MILK & GINGER

February 2nd
12:43

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Raise Taxes on Rich to Reward True Job Creators: Nick Hanauer

It is a tenet of American economic beliefs, and an article of faith for Republicans that is seldom contested by Democrats: If taxes are raised on the rich, job creation will stop.

Trouble is, sometimes the things that we know to be true are dead wrong. For the larger part of human history, for example, people were sure that the sun circles the Earth and that we are at the center of the universe. It doesn’t, and we aren’t. The conventional wisdom that the rich and businesses are our nation’s “job creators” is every bit as false.

I’m a very rich person. As an entrepreneur and venture capitalist, I’ve started or helped get off the ground dozens of companies in industries including manufacturing, retail, medical services, the Internet and software. I founded the Internet media company aQuantive Inc., which was acquired by Microsoft Corp. (MSFT) in 2007 for $6.4 billion. I was also the first non-family investor in Amazon.com Inc. (AMZN)

Even so, I’ve never been a “job creator.” I can start a business based on a great idea, and initially hire dozens or hundreds of people. But if no one can afford to buy what I have to sell, my business will soon fail and all those jobs will evaporate.

That’s why I can say with confidence that rich people don’t create jobs, nor do businesses, large or small. What does lead to more employment is the feedback loop between customers and businesses. And only consumers can set in motion a virtuous cycle that allows companies to survive and thrive and business owners to hire. An ordinary middle-class consumer is far more of a job creator than I ever have been or ever will be.

January 30th
12:39

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What the housing bubble teaches us about political events

That is because people do not respond to political events; they respond to what trusted sources tell them about political events. This seems especially true when dealing with somewhat complicated subjects like the housing bubble. Conservatives who listen to conservative media heard the frankly absurd story that the government was to blame, that Fannie and Freddie was to blame, and that too much regulation was to blame. These assertions were bolstered within conservative media by the dodgy claims being made by the long-discredited analysis of Wallison and Pinto. Of course, the exact opposite of all of these claims is true.

January 24th
10:59

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Republican presidential candidate Mitt Romney earned $21.6 million in 2010 and paid 13.9 percent of that amount in income taxes

Republican presidential candidate Mitt Romney earned $21.6 million in 2010 and paid 13.9 percent of that amount in income taxes, using the preferential rate on investment income and charitable deductions to pay a smaller share of his earnings than top wage earners typically do.

The former private-equity executive and Massachusetts governor earned more than half of his income from capital gains and dividends, which are taxed at a top rate of 15 percent, rather than the 35 percent top rate for ordinary income. His campaign showed his tax returns to reporters last night and will release them publicly today.

President Barack Obama and his wife Michelle released their tax 2010 tax return in April last year, showing an income of $1.7m. They paid about $450,000 in federal tax, a rate of about 26%.

January 23rd
22:33

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A disturbing story about laissez faire capitalism

Apple executives say that going overseas, at this point, is their only option. One former executive described how the company relied upon a Chinese factory to revamp iPhone manufacturing just weeks before the device was due on shelves. Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. New screens began arriving at the plant near midnight.

A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.

“The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.”

Now, read the last three paragraphs again and think about what it implies for the future of the American worker. Please do read the whole article. It is important that you do, because this is Tea Party future. This is the future if the only emphasis is on jobs and maximizing profits, with little emphasis on caring for others. Look again carefully at the last three paragraphs. Workers at a Chinese factory were living in company dormitories. They were roused and given but little food. They were told to work 12 hour shifts. By the way, this is in a Communist country, which means that when you buy Apple, you are supporting not just socialism, but Marxist socialism. Oops, did you notice that there is no family emphasis? The workers were in dormitories, not in family housing. Oh, and should Father Orthoduck mention that when we buy cheap goods from China (not Taiwan) we are buying goods from a country with forced abortions? More than that, many supporters of the Tea Party are busily running campaigns against anyone who supports abortion in an even indirect way while they have no trouble buying good from a country which openly forces abortions upon people. Hmm, Father Orthoduck guesses that economic policy trumps pro-life policy because Father Orthoduck certainly does not see pro-life organizations running campaigns to stop us from buying from communist China. That is, Tea Party supporters are against what they call socialism in the USA while stronly supporting it with their economic policies and buying habits.

