality?

Liberals reply that income inequality is worse than ever. (Note here in their own lives they have no problem with other “merit”-based inequality: e.g., Why can’t Johnny Depp turn down a couple of roles so other less fortunate actors could star? Why doesn’t Cornel West at last break up his endowed mega-salaried professorship into three or four lectureships for the struggling part-timers? Why doesn’t Maureen Dowd go down to one column every other week to allow less compensated New York Times op-ed writers a chance to catch up? In other words, why not back off from the trough and let others have a go?) But back to income inequality: some of those figures are not just attributable to the proliferation of $200,000 orthodontists, but to factoring in the mega-fortunes of a Johnny Depp ($50 million last year in income alone) or a Warren Buffett. The onset of a globalized market allowed a new top bracket to make tens of millions of dollars, a world away from the lesser professional. There is no aggregate homogenous group of “the wealthy.” My big-farming near neighbor (500 acres in vineyard plus), who probably nets $300,000 on a rare good raisin year like this one, is a world away from the late Steve Jobs or the thousands of million-dollar-plus incomes in Silicon Valley. This incongruence is not a rhetorical point or special pleading, but evident through the president’s own rhetoric: “Millionaires and billionaires” is a deliberate attempt to weld two disparate groups together — one making 1000 times the other (if the president is talking of annual income), or one worth 1000 times more than the other (if the president is talking about net worth). But is the Menlo Park bungalow owner who teaches at Foothill College and might be “worth” $1 million (given housing inflation) really comparable to Meg Whitman? Mr. Obama knows that there is not enough of the 1% of the 1% to come up with enough revenue to cover his new $4 trillion in debt, but does he think that by going after the top 5% or 10%, well, there just may be?

I’m actually sensitive to this comparison issue, because Marin skews things. In most other parts of America (other than the other rich liberal enclaves scattered about America), we’d be rich. In Marin, we’re squarely in the middle. Because prices here are so ridiculously high, we live in a middle house, drive middle cars, shop at middle stores, and send our kids to public schools. If we had the same income in Kansas or Texas, we’d be much more comfortably situated — and in Texas, we wouldn’t be turning more than 50% of our money over to the government (state, federal and local).

Of course, we could move, but I like it here:  our house is near my aged mother who is too old to be relocated; the temperate climate suits me, because I’m a wuss; and our neighborhood is unique by any standards, providing a truly perfect backdrop to raising decent, honest, nice children.

The beer theory of taxes

Sadie got this in an email and posted it as a comment.  It’s too good, though, not to get wider play.  The beer theory of taxes explains just about everything that’s wrong with a system that drives away the wealth:

THE TAX SYSTEM EXPLAINED IN BEER

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100…

If they paid their bill the way we pay our taxes, it would go something like this…

The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.

So, that’s what they decided to do..

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve ball.
“Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily beer by $20″. Drinks for the ten men would now cost just $80.

The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free.  But what about the other six men? How could they divide the $20 windfall so that everyone would get his fair share?

They realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer.

So, the bar owner suggested that it would be fair to reduce each man’s bill  by a higher percentage the poorer he was, to follow the principle of the tax system they had been using, and he proceeded to work out the amounts he suggested that each should now pay.

And so the fifth man, like the first four, now paid nothing (100% saving).
The sixth now paid $2 instead of $3 (33% saving).
The seventh now paid $5 instead of $7 (28% saving).
The eighth now paid $9 instead of $12 (25% saving).
The ninth now paid $14 instead of $18 (22% saving).
The tenth now paid $49 instead of $59 (16% saving).

Each of the six was better off than before. And the first four continued to drink for free. But, once outside the bar, the men began to compare their savings.

“I only got a dollar out of the $20 saving,” declared the sixth man. He pointed to the tenth man,”but he got $10!”

“Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar too. It’s unfair that he got ten times more benefit than  me!”

“That’s true!” shouted the seventh man. “Why should he get $10 back, when I got only $2? The wealthy get all the breaks!”

“Wait a minute,” yelled the first four men in unison, “we didn’t get anything at all. This new tax system exploits the poor!”

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn’t show up for drinks, so the nine sat down and had their beers without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and government ministers, is how our tax system works.
The people who already pay the highest taxes will naturally get the most benefit from a tax reduction. Tax them too  much, attack them for being wealthy, and they just may not show up anymore.

In fact, they might start drinking overseas, where the atmosphere is somewhat friendlier.

