Obama and the tax code: from each according to his ability, to each according to “fairness”
Some of Obama’s slightly-less-publicized statements are the ones that concern me most.
Case in point: in this WSJ column by William McGurn, the author points out that for Obama, taxes are not just about collecting revenue. What are they for? Fairness.
Obama was being quizzed on his proposal to raise the capital gains tax. When Charlie Gibson of ABC noted that the empirical evidence indicates that increasing the capital gains tax tends to lead to a decrease in actual revenue collected, Obama’s answer was, “Well, Charlie, what I’ve said is that I would look at raising the capital gains tax for purposes of fairness.”
McGurn writes:
Translated into ordinary English, what that means is that it doesn’t really matter whether a tax increase actually brings in more revenue. It’s not about robbing from the rich to give to the poor. Robbing from the rich will do, especially if it’s done in the name of fairness.
I don’t think it’s quite as simple as McGurn indicates, but I think his basic premise is correct. The complexity derives from the fact that there is some controversy about whether Gibson’s assertion concerning the trend of capital gains revenues is correct.
If you Google the issue, you’ll find (surprise, surprise) that there’s some disagreement on whether the drop in revenue from rises in the capital gains tax is a short-term artifact or a long-term reality, and that the viewpoints on the subject break down into the usual Left-Right divisions.
The most nonpartisan-sounding discussion of the issue that I was able to find in an admittedly quick perusal of the subject was this one by Gerald Prante at the Tax Foundation. Prante unsurprisingly concludes that the true answer to the question is “it depends.” What it generally depends on is something called the Laffer Curve, which postulates that revenues rise with rising taxes up to a break-even point and then start to decline as people adjust their behavior accordingly to avoid them.
Was Obama alluding to the Laffer Curve effect during this later exchange in the Gibson interview? I don’t think so, although it’s not entirely clear:
GIBSON: But history shows that when you drop the capital gains tax, the revenues go up.
OBAMA: Well, that might happen, or it might not. It depends on what’s happening on Wall Street and how business is going.
If Obama had meant to reference the Laffer Curve, I believe he would have said something like “It depends what the rates actually are,” rather than citing the economy in general. Or if he actually meant to argue economics, he might have cited another liberal argument and said, “It depends whether you are talking short or long term.”
Gibson’s premise in asking the question was admittedly somewhat simplistic (see this for the conservative viewpoint on the subject of fluctuating capital gains taxes, and this and this for brief statements of the liberal one). But Obama’s response was even more simplistic than Gibson’s question, and more worrisome as well. That’s because he didn’t base his answer on what revenues he thinks will actually be generated by raising the tax—which after all was Gibson’s point, and one on which Gibson certainly could have been challenged. Instead, Obama emphasized a different purpose for taxes, one he seems to think is superior: fairness.
However, the main purpose of taxes in our system is to raise revenue for the government. And although both liberals and conservatives wish to do it in a “fair” way, “fair” seems to mean something different to each.
Obama’s brand of liberalism seems most interested in the appearance of fairness, and appears to view the economy as a zero-sum game. To help some people, you must take money away from others. The idea of a rising tide floating all boats—or of a capital gains cut stimulating the economy in a way that yes indeed, does benefit the rich but also benefits the entire financial system in a way that ultimately helps the middle class and even the poor—is often considered a nefarious and duplicitous scheme hatched by (who else?) the Republicans. That it often (thought not always) conforms to reality is a mere detail, because the rich are by definition bad and need to be taken down a peg (this, by the way, is at least part of what’s behind the current Obama campaign against John McCain and his too many houses to count).
In Obama’s eyes, what could be more “fair” than to tax the rich and give it to the poor? Whether or not this actually benefits anyone is, quite simply and shockingly, not important to him. What is vital is that it look fair and seem fair on the surface—and appeal to those who are his most likely supporters in the upcoming election.
The one doesn’t bother me. My reading of the economics literature is that there is virtually no evidence for a Laffer-curve type effect for realistic tax rates. Certainly if you increased the rate from 95% to 100% we would expect revenue to decrease, but from 30% to 35% I think not. So I don’t believe Gibson is correct.
And as for the larger point about fairness in the tax system, considerations of fairness have always been part of how the tax system is structured. The very idea of a tax rate, rather than a lump-sum tax (which would be less distortionary), embeds the idea that richer people ought to pay more. In general, we tax from the rich and return that money through social programs to the poor. (Of course there is also taxation to provide public goods, which is a potentially separate motivation, but redistributive direct transfer programs like Medicare are an increasingly large chunk of government expenditure.)
I don’t think that Obama would support a policy of wanton destruction of rich people’s wealth, just to achieve distributional equity. I think probably what happened is that he supports an increase in the estate tax, partially for reasons of fairness and partly to raise money, but would not support it if it simply destroyed money. Gibson alleged that it in fact destroyed money, catching Obama off guard. Rather than completely reversing his stance he reiterated his other reason to support it, which was equity.
As far as I know: cutting taxes has always juiced our economy and increased government tax revenue over previous levels. It worked for JFK, then Reagan, then GWB. In each instance, the results provided evidence of the positive “economic effect” of increasing incentive to produce; each instance provided evidence of the validity of the Laffer Curve. If anyone knows of a contra example, I would like to know of it also.
Re Obama’s comments to Charles Gibson:
I suspect Obama was out of his depth when answering Gibson’s question, and doesn’t understand the difference between a straight “arithmetic effect” and an “economic effect”.
Obama does desire the “economic justice” he anticipates from a Robin Hood type of tax policy and social policy combination.* Obama doesn’t believe raising taxes actually deprives the government of tax revenue. Obama hasn’t learned that raising taxes – because it depresses the economy – actually hurts lower income persons. I wager Obama is simply ignorant of the concepts, and therefore Gibson’s words did not compute.
*James Cone, considered the father of Black Liberation Theology, in April 2008:
Mr. Cone doesn’t know how because it cannot be done.
In a recent speech to the NAACP, and in the spirit of James Cone, Barack four times stated his belief in “economic justice”. That sends shivers up my spine.
In his Super Tuesday speech, Barack said “it’s going to be hard to get them [oil companies] to give up some of that profit.”
When Barack left Hawaii for Occidental College, his teen-aged father figure/advisor: American poet and acknowledged communist Frank Davis, admonished him “don’t believe all that bull they will try to feed you about the American Dream”.
I thought of that when reading Larry Petrash, of the Wichita Falls Times Record News:
It needs to seem fair, otherwise how can Obama justify enriching himself while saying he will tax the rich?
I think once you raise taxes to a certain point it becomes economical to pay for more complex sheltering schemes.
I think once you raise taxes to a certain point it becomes economical to pay for more complex sheltering schemes.
Like, starting a shell corporation to make your investment through and pay yourself out part of the appreciation as a 1099 or W2 salary (vs. a capital gain). You could also write off a bunch of personal expenses as business related (had to fly to Florida for Disney— I mean to check on my property there).
I think Obama knows all this (along with why corporations don’t pay taxes) and this is all just more lefty populism noise.
“The idea of a rising tide floating all boats–or of a capital gains cut stimulating the economy in a way that yes indeed, does benefit the rich but also benefits the entire financial system in a way that ultimately helps the middle class and even the poor–is often considered a nefarious and duplicitous scheme…”
I don’t consider it a scheme. I consider it just plain wrong. The U.S.A. has indeed gotten richer in the last eight years, but the middle class has not. It makes no sense to assume that larger amounts of money coming into a nation automatically means everyone in the nation is benefiting.
Money makes money; we all know that. That means that unrestrained capitalism in this modern environment only leads to greater inequality of wealth and therefore greater injustice. Don’t ask me how to solve the problem, but hopefully you can see there is one.
taxes are not just about collecting revenue. What are they for? Fairness.
Code for “Social Justice”.
“Well, Charlie, what I’ve said is that I would look at raising the capital gains tax for purposes of fairness.”
How that will be fair, I don’t know. Each persons stock accounts will suffer if they earn and sell… they will end up sitting on stock longer to clear more, and will not try to experiment with companies that will not do very well to offset the tax.
Of course, when things slow down and don’t change hands, there is no time for the tax man to slip in and take his share. which is whey Obama ALSO said he was going to tax WEALTH… of course the already wealthy will move their money out of the country, same with capital gains, but the majority of those who are wealthy wont, they will just park it.