Yes, this is a rant by Father Orthoduck about both the Tea Party and those who say they are against socialism while inappropriately supporting employee mistreatment in countries such as China and other countries that have oppressive child labor, etc. This is what it means to be a Tea Party supporter. It means that in the USA they hoist signs that claim that Obama is leading us to socialism at the same time that they have no problems with worker wages being lowered or with products being sold in the USA that are produced by Marxist-oppressed overseas workers. It means that Tea Party supporters have no problem with a slow return to workers having to live in company housing and buying at the company store. For those of you who do not know history, I would suggest that you read the history of company towns and company stores, particularly in mining regions in the Appalachian areas of the USA, and what it took to have a decent life as a miner in the USA.

All too many Tea Party supporters claim the moral high ground while they are in fact supporting Marxism (by their buying habits) and having no problem with wages being cut and families being torn apart so that the husbands (or single women) are available 24/7 in worker dormitories to do whatever is necessary so that profits might be maximized. When profits become all that is important, then families take a much lower place. When profits become all important, then even life (whether infant or adult) takes a much lower place. This is what it means to be a supporter of laissez faire capitalism. This is what it means to be a secular Tea Party supporter. Let Father Orthoduck strongly state that if one is a Christian Tea Party supporter, then while one may support conservative economic policies, one ought to also support boycotts of any country that has strongly anti-life policies. To say that one is against President Obama for socialism while buying Marxist Chinese goods without a protest is a contradiction. One must, as a Christian Tea Party member, be concerned not simply about profits but about any working conditions that will be destructive to families (such as worker dormitories). To say that one is a Christian Tea Party member without making any mention of boycotts against China is only to show either a total uneducated ignorance of reality or to show just how shallow one’s understanding is, or to broadcast to the world that profits are more important than babies. Sadly, most Christian Tea Party members are all about slogans rather than about consequent stances. Most Christian Tea Party supporters do not even think about who their buying policies are supporting and what their policies mean to employee wages and benefits.

Welcome to capitalism.

January 22nd
20:24

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#22 - A phone hangs off the hook on Wall Street.

January 16th
19:48

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"Capitalism is like spending a night with a great hooker, until she leaves and takes everything you have"

— Unknown

December 21st
12:35

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The totally baffling idea of a flat tax

Rick Perry, Newt Gingrich, and Herman Cain have all put out a flat tax plan of one sort or another. If you want to see what this will mean for you, here are the savings you can expect organized by economic quintile:

As you can see, if you are not rich, don’t expect much. But if you are rich, you will be rolling in it. Now usually I would just note that Americans already pay flat taxes if you take into consideration all taxes, not just income tax. That means introducing a flat income tax would just make the overall tax system regressive.

But what I want to get at in this post is the strangeness of flat taxes in general. When someone advocates for flat taxes, their arguments invariably rely on the idea that everyone should be paying the same rate, that we should not be punishing people who make more, and that it is unfair to do otherwise.

But these moral kinds of arguments for flat taxes are completely confused. If you wanted to make sure that we are not punishing those with high incomes by making them pay more, the flat tax does not achieve that. The flat tax does make rich people pay more. A rich person who made $1 million will pay $100,000 in taxes under a 10% flat tax, while someone making $10,000 will only pay $1,000. The rich person is being made to pay $99,000 more! Surely if you were interested in making sure people did not have to shoulder a higher tax burden due to income, you would favor taxing a specific amount of money, not a percentage of income.

But flat tax advocates ultimately balk at this idea. If you offered an alternative tax plan where everyone paid $10,000 in taxes no matter how much income they made, almost no flat tax supporter would support you. But why? I suspect it is because flat tax advocates already buy into the idea that $1 to a poor person is not the same as $1 to a rich person. In economic terms, income has diminishing marginal utility. The richer you are, the less losing a dollar will hurt you.

