Quotulatiousness

October 19, 2011

Questioning the “income inequality” argument

Filed under: Economics, Media, Politics, USA — Tags: , , , — Nicholas @ 09:19

James Pethokoukis doesn’t find the income inequality talk particularly convincing, and has a few reasons why:

Sorry, the story just doesn’t hold together. According to left-wing think tanks, columnist and bloggers — and, of course, the Occupy Wall Street radicals — the top 1 percent have been exploiting the 99 percent for decades. The rich have been getting richer at the expense of the middle class and poor.

Really? Just think for a second: If inequality had really exploded during the past 30 to 40 years, why did American politics simultaneously move rightward toward a greater embrace of free-market capitalism? Shouldn’t just the opposite have happened as beleaguered workers united and demanded a vastly expanded social safety net and sharply higher taxes on the rich? What happened to presidents Mondale, Dukakis, Gore, and Kerry? Even Barack Obama ran for president as a market friendly, third-way technocrat.

Nope, the story doesn’t hold together because the financial facts don’t support it. And here’s why:

[. . .]

5. Set all the numbers aside for a moment. If you’ve lived through the past four decades, does it really seem like America is no better off today? It doesn’t to Jason Furman, the deputy director of Obama’s National Economic Council. Here is Furman back in 2006: “Remember when even upper-middle class families worried about staying on a long distance call for too long? When flying was an expensive luxury? When only a minority of the population had central air conditioning, dishwashers, and color televisions? When no one had DVD players, iPods, or digital cameras? And when most Americans owned a car that broke down frequently, guzzled fuel, spewed foul smelling pollution, and didn’t have any of the now virtually standard items like air conditioning or tape/CD players?”

No doubt the past few years have been terrible. But the past few decades have been pretty good—for everybody.

October 16, 2011

The argument for value-added taxes

Filed under: Cancon, Economics, Government — Tags: , , , — Nicholas @ 10:37

In an article about the Canadian copy-cat protests, Mike Moffatt addresses some of the demands to increase taxes on the wealthy and explains why value-added taxes (like the much-hated Harmonized Sales Tax) are more efficient:

The Occupy Canada protests which began Saturday took place in over a dozen cities with mostly modest turnouts. They also lacked a cohesive goal or message, as their critics in the media are fond of pointing out. The protests did, however, address a number of important societal issues, such as the growing gap between the rich and the poor. As has been acknowledged by both Bank of Canada governor Mark Carney and Finance Minister Jim Flaherty, rising income inequality in Canada is a real and legitimate concern.

Over the last 30 years, the income gap between the top 1 per cent (or more accurately, the top 0.1 per cent) and the rest of us has increased substantially. Furthermore, this inequality is growing faster in Canada than it is in most other countries, including the United States. The Conference Board of Canada has reported that Canada has fallen to 12th out of 17 countries in its peer group when it comes to income inequal-ity. Between 1980 and 2005, before tax earnings increased by 16 per cent for the top 20 per cent, but fell by over 20 per cent for the bottom 20 per cent. The Occupy Canada protests are the product of a rising tide only lifting a few boats.

[. . .]

So how do we reduce inequality? The obvious place to start would be to borrow solutions from countries where after-tax income inequality is relatively low. Three countries that consistently score well on income inequality measures are Denmark, Finland and Sweden. These three Nordic countries share very similar tax structures, featuring moderate-to-low marginal corporate tax rates, moderate-to-high income tax rates and very high value added sales tax rates (VATs, similar to Ontario’s HST). The average VAT in these three countries is 25 per cent, a rate nearly twice that of the average Canadian federal GST plus provincial sales tax or HST. A onepercentage-point increase in the HST alone would raise $5 billion to $6 billion per year for the federal government, so increases by a few percentage points could adequately fund programs designed to reduce inequality. No country on Earth has been able to find a way to fund the kind of social programs and redistribution needed for “reasonable” levels of inequality without VAT rates significantly higher than Ontario’s HST.

