Toons of the Day: Happy Turkey Day!

Mr President, Clinton Prosperity Requires Clinton-Sized Government

M2RB:  Lynyrd Skynyrd, live at Knebworth, 1976

 ( A shoutout to my Fabulous Finns!  Your fave...)

 

Cause I'm as free as a bird now,
And this bird you'll never change.
And this bird you can not change.
Lord knows, I can't change.
Lord help me, I can't change. 

By Steve Forbes

There is a way for Congressional Republicans to reach an accord with Democrats that would enable the nation to avoid falling off “the fiscal cliff” into a searing recession.

Obama Democrats argue that the President only wants to restore the top rates that reigned during the Clinton presidency, which was a prosperous time. We should say: 

"Absolutely, let’s do it. But in order to achieve a Clinton economy, you also must enact the other Clinton policies critical to the prosperity of those years: They include":

I. A Freer Economy

The oppressive ObamaCare of that time was HillaryCare, which was never enacted. If we want to re-create the Clinton economy, then we have to repeal ObamaCare. Are Democrats willing to do that?

The federal-regulation regime was also much easier then than it is now. Will the White House become serious about genuine deregulation?

II. Clinton-era Federal Spending Levels

Federal spending as a proportion of the economy was smaller in those days. That would mean budget cuts now of around $500 billion – not spread over ten years, but right now. How likely is that?

III. A Strong and Stable Dollar

The dollar in those days was almost as good as gold – a critical factor in that time’s economic boom. Will the White House ax Ben Bernanke and his destructive monetary policies?

The Republicans should tell Mr. Obama that, if he’s truly serious about restoring Clinton-era prosperity, he has to combine Clinton tax rates with the former president’s wise management of the economy that encouraged free enterprise and a true recovery. If not, we will see a return to recession in 2013 and continue on our current path toward European-style malaise and stagnation.

 "Freebird" - Lynyrd Skynyrd 

If I leave here tomorrow

Would you still remember me?
For I must be travelling on, now,
'Cause there's too many places I've got to see.
But, if I stayed here with you, girl,
Things just couldn't be the same.
'Cause I'm as free as a bird now,
And this bird you can not change.
Lord knows, I can't change.

Bye, bye, its been a sweet love.
Though this feeling I can't change.
But please don't take it badly,
'Cause Lord knows I'm to blame.
But, if I stayed here with you girl,
Things just couldn't be the same.
Cause I'm as free as a bird now,
And this bird you'll never change.
And this bird you can not change.
Lord knows, I can't change.
Lord help me, I can't change.

The Ferret, The 1950s, And The 91% Income Tax Rate For The "Evil Rich"

M2RB:  Bob Marley

Oh, now, now. Oh!
I shot The Ferret

The Ferret...
But, I swear it was in self-defence...

...because the man is a stark, raving, batshit crazy loon.

Oh, no! (Ooh, ooh, oo-oh) Yeah!
I say: I shot The Ferret.  Oh, Lord!
And, they say it is a capitalist offence.
Yeah! Ooh, ooh, oo-oh. Yeah!

By Mickey Kaus

A few notes about Paul Krugman’s column, “The Twinkie Manifesto,” which discusses the 1950s:

1) That 91% tax rate: Krugman writes:

[I]n the 1950s incomes in the top bracket faced a marginal tax rate of 91, that’s right, 91 percent, while taxes on corporate profits were twice as large, relative to national income, as in recent years. The best estimates suggest that circa 1960 the top 0.01 percent of Americans paid an effective federal tax rate of more than 70 percent, twice what they pay today. [E.A.]

Hmm.  Something seems off here. Did this super-rich hundredth-of-the-1% in the ’50s really a) pay anything near those super-high 91% marginal rates, or did they b) employ accountants and loopholes to avoid them (as the conventional tax-reformer wisdom would have it)? If you read Krugman’s paragraph you’d probably conclude (a)–high income tax rates really sock it to the rich! But the truth is closer to (b).

According to this CRS study, that 91% marginal rate produced an effective income tax rate on the top o.o1 percent of only about 45%. Krugman himself appears to be relying on Piketty and Saez–but they come in with an even lower figure, 31%. They only get to 70% by including corporate taxes, which Krugman mentions, and estate taxes–which he doesn’t mention at all.