But the response to this observation is not to impose a flat tax. That does not equalize burdens. Just like $1 to a poor person is not the same as $1 to a rich person, 15% of income to a poor person is not the same as 15% of income to a rich person. Broadly speaking, losing 15% of your income while making $10,000 per year will impose a much greater burden than losing 15% of your income while making $1 million per year. So, under the theory that we want everyone to shoulder an equal tax burden, a progressive tax system where the rich are taxed more is the only one that makes sense.

Thus the flat tax advocate is in a weird position. If he thinks rich people should not have to pay higher taxes, then he should favor taxing a flat amount, not a flat percentage. But he doesn’t favor that. If he thinks everyone should shoulder the same personal burden for taxes, then he should favor a progressive tax. But he doesn’t favor that either. So instead, the flat tax advocate winds up in this weird no-man’s land where no moral justification for his preferred taxing system really exists.

By Matt Bruenig On December 17, 2011 · In Philosophy

November 17th
22:30

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Fact of the day #3

The numbers ‘172’ can be found on the back of the U.S. $5 dollar bill in the bushes at the base of the Lincoln Memorial.

October 3rd
12:53

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Keynesian Economics Don’t Work

Which is why when Park Chung Hwee decided to reform Korea’s economy and follow Keynesian economics, South Korea’s economy went down the toilet from the 2nd poorest country in Asia to having the 15th highest national GDP in the world according to the 2010 statistics provided by the world bank, the IMF, and the CIA.

September 26th
18:52

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A Billionaires’ Coup in the US
The debt deal will hurt the poorest Americans, convinced by Fox and the Tea Party to act against their own welfare
by George Monbiot
Published on Friday, September 23, 2011 by The Guardian/UK

… The movement started with Rick Santelli’s call on CNBC for a tea party of city traders to dump securities in Lake Michigan, in protest at Obama’s plan to “subsidise the losers”. In other words, it was a demand for a financiers’ mobilisation against the bailout of their victims: people losing their homes. On the same day, a group called Americans for Prosperity (AFP) set up a Tea Party Facebook page and started organising Tea Party events. The movement, whose programme is still lavishly supported by AFP, took off from there.
So who or what is Americans for Prosperity? It was founded and is funded by Charles and David Koch. They run what they call “the biggest company you’ve never heard of”, and between them they are worth $43bn. Koch Industries is a massive oil, gas, minerals, timber and chemicals company. In the past 15 years the brothers have poured at least $85m into lobby groups arguing for lower taxes for the rich and weaker regulations for industry. The groups and politicians the Kochs fund also lobby to destroy collective bargaining, to stop laws reducing carbon emissions, to stymie healthcare reform and to hobble attempts to control the banks. During the 2010 election cycle, AFP spent $45m supporting its favoured candidates.
But the Kochs’ greatest political triumph is the creation of the Tea Party movement. Taki Oldham’s film (Astro)Turf Wars shows Tea Party organisers reporting back to David Koch at their 2009 Defending the Dream summit, explaining the events and protests they’ve started with AFP help. “Five years ago,” he tells them, “my brother Charles and I provided the funds to start Americans for Prosperity. It’s beyond my wildest dreams how AFP has grown into this enormous organisation.”
AFP mobilised the anger of people who found their conditions of life declining, and channelled it into a campaign to make them worse. Tea Party campaigners take to the streets to demand less tax for billionaires and worse health, education and social insurance for themselves.
Are they stupid? No. They have been misled by another instrument of corporate power: the media. The movement has been relentlessly promoted by Fox News, which belongs to a more familiar billionaire. Like the Kochs, Rupert Murdoch aims to misrepresent the democratic choices we face, in order to persuade us to vote against our own interests and in favour of his.
What’s taking place in Congress right now is a kind of political coup. A handful of billionaires have shoved a spanner into the legislative process. Through the candidates they have bought and the movement that supports them, they are now breaking and reshaping the system to serve their interests. We knew this once, but now we’ve forgotten. What hope do we have of resisting a force we won’t even see?