Why are high sales taxes needed to fund social programs rather than higher corporate taxes or higher income taxes? Put simply, VATs are the hardest taxes to avoid paying. Higher income taxes reduce labour effort by the taxed. Higher corporate tax rates reduce investment. Canada’s corporate income tax rate was, not so long ago, twice what it is today. Adjusted for the inflation and the size of the economy, however, the higher corporate tax rates brought in similar levels of revenue then as they do now. There are some ways to avoid the HST, of course, but these are far more limited than they are for other taxes. The HST, as with all VATs, is a cash cow that provides governments with the necessary resources to tackle important societal issues.

October 15, 2011

It’s not as stirring a rallying cry to say that the 99% earn 80% of the income

Filed under: Economics, Government, Politics — Tags: , , , , — Nicholas @ 12:32

Lorne Gunter can, if he holds his mouth right, kind of agree with the “Occupy Wall Street” protesters, but he says they do themselves no favours by mixing in fake “facts”:

The protesters’ main point also is obscured by all the lefty, social justice, union-financed trash they have heaped on it. The Occupy movement has proclaimed itself in favour of animal rights, a guaranteed living wage, free health care and education, and an end to the “poisoning” of the food supply.

Nor can the protesters help repeating a lot of class-warfare myths, such the “fact” that 1% of the population controls almost all of the wealth. According to Internal Revenue Service statistics in the United States, the “99 per centers” — as OWS types like to call themselves — earn about 80% of all income and control over two-thirds of the personal wealth (both percentages are slightly higher in Canada), while the “one per centers” earn about 20% of income and control about 32% of wealth.

It’s true that the top 1% of earners are taking a greater share of the pie than at any time since the 1950s, when reliable family income figures first became available. But it is also true that even the bottom 20% of earners are better off than they were then — not as much better off than the top 1%, but better off than they were in the mid-20th century.

[. . .]

But the biggest problem with the OWS movement is what they want to do about the problems they see. Because they view most corporate activity as bad and most government programs as good, the Occupiers have convinced themselves the only way to a fairer society lies through bigger government, more public spending and much higher taxes, all of which would only make our economic problems worse, while alleviating none of the disparity protesters believe is so corrosive to democracy.

Conrad Black on “Occupy Wall Street” and its targets

Filed under: Economics, Government, Media, USA — Tags: , , , , — Nicholas @ 11:50

Conrad Black looks at the “Occupy Wall Street” movement:

The Wall Street protesters denounce government bail-outs, the political and economic short-shrifting of students and young workers, the high cost of post-secondary education, various forms of discrimination, U.S. foreign policy, union-busting, outsourcing, the oil industry, media misinformation and (more generally) capitalism and globalization.

Of course, this is a pretty hackneyed scatter-gun indictment by people who haven’t really thought it through, but their anger and frustration are largely justified nonetheless: In the past decade, many prominent financial houses joined in the process of issuing consolidated debt obligations (CDOs), consisting of unfathomable patchworks of mortgages on packages of residential real estate, unsupported by any real base of invested equity in the underlying assets by their ostensible owners, and covered by diaphanous fig-leaves of default insurance. These instruments were made deceptively presentable by certifications from the main rating agencies that they were investment-grade, as if issued by serous entities and secured by unquestionable assets.

[. . .]

As for the Wall Street protesters, their largely justified complaints can’t be addressed by the wild methods they suggest. (A proposed list of demands posted at OccupyWallSt.org includes “free college education,” “bring the fossil fuel economy to an end” and “Immediate across the board debt forgiveness for all.”) The prestige of the U.S. financial leadership, the country’s political class and its economic academics and financial media have all collapsed at once and together, like a soufflé. Except for the military and the pure sciences, the country’s elites have been utterly discredited, and no one believes anything they say. Even if they wanted to, they could not impose on Americans the sort of radical anti-capitalist reforms the protestors urge.