However those are the two ways in which a lowly person can actually save and earn and put money to work while they make more.
Tactically speaking they are making a chasm to decide the winners and losers in the conversion game. That if and when our politics change, these actions will decide who is on the winning feudal lord side, and who is going to have a heel on their necks as slave workers for them.
If you pay close attention to ALL the points, they are creating an economic barrier between those who rule, and those who are ruled (to paraphrase Nietzsche)
Put it ALL together. Every crackpot terrorist org wants Obama. Fine. Every leftist wants Obama. Ok. However, what does Russia want? If Russia wanted Obama, then why give the election to McCain by executing this invasion plan?
Easy, they want a real conflict. Everything is gearing up for it. its pretty easy to see. All the sides are starting to pick their sides and are starting to square off. Russia has decided she wants to go another round, now that so much has changed to weaken us.
Before you get on my case for saying it, I am just paraphrasing Medvedev.
“Russia is indeed stronger and able to assume greater responsibility for solving problems on a regional and global scale.” / “We need to regularly consult history or, for obvious reasons, its most negative scenarios will repeat themselves.” July 15 Russian Foreign Ministry, Moscow
Dr. Sergei Markov sounded off and is the one to be saying that the Georgian conflict was caused by dick cheney to insure that mccain is in office. But the hint of what will happen next is that they blame someone else before they do the same thing. Markov also said that the US was creating the situation of an armed conflict between Russia and Ukraine.
The reason I bring this up, is that the situations are not just here, or just there, everything is connected. A major armed conflict just after the election, would create some really really nasty conditions world wide if the jackals all decide to play cards to advantage and damn the costs. An analyst blames a future conflict on the US, since Russia is acting like George Kennan said, that they can only tolerate their own countries or satellite countries at their borders, but not free countries.
So each candidate is taking actions or making promises in a world in which this kind of situation is building up. Russia gets so much out of this conflict and loses little. In this case, they get to dictate the next president. The one that will weedle and hem and haw as Russia takes some countries (which really will not make changes), or the one that if it tries will start a conflict?
Basically either way it wins. In a big conflict, we suddenly go belly up as we no longer can get most things from china. in a pacifist situation under the same forces, and there is plenty of excuses to make wholesale changes towards deciding these factors.
Either way, the outcomes are the same… a huge financial crisis in the US.
Obamas said these things, and more:
Take capital gains, hit the poor man with higher hidden taxes (by letting things lapse and not doing anything), create precedent for a profits tax (once in once industry, it will be the new revenue stream), gut the military, basically unilaterally disarm, new wealth distribution for other countries, no drilling, more social negative policies sold on positive promises/lies (like the way he distributed 100 mill and never improved education with his buddy ayers).
That and more can and will push us into a slump like we haven’t seen since my childhood. It will be like I remembered when I was young and the banks charged high interest and a savings account could earn (if you could earn anything to put into it after pay and subsistence living and bills. I grew up poor in a bad area inner city)
I don’t think it’s quite as simple as McGurn indicates, but I think his basic premise is correct.
I have to disagree neo. Your looking at the words being said, and so is he but your not applying the doctrines of obamas friends to the calculation. Remember, he would never say, I am a communist, instead he would say, I am progressive. Nothing is stated directly because the direct truth would not be tolerated and cracks the mask.
If you look at your italics paragraph above the passage I quoted, you are seeing a round about definition of “social justice”.
“Social justice refers to the concept of a society in which justice is achieved in every aspect of society, rather than merely the administration of law.”
Its not for legal reasons, its not for punishment, its not to redistribute it, its to make it a form of justice to take it, or make it so they have nothing to give.
They didn’t starve the kulaks for law, or pleasure, or such, they starved them as a form of social justice. Reparations are a form of social justice. Preventing the wealthy from earning so the poor are poor, is a form of social justice.
Was Obama alluding to the Laffer curve effect
He was and he wasn’t. he wasn’t alluding to it in the way you found out in your quick (and good) research, he was alluding to it so that others will think he alluded to it. and its ambiguous so that he cant be held down to it. he is aware of the laffer curve, but he cant say he is, and then cause the down trend to happen and be able to cry “I tried, but couldn’t predict this” and get absolution.
In other words, he knows the laffer curve and its proven effects to be able to choose an action to give him the negative results (crisis) he wants, but he also knows enough not to actually let every one know directly that he knows, or else he will get nabbed for it. (and to allude at all is to let the fellow travelers know, while maintaining plausible deniability, so he can maintain support).
What you are not aware of is the code that is being said. its not a hidden code, it’s a code that lets people on one side know what he really stands for, and not allow him to be nailed for what he really stands for.
Fascism is code for anything right of communism, it no longer has the meaning it had, so it’s a slur.
The communists in the US, used the terms progressive, or as Medvedev used in his speech, pragmatic (Dewey turned out to be revealed in the Venona transcriptions that he was a spy).
Social justice is not about social justice, its about using something akin to it to sell people and end justifies the means justification to hurt those with power that could oppose things in a meaningful way. it’s a way to slowly disarm the wealthy while assuming more state power.
Liberation theology, as Ratsinger points out in preliminary notes (www.christendom-awake.org/pages/ratzinger/liberationtheol.htm) his book, is an overlay to Christianity that seeks to replace its doctrines with a new one by switching things around.
Or as he says:
A theologian who has learned his theology in the classical tradition and has accepted its spiritual challenge will find it hard to realize that an attempt is being made, in all seriousness, to recast the whole Christian reality in the categories of politico-social liberation praxis. This is all the more difficult because many liberation theologians continue to use a great deal of the Church’s classical ascetical and dogmatic language while changing its signification. As a result, the reader or listener who is operating from a different background can gain the impression that everything is the same as before, apart from the addition of a few somewhat unpalatable statements, which, given so much spirituality, can scarcely be all that dangerous.
There is a heck of a lot of this, and if you study non revisionist history, you will learn it. its not a secret language, or such, its just a way of talking. If you also study soviet history and such, you will find that they would use this constantly when negotiating.
Like humpty dumpty a world means exactly what they want it to mean, but they don’t let others in on it.
When the west talks of peace, they mean living mutually beneficial
When the communists used the term peace, they said it was defined as “a world in which there is no more opposition to communism”
Ratsinger has more to say:
Initially we said that liberation theology intends to supply a new total interpretation of the Christian reality; it explains Christianity as a praxis of liberation and sees itself as the guide to this praxis. However, since in its view all reality is political, liberation is also a political concept and the guide to liberation must he a guide to political action:
“Nothing lies outside … political commitment. Everything has a political color.” A theology that is not “practical”; i.e., not essentially political, is regarded as “idealistic” and thus as lacking in reality, or else it is condemned as a vehicle for the oppressors’ maintenance of power. .
That bolded area sounds like the feminists “everything is political” combined with Mussolini’s “Everything for the state, nothing outside the state, nothing against the state.”
If you don’t know this language game is going on, you will try to analyse it, and say things like:
If Obama had meant to reference the Laffer Curve, I believe he would have said something like “It depends what the rates actually are,” rather than citing the economy in general. Or if he actually meant to argue economics, he might have cited another liberal argument and said, “It depends whether you are talking short or long term.”
And be confused!
But if yo know the code, then you know that he is pushing social justice as the new state doctrine… along with pushing a state that no longer cares at all what the constituency want!!!!
But if you don’t know the code, you waste a whole lot of time trying to make sense of it and reading pundits and so forth, and never actually get a tight enough grip to actually understand what he means and know where he is going, and do something about it.
Look above this post and note how everyone is so smart that they can be redirected to all attempt to make sense of the situation, and do it through economic thesis. This is how you keep smart people who can actually think well enough to do something, too busy. Dumb people you have to have work and not have time, smart people you have to send on wild goose chases and run them in circles.
Yes people are really that diabolical when that’s their aim…
But the fellow travelers and historians, and those who suffered in the past the games of the left. As was said I think in the new york times, those in Europe who did not experience things, they are stumped, and frozen, acting like Neville chamberlain. Those who have experiences “the great game” in one form or another fear a resurgence of that insanity and see the similarities all over.
as an aside using conflict to put McCain in office so close to the election, will play perfectly into the conspiracy propaganda on the republicans, and that may just start other more violent acts of social justice under the doctrines of oppressed and oppressor logic.