The whole thing is also a ready-made argument for flat taxes, isn’t it? Things seem more fair when everyone pays an equal percentage.

Incidentally, at lunch today, Don Quixote pointed out that with the American rich getting visibly richer, and those who are not rich feeling as if they’re falling behind, it would behoove the rich to put back into the system.  Even if the poor’s perception of their poverty is historically incorrect (insofar as the American poor enjoy a higher standard of living than the poor in other parts of the world or other times in history), we know from past experience (the French, Chinese and Russian Revolutions spring to mind), that if the people feel the chasm is too deep, a small cadre of Leftists can manipulate them into startling acts of violence and tyranny.

The problem is that the OWS crowd, and Leftists generally, want the rich to be forced to put back into the system by having the government grab money from their pockets, a tactic that only drives them away.  (See beer example, above.) If it were up to me, I would rejigger our system so that there are fewer barriers to the rich investing their money in America.  I would lower government hurdles that currently make it ridiculously difficult to build factories, hire workers, construct roads, and bring products to market.  That would make India and China look a whole lot less enticing, keeping wealth within America, so that there’s more to spread around.

Democratic Exhaustion

Is our democracy germinating the seeds of its own destruction?

Alexis de Toqueville warned, “The American Republic will endure until the day Congress discovers that it can bribe the public with the public’s money.” That day has come. It is not yet gone.

Democracy  in ancient Athens lasted about 250 years. We in the United States are at about that same point in our history today. In Europe, alas, democracy came but as a short, brief whimper in time. Now, post-Lisbon, it is gone…at a national scale and, very soon, at the local level, too.  EUro democracy – so ancien regime! In EUrope, the new aristocracy is already taking form, with power centered in Brussels and Strasbourg. In America, our own Washington, DC-centered aristocrat wannabees remain diffuse and riven by competing factions, but they are there and waiting.

What went wrong? I propose that the primary seed of our destruction lies in our own human nature. It is the “tragedy of the commons” writ large. The tragedy of the commons, formulated by ecologist Garrett Hardin in the 1960s, describes the dynamic whereby individuals and other animals, when confronted with limited resources, have a self-interest in expropriating the maximum amount of those resource for themselves while they can, thereby hastening the resource’s destruction. The tragedy of the commons is neatly summarized by Illinois’ de facto state motto, “where’s mine?” (with a respectful hat tip to Chicago Tribune editorialist John Kass).

I suspect that, deep down, many serious people in America’s contending factions (Left, conservative, Democrat, Republican, Libertarian) believe that we are now in the end game and that we are thus witnessing a mad, vicious scramble by traditional Democrat constituencies (e.g., public sector unions) to secure to themselves as much wealth and political power as possible before the inevitable financial collapse. The primal screams and vile demagoguery harmonized by the howling mobs of Wisconsin, Greece, France and Britain (or from our Commander in Chief, for that matter) are but the beginning of this process. Change can be ugly when people lose hope!

“Where’s mine?”

It still remains incredible for me to contemplate how we in the West, endowed with the richest standards of living every conceived in human history, still could not find satisfaction from living within our means. The wails and tribulations of the Left notwithstanding, all groups in America are living far better material standards of living than they did 25, 50 or 100 years ago or than the vast majority of our world enjoys today. How could we not find it within ourselves to be grateful for and respectful of what our forebears built and accumulated as their legacy for us. Indeed, our unparalleled wealth and quality of life appears only to have fueled resentment of “the other” in tandem with an exponential growth in our appetites and expectations. Thus have we now come to the point of destroying ourselves and our inheritors through impossible debt obligations, gained in our quest for ever more lucre and comfort gained on other peoples’ dimes.

“Where’s mine?”

So today, confronted with hard choices on whether to cut back on our expectations and regenerate the wealth that we have lost on one hand (the Paul Ryan plan) and a mad scramble to secure our own selfish claims upon the commons before its dissolution, our country confronts the fork in the road that, as Yogi Berra put it, must be taken.

Why do I suspect that earlier in our democracy, when government was not expected to fulfill everyone’s economic and social needs, a national belt-tightening to confront an existential crisis would hardly have been considered controversial. A split electorate today, unfortunately, does not bode well for constructive solutions. From my limited perspective, I suspect that 25% of our population seems committed to the conviction that the government’s largesse can continue forever and another 25% (public employee unions, Liberals, Democrat politicians) cynically manipulates events to amass all it can before the inevitable collapse.

“Where’s mine?”