Why is this semi-deceptive omission significant? Because Krugman’s arguing against the Simpson-Bowles Commission’s pursuit of

“lower [income] tax rates” as a “guiding principle”

If the rich actually paid the high income tax rates of the 1950s–as opposed to wasting a lot of society’s energy finding loopholes and evading them–then the Simpson-Bowles argument for low rates/fewer loopholes would make less sense. It might even seem to be a conspiracy to let the super-rich off the midcentury redistributionist hook. But the super-rich didn’t pay those rates.

Why didn’t they? Here are Picketty and Saez, concluding that the effective income tax rate

in 1960 reached an average rate of 31 percent at the very top, only slightly above the 25 percent average rate at the very top in 2004. Within the 1960 version of the individual income tax, lower rates on realized capital gains, as well as deductions for interest payments and charitable contributions, reduced dramatically what otherwise looked like an extremely progressive tax schedule, with a top marginal tax rate on individual income of 91 percent. [E.A.]

It turns out that reduction in top marginal rates under Reagan and Bush was not so bad, progressivity-wise:

The reduction in top marginal individual income tax rates has contributed only marginally to the decline of progressivity of the federal tax system, because with various deductions and exemptions, along with favored treatment for capital gains, the average tax rate paid by those with very high income levels has changed much less over time than the top marginal rates. [E.A.]

That’s for the super-rich. What about the non-superrich–say the storied 1% (as opposed to the .01%)? Here Krugman hides the ball again. It turns out that those wonderful high marginal income tax rates of the 1950s soaked this cohort not that much more than the one-percent of today get soaked–even if you take into account corporate and estate taxes. For the bottom half of the One Percent–99 to 99.5th percentiles of the income distribution–the effective tax rate was 34% in the high-marginal-rate 1960s and 31% in the low-marginal-rate 2004. BFD.

As a historical progressivity mechanism, high marginal income tax rates (like that 91%) would seem to be way overrated. Mainly they offer a way for inequality-fightin’ economists like Krugman and Robert Reich pose as great levellers while doing little that threatens to put them out of that job by solving the problem–while simultaneously offering plenty of employment for loophole hunting lawyers.  

Win-win!

2) The servant problem: Why do we care about rising income inequality anyway? Do we just hate rich people having nice homes and cars? I’d argue it has more to do with the way having more money can enable rich people to think they’re better than the rest of us–and treat us as social inferiors. Krugman, with his talk of “demeaning workers” seems to agree.

One of the primary ways rich people might accomplish this is by hiring lots of personal servants. Which makes these Krugman grafs significant:

 In 1955 Fortune magazine published an essay, “How top executives live,” which emphasized how modest their lifestyles had become compared with days of yore. The vast mansions, armies of servants, and huge yachts of the 1920s were no more; by 1955 the typical executive, Fortune claimed, lived in a smallish suburban house, relied on part-time help and skippered his own relatively small boat.  …

Today, of course, the mansions, armies of servants and yachts are back, bigger than ever … [E.A.]

Armies of servants? Bigger than ever? That would be deeply troubling, especially … I never got to finish that thought because the loud klaxon of my BS detector made thinking impossible. Does Krugman really believe that if you compared the household of, say, John D. Rockefeller *** and the household of Bill Gates or Warren Buffett that the latter figures would have more servants?

It’s probably true that, compared with the more recent past (i.e., the ’70s or ’80s) rising income inequality has led to a rise in servants–houseboys and butlers and personal chefs–among the richest Americans, though technological progress has also tended to make having lots servants unnecessary, giving the rich fewer of their fellow citizens to lord it over. (And in the middle class–well,  it was common as late as the ’60s for middle class Americans to have full-time maids. In 1960, 29% of American families reported expenditures for “domestic service.”  By 1989 that number was down to under 7%.)

 3) The big argument: We had powerful unions and more progressive taxes in the 1950s and the country prospered. Therefore we can have powerful unions and more progressive taxes now and prosper again! I can’t be the only one to point out that this does not follow. What if something important about the economy has changed in the meantime? Say, trade has opened up a global market in which American workers must compete with cheaper foreign labor (so any union that extracts above-market wage hikes is quickly undercut). And advances in technology have reduced the value of unskilled work, quite apart from trade-while requiring businesses that can make lots of changes very quickly (without worrying about work rules) and workers who can shift jobs frequently. As someone–an economist named Paul Krugman–recently pointed out:

insecurity is on the rise for everyone, driven by changes in the economy. Our industrial structure is probably less stable than it was — you can’t count on today’s big corporations to survive, let alone retain their dominance, over the course of a working lifetime. And the traditional accoutrements of a good job — a defined-benefit pension plan, a good health-care plan — have been going away across the board. [E.A.]

