Thursday, October 30, 2008

Pinko

Why is it that when some people mention "socialism", the image they conjure in their minds is some 18-year old who won't go find a job, instead of some blue-collar worker who gets sick?

The idea behind socialist policies is that there are some events in a few people's lives that almost nobody can adequately prepare for entirely on his or her own. Yes, there will always be people who abuse the system, but that suggests reform instead of tossing the whole idea.

Thursday, October 23, 2008

What a Stupid Thing to Say to Me!

Speaking of being detached from the Real World,
Greenspan, 82, acknowledged under questioning that he had made a "mistake" in believing that banks, operating in their own self-interest, would do what was necessary to protect their shareholders and institutions. Greenspan called that "a flaw in the model ... that defines how the world works."
Alan (may I call you Alan?), you're nearly thrice my age and almost certainly much smarter than I am, but even I knew that a "bank" makes no decisions and therefore cannot act in its own "self-interest." Instead, bank executives act on the self-interest of... bank executives.

Your model is not just flawed. It is hopelessly naïve. You actually assumed that corporate leaders are, as a rule, going to be responsible stewards of the organization? Where have you been?

Thursday, October 16, 2008

The American Delusion

One of the most amazing things that the Republicans have managed to achieve is to fool their supporters into voting as if they were rich. Instead of voting for middle-class tax cuts, they imagine themselves to be millionaires (or at least, for "Joe the Plumber", somebody who will make more than $250,000 a year someday) with estates to leave their children. This is why they worry about the "death tax" and other money that they haven't actually earned. Or will ever earn.

Let's say you make US$300,000 a year. That income easily puts you in the top 1.5% of the population. In contrast, a US$1,000,000 loan at 5.75% interest over 15 years will require about $99,650 a year. In other words, you can afford a mansion in Joe Plumber's Ohio (or, in the Bay Area, still a pretty nice house) and still have about a hundred grand a year to spend on everything else. Obama proposes to raise the taxes for income above $250,000 by 3%, which means you have to pay US$1,500 more in taxes.

If you ever make US$300,000 a year. Is that really a big amount of money for somebody who makes more than 98.5% of the US population? That's about a fifth of what you pay for your million-dollar house in a month.

Another blind spot that people have is that they think that wealth is linear. It isn't. If somebody making US$50,000 is getting by with US$5 McDonald's meals, a person making a million doesn't necessarily have to spend $100 a meal. They might get the $200 cable TV package that has 5,000 channels, while you pay $40 or $50 for your more modest choices. They might fly first class for US$5,000 a seat, while you fly in cabbage class for $500. Few of these expenses actually differ by the same factor as income! In other words, a reasonable millionaire will have far more money left by percentage than somebody making far less, and are therefore far more able to shoulder a bigger percentage of taxes.

So stop worrying about taxes on the kind of money you will probably never earn anyway.