What we are refusing to see is that there is a battle going on underneath all this. Its not just that these people have risen in their politics honestly. Which is why Obama came up from no where so fast.
Lots of things are being orchestrated, and lots of people are giving blind support to those speaking the language. Lots of money from around the world is flowing in and everything is heating up like we haven’t seen in our lifetimes unless we are really old.
Obama’s brand of liberalism seems most interested in the appearance of fairness, and appears to view the economy as a zero-sum game. To help some people, you must take money away from others. The idea of a rising tide floating all boats–or of a capital gains cut stimulating the economy in a way that yes indeed, does benefit the rich but also benefits the entire financial system in a way that ultimately helps the middle class and even the poor–is often considered a nefarious and duplicitous scheme hatched by (who else?) the Republicans.
You really have nothing to go on. So all this is, is a combination of rationalizations from people picking up on the confusing stuff. along with some helpful writers who will feed their own ideas, and others who are fed lines from watching certain papers, and authors, and then go out and multiply that effect providing nice rationalizations.
Without history and study, you wouldn’t realize that they like a hammer and anvil effect, working a situation from both sides, to control everyone in the middle.
In Obama’s eyes, what could be more “fair” than to tax the rich and give it to the poor?
To tax the rich, give some to the poor and pocket the difference as it trades hands. In that way, socialism allows those in the state, to disburse more graft and money to each other and friends than would EVER be possible in a meritocracy in which the state was minimal and didn’t do that.
How else could Quinn in ny hide 50 million in fake front charities that they made up?
How could Obama and ayers distribute 100 million of our money to friends and such and make no progress?
How else can democrats give money to their family and friend if the friends couldn’t legally start a 501c corporation, and then get a huge socialist money injection? The scandals are much the same with them, and show a common lack of morals. What in the past was called moral imbecility, which today I think is referred to as sociopathy.
If one wanted do give away 840 billion tax dollars over 5-10 years to friends in foreign countries in a meritocracy, how could you? but in a socialist state, Obama can make a tax and redistribute/steal almost a trillion dollars of us labor and hand it out to his family and friends in Africa.
Remember, that’s social justice as he sees it.
“Whether or not this actually benefits anyone is… not important to him.”
It benefits someone: those people who’s votes he wants.
“I don’t consider it a scheme. I consider it just plain wrong. The U.S.A. has indeed gotten richer in the last eight years, but the middle class has not. It makes no sense to assume that larger amounts of money coming into a nation automatically means everyone in the nation is benefiting.”
Even lets assume you are correct (and you only are if you read articles that define “wealth” in odd ways) – so? Is the fact that somone didn’t get richer mean that everyone else can not? Of course – that right there is exactly what Obama means by “fair”. His supporters instantly realize this yet they (and he) know that they can’t really express that directly without looking like loons.
“That means that unrestrained capitalism in this modern environment only leads to greater inequality of wealth and therefore greater injustice. ”
You state that as if it is an obvious axiom – that because someone has more money than you there is injustice in the world. There is no evidence whatsoever presented, no arguments, just simply stating it as truth and going on.
Our individual purchasing power is as large as it has ever been. The wealth people have (in both money in hand and assets) is at the highest it has ever been and is continuing to rise – it is doing so across the board. The vast majority of our poor live better than the middle class did just 20 years ago. Only in the liberal and/or greedy jealous people is that “injustice”. I shudder to think what people will do when we have a real recession or a real depression (negative growth – all economies go through that from time to time) – as of now the complaint is that we aren’t gaining fast enough.
“Don’t ask me how to solve the problem, but hopefully you can see there is one.”
Yes, I see that there is one, but it isn’t the one you describe. I reminded of something my mother said recently after the news was reporting on some space mission we were launching – if they can do that why can they not get things like hydrogen powered cars or have home generators? That is the technology seems so good and so advanced that, coupled with a lack of education on things like principles of thermodynamics, they see the latter as being easy to achieve. Never mind that the conservation of energy means that one can not create some of it or that due to it being the smallest element that is *really* hard to create something smaller than hydrogen for efficient long term containment (never mind that economies can not work that way or never have in the past), everything else is so advanced it *must* be possible.
It makes perfect sense why Obama is so popular with this crowd – he is saying *exactly* what they believe and is doing it in a manner that they appreciate (obfuscating what is really intended).
“It makes perfect sense why Obama is so popular with this crowd…” Well put.
This crowd being those with a high school level of social-economic understanding. It never occurs to them that the application of “social justice” is terrible crime and injustice.
The inverted sense of “justice” (and, hence, injustice) never ceases to amaze: that someone who doesn’t complete schooling, shows no responsibilty, takes no advantage of the opportunities that this society offers should be expected to achieve the same level of wealth as someone who works productively, plans ahead, delays gratification in favor of a secure future, etc, is just absurd. Even worse is the idea that those who produce should be robbed in order to compensate those who don’t. That is injustice.
“Obama’s brand of liberalism seems most interested in the appearance of fairness”
This is not unique to Obama, but is the classic pose of the left. If any action creates the appearance of . . . fairness, diversity, equality, etc. then it is embraced. It doesn’t matter that the theory actually doesn’t work in practice.
Regarding taxes and fairness:
What Obama and many Washington types do not understand is that lowering taxes raises more revenue because it encourages economic growth. It is not a zero-sum game, but the pie gets bigger for everyone.
Hauser’s law (http://online.wsj.com/article/SB121124460502305693.html?mod=opinion_main_commentaries) demonstrates that tax revenues remain relatively constant at abour 19.5% of Gross GDP. The reason lower taxes generate more revenue is because there is more economic activity to tax.
The left doesn’t care. In the interest of “fairness” they would raise taxes and thus stifle economic activity. People would lose their jobs and the economy would be lethargic just like the economies in Europe. But that’s okay, because the left’s primary concern is the appearance of fairness and the appearanceof equality, not a healthy economy with benefits to all. So, they are willing to shackle the best and most successfull out of a misguided and politically correct abstract theory of fairness.
Remember as a simple example in 1993, the Democratically controlled congress passed a luxury tax on cars and boats above a certain price range. The result? The blue collar workers in these industries saw cutbacks and layoffs and many of them lost their jobs. But that was okay. because it’s “fair” to tax the purchases of the wealthy.
This is what socialism does; and who decides what’s “fair?” Why, the government, of course! . . . to each according to his need.
Everything I have read about Obama’s views of tax policy, economics, and finance draws me to the correct conclusion that he does not know what he’s talking about. He understands nothing about the modern economy and finance.
Whenever a business that is rationally run has to make a decision about whether or not to expand, bring a new product to market, open a new factory or retail outlet, or even make decisions about leasing vs. buying – today it’s done by numbers. That NUMBER is called the net present value of future cash flows. When you take an estimated future cash flow and discount it to the present part of the equation involves a cost of capital. It’s a discount rate that is determined by a risk-free rate of return and an after tax rate of return premium that is added to the risk free rate (which is essentially some proxy for U.S. government securities for the applicable number of years).
Anything you do to raise the cost of capital, makes those discounted to the present future cash flows a smaller number. Let me remind everyone here that job creation most certainly is a function of the process I just described. Anything that raises the cost of capital will shrink economic opportunity. How much is debatable, but it most certainly does happen.
Barack Obama, the people who advise him, and the people who support him seem oblivious to these things. He’s never run a business and has no understanding of the complexity of it all and how risk needs reward in order for risks to be taken. If you make risk cost more, well it means fewer risks will be taken and money is not invested productively. Obama lives in a world of zero-sum thinking, which is a typical mindset of the Left.
But, hey, if you want “fairness” just don’t be surprised if we go back to the days of the sixties and seventies – when there was very little business investment and expansion and unemployment was creeping upwards over time. If he thinks we need to go back to the days before Ronald Reagan, he should ask who it is who thinks that those were the good old days.
“This crowd being those with a high school level of social-economic understanding.”
Were it only them then I wouldn’t worry overmuch – that crowd really doesn’t matter. They may very well make up the majority of people (in fact *all* of us only have that level of education in most things) but they generally do not vote much. Either they are smart enough to know they don’t know or the reason they don’t know is that they were unmotivated.
