"I think you make a good point in principle, but I don't think you can govern by eschewing any approach that in the extreme could lead to tyranny."

I understand. But you and I had a go-round about the growth of non-defense spending. At the rate it has been growing, and you add on Obama's budget, my concerns about out of control spending, I think, are valid in spades. That of course, leads to funding (taxing) and tyranny. I always relate issues like this to running businesses. And the "don't worry be happy" approach is how I've seen businesses get into trouble. Blink, and you have a problem.

"Demagoguery is a huge problem in a democracy. People will vote for the man who promises tax cuts to 95% of the population, sure."

Ever since William Jennings Bryan.

"It is also demagoguery to claim -- as have many Republicans -- that tax cuts increase revenue, which is the ultimate free lunch promise."

I dispute that, but its for another day.

"Anyway, I think there is a useful debate to be had here about demagoguery, the problems of a 50%+1 coalition taxing the other 49.99%, etc. But we won't get to a productive consensus if we either (a) spend all our time insulting each other or (b) insist that there is a clear moral equivalence between increasing taxes on the wealthy and Auschwitz."

I said it was a sleazy, snarky response, Bernard....for effect. But it was your words: "after all, they are a small minority" that started it. Do you really believe, that if given an opening Team Obama would not have us at 70% marginal rates? That would be a disaster. Here's a much more benign approach to the point: democracy and tax policy is like 5 wolves and a lamb deciding what's for dinner.

"From my perspective, I think an "undue burden" test -- qualitative though it is -- is worth considering. Are the wealthy -- and again, for better or ill, I guess I am in that category -- hurting? Are they hurting as much as working families making $42k a year? If the choice is my kids getting stuck with the bill for our spending or me and my wife getting stuck with higher taxes, that's actually an easy choice. I'll pay extra now."

Here is our point of departure. First, is there an underlying reason family A vs family B is hurting? Avoiding that argument to be "nice" is a problem. And again, I have seen this in businesses for about 18 years now. If you simply capitulate, and fund the spending ("after all, we are a democracy" or "we just have to pay our bills") then I flat damned guarantee you spending will not be corralled. I guar-own-tee.

"I wish we could cut spending... but spending is social security, medicare, medicaid, defense, and interest on the debt. Everything else -- all the earmarks and moose DNA studies and overhead projectors -- taken together is pretty small potatoes. I don't think we can do much about cutting Social Security for political reasons. I would oppose significant cuts in health care spending absent massive reforms in the whole sector, which again is tremendously difficult to achieve. I think we could trim defense a little... but not enough to make a real difference if we want to maintain our current foreign policy commitments. So... there you go. We have to pay our bills."

See comment above. In previous posts I have snidely remarked that if a manager gave me that response (and they do) I would find a competent one. All I am trying to point out is that it appears that the only entity on the face of the earth that doesn't have to deal with budgetary realities is government. Talk about tyranny.

"the only question is who pays them. And from my perspective, there is room for the wealthy -- who admittedly already pay much more than their fair share -- to contribute a bit more."

That's fine. That's a qualitative judgment. But seriously:

1) What is the definition of "a bit more."
2) Does "a bit more" have an outer bound?

Once you have laid the predicate you have, I can't see how "a bit more" has any upper bound.

Afterthought: In your worldview, what is the maximum fraction of a person's gross income that should be turned over to the state?

Regards,

"Live a long life, but try not to get old in the process."

Words to live by. Good luck with your knee. No matter how good the carver, its never the same.

How many manual laborers wake up at night worrying about next month's payroll or accounts payable? Hell, how many are worried about that as they drive home at 5. I know I am when I drive home at 7.

They are lying awake trying to figure out how they are going to buy clothes for their kid as the school year approaches and trying to figure out whether or not they can afford to get their kid braces and how they are going to replace tires on their car before the annually mandated inspection and whether or not they are going to get laid off and if they do how will they pay their mortgage.

Seriously- do you all really not know anyone outside of your own income level?

(daydreams...

GOP Base Wacko: "Evolushun and Global Warming are teh devil! Scientists are all telling Librul Lies! I didn't come from no monkey! Burning 450 trillion tons of coal can't possibly have any affect on anything!"