It’s especially implausible to just assume that traditional Wagner Act unionism will achieve prosperity in this new climate given that unions themselves have changed since the 1950s–e.g. becoming more minutely legalistic as court decisions have imposed on them a duty to defend practically every dismissed or aggrieved worker, on pain of being sued.

Krugman knows all this, of course. He just writes as if we don’t.


__________


**– Each  of these two other taxes–corporate and estate–seem to ding the super-rich for another 20% of income in Piketty and Saez’s calculations, though it is notoriously difficult to figure out who actually pays higher corporate taxes. Pikkety and Saez apparently assume, for example, that none of that corporate tax gets passed on to labor in the form of reduced wages. They also assume, when calculating the effect of the estate tax, that the distribution of estates mirrors the distribution of income.

***–Presumably the effective rates (counting estate and corporate taxes) on the entire one percent were higher than 34% in 1960. Piketty and Saez don’t give that stat in the paper I’ve linked, but just eyeballing their chart it’s hard to believe it isn’t closer to 40% than 70%.

****–The prototypical 1920s rich guy is, unfortunately, a fictional character. But Jay Gatsby had a lot of servants, no?

"I Shot The Sheriff" - Bob Marley

(I shot the sheriff
But I didn't shoot no deputy, oh no! Oh!
I shot the sheriff
But I didn't shoot no deputy, ooh, ooh, oo-ooh.)
Yeah! All around in my home town,
They're tryin' to track me down;
They say they want to bring me in guilty
For the killing of a deputy,
For the life of a deputy.
But I say:

Oh, now, now. Oh!
(I shot the sheriff.) - the sheriff.
(But I swear it was in selfdefence.)
Oh, no! (Ooh, ooh, oo-oh) Yeah!
I say: I shot the sheriff - Oh, Lord! -
(And they say it is a capital offence.)
Yeah! (Ooh, ooh, oo-oh) Yeah!

Sheriff John Brown always hated me,
For what, I don't know:
Every time I plant a seed,
He said kill it before it grow -
He said kill them before they grow.
And so:

Read it in the news:
(I shot the sheriff.) Oh, Lord!
(But I swear it was in self-defence.)
Where was the deputy? (Oo-oo-oh)
I say: I shot the sheriff,
But I swear it was in selfdefence. (Oo-oh) Yeah!

Freedom came my way one day
And I started out of town, yeah!
All of a sudden I saw sheriff John Brown
Aiming to shoot me down,
So I shot - I shot - I shot him down and I say:
If I am guilty I will pay.

(I shot the sheriff,)
But I say (But I didn't shoot no deputy),
I didn't shoot no deputy (oh, no-oh), oh no!
(I shot the sheriff.) I did!
But I didn't shoot no deputy. Oh! (Oo-oo-ooh)

Reflexes had got the better of me
And what is to be must be:
Every day the bucket a-go a well,
One day the bottom a-go drop out,
One day the bottom a-go drop out.
I say:

I - I - I - I shot the sheriff.
Lord, I didn't shot the deputy. Yeah!
I - I (shot the sheriff) -
But I didn't shoot no deputy, yeah! No, yeah!

The American Dream Is Alive and Well — In Canada

M2RB: Lily Allen

There's just one thing,
That's getting in the way,
When we go up to bed your just no good,
its such a shame!
I look into your eyes,
I want to get to know you,
And then you make this noise,
and it's apparent, it's all over.

Its not fair,
And I think you're really mean,
I think your really mean,
I think your really mean.

Oh you're supposed to care,
But you never make me scream,
You never make me scream.

Oh, I lie here in the wet patch
in the middle of the bed.
I'm feeling pretty damn hard done by
I've spent ages giving head
Then, I remember all the nice things,
that you never said to me.
Maybe, I'm just overreacting,
maybe, you're the one for me.

(lOoOoLz)

By Jesse Klein

 

Speaking at an event in Burlington, Ont., on Monday, Liberal Senator Art Eggleton warned the audience about the growing level of income inequality in Canada.

“I think our future level of prosperity depends on us addressing our current level of poverty,” he said. And who would disagree? Most people would prefer not to live in a society where people suffer in poverty. But, he continued, “I think in the income inequality context we are able to reach out to a much larger part of the population, who see the unfairness in the way we are going and the danger in the way we are going, both to our social fabric and the vigour of our economy.”