The issue is that many, if not most, people out there consider themselves “average”. Everyone above them needs to be punished for justice, everyone below them just didn’t work hard enough. It doesn’t matter that a few years ago they were in the socioeconomic class that “didn’t work hard enough”, it only matters what they are *now*. This leads to the vast majority of people actively working in class warfare – I know of at least two multi-million a year income families that think of themselves as “average” and support legislation to tax rich people into oblivion. Well, that is until said taxes are seen in the new forms. It is …amusing… to hear them talk about it being unfair they are being taxed as only the rich are supposed to be and then blame it on republicans (they are old hippies from the 60’s).
A large portion of educated people think as such. The very top end realize that the dems are more easily buy able as their constituents will believe anything (or rather believe nothing except that the dems are great) and is why so many of the ultra rich support those that are going to “stick it to them”.
Education only does so much, greedy does WAY more. If your constituents constantly think that you are going to take from those above them and give to them then they are happy. In fact if you are vague enough their greed will allow them to rationalize it for a long time, though they eventually figure it out. It is a large part of the old saying: “if you are not a liberal at 18 then you have no heart, if you are not a conservative at 30 you have no brain”. Those ages aren’t necessarily 100% there but the sentiment is (one assumes that by 30 most have taken a good long hard look, though that is increasingly not so true until their 40’s or 50’s).
The concept of social justice is so vague and so robustly defies all attempts to clarify it, that the only reasonal choice is to abandon it completely.
I love the unfairness created by the quality of peoples life decisions determining their life reward. Anything else is grossly unfair in its rejection of human diversity and break away potential.
Der Neo,
Coincidentally there is a piece in The American Thinker which thoroughly supports your statement thatWhether or not this actually benefits anyone is, quite simply and shockingly, not important to him
Sorry. I didn’t get the URL for the American Thinker piece. It’s:
http://www.americanthinker.com/2008/08/obamas_lost_annenberg_years_co.html
I can’t find it now, but Gary Becker had a neat little reductio ad absudum on income inequality. He showed that the biggest factor in lifetime income was education, and argues that the increasing returns on education (knowledge economy and all that) are actually increasing income inequality. Therefore, if income inequality is something we must cure, we can do this most efficiently by taxing, rather than subsidizing, higher education and by ending student loans and grants programs. Extending it further, maybe we should preferentially fund Art History over Electrical Engineering, since the latter is more likely to raise one’s income over what a high school diploma would bring. (My undergraduate degree was in English Literature, but I overcame it.)
In personal terms, no one ever paid me for attending night school all those years; why should I pay someone else for my having done so? Seeing it expressed that way, “fairness” in income distribution looks kind of silly, doesn’t it? My fair share, as I see it, is the same portion of my income as everybody else’s, after allowing for what you need to keep your family fed. In other words, a flat rate with a realistic personal exemption.
Sorry, Obama, but life isn’t Tee-ball and we don’t all get prizes just for participating.
gcotharn wrote:
“cutting taxes has always juiced our economy and increased government tax revenue over previous levels… each instance provided evidence of the validity of the Laffer Curve. If anyone knows of a contra example, I would like to know of it also.”
Stimulating the economy and increasing government revenue are two very different things. There is tons of evidence that tax cuts stimulate the economy, but very little credible evidence that they raise revenue.
I mean, did any of you even read the Tax Foundation link that neo gave us? Here it is again.
These non-partisan tax experts tell us that “most estimates would say that we are currently on the left side of the Laffer Curve with respect to capital gains.” For those who don’t remember, the left side of the curve is where tax cuts lower revenue. The right side is where they raise revenue. Translation: Charlie Gibson was incorrect.
Alex: That’s what I saw in the link as well. What I wasn’t sure about was whether Obama’s proposals would put us over on the other side of the curve (maybe the answer is “maybe”?)
But my point was that Obama said he didn’t care, or at least indicated he doesn’t care. He also showed no understanding or awareness of the Laffer Curve in his answer—which doesn’t necessarily mean he knows nothing about it, but it means it’s a possibility. At any rate, he has made many statements about fairness being his tax goal. Now, I agree that fairness (and nonregressive taxes) is a good idea, but his definition of fairness seems to be income redistribution for the sake of income redistribution, hang the consequences.
Peter Says:
“I don’t consider it a scheme. I consider it just plain wrong. The U.S.A. has indeed gotten richer in the last eight years, but the middle class has not.”
To be honest, there has been very little change since they started taking those statistics… except that the middle class has a greater percentage of the national wealth today than when they started (an old trend).
Anyway, I do deny there is a problem. Percentages of wealth are relative. I may only have the same percent of wealth as a middle class person from the 1920s… but the relative wealth is much larger.. and I have a bigger house, better food, cheaper travel, et cetera than they did.
Same goes for the poor.. same percent but actually have better / more stuff with that same percentage…
Then we get into who pays the Fed income tax… the top 1% pay over 40% of it now… how exactly they are not paying their share.. I don’t know… and if we keep demanding more, eventually they’ll find a way to stop paying and the revenues will go down.
Sergey Says:
“The concept of social justice is so vague and so robustly defies all attempts to clarify it, that the only reasonal choice is to abandon it completely.”
Its just code for socialism…
These non-partisan tax experts tell us that “most estimates would say that we are currently on the left side of the Laffer Curve with respect to capital gains.”
Federal tax revenue isn’t just about capitals gains. It’s about something called net, and when capital gains produce more for the feds but decreases other income sources below what it increased, then you have an negative net even if the income from the capital gains is positive and can still increase.
Ymar,
Are you saying that a rise in the capital gains tax might have a negative effect on income, enough so that the negative income tax revenue effect dominates the positive capital gains revenue effect and the net revenue effect is negative?
Though this seems theoretically plausible, I know of no evidence to suggest this is the case in practice. The response of income to the capital gains tax just isn’t very large.
I must confess, I’m a little befuddled as to why commitment to the Laffer effect is so strong on the right. I realize that Reagan believed in it, but the evidence for it just isn’t there. (At least for “normal” tax rates. For tax rates of 70% or more, my money is on the Laffer effect holding. And no, I don’t believe Obama’s plan would put us over the hump.) The thing is, Republicans still have plenty of arguments for tax cuts without having to resort to the Laffer effect. I mean, tax cuts do stimulate the economy. I say, focus on the real positives and leave Laffer to the loonies.
I must confess, I’m a little befuddled as to why commitment to the Laffer effect is so strong on the right…. I mean, tax cuts do stimulate the economy.
The Laffer effect is important because it illustrates something that even common extortionists understand — exhorbitant demands will eventually choke off and dry up the very source of one’s coerced gains. Of course, for the extortionist, it’s all about staying just on the left of the peak, since he hasn’t the slightest care about reducing either the total amount of wealth accumulated (unless he can get his hands on it), nor about the rate at which it accumulates — for the common extortionist (like, apparently, some economic commentators) the only thing that’s important is whether he can still squeeze a few more drops of juice from his victim. For most other people, on the other hand, that’s … well, reprehensible. So it is about fairness after all.
Alex,
You say:
I disagree. Even you were arguing Laffer – in the paragraph immediately preceding – when you said:
It seems, to me, if income (i.e. the economic effect) responds in any way whatsoever, the Laffer Effect is validated. One can argue details about how slowly or how quickly the economic effect kicks in, but – in doing so – one is nevertheless tacitly validating the Laffer Effect. Please inform if I am somehow wrong about this.
I understand Laffer is a simplistic explanation inside a more complex reality, yet I argue it is valid.
~~~~~~~~~~~~~~
In the context of federal income tax: huge numbers of voters (and Senators and Congresspersons and Presidential Candidates) have never considered how the economic effect and the arithmetic effect play off of each other. Laffer is invaluable for educating these persons.
~~~~~~~~~~~~~
You say, in two different comments:
Thats is careful wording. Economics is a young science. Accurate analyzing is difficult. I could equally say I know of no credible evidence in the opposite direction. The preponderance of evidence suggests Laffer is valid. Again, please inform if you know of contrary evidence. I want to see it.