A Billionaires’ Coup in the US

The debt deal will hurt the poorest Americans, convinced by Fox and the Tea Party to act against their own welfare

by George Monbiot

Published on Friday, September 23, 2011 by The Guardian/UK

… The movement started with Rick Santelli’s call on CNBC for a tea party of city traders to dump securities in Lake Michigan, in protest at Obama’s plan to “subsidise the losers”. In other words, it was a demand for a financiers’ mobilisation against the bailout of their victims: people losing their homes. On the same day, a group called Americans for Prosperity (AFP) set up a Tea Party Facebook page and started organising Tea Party events. The movement, whose programme is still lavishly supported by AFP, took off from there.

So who or what is Americans for Prosperity? It was founded and is funded by Charles and David Koch. They run what they call “the biggest company you’ve never heard of”, and between them they are worth $43bn. Koch Industries is a massive oil, gas, minerals, timber and chemicals company. In the past 15 years the brothers have poured at least $85m into lobby groups arguing for lower taxes for the rich and weaker regulations for industry. The groups and politicians the Kochs fund also lobby to destroy collective bargaining, to stop laws reducing carbon emissions, to stymie healthcare reform and to hobble attempts to control the banks. During the 2010 election cycle, AFP spent $45m supporting its favoured candidates.

But the Kochs’ greatest political triumph is the creation of the Tea Party movement. Taki Oldham’s film (Astro)Turf Wars shows Tea Party organisers reporting back to David Koch at their 2009 Defending the Dream summit, explaining the events and protests they’ve started with AFP help. “Five years ago,” he tells them, “my brother Charles and I provided the funds to start Americans for Prosperity. It’s beyond my wildest dreams how AFP has grown into this enormous organisation.”

AFP mobilised the anger of people who found their conditions of life declining, and channelled it into a campaign to make them worse. Tea Party campaigners take to the streets to demand less tax for billionaires and worse health, education and social insurance for themselves.

Are they stupid? No. They have been misled by another instrument of corporate power: the media. The movement has been relentlessly promoted by Fox News, which belongs to a more familiar billionaire. Like the Kochs, Rupert Murdoch aims to misrepresent the democratic choices we face, in order to persuade us to vote against our own interests and in favour of his.

What’s taking place in Congress right now is a kind of political coup. A handful of billionaires have shoved a spanner into the legislative process. Through the candidates they have bought and the movement that supports them, they are now breaking and reshaping the system to serve their interests. We knew this once, but now we’ve forgotten. What hope do we have of resisting a force we won’t even see?

September 18th
21:15

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Economics for dummies.

Makes perfect sense now.

August 15th
19:51

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Stop Coddling the Super-Rich by Warren Buffett

OUR leaders have asked for “shared sacrifice.” But when they did the asking, they spared me. I checked with my mega-rich friends to learn what pain they were expecting. They, too, were left untouched.

While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks. Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as “carried interest,” thereby getting a bargain 15 percent tax rate. Others own stock index futures for 10 minutes and have 60 percent of their gain taxed at 15 percent, as if they’d been long-term investors.

These and other blessings are showered upon us by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species. It’s nice to have friends in high places.

Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.

If you make money with money, as some of my super-rich friends do, your percentage may be a bit lower than mine. But if you earn money from a job, your percentage will surely exceed mine — most likely by a lot.

August 4th
22:01

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"

If the Tea Party, Members of Congress and every Republican had read the works of Jesus Christ instead of the works of Ayn Rand, maybe we wouldn’t be in this mess. Obviously the ideas of a contractionary religion, pioneered by a dead zombie figure, with numerous disciples and millions of cult like post humous followers should be taken with a pinch of salt.

And so should the views of Christianity.

"

— Unknown