To back up his case, he cited statistics saying that in 1980, the average CEO’s salary was 40 times greater than the average worker, but that number has jumped to 189 times today. OK, but so what? If my neighbour has 189 times more money than I do (which he probably does), that does not mean that I’m doing badly. Measuring your success relatively to someone else’s can only ever show which one of you two is better off. The issue that should be on the minds of everyone — poor and rich, Occupier or Tea Partier alike — is whether our poor have enough to not just survive, but live comfortably. In the vast majority of cases, that’s so.

Looking beyond the material needs of the poor, what really matters is income mobility: How easy it is for people to better their lot in life by moving up the economic ladder, and whether the structure that’s in place creates a permanent underclass of destitute citizens. And the answer is good news: According to a new study from the Fraser Institute, Canadians are not stuck on one rung of the economic ladder; they in fact enjoy a high degree of income mobility.

The report examined Statistics Canada data on groups of people over five, 10 and 19 year periods. In all the time periods, those in the lowest income bracket experienced the highest degree of income mobility. Between 1990 and 2009, 87% of those in the bottom 20% of income earners moved into a higher income group; 21% managed to move all the way up to the top 20% of earners. The average salaries of people at the bottom increased by 635% over that same period of time.

Stated another way, in two decades, nine of every 10 of the lowest income earners were able to improve their lot in life; two in five of them ended up in the top 40% of income earners. Those who started in the middle were also able to command larger salaries as time went on: Approximately 70% of people in the second-lowest group were also able to move up at least one income group, and those who experienced a decrease in income mobility were most likely to have started in the top 20%.

The results of the study make sense: As people grow older, acquiring knowledge and skills along the way, they are able to garner a higher income. What this study shows is that contrary to those on the left who say the rich are getting richer and the poor are getting poorer, the gap actually gets smaller over time.

“In 1990, the average income of individuals in the highest income group was 13 times that of individuals initially in the lowest group,” write the report’s authors. “By 2009, those who had been in the highest group in 1990 had an average income only twice that of those who had been in the lowest group in 1990.”

The take away for Canadians is that a little hard work can go a long way. For policy markers, this is a reminder that fighting poverty should focus on helping those who have fallen through the cracks, rather than penalizing those who have worked hard and managed to get ahead.

- National Post

Related

 

• Poor today, rich tomorrow: Study shatters 'myth' of permanent underclass
• Canada's 'poor' actually getting richer: How research ­overthrows claims of Occupy ­protesters

 

Not Fair - Lily Allen

 

Oh, he treats me with respect,
He says he loves me all the time,
He calls me 15 times a day,
He likes to make sure that im fine,
You know I've never met a man,
Whose made me feel quite so secure,
He's not like all them other boys,
They're all so dumb and immature.

There's just one thing,
That's getting in the way,
When we go up to bed you're just no good,
its such a shame!
I look into your eyes,
I want to get to know you,
And then you make this noise,
and it's apparent, it's all over

Its not fair,
And i think your really mean,
I think your really mean,
I think your really mean.

Oh your supposed to care,
But you never make me scream,
You never make me scream,

Oh it's not fair,
And it's really not ok,
It's really not ok,
It's really not ok,

Oh, you're supposed to care,
But all you do is take,
Yeah, all you do is take.

Oh, I lie here in the wet patch
in the middle of the bed.
I'm feeling pretty damn hard done by
I've spent ages giving head
Then I remember all the nice things,
that you never said to me.
Maybe I'm just overreacting,
maybe you're the one for me.

There's just one thing,
That's getting in the way,
When we go up to bed you're just no good,
its such a shame!
I look into your eyes,
I want to get to know you,
And then you make this noise,
and it's apparent, it's all over.

Its not fair,
And i think your really mean,
I think your really mean,
I think your really mean.

Oh your supposed to care,
But you never make me scream,
You never make me scream,

Oh it's not fair,
And it's really not OK,
It's really not OK,
It's really not OK,

Oh, you're supposed to care,
But all you do is take,
Yeah, all you do is take.

There's just one thing,
That's getting in the way,
When we go up to bed your just no good,
its such a shame!
I look into your eyes,
I want to get to know you,
And then you make this noise,
and it's apparent, it's all over.

Its not fair,
And I think you're really mean,
I think your really mean,
I think your really mean.

Oh you're supposed to care,
But you never make me scream,
You never make me scream,

Oh it's not fair,
And it's really not OK,
It's really not OK,
It's really not OK,

Oh, you're supposed to care,
But all you do is take,
Yeah, all you do is take.