~~~~~~~~~~~~~
As for your scolding of us for not reading The Tax Foundation link, and for not knowing The Tax Foundation estimates we are on the left side of the Laffer Curve: I’m guilty. In my own defense: I was speaking of the economic effect inside the cutting of federal income taxes, and I did give specific examples: JFK, Reagan, GWB.
In response to your scolding, I also point out The Tax Foundation article is a not recommending a raise in the Capital Gains Tax – parenthesis occurred in the original text:
also: what Sally said.
neoneocon,
I want to make the case – at least to you – that “fairness” and revenue gathering for the government are not the really important issues. They aren’t because neither have the power to generate economic growth. If you raise the cost of capital, you get less investment. Less private investment means fewer jobs. That, in turn, has profound social and economic consequences for the nation.
I know it’s a truism, but it really is true. The Fortune 500 companies are net subtracters of jobs from the economy. It is small, young, growing companies that create most of the jobs. They are most sensitive to policies which raise the cost of capital. If you penalize risk, you get less of it. Less risk = fewer jobs = less overall prosperity.
I work in the investment business. I analyze the banking and retail sectors, so I understand how this stuff works.
I understand that there are disgruntled people out there. They see corporate America downsizing them out of existence and moving jobs to China. But the fact of the matter is that the jobs and industries moving to cheap labor countries are companies and industries that are well into the mature stages of their business models, products, or company cycles. Their margins are shrinking due to competition BEFORE they even move away. They move because there is only one way to achieve profits: cutting costs. They can’t raise their prices and their market shares are slimmed down because of competitors with similar products.
So, the only way to obviate what has been happening on that front is to create an environment where new products, business models, and companies can grow and thrive. Small companies typically have the highest costs of capital, because the equities’ markets and the banks demand a higher risk premium from them. So, anything that the government does that makes it more expensive to get capital in turn slows the potential of the economy.
And that is why the issue of “fairness” and the Laffer Curve are not relevant, from my standpoint.
Another way of looking at things:
I honestly believe that the tax code should be merely a way of raising the necessary money to carry out the legitimate functions of government. That is to say, maintain a stable currency, promote a fair and predictable system of justice, keep the roads and bridges in good repair, and make sure the barbarians stay on the other side of the river.
For those who say the tax code should be employed to achieve other socially desirable purposes, let me ask this: Would you instead be willing to subsidize this favored activity with an outright grant of money? Would your constituents support this expenditure? Looking at it this way, you might get very different answers. You may want to give tax credits for research and development, but would you like to write a check to Intel or Merck? You may say that you want to make sure that all children get an equal chance at a quality education, but would you agree to a 50% surcharge on private college tuition to pay for state colleges? Dollar for dollar, these are the exact same outcomes. The only difference is how they are packaged and marketed.
What Fred said also. I like having it all ways!
But, mainly, just get the government out of the way and let free market opportunity work.
Jonah Goldberg:
“It seems, to me, if income (i.e. the economic effect) responds in any way whatsoever, the Laffer Effect is validated… Please inform if I am somehow wrong about this.”
Gcotharn, I think that you are wrong about this. Any economist worth his or her salt will tell you that people respond to incentives. If you raise taxes by 10%, tax revenue will go up by something less than 10% (like 9%, or 8%) because people will respond to the decreased incentive to earn money by working less. That is economics 101 and very few people dispute it.
The Laffer effect says that if you raise taxes by 10%, tax revenue will change by -1%, or -2%: something less than zero. The incentive effect will be so large as to completely dominate, and more than cancel out, the direct effect of increasing the tax rate. So whether the Laffer effect exists is really a question of the size, rather than the existence, of an incentive effect. I believe, and the majority of economists today also believe, that for normal tax rates the incentive effect is not nearly large enough to cancel out the direct revenue effect.
Alex: The Laffer effect says that if you raise taxes by 10%, tax revenue will change by -1%, or -2%: something less than zero.
No, it doesn’t. That’s why there is such a thing as a Laffer curve, and why there’s a “left side” of the curve as opposed to the right side of the curve. (This statement is also why Alex needs to take a refresher course in Economics.) The “Laffer effect” says that, so long as you stay on the left side of the curve, you can still squeeze a little more total revenue out of your victims, even at the cost of reduced total wealth. It’s the reduced total wealth, of course, that validates the Laffer effect, for anyone other than the moral equivalent of the extortionist.
Alex Says:
“The Laffer effect says that if you raise taxes by 10%, tax revenue will change by -1%, or -2%: something less than zero.”
It says this at certain comparison points. Like between 40% taxation and say 90%. And it is right…
Uh, no Sally.
From the original post:
“Charlie Gibson of ABC noted that the empirical evidence indicates that increasing the capital gains tax tends to lead to a decrease in actual revenue collected”
Gibson’s statement was that an increase in the tax rate (like say by 10%) leads to a decrease in revenue collected (equivalently an increase of, say, -2%). Gibson’s statement is extremely typical of what conservatives mean when they say they believe in the “Laffer effect.” It is specifically the claim that we are on the right side of the Laffer curve.
More reasonable economists see nothing wrong with the concept that a Laffer curve exists. (The Heritage Foundation’s page on the Laffer curve notably quotes Keynes’ theoretical description of a very Laffer-like effect.) The objection is that the peak of the Laffer curve is very far to the right (like at, say, an 80% tax rate) and we are definitively on the left side of it, were higher taxes do indeed raise more revenue. Someone who “believes in the Laffer effect”, like for instance Charlie Gibson and perhaps a number of you, is effectively making the claim that the peak is much farther to the left, like at a 10% tax rate.
All economists agree that a non-zero tax rate is distortionary. Agreeing to this does not “validate” the Laffer effect, any more than saying the Laffer peak is at 90% validates it. In other words, the theoretical concept is not itself under debate. The real bone of contention is the location of the peak.
Seems to me the problem with concepts like the laffer curve is that we lose sight of whats right and just, and instead head down the road of assuming govt even needs or deserves such a thing as a maximizable amount of money from citizens.
Uh, no, Alex.
a) Charlie Gibson is hardly representative of “conservative” opinion.
b) By the “Laffer effect”, conservatives, along with “more reasonable” people of all stripes, simply mean that there exists a point, within sight of current tax rates, beyond which a further increase in rates yields a decrease in revenue.
c) Conservatives, again like reasonable people, tend to regard a word like “distortionary” as a laughable euphemism — anything and everything is “distortionary”, but non-zero tax rates on capital gains tend to be a little more harmful, in that they reduce investments needed to create and sustain the wealth that supports us all.
Regardless of the location of the peak, in other words, the real bone of contention is whether trying to wring a few more dollars in tax revenue is worth the damage done to the economy, quite apart from the manifest unfairness of it.
The BIG PICTURE, folks, ought not to be an arcane debate about the Laffer Curve. I’m concerned about the general welfare of the people and the nation. You kill prosperity when you penalize investing and saving. “Fairness” be damned. I grew up during the sixties and seventies, as one of the younger Baby Boomers. Do any of you know what it was like to try to find a job during those days? For us high school and college kids, and even recent college grads it was brutal. THERE WAS NOT ENOUGH INVESTMENT AND RISK TAKING. Marginal tax rates were high. Taxes on investments and dividends were high.
If you want economic stagnation, then by all means do obsess about “fairness” and revenues for the government. I think economic stagnation is unfair. It robs people of a future. It reduces the populace to various interest groups pleading with the government for more welfare and long term unemployment benefits.
You want to see what the future holds if you keep on taxing capital? Look at Europe. High long-term, structural unemployment. Very few small, growing companies. And the people reduced to groveling before politicians to promise more government teat.
I don’t think that’s fair at all.
Sally, if these are your opinions then we are fairly near to agreement. My point was that Charlie Gibson is wrong and we are safely on the left side of the curve. And that conservatives ought to leave Laffer aside and focus their arguments on more realistic benefits of tax cuts, such as economic stimulus (i.e. removal of “distortion”).
P.S. We probably still aren’t in agreement about the level of the optimal tax rate(s), but that’s a separate debate for another day. (I think there are plenty of types of government spending that are plausibly more valuable than the harm caused by the distortionary taxes needed to fund them, which I believe is often overstated.)
P.P.S. Is everything distortionary? Not Pigovian taxes, which actually correct the distortions caused by externalities.