Scientific Community: "Until you have successfully run a research lab, written grants, hired, postdocs, performed experiments, and written up the scientific papers, we frankly don't want to hear another goddam word about what you think about our results...")

Yeah...I could get used to that kind of logic... :-)

Or, perhaps you should be banned from commenting on Obama, since you have never run the federal government, successfully or otherwise :)
Posted by anjin-san | March 9, 2009 | 05:55 pm | Permalink

Ouch! Anjin-san wins Comment of the Week.

Another key difference is that people who schlep boxes for a living don’t take their work home with them.

Tell that to my younger brother, who got lower back problems after ~6 mos on the job as a mover in Jacksonville.

I still have to figure out why on earth I have to pay a MD $200 to get a prescription for under the counter allergies (Allegra).

Are you willing to sign a document holding harmless the MD who, with only perfunctory questioning signs off on that prescription? Or extend to the mid-wife the same indemnity for delivering your child? How about extending it to the engineer who visits your house for an hour to evaluate structural ramifications of your upcoming kitchen remodel?

Another key difference is that people who schlep boxes for a living don’t take their work home with them. They’re not thinking about better ways to get a piano down the stairs on the weekend...

I don't know the percentages, and admittedly it could be small, but there are 'piano schleppers' who think, over the weekends, how they could provide more efficient schlepping at a marketable price.

There are doctors that started off as EMT's, there are engineers that started off building houses, and there are lawyers that started off as defendants.

Another key difference is that people who schlep boxes for a living don’t take their work home with them. They’re not thinking about better ways to get a piano down the stairs on the weekend or stressing about how much packing tape they’re using on the drive home.

Demagoguery is a huge problem in a democracy. People will vote for the man who promises tax cuts to 95% of the population, sure. Though, in the end, he did not get 95% of the vote, and indeed many people in the top 5% (myself included) voted for him knowing full-well we'd be paying more taxes. It is also demagoguery to claim -- as have many Republicans -- that tax cuts increase revenue, which is the ultimate free lunch promise.

Anyway, I think there is a useful debate to be had here about demagoguery, the problems of a 50%+1 coalition taxing the other 49.99%, etc. But we won't get to a productive consensus if we either (a) spend all our time insulting each other or (b) insist that there is a clear moral equivalence between increasing taxes on the wealthy and Auschwitz.

From my perspective, I think an "undue burden" test -- qualitative though it is -- is worth considering. Are the wealthy -- and again, for better or ill, I guess I am in that category -- hurting? Are they hurting as much as working families making $42k a year? If the choice is my kids getting stuck with the bill for our spending or me and my wife getting stuck with higher taxes, that's actually an easy choice. I'll pay extra now.

I wish we could cut spending... but spending is social security, medicare, medicaid, defense, and interest on the debt. Everything else -- all the earmarks and moose DNA studies and overhead projectors -- taken together is pretty small potatoes. I don't think we can do much about cutting Social Security for political reasons. I would oppose significant cuts in health care spending absent massive reforms in the whole sector, which again is tremendously difficult to achieve. I think we could trim defense a little... but not enough to make a real difference if we want to maintain our current foreign policy commitments. So... there you go. We have to pay our bills, and the only question is who pays them. And from my perspective, there is room for the wealthy -- who admittedly already pay much more than their fair share -- to contribute a bit more.

"But that wasn't the point."

Yes it is.

"Porter's point is that, the doctor and the anesthesiologist are quite rightly valuable, but their value is maximized in virtue of the organization in which they function--and the overall value of that organization, what gives it its competitive edge, is a matter of all the value-adding contributions of its components."

True enough. So it would be irrational for those on top not to make sure those not-so-much on top were happy and appropriately comped. It maximizes their interests. In my organizations, at least, they are.

"Management, here administrators, don't add as much value as the nurses and the doctors. As Greg House said of Cutty: She assigns parking spaces, I save lives."

A classic argument. As an investor, whenever I see an organization dominated by eggheads (sorry, my words - "high level and specialized professionals") - who all discount management and managerial practices, I run for the hills. They can be fine small businesses.....but very rarely more.

"BTW, the next time you're in hospital, let us know if it's the doctors or the nurses that have more to do with the hour-to-hour comfort of your stay."