October 11, 2011

What the “Occupy #LOCATION” folks should really be protesting

Filed under: Economics, Liberty, Politics, USA — Tags: , , , , , , — Nicholas @ 12:09

Caroline Baum puts her finger on the real looming crisis that the folks out in all the various Occupy Wall Street/Bay Street/Seattle/Edmonton gatherings should really be agitating about:

Oh, sure, some protesters have posted lists of pie-in-the-sky demands. (The occupywallst.org website insists there is no official list of demands.) One of these includes a $20 minimum wage regardless of employment, tariffs on all imports, trillions of dollars in new spending on alternative energy and infrastructure, and debt forgiveness — all debt “on the entire planet.”

In other words, lots of benefits and no consideration of the cost. You’d think one of these kids — and that’s how they come across — would have taken an economics course along the way. Where do they think the government gets the money for its largesse? Imposing usurious taxes on the top 1 percent of earners won’t yield enough money to provide for the other 99 percent. (One of the protesters’ slogans is, “We are the 99 percent that will no longer tolerate the greed and corruption of the 1 percent.”)

It’s not as if young adults couldn’t find good targets for their anger. If these protesters are looking for something to get exercised about, they might want to wander into Chris McHugh’s Monetary Economics class at Tufts University in Medford, Massachusetts, and learn about “generational economics,” the idea that government is going to stick the younger generation with the bill for supporting the retiring baby boomers. McHugh asked his students to identify grass-roots youth groups that are agitating about this, but all they found were a couple of minor groups that tended to be Tea Party and Ron Paul spinoffs.

Talk about haves and have-nots. The debt burden that the younger generation is staring at almost guarantees it will have a reduced standard of living. After all, if more dollars are directed at keeping Granny alive until age 102, that means fewer dollars for productivity-enhancing investments.

This idea clearly hasn’t resonated with today’s youth.

Maybe that’s because the numbers — tens of trillions of dollars in unfunded Social Security liabilities, for example — are hard to fathom. It’s much easier to vent their anger at bank bailouts and preferential treatment for corporate interests, much of which is justified. They seem to be ignoring Capitol Hill, where the rules are made by our bought-and-paid-for government.

October 9, 2011

ReasonTV: Remy’s Occupy Wall Street Protest Song

Filed under: Economics, Humour, USA — Tags: , , , — Nicholas @ 11:52

October 7, 2011

“The entire Occupy Wall Street movement needs a ‘[citation needed]’ footnote”

Filed under: Liberty, Media, Politics, USA — Tags: , , , — Nicholas @ 08:32

Robert David Graham does some independent reporting of the “Occupy Wall Street” protests and finds the mainstream media is being remarkably superficial:

It’s the quality of the coverage, not the amount that’s the problem. It’s been on the nightly news every night for the past week, but there has been little “serious” reporting.

By “serious” reporting, I mean such things as contacting the park’s owners asking for an official statement. The protesters are occupying Zuccotti Park, owned by the same company (Brookfield Office Properties NYSE:BPO) that owns the adjacent skyscraper. An obvious step would be to contact them asking for a statemen, but I could find no journalists that had yet done so. Well, if “journalists” aren’t going to do this, I can do this myself. I sent an email to their VP of Communications. I got a response, which I posted to my blog. When I posted it, I also Googled the sentences from the official statement, and found no results. I was indeed the first one “reporting” on this. Since then, others have mentioned the official statement, probably by picking it up from the #OccupyWallStreet Twitter hashtag that links to my blog.

[. . .]

In many ways, the press treats this protest the way they treated the Tea Party, completely distorting the story. Journalists ignored the mainstream of the Tea Party and instead focused on the fringe. Instead of showing the hundreds of signs calling for smaller government, reporters instead focused on the one sign showing Obama as Hitler. In the end, this reporting became self-fulfilling. The Republican fringe disaffected with the establishment were convinced by this reporting, believing that they, too, should join the Tea Party, thus derailing it.

[. . .]

In that way, it’s like the Internet. When the Internet appeared on the scene 20 years ago, it wasn’t like anything that predated it. Yes, you could define it in terms of the old, as a digital library, as an electronic form of mail, or as a communications network, but none of these descriptions captures the essence of what the Internet really is.