Alex, let me take a shot at explaining Laffer, and perhaps you’ll see where your perfectly accurate observation leads you astray:
Laffer’s famous U-shaped curve was only the first step in the point he was trying to make. He used it to show (as you said) something that at that time was totally counterintuitive: That when a government raises tax rates by X percent, the increase in tax revenue is *always* less than X.
One reason for this–which you seem to know–is that as the taxman takes a larger percentage of income, people who work for a living start deciding that there’s very little benefit to their working harder.
Also, taxpayers start setting up cumbersome but legal methods to reduce taxes. Others drop out of the visible economy altogether, making their living in invisible (and untaxed) ways.
Accordingly, at *some* tax rate, increasing the rate won’t reap *any* extra tax revenue, because a two percent hike in rates causes an identical drop in reported taxable income–as you seem to agree.
Now, you *believe* our federal tax rate is well left of the flat part of the revenue curve described above–and I actually agree. But here’s the kicker: A few of those taxpayers who decide to work less if tax rates rise are entrepreneurs–they turn ideas into reality, and eventually create jobs.
Change the annual growth rate from, say, 2 percent to one percent, due to less entrepreneurial activity. Compound for, say, ten years. Compare the two end-points.
So it’s not just the *initial* lessening in economic activity that puts the power into Laffer’s analysis. But that was too much to fit on a napkin (as the story goes).
sf Says:
“Change the annual growth rate from, say, 2 percent to one percent, due to less entrepreneurial activity. Compound for, say, ten years. Compare the two end-points.”
Yep… just look at the US vs. Europe since 1980…
P.P.S. Is everything distortionary? Not Pigovian taxes, which actually correct the distortions caused by externalities.
Every rain shower is “distortionary”; every raised eyebrow is an “externality”. Pigovian taxes, in the defined sense, are merely a fantasy.
The idea, however, is very susceptible to an unfortunate, even sinister, temptation to want to “engineer” human societies, as though the individuals making them up were mere cogs to be manipulated as the designers will. With this, we’re certainly beyond notions of “fairness”, I think, but just as certainly not beyond moral notions of right and wrong.
In Britain, health care policy is also about “fairness.”
For example, if you’re dying of cancer and your have means, you have two choices:
Buy the drugs that will prolong your life with your own money, and lose your national healthcare benefits that pay for everything else (C-T scans, dental care, etc.).
Or, in the alternative, forgo the drugs and die.
And the Brits justify this in the name of “fairness.” I shit you not.
sf wrote:
Laffer’s famous U-shaped curve was only the first step in the point he was trying to make. He used it to show (as you said) something that at that time was totally counterintuitive…
This just isn’t correct when it comes to economic intellectual history. The idea that if taxes go up by X% revenue goes up by less than X% wasn’t counterintuitive at the time—it was standard belief. Laffer certainly didn’t originate the notion. Laffer’s “contribution” was the erroneous claim that in practice when you raise taxes revenue goes down. So please don’t give him credit for other people’s ideas.
Change the annual growth rate from, say, 2 percent to one percent, due to less entrepreneurial activity. Compound for, say, ten years. Compare the two end-points.
Definitely, I agree, this is how growth works. But what isn’t obvious is that the growth-maximizing level of taxation is zero. A lot of government spending may actually raise the growth rate. To take an example dear to conservatives, spending that preserves property rights and the rule of law (think police and courts) almost certainly increases the growth rate more than the taxes needed to pay for it decrease the growth rate. Just saying that growth gets compounded doesn’t really prove much — we still need to know what sorts of spending help economic growth more than they hurt it. Another good candidate: education spending.
Sally wrote:
Every rain shower is “distortionary”; every raised eyebrow is an “externality”. Pigovian taxes, in the defined sense, are merely a fantasy.
Now you’re starting to sound positively nihilist and post-modern. Don’t you believe that economists can know anything? There is nothing particularly fantastical about externalities, nor taxes and subsidies meant to correct them. Of course we don’t want to go down the slippery slope of thinking that every market failure is correctable through government action, but still I’d put good money on the proposition that a $20/ton carbon tax gets us closer to the Pareto frontier than the $0/ton tax we implicitly choose by doing nothing. And if we can use the revenue from a Pigovian tax to lower other tax rates (capital gains, anyone?) then the plan’s a double winner from an efficiency perspective alone. Just because government intervention can sometimes go wrong doesn’t mean that doing nothing is always better than doing something. That’s black-and-white thinking, in my opinion.
Just because government intervention can sometimes go wrong doesn’t mean that doing nothing is always better than doing something. That’s black-and-white thinking, in my opinion.
Well, not just “black-and-white thinking”, it’s obtuse — and it’s not what I said. But “Pareto frontiers” are just the same sort of theoretical fictions as “Pigovian taxes”, and give rise to the same sort of technocratic abuse. In textbooks and academic monographs individual human beings can be abstracted out of the picture entirely, and the economist can indeed imagine that he/she knows what’s best — or rather, what’s “optimal” — for the system. But trying to impose that sort of god-like perspective on the real world is not just hubristic and prone to massive breakdown, it’s morally wrong. Governments exist not to achieve some mythical Pareto optimality (which in practice, of course, is always just some bureaucrat’s/politician’s/”activist’s” version of “optimality”), but to address particular society-wide problems that other institutions cannot. Which leaves us with the usual political muddle, it’s true, but at least without the technocratic veneer to cover an old but recurring lust for power and control.
Sally,
A little while back you told me I needed a lesson in economics, and now you’re telling me that all economics is just meaningless abstraction…?
Personally, I see meaning in the abstractions of economics, and believe they can tell us important things about how best to organize society. It’s perfectly fine if you disagree — a lot of people do. But I object to the practice of employing economic mumbo-jumbo when it supports one’s beliefs (see Laffer curve) and rejecting it when it doesn’t (see Pigovian taxes).
… and now you’re telling me that all economics is just meaningless abstraction…?
No, Alex, I’m not. The trick is to be able to distinguish mumbo-jumbo from real-world theory. A Pigovian tax is a good example of a theoretical construct that has no valid practical application because it depends upon another notion that can only exist in theory — system-wide, objective optimality. The Laffer curve, on the other hand, is a good example of a theoretical construct that can be tested against reality, and hence can be a useful contribution to practical policy debates.
Fwiw, by the way, you too are quite free to disagree — but you should try to be more clear about what it is you’re disagreeing with.
Alex,
Your main claim, so far as I can tell, is this:
First: You haven’t made your case, imo. Maybe your case is too complex to make within the strictures of this comment thread.
Second: Is it possible you agree with Laffer yet disagree with the underlying economic assumptions which most often drive the plotting and intersecting of his curves?
~~~~~~~~~~~~~~~
You say:
Beyond our agreement that some of a nation’s wealth must be spent to protect life, liberty, and pursuit of happiness: we further agree that someone has to decide how to deploy the remainder of a nation’s wealth.
Someone or something has to decide. Your second largest claim arises at this point: you effectively claim smart persons in the government are the most efficient deciders of how to deploy that remaining wealth.
I disagree. The free market is a more efficient decider.
Does my heart go out to people who – in a free market economy – have less economic success than other people? Sure it does. I love those people.
Their best opportunity for economic success occurs inside a robust free market economy – including inside localized private initiatives.
Their worst opportunity for success is through legislative spending which comes out of a centralized government.
Jonah Goldberg:
In my post above, my blockquoted assertion of Alex’ “main claim” was my own summary of his words.
Most of Obama’s young supporters were either not yet born at the time or were too young to know or understand what the economy was like when we penalized risk and capital at higher rates. There was one brief period during the Carter administration when unemployment did get under 6%, but it got there because a Burns’ Federal Reserve made Bernanke’s Fed look staid and restrained. And still we lost jobs and there was not enough investment in order to absorb the enormous number of Baby Boomers coming into the job market or trying to get ahead after they got inside it.
There was a supply problem with oil and a huge bubble in commodities because of the very lax monetary policies pursued. Eventually, it all came to a head late in the Carter administration in a profound way.
Obama’s young supporters mostly are deficient of solid background in history and economics. These kids are the ones who will suffer the most from a stagnant economy that will ensue if they approve of penalizing risk capital. His older Boomer supporters are mainly Leftists who have government and education jobs, hence they feel secure in an environment where government takes more to redistribute it.