When I had my cervical fusions I did my research and found - of all places - a world class neuro in my back yard. I asked him: "Nick, why are you here in Naperville, IL??" (He was trained at Miami, and Texas Back Institute) His response: "this is an absolutely great organization that let's me do my best work."

But I guess management doesn't matter.

Snark aside, here is totally unsolicited advice for anyone who bothers to read this. If you ever need serious spine surgery (and what spine surgery isn't serious?) look up Nicholas Mataragas. He's on the web. There's plenty of good doctors. But they come in from all over the world to see this guy's techniques.

I hope that doesn't offend our host, James. But that may be the most important thing I ever say here..................

Until Young Mr. Yglesias has successfully run a business I frankly don't want to hear another goddamned word about how hard he thinks I work relative to anyone else,

Well, you might want to take the radical step of not reading him if you don't dig what he has to say.

Or, perhaps you should be banned from commenting on Obama, since you have never run the federal government, successfully or otherwise :)

"Are you insane?"

Hold on a second, Bernie. Nope. I took my meds today. I'm A-OK. At least for now.

Bernard, haven't you figured out that hyperbole and slinging a little mud are my MO? We have to have some fun here, right?? Its too droll and self important otherwise.

Look, you can't just come here and make the statement: "they are just a small minority" and "tax their ass off because they are easy pickins" - OK, my words - and not expect a sarcastic rise.

But now seriously, do you really mean this?

"If I convince the majority of the population, then it may become law. If you convince them of the opposite, then it doesn't. What is wrong with democracy?"

Nothing, Bernard. You miss the point. You will note that I included the slightly sleazy Jewish reference. But is it so far off? What you describe so innocently as "Democracy" is really just thinly disguised mob rule when it is in the context of a group "convinced" (that is, bribed) that they can simply take the property of minorities who have been vilified by opportunistic pols. No??

Courts protect racial and other minorities from majority injustice. Should minorities based on financial means simply be left to the mobs, to be raped and pillaged?? Surely you can think of better arguments for the taking of property.

"We can't have a system of unanimity. Someone will oppose each and every tax, and someone will oppose each and every expenditure. So, we all get together a decide that as much as we may dislike it, we agree that the majority gets to make this sort of decision."

Who's "we," kemosabe?? Someone must stand up and oppose the tax debate equivalent of "give him a fair trial and then hang him." When a politician stands up and promises in classic populist snake oil salesman mode: "95% of you will pay no tax, so I'm just taxing those no good rich people for your benefit......are you with me, are you with me??!!" (Let's burn the town down!!!!) You may find that all well and good - your definition of "democracy" - but I won't apologize for calling out the crudest, most bald faced demonstration of greed, class envy and callous disregard for property rights and fairness...not even touching on economics.

"Instead of silly, sneering insults, feel free to make a reasoned argument."

Now, now. I just did. Bernard, your total reliance on the argument: "its a democracy" is completely useless, and can be taken directly to 100% taxation if based upon that principle alone. Or any other extreme view you would like to propose. I noted previously, want to break out the old saw about slavery?? Its a democracy, you know.

Can YOU make a reasoned argument for an appropriate level, and protection of the minority??

Until Young Mr. Yglesias has successfully run a business I frankly don't want to hear another goddamned word about how hard he thinks I work relative to anyone else, or what I am entitled to for taking the risks, putting up the capital, doing the travel, working the extra hours, or, dare I say it, actually doing some things that others cannot. His know-nothingness of what it takes to run a business is just so typical for a coffeehouse commissar wannabe.

Does it have to be privately held? How about if you own a controlling interest in a public corporation?

In that case, I tend to view it as nothing more than stock.

There is a legitimate public policy concern about the cost of tax planning, however, which is a dead weigh on economic growth

Yup. Instinctively, I'd like to do away with income taxes altogether and move to a consumption tax. Practically, that's hard for a variety of reasons and politically it's likely a non-starter.

If you get rid of the estate tax or any other tax, where are you going to either make up revenue or cut spending? And can you sell that package politically?

The latter part's the problem, obviously. Again, though, as in my previous post, I'm not at all sanguine about simply putting whether other people get to keep their money up to a vote.