Monday, September 29, 2008

Don't Panic?

After sending the following queries to my two best friends, I thought I'd share them with the world, not, Bill, because I think anyone in particular is reading this, but because I want my reaction noted for posterity. If we quickly devolve to hunter/gatherers, just before I get trampled by a giant herd of buffalo, I want to be able to smile and think, "I toldja' so."

Tonight, before heading off to Open House at school, I watched the tail end of the local news, all of the national news, and the beginning of the local news again. I heard/read the words "Don't Panic" at least four times. Just now, it's fully sinking in. How often does one hear that phrase on the news? How often is panic an entirely appropriate response? Could the answers to those two questions be identical?

As a person who owns a whopping zero shares of stock, I will be paying attention to how the Dow does tomorrow.

Is it wrong to fantasize about a complete collapse of the global economy? How often should one participate in such fantasies? Is it the same answer?

Wednesday, September 24, 2008

The Age for Bad Poetry

"I took a poetry class in college
And the most important thing I learned
Is that I'm no poet."
I've told the story
Wink and smile
So many times
Branding like the soda I drink
The car I drive
The music on my ipod
The ipod
The ipod


But here we are.
This is the age for bad poets.
The culture spins down the drain
To the beat of arrhythmic verse
Holds every office
Levers of power
Pulled into uneven lines.
T.S.Elliot slouches toward the poetry slam.
William Blake dreams apocalyptic visions
Of talking heads debating economic band aids
While we burn and burn
And reach up out of the flames
To tap the keys
Paperless in the heat.
Not protest tunes, but jingles.
Not novels, but fabricated memoirs.
Art produced for uncollateralized credit.
This is not the age for great poetry.
This is the time to widen our eyes
Take in the civilization's decay
Spread it amongst ourselves.
This is not poetry.
This is how the world ends.
Digital chlamydia.

Nice Pants

"Nice pants,"
The fourteen-year-old told me,
And I suddenly found myself
Fixed in my era
Like a mosquito in amber
My belly full of the blueprints for dinosaurs.
My age is divined by a forked branch from some mystical tree
Pointing back to an add campaign
Twenty years ago
The woman stops the car to tell the hitchhiker
"Nice pants,"
But now she's shrunk
To this two-bit punk kid
Proud gang member
Late to class each day
Facial muscles slack with an affected apathy
Masking a real stupidity
He'd give his soul away for a compliment
From a super model
Or the tougher kid on his street
Or a misinterpreted rap lyric
He's the most cynical advertiser's wet dream.

But I'm also standing in the cement of the global economy
Hot lava meltdown revealing nothing but gas bubbles
Borders as invisible as credit
Cultures pushed into the bedrock
By liquidity, liquidity, liquidity
And I can't help but think,
In England
"Nice pants"
Refers to underwear.

And then I'm back in America
At the tail end of one of the world's least glorious empires
All empty shell casings and disco music
Stuffed with incendiary sarcasm
Made more deadly by it's lack of cleverness
As much beauty and truth as the plaque I brush off my teeth
While I look in the mirror
Too tired to teach tomorrow
But I'll go
Wearing different pants.

Saturday, September 20, 2008

A Rant about Taxation

Someone on a list serve sent me the following email, asking how to respond to a Republican friend who preaches lower taxes for the wealthy. The forward got my blood boiling, so I weighed in, and I thought I’d share the original forward and my response here.

Here’s the original forward:

Because it's the election season, let's put tax cuts in terms everyone can understand. [Way to start out with condescension from the get-go, eh?]

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 man would pay $1.
The sixth man 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 curved ball (or is that a curved beer!).
'Because 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 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 ??[sic] the paying customers? 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 b y roughly the same amount, and he proceeded to work out the amounts each should pay. And so:

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

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

'I only got a dollar out of the $20,' 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 than me!'

'That's true!!' shouted the seventh man.

'Why should he get $10 back when I got only two? The wealthy get all the breaks!'

'Wait a minute,' yelled the first four men in unison. 'We didn't get anything at all. The
system exploits the poor!'

The nine men surrounded the tenth man and beat him up.

The next night the tenth man didn't show up for drinks, so the nine sat down and had 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 college professors, is how our Tax System works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy and they just may not sho w up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

David R Kamerschen, Ph.D.
Professor of Economics
University of Georgia
[and, because the intro wasn’t insulting enough, it ends with this flourish]

For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible.”

This first thing I did when I read this was to google the Ph.D. who is credited with this deceptive story. It seems there is a David R Kamerschen, Ph.D. who teaches econ at the U. of G., but, of course, he may not have written this. For his sake, and for the sake of the institution where he teaches, I sincerely hope not.

The story shows a fundamental misunderstanding of what taxes are and what they pay for.
It's true that the poor pay less, but they receive less. Taxes don't go to beer. They go to things like police and firefighters and public schools. A policeman defends all homes from, for example, theft, so the wealthy person is receiving protection for far more valuable goods than the poor person. Likewise the firefighter, who is protecting a lot more property when he/she puts out the fire in the wealthy person's home than when putting out a fire in a poor person's home. The same even goes for public schools: the education may be the same for the child of a wealthy person or a poor person (or, at least, it would be if we had a more equitable system) but the wealthy person not only receives an education for his/her child, but a more educated workforce at his or her company, a benefit which the poor person doesn't experience. Also, the values of the expensive property of the wealthy person are related to the quality of the schools, just like the crime rate. Any of you who have crummy schools and have seen a decline in the value of homes in the area know this to be true. So, an economic professor might think we get beer for our tax money, but I'm not sure what country has such a system. I expect services, and the wealthy do benefit more, so they should pay more.

People like Bill Gates Sr. have said as much when they advocate for keeping the estate tax: they know how they've benefited, and that a more equitable system, even one that costs them more in taxes, benefits them even more in services. Bill Gates Sr. wrote: "The estate tax — our nation’s only levy on accumulated wealth — is the fairest and most important tax we have.

"It puts a brake on the concentration of wealth and power, generates substantial revenue from those most able to pay and encourages billions of dollars in charitable giving each year. The estate tax is not only fair but an essential component of our nation’s economic dynamism.

"Without our society’s substantial investments in taxpayer-funded research, technology, education and infrastructure, the wealth of the Forbes 400 richest Americans would not be so robust."

And as to the spurious argument that the ultra-wealthy will leave the U.S. for a country where high taxes and a strong government do not protect their wealth: show me the wealthy person who has decided to invest all his money in countries with low taxes and no stable banking system or protections of personal property, and I'll show you someone who may become very poor very quickly then they government falls or decides to seize his assets without cause. There's a reason a country like the U.S., which taxes the wealthy more than the poor, has the largest GDP in the world, and there's a reason why the economy slips when McCain, Bush, and the other acolytes of anti-tax activists gain power and try to do away with the very regulations that protect us all, wealthy and poor alike.

[I wrote that last bit on September 16th. This is not to say that I have some unusual powers of prognostication when it comes to the markets, but I think any economics professor worth his/her salt would concede that deregulation has shown its darker side quite vividly in the five days since.]

The next day I thought of another example as I fumed about the guy's perverted parable: Imagine that you have a hundred dollars in a bank, and somebody comes along with a hundred million and wants to open an account. The bank decides it will have to build a new, two million dollar high-tech vault to keep all that money safe. A conservative tax scheme would dictate that the most fair way to divide that cost would be for both you and the multi-millionaire to pay an even million each for that protection.

I think, when reduced to that oversimplification, it's easy for anybody to see that fair isn't always equal and equal isn't always fair.