I propose, however, that these manipulators on the Left and their followers are fundamentally mistaken in the following ways:

One is to believe that whatever political and financial power they accumulate in these days will translate into power and wealth in the future. I don’t think so. You can’t, for example, pay pensions on the back of a collapsed market economy. You can’t fund ObamaCare promises through foreign largesse. Princely union boss salaries will be worthless when union members inevitably catch on to their betrayal and they, too, ultimately depend upon a healthy private sector economy.

Two, we can never really predict the future.  Revolutions lead to unpredictable ends and often end-up eating their own. Anarchists and Democrats can try to collapse the system, perhaps, but nobody can know what will replace it.

Three, the real threat to our society today is not our debt but the destruction of our debt capacity. Debt capacity refers to our ability to absorb more debt in response to crises: for me, for example, debt capacity is represented by my home equity line of credit, to be drawn upon in emergencies. We can be guaranteed that our Western civilization will face serious crises that will threaten our very existence. With our home equity line exhausted, from whence will we find the capital resources to fund our survival? How will we build back from the rubble?

When FDR embarked on his wildly irresponsible debt-financed financial adventures, our country’s ability to absorb debt was still great by the time WWII arrived. We survived and, as a result, thrived. I am not so certain that we could do so today. Not to veer too far off path, but does anyone else get the sense that the ineffectual flounderings of the U.S. and our NATO allies in Libya, a misbegotten economic and military backwater of 6.5 million people, hardly reflect the actions of robust democracies?

I sense that our Western democracies have reached a point of exhaustion. Perhaps this reflects the natural lifespan of democracies. I hope not. The Ryan blueprint presents our 50:50 nation with an existential fork in the road. We shall soon discover the true strength of our national fiber. Will we tighten our belts, retrench and expand the national and global commons as we have in the past…or will we intensify our mad struggles to secure dwindling remnants thereof to ourselves? If the latter, then our democratic experiment will truly be at an end. And that would be a tragedy.

I do not say that democracy has been more pernicious on the whole, and in the long run, than monarchy or aristocracy. Democracy has never been and never can be so durable as aristocracy or monarchy; but while it lasts, it is more bloody than either. … Remember, democracy never lasts long. It soon wastes, exhausts, and murders itself. There never was a democracy yet that did not commit suicide. It is in vain to say that democracy is less vain, less proud, less selfish, less ambitious, or less avaricious than aristocracy or monarchy. It is not true, in fact, and nowhere appears in history. Those passions are the same in all men, under all forms of simple government, and when unchecked, produce the same effects of fraud, violence, and cruelty. When clear prospects are opened before vanity, pride, avarice, or ambition, for their easy gratification, it is hard for the most considerate philosophers and the most conscientious moralists to resist the temptation. Individuals have conquered themselves. Nations and large bodies of men, never.

- John Adams

San Francisco discovers free enterprise

San Francisco is definitely up in the top five when it comes to “most Progressively governed cities in America.”  No surprise, then, that the city’s finances are in a shambles.  What is a surprise is the fact that, faced with a looming budget collapse, the City has suddenly discovered capitalist incentives:  it’s offering the big employers tax cuts to stay in the City.

This is a smart move on San Francisco’s part.  (And I can’t believe I wrote that sentence about the City that doesn’t know how.)  The Leftists may call them “the rich people” or “blood sucking corporations,” but I have another name for them:  employers.  The City has discovered that if you constantly penalize employers, they go away.

As Obama’s vicious, dishonest budget speech shows, he hasn’t yet come to that little realization.  Nor, despite his intellectual common ground with Tom Friedman, has he seemed to realize that Friedman is right about one thing:  the earth is indeed flat.  In the old days, employers had nowhere to run to and nowhere to hide.  Now, the corporations can go to all the other socialist countries that have lower corporate tax rates than the U.S., while individuals simply bid a fond adieu to their natal land.

I realized today that what makes Obama’s class warfare even more disgusting is that he makes no attempt to pretend that he’s one of the little people.  As I read in Ronald Kessler’s In the President’s Secret Service: Behind the Scenes with Agents in the Line of Fire and the Presidents They Protect, when Jimmy Carter, the last president who presided over such a disastrous economy, paraded around carrying his own suitcase, it was pure theater:  the suitcase was empty.  Nevertheless, he made the effort.