It will all hurt the people who most need opportunity: the ones they think they are trying to help.
CFB Says:
“In Britain, health care policy is also about “fairness.””
I tend to call it forced equality.
sorry my post was so long…
but here is more to confirm some of the stuff i was saying…
like fredhjr i am conscerned with the big picture, everyone here gets caugt in local minima and cant see past the thing discussed to see how all these facets fit together.
ibdeditorials.com/IBDArticles.aspx?id=302137342405551
Barack Obama’s Stealth Socialism
Election ’08: Before friendly audiences, Barack Obama speaks passionately about something called “economic justice.” He uses the term obliquely, though, speaking in code – socialist code.
this is just so you all (if you bothered to read my long post), dont think i am nutty and imagine secret codes, when its well known that the socialists have talked in codes here for nigh 75 years.
“we’ll ensure that economic justice is served,” he asserted. “That’s what this election is about.” Obama never spelled out the meaning of the term, but he didn’t have to. His audience knew what he meant, judging from its thumping approval.
It’s the rest of the public that remains in the dark, which is why we’re launching this special educational series.
“Economic justice” simply means punishing the successful and redistributing their wealth by government fiat. It’s a euphemism for socialism.
In the past, such rhetoric was just that – rhetoric. But Obama’s positioning himself with alarming stealth to put that rhetoric into action on a scale not seen since the birth of the welfare state.
that there are many terms in which the mass public is unaware since they dont read the papers where such things are discussed. they are given the terms, but not the definitions, and if the definitions are constructed from the terms, they mislead the person into thinking that they are about other things that the person generally would not be against, and not for socialism.
Obama also talks about “restoring fairness to the economy,” code for soaking the “rich” – a segment of society he fails to understand that includes mom-and-pop businesses filing individual tax returns.
It’s clear from a close reading of his two books that he’s a firm believer in class envy. He assumes the economy is a fixed pie, whereby the successful only get rich at the expense of the poor.
Following this discredited Marxist model, he believes government must step in and redistribute pieces of the pie. That requires massive transfers of wealth through government taxing and spending, a return to the entitlement days of old.
Of course, Obama is too smart to try to smuggle such hoary collectivist garbage through the front door. He’s disguising the wealth transfers as “investments” – “to make America more competitive,” he says, or “that give us a fighting chance,” whatever that means.
While at Harvard Law School, he still found time to hone his organizing skills. For example, he spent eight days in Los Angeles taking a national training course taught by Alinsky’s Industrial Areas Foundation. With his newly minted law degree, he returned to Chicago to reapply – as well as teach – Alinsky’s “agitation” tactics.
(A video-streamed bio on Obama’s Web site includes a photo of him teaching in a University of Chicago classroom. If you freeze the frame and look closely at the blackboard Obama is writing on, you can make out the words “Power Analysis” and “Relationships Built on Self Interest” – terms right out of Alinsky’s rule book.)
=======================
Obama joined Wright’s militant church, pledging allegiance to a system of “black values” that demonizes white “middle classness” and other mainstream pursuits.
(Obama in his first book, published in 1995, calls such values “sensible.” There’s no mention of them in his new book.)
when you discuss the points as if this is still a meritocracy, your being led by the nose, since that discussion was actually never on the table.
obama does not want a discussion as to any validity, he just wants compliance and deniability so that appearing to make an attempt to fix something never is held against the merit of was if fixed.
this is a game of codes, and such.. not a game of real debate and we forget this.
the time for debate is in the years between elections. thats when we should find out what social justice is, what liberation theology is, and so forth…
and then steel ourselves agasinst accepting snake oil salesmen pushing those cures.
now is the time to hear the codes and the tag lines and to swarm to the side promoting what you think yuo want.
for the left thats communism. a benificial nice communism, that has never existed, for good reasons. (mainly because its a beuracratic feudal state).
i am sorry i am so long… there is so much that people here just ignore as if it doesnt exist.
that there are state intereferences, that there are spies and operatives, that russias archives have shown they have been VERY active for 75 years and funded by the societies that they take over and complicity in the state socialists giving out billions to things like acorn.
that ayers, and alinksy, and wright, and frank, adn all the others were die in the wool communist reds of the russian kind.
which then makes obama cut from teh same cloth. evne more so when one knows the code terms that they use in their own writings to let one know that the REAL thing they are promoting is X, while talking about Y, Z, and R…
sigh
my inability to be articulate enough prevents my being taken better in discyussion. it doesnt mean i am not talking about valid things.
in fact i am talking about valid things that are even scarier than the presumption of not understanding the laffer curve. but imply understanding and a purposeful intent to use the curve to create crisis.
recuse to consider that the worst people have to compete with the best and hide their ulterior motives.
If you’re interested in misery,
1- always try to look good in front of others;
2- always live in a world of assumptions and treat each assumption as though it’s a reality;
3- relate to every new situation as if it is a small crisis;
4- always live in the future or the past; and
5- occasionally stomp on yourself for being so dumb as to follow the first four rules.
W. W. Broadbent
“We were making the future, he said, and hardly any of us troubled to think what future we were making. And here it is!”
H. G. Wells
here is what the founder of the ACLU said:
“Do steer away from making it look like a Socialist enterprise…We want also to look like patriots in everything we do. We want to get a good lot of flags, talk a good deal about the Constitution and what our forefathers wanted to make of this country, and to show that we are really the folks that really stand for the spirit of our institutions.”-Baldwin
if you dont know this, how useful are your plans, ideas, and other things? does something like this change your idea of why the ACLU fights for what it does, and ignores other things?
and then to know that such ways and means were spread across the whole polity?
On January 17, 1931, the Special House (of Representatives) Committee to Investigate Communist Activities in the United States issued a report which stated the following:
“The American Civil Liberties Union is closely affiliated with the communist movement in the United States, and fully 90% of its efforts are on behalf of Communists who have come into conflict with the law. It claims to stand for free speech, free press, and free assembly; but it is quite apparent that the main function of the ACLU is to attempt to protect the communists in their advocacy of force and violence to overthrow the Government, replacing the American flag with a red flag and erecting a Soviet Government in place of the republican form of government guaranteed to each State by the Federal Constitution…Roger N. Baldwin, its guiding spirit, makes no attempt to hide his friendship for the communists and their principles.”
so how can we regard everything as if this darker half doesnt exist at all… i am using the aclu as an example, but there are literally hundreds more.
acorn today would be a current example even though the aclu is still doing the same things.
Obama can and would never be able to say straight out what he wants, what he proposes, or what he intends to do. he is what is referred to as a crypto communist…
and as such… speaks in the codes that make the ignorant stay that way, chasing false things, when dialoging to consensus insures that their discussions are meaningless and the outcome predetermined. This code also allows his supporters to glom onto him
thats how come all over the world everyone is piping up in support. their programming is to support those in power that use the code terms.
they stress them, they repeat them, and like neo above, if accepted as face value, you waste your time arguing merit,when its not even on the table!
> I don’t consider it a scheme. I consider it just plain wrong. The U.S.A. has indeed gotten richer in the last eight years, but the middle class has not.
Horse crap. Flat out horse crap.
Median Individual income is up by 50% from 20 years ago. Even adjusted for (the fairly low) inflation, it’s still a huge increase in only 20 years.
I suggest you try to use a different orifice for talking.
Social Justice: Code for Communism
http://www.discoverthenetworks.org/guides/Z-Social%20Justice-Code%20for%20Communism.htm
and below is a leftist complaining about all the codes and an example.
I’ve been loosely involved on the far-left for about four years now and I’m only getting used to the jargon and the alphabet soup of different groups.
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Not only is a variety of impenetrable terms deployed but a lot of these are used wrongly which is even more confusing. For example, the term ‘ultra-left’ is generally used by socialists and communists as a mild term of abuse for anyone advocating anything even slightly to the left of an individual’s own politics. I’ve heard Labour Party members use it to describe anyone who wasn’t a member of the Labour Party, members of my own party use it to describe socialists who disagreed with us about current events in South America none of which makes any sense.