In particular, there is the problem with the “filter bubble”. While the Internet can expand a person’s universe, it gives people the power to shrink it. People create a “filter bubble” around themselves, using tools of the Internet to pass only those things they agree with. For example, Google watches what people search for, profiling them, and sorts the results for that individual. They see their own small universe reflected back, rather than the big universe.

[. . .]

I get the impression that the entire Occupy Wall Street movement needs a “[citation needed]” footnote. Wikipedia uses this technique to allow anybody to challenge an unsupported assertion. Anybody can insert this footnote, expressing to the reader that (as yet) the assertion isn’t supported. Anybody else can find supporting evidence, and replace the [citation needed] to a footnote pointing to a reliable source. If no citation can be found, the assertion is eventually deleted.

October 3, 2011

Occupy Wall Street activists fail to persuade

Filed under: Media, Politics, USA — Tags: , , , , , — Nicholas @ 13:12

Brendan O’Neill says that the “teenage moralism” of the protesters makes him “ashamed to be Left-wing”:

Occupy Wall Street, the gathering of angry actors, graphic designers and various other hipsters in the financial districts of New York City, might just be the most degenerate Left-wing movement of recent times. Its weird demands, plastered across tongue-in-cheek placards and on super-cool, self-pressed t- shirts, capture the descent of the modern Left into the cesspool of victimology, conspiracy-mongering and disdain for mass society and its allegedly dumb inhabitants. Far from representing anything that I, a Leftie, would recognise as progressive and humane, this gaggle of rich kids spouts little more than snobbery and fear, seemingly incapable of deciding whom they loathe the most: greedy fat bankers or the dumb fat public.

Occupy Wall Street claims to be a mass workers’ movement, but it’s nothing of the sort. It is in fact a tiny, self-selected group of self-righteous, mostly middle-class activists who have failed to win over large sections of the American public to their “cause” — which isn’t surprising when you consider that on the rare occasion that these trendy banker-bashers talk about the American public, they do so with a metaphorical peg on their snouts. An article on the Occupy Wall Street website claims “the working class in this country has been brainwashed by MSM, Fox News and the Right-wing propaganda machine”. It says everyday Americans, being stupid, do not understand what socialism is, because “they have been emotionally brainwashed against it”. And so it falls to the cool, fashionable, oh-so-enlightened activists of Occupy Wall Street to help “de-programme people against the brainwashing they’ve experienced”. That is, the oiks must be re-educated by the hipsters. The little people must have their minds cleaned out by their moral and fashion superiors. Occupy Wall Street mashes together the outlook of Kim Jong-Il with the politics of Susan Sarandon, giving rise to a weirdly hippyish yet authoritarian gathering of slackers-cum-elitists.

September 19, 2011

The “Day of Rage” turns into a damp squib

Filed under: Politics, USA — Tags: , , , , — Nicholas @ 08:38

Apparently it wasn’t the start of the anti-capitalist revolution after all:

September 17 was supposed to be the Day of Rage, the starting point of an anti-capitalist revolution that (in theory) was going to sweep the country coast-to-coast. As I noted yesterday, “The plan is to protest in state capitals and major cities across the nation, but the focus of the revolution will be in New York, where a hoped-for 20,000 anti-capitalists will ‘occupy’ Wall Street.”

I dutifully sent my operatives out to cover what were to be three of the largest Day of Rage protests — in New York, San Francisco, and Los Angeles — so humanity would have a full record of this pivotal moment in history.

Really, I should have learned my lesson by now: The bigger the build-up to a protest, and the more grandiose the promises, the louder the sound of the bellyflop onto the dustbin of irrelevancy.

In other words: “Day of Rage” was a massive FAIL.

Lots of sad photos at the link. Even the fringy-est of fringe movements were represented. As one of the photo captions says, “Down in L.A., there were so few authentic protesters, that the LaRoucheites comprised a significant proportion of the attendees.”

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