Obama, however, doesn’t bother.  Even as he demagogues about the fat cats, stopping just short of demanding their heads on pikes, he openly revels in the kind of lifestyle only the very rich can afford.  While he lectures us about heat and air-c0nditioning, he keeps his White House digs at 75 all year round; while he tells us to trade in our tried and true cars for expensive hybrids, he and his family jet all over the world on exotic vacations, traveling in gas guzzlers everywhere they go; while he “commiserates” with our belt tightening, he and his family dine on lobster, Kobe beef, and foie gras.  His arrogance is so overweening that he assumes that he is entitled to these luxuries — at our expense, of course — even as he insists that we cut back, tone done, retrench and, of course, destroy our employer class.

Putz isn’t a strong enough word, but it’s the only one I’ll use on my PG blog.

Cross-posted at Right Wing News

The Bookworm Turns : A Secret Conservative in Liberal Land,
available in e-format for $4.99 at Amazon or Smashwords.

Taxes, government dependency and happiness

Two interesting things rolled across my desk today, interesting because they address the same topic — dependence on Big Government — but reach diametrically opposite conclusions.  The first is a Dennis Prager column that examines why American conservatives are happier than American liberals.  This isn’t just Dennis’ opinion, by the way.  Instead, several recent polls have shown that, on the whole, conservatives are happier people.

Dennis opines that the matter essentially boils down to a few key differences in outlook.  One is a sense of victimhood.  In America, those who turn to the government for succor are those who feel betrayed by the American system, whether because they’re blacks invested in the notion of racism, or people of any color feeling that they haven’t succeeded in the American system as they deserved.  Another is the notion of utopianism.  Liberals believe in perfectibility, and are constantly disappointed; conservatives recognize flaws, and are always thrilled to live in the society that best harnesses negative human traits and gives the most rein to positive traits.  Conservatives are also more generous — they give their money away to causes, rather than waiting for the government to take it.  That affects how they feel about their own contributions to societal good.

The other article that came to me, via a very Progressive facebook friend, is one by Thom Hartmann that argues in favor of huge taxes on the rich, with the assurance that, in Denmark, people are happy because they pay such high taxes, with the rich taking the greatest hit, but not feeling it, while everyone else gets cheap, high-quality government services.  It’s a very sophisticated argument, and often a correct one, about the differing effect taxes have on the rich and the poor.

As I understand it, Hartmann argument boils down to this.  The rich earn far more than they can ever spend.  This means that taxes affect only their non-discretionary income, not their discretionary income.  If they’re taxed more, they might save less, but it won’t affect the money they spend annually on both life’s necessities and its reasonable frivolities.  The non-rich, however, spend everything they earn after taxes.  If taxes are raised, they have less after-tax money to spend, which hurts them.  BUT (and this is the kicker), Hartmann contends that, invariably, the market adjusts so that, after a few years, the non-rich end up getting from their employers precisely the same amount in adjusted dollars to bring them to spending parity with their situation before the tax increase.

This means, says Hartmann that, if top marginal tax rates are increased, only the rich will suffer.  Everyone else will remain the same, except that the government will have hugely greater number of dollars at its disposal for free health care and education. Further, the less money the rich people have to throw around, the more stable the economy is, because it prevents bubbles.  This means that there is no great wealth creation, but there are no collapses either.

A large chunk of the article is concerned with trying to figure out why non-rich people are so stupid that they don’t want to tax the rich at a higher rate, considering that, in the long run, higher rates will leave non-rich people with pretty much the same amount of disposable income.  Scaife comes into all of this, of course, as does the Heritage Foundation, William Kristol, and the usual conservative suspects. I found that part of the article uninteresting.  When Hartmann got back to substance, he started making thought-provoking points again.

Thus, Hartmann asserts that, if you increase tax rates, government actually shrinks, which is what sensible conservatives should want.  I can’t summarize the argument adequately, so let me quote it here:

From 1985 until 2008, William A. Niskanen was the chairman of the Cato Institute, a libertarian think tank, and before 1985 he was chairman of Reagan’s Council of Economic Advisers and a key architect of Reaganomics. He figured out something that would explode Reagan’s head if he were still around. Looking at the 24-year period from 1981 to 2005, when the great experiment of cutting taxes (Reagan) then raising them (Bush Sr. and Clinton) then cutting them again (Bush Jr.) played out, Niskanen saw a clear trend: when taxes go up, government shrinks, and when taxes go down, government gets bigger.