Ultra-left groups do exist, such as the International Communist Current, and the ultra-left refers to the collection of political tendencies that historically were to the left of the Bolsheviks in Russia, left communism, council communism, autonomist Marxism. Not that it matters but the ultra-left refers to the groups who disagreed with the positions decided at the Third and Fourth Congresses of the Communist International. If people insist on using jargon and archaic language, they can at least get it right.
there are literally tons of sentences, catch phrases, and slighly changed phrases that are mantras of communisms conversations with the west in speaking codes.
it actually helps build cache and such as those in the know, feel they are part of some movement, something special. and those on the out, appear stupid to them.
socialists talk in war terms… the war against poverty, the war against drugs, the war against wars, etc. / they like terms like revolution, revolutionary, marches, struggles, battles, crisis…
todays phrases are the old ones with some new ones, liberation theology, social justice, justice, reform, diversity, equality (so that we push equality of outcome rather than equality before the law)..
disciples who understand the sterile language of socialism are programmed to respond the same way using the exact same words. If one were to ask better educated core supporters three questions, they will each respond exactly the same way, using the exact same boring ideological words and phrases. That is an indication of brainwashing and indoctrination.
this is why they all sound the same and cant argue merit. they are not knowlegeable in the facts, they are knowlegeable, like confucians on the right customary response as dictated by their leaders. and so they apply that and the language.
LANGUAGE is key.
after all, what is communitarian, other than the concatenation of communist totalitarian?
language is key
Education of a Patriot
http://www.time.com/time/magazine/article/0,9171,934288,00.html
with the study of Russian compulsory in all grades of primary and secondary schools, pupils are required to spend more time learning “the language of socialism” than any other subject except Hungarian language and literature.
they have a language, its consistent, and its used as a weapon. the article above is from 1949… and they talk of the language of socialism…
and those in the US, unless part of the issue, are usually totally ignorant of it.
which makes them vulnerable to waste their time arguing decided points because of a designed language game!!!
heck without that you cant learn the strategy of communism from above (politicians) and communism from below (grass roots), and how they seek to crush the people between both of them.
It might be more illuminating to see the dividing line between the conservatism of an old left and the radicalism of a new left as an issue between a politics from above and from below. Among the new left there continued to be a quite fluid debate about the appropriateness of continuing with the language of ‘revolution’. Parts of the ‘new left’ proved perfectly capable of stepping back across the divide and rejoining the ‘old left’ (in the shape of the Communist and social democratic parties). The new feminism or sexual permissiveness, for example, was not automatically linked to anti-authoritarianism or to ideals of self management.
In the middle way / Colin Barker
rather than have uniforms to denote who they belong with, they have language. that way they acn appear in any context and place, from bikers, to politicians, and appear so different, but talk exactly the same talk.
here is a classic code… marx spoke of alienation, everyone today uses it as if they are talking about medical alienation, but in the language of socialism, alienation is actually something else. its interesting reading leftists use the term the wrong way and use the wrong way to justify something, never having enough actual knowlege to actally be proficient in what they are talking about.
the language allows them to SOUND proficient.
Political language — and with variations this is true of all political parties, from Conservatives to Anarchists — is designed to make lies sound truthful and murder respectable, and to give an appearance of solidity to pure wind.
George Orwell, “Politics and the English Language”, 1946
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The great enemy of clear language is insincerity. When there is a gap between one’s real and one’s declared aims, one turns as it were instinctively to long words and exhausted idioms, like a cuttlefish spurting out ink.
George Orwell, “Politics and the English Language”, 1946
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The quickest way of ending a war is to lose it.
George Orwell, Polemic, May 1946, “Second Thoughts on James Burnham”
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Doublethink means the power of holding two contradictory beliefs in one’s mind simultaneously, and accepting both of them.
George Orwell
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So much of left-wing thought is a kind of playing with fire by people who don’t even know that fire is hot.
George Orwell
Alex wrote with confusion, “My reading of the economics literature is that there is virtually no evidence for a Laffer-curve type effect for realistic tax rates.”
Reading your first post indicated to me that you were confused as to the topic being about “capital gains taxes” not income tax rates….
I read subsequent posts to see if your mind got clearer but got tired with it.
EVERY time for over 50 years that the capital gains tax rates are reduced the revenue flows into the government go UP. To ask for us to show you this is laziness on your part to be blunt.
Do not be confused and lump in income tax rates when the topic is capital gains tax rates.
Additionally, the reverse is true. When capital gains tax rates are increased the revenues from capital gains is reduced….
The reason for these reactions has almost NOTHING to do with the Laffer curve – no similarity to income taxes… Yes, the Laffer curve should be recognized by the left because they seem incapable of understanding that increasing income tax rates does not equal a STATIC increase in revenue into the government but again….. THE TOPIC was capital gains taxes…
To be helpful… When capital gains tax rates are reduced.. enterprises, home owners, individuals realize more of their gains and they make the determination more often that NOW is the time to sell their capital. Capital flows faster. When capital gains tax rates are high the reverse is true. More people hold onto their capital because there is no gain to selling when it will simply be eaten up by taxes.
Let’s take farm equipment or houses for example. If an investment into farm equipment or houses have increased over the years so that it is worth twice as much ($200,000 versus $100,000) when capital gains taxes are high there is very little benefit to offloading the capital. Capital is frozen. Doesn’t move. When capital gains taxes are reduced – indivuduals and entities are likely to gain from their investment more and therefore capital moves more often.
This is why in history in the U.S. every time capital gains tax rates are reduced the government sees a flurry of revenue and the economy improves. There are TWO benefits to reducing capital gains taxes that leftists seem NOT to understand:
1) government sees a short term flurry of revenue for a few years as capital starts moving
2) The movement of capital is a catalyst towards economic activity and job creation. More employment is a LONG term revenue booster because more tax payers are paying income taxes and it lessens the burden on government as less people are dependant on the government.
Wouldn’t you say mr. alex leftist that point number two is Fair? 😉 Or would you LIKE for more people to be dependant on government ?? 😉
Artfldgr,
I appreciated your posts. I know they are long and I don’t have time to read everything, but I get most of it. My frustration with this topic stems from the fact that some people miss the forest for the trees. Arguing the Laffer Curve and government revenues, while strictly adhering to the topic as neo set it up, completely misses the most important thing: the overall prosperity of the nation and the dynamism of its economy. I am quite familiar with the Laffer curve debate, as it was all the rage back when I was an economics major at UNH (1978-82). But by the time I had matriculated into BC’s MBA program in 1987, after I had left the seminary, it quickly became apparent to me that the Laffer curve and the debate about it miss the point. Maximizing revenues to the government is not what our country is about. Maximizing opportunity and prosperity for our people IS the important point. Learning the mathematics of investing and evaluating risk, quantitatively and qualitatively, gives one the correct context for understanding the nature of the problem.
FredHjr wrote, “Maximizing opportunity and prosperity for our people IS the important point.”
You maximize ‘opportunity’ by allowing capital to move more freely by taxing it less. More jobs are created by entrepreneurs and companies.
Investments lead to opportunity.
Yes, that is the important point. 🙂
It is for the reason I state above that liberals/leftists have to resort to making the accusation and erroneously that reducing the capital gains tax rates reduces revenue into the government. Liberals and leftists try to appeal to people with class warfare and those who STUDY the issue see that liberals/leftists have it wrong on ALL fronts.
Opportunity would be realized with reductions in income tax rates, capital gains tax rates and estate tax rates.
As the economy expands, yes, opportunity is realized. 🙂
thanks for the kind words fredhjr!! i wish i could be more brief, but since there is so much that is not commonly known, i end up in these long things rather than just references.
if we talked about ballet with neo, we would not have to define everything nor expand on every point for understanding.
but when your talking and referencing history that most are not aware of, what can one do?
you are right as to the premise of taxes, and your point indicates or draws into relief the fundemental change that happened to the state once socialism came on the scene.
i will bring this up again later at a hopefully opportune point, but will say just a tiny amount here.
that if socialism is justice, and capitalism and other things outside of that are to blame for the bad, then the system will not stop till all is totally controlled.
the reason being is that in order not to do that we would have to be happy with having a partly ‘bad’ system. since we are no longer capable of that, the system eventually becomes totalitarian in ALL versions. its only a matter of time.
even bakunin said so, and said woe to the people on the bottom in the two class communist system. and did so decades before the russian revolution brining such evil pragmatnic system devoide of morals into the world.