Consider this: You have a clothing store and you offer a “50 percent off” sale on everything in the store. What happens? Sales go up. Do it for a few years and you’ll even need to hire more workers and move into a larger store because sales will continue to rise if you’re selling below cost. “But won’t the store go broke?” you may ask. Not if it’s able to borrow unlimited amounts of money and never—or at least not for 20 years or more—pay it back.

That’s what happens when we have unfunded tax cuts. Taxpayers get government services—from parks and schools to corporate welfare and crop subsidy payments—at a lower cost than they did before the tax cuts. And, like with anything else, lower cost translates into more demand.

This is why when Reagan cut taxes massively in the 1980s, he almost doubled the size of government: there was more demand for that “cheap government” because nobody was paying for it. And, of course, he ran up a massive debt in the process, but that was invisible because the Republican strategy, called “two Santa Clauses,” is to run up government debt when in office and spend the money to make the economy seem good, and then to scream about the debt and the deficit when Democrats come into office. So while Reagan and W were exploding our debt, there wasn’t a peep from the right or in the media; as soon as a Democrat was elected (Clinton and Obama), both the right-wingers and the corporate media became hysterical about the debt.

And when Clinton raised taxes so that people actually started paying the true cost of government (a balanced budget as in the years 1999 and 2000), they concluded that they didn’t need as many services, so government actually shrank—in terms of both cost and the number of federal employees.

As a non-economist, I have to admit that what Hartmann says makes a certain amount of superficial sense.  I suspect, though, that there’s more to it.  For example, Laffer’s curve may be involved.  That says that lower tax rates create greater wealth, which actually increases government revenue.  With greater government revenue, profligate politicians and greedy citizens have more to play with. The problem, then, isn’t the tax structure; it’s the boondoggles, and earmarks, and “other people’s money” syndrome that inevitably plagues an organization that lacks fiscal discipline.

My core problem with Hartmann’s whole premise, though, is that it works because his allusion to Denmark shows that what he really wants is a world in which the government is responsible for all income that’s not dedicated to life’s necessities.  Under the current American system, that “excess” money that the “rich” have floating around — the money that Hartmann thinks the government should take and redistribute — is money that goes to banks that lend it to future homeowners and entrepreneurs; it goes into businesses that hire people; and it goes into funding innovation that improves people’s lives.

Having wealth circulate in the marketplace increases the risks of a slap happy economy, but it also vastly increases the possibilities of life improvement.  It increases innovation and, yes, greed, which is a powerful motivator.  In the Scandinavian countries, which until recently had stunningly homogeneous populations, no defense budgets, and no sense of obligation to the rest of the world (which we, in the U.S., heavily fund), it’s easy to have a tight little loop of shiny, clean, teeny houses; lean, mean Danish modern furniture; health care for that homogeneous population; and an almost zero track record on innovations that improve life for most of the world’s population.

Hartmann envisions a world in which everyone is happy with a brightly colored Danish modern version of very little.  Hartmann also fails to take into account dynamic populations.  The Scandinavian countries worked so well for so long because they were populated by people with precisely the same values and precisely the same life habits, habits that happened to be particularly neat and self-disciplined.  The tremors are starting, though, as these same countries struggle to deal with newcomers who have nothing in common with this nice, neat, egalitarian very white world view.  The welfare scams, violence, polygamy, cultural incest, etc., that the Muslim populations are bringing to Denmark and Sweden, and other northern countries, are all going to place a very interesting burden on these happy little taxpayers who could always rely on each other for homogeneity and on Papa America for world stability.

Before being quite so smug, places such as Sweden and Denmark might want to cast a jaundiced eye on Holland and Britain and France, all of which started with less homogeneous populations than the northern countries; all of which have had a head start on the challenging task of incorporating Muslims into their closed world views; and two of which (Britain and France) actually had to set aside defense budgets.  Hartmann, too, might want to consider that America is Holland, Britain, France, etc., on speed when it comes to population diversity; constant immigration; and defense spending upon which the entire Western world has relied since 1942.

At bottom, I’d rather be a happy American iconoclast, living with a fairly low level of risk (heck, we’re not yet Argentina, Greece or Ireland) and wedded to the infinite possibilities of a dynamic economy that trusts the innovation and drive individuals, rather than coping with a government’s overarching static, inefficient bureaucracy.  I’d also rather be in a surging country that, better than any place in the world, incorporates incomers, even illegal ones, as opposed to a country that is, for the first time, has to deal with profound outsider disruptions to its cozy little system.  I’m happy here.  Not droned, not pacified, not opiated, but happy.

Cross-posted at Right Wing News