Wednesday, January 02, 2013

NYT urges Obama to introduce socialism

Off-topic, firewalls: Ted Jacobson wrote the 26th followup of the AMPS firewall paper and he joined the majority that disagrees with the "original perpetrators", as he calls Polchinski et al. He declares that their paper assumes that one may tensor-factorize the Hilbert space and isolate inner and outer degrees of freedom which is incorrect in quantum gravity where the Hilbert space is "a priori constrained", something that doesn't make local measurements impossible. I rarely agree with Jacobson but here he's on the right side.
Many American conservatives remain significantly proud about their country that they believe to be much more immune against socialism, top-down bureaucratic control, and other things they associate with the Eurotrash in their own old continent.

Well, I am afraid that this pride is exaggerated.

Economist John Cochrane (via Patria.CZ) noticed that The New York Times has published a breathtaking editorial (the opinion of all the important editors) on Saturday:
Why the Economy Needs Tax Reform
The term "tax reform" may sound refreshing and intriguing but if you read the editorial, or just a part of it, you will quickly realize what they actually mean by or hide behind the term "tax reform".

They just want the taxes to be high, more progressive, and they want all the types of taxes that were ever abandoned to be resuscitated and all the new taxes that have never existed but that were mentioned by anyone to be introduced.

So the Obama administration is told not only to increase the corporate taxes – in which the U.S. is already the 2nd most taxed Western country – but also to restore the real estate tax, surcharges on multi-million-dollar incomes, end to the deferral of tax for companies stashing their earning abroad, and to work on the establishment of new carbon taxes, value-added taxes, and financial transaction taxes.

The editors are clearly convinced that the closer to North Korea the American IRS will become, the more prosperous the country will be. When people don't have too much money to waste, the editors say, the government will have much more room to increase the GDP. Holy cow.

Der Steuersong (The Tax Song) was recorded by a rubber German ex-chancellor, Gerhard Schröder (SPD), as a satire – a great one. But if you look at the lyrics translated to English, you may notice that the content is pretty much equivalent to the "plan" of The New York Times that is apparently meant seriously!

So while I am still more worried about old Old Continent, I am almost equally worried about that great country that we could have relied upon as a reservoir and defender of freedom for the Western world. If the U.S. joins the EU and its Orwellian policies, the Western world may be screwed rather soon.


  1. The political battle seems to be on the growing gap between the 1% rich and the middle class.

    Greenspan wrote in his book that one reason are the limited working visas for highly-skilled people and thereby the elites do not face as much competition pushing up the salaries for top management and experts.

    So the US is not really a capitalist system when it comes to the labour market of the highly skilled as the offer is artificially restricted.

  2. The political battle seems to be on the growing gap between the 1% rich and the middle class.

    I never cease to be amazed by similar propagandist, Marxist, idiotic, dishonest sleights-of-hand. There is no "gap" between 1% of the rich and the rest. The number 1% was chosen by you - and is being chosen by others - ad hoc, without a tiniest glimpse of an ethical or rational justification. It's being chosen with a "class struggle" in mind - people who spread similar hateful communist lies about 1% and 99% want to gather the support of a big fraction of the "99%" - so that their "backing a majority" is believed to be guaranteed from the beginning - against the "evil minority" of 1%.

    But the 1% isn't an evil minority. It's the group with the largest contributions per capita to the wealth of our nations. At the same moment, it's not a group that can feed whole nations by itself. Its power was and is in the ability to invent, find, or organize meaningful work and profit for employees and products and services for business partners.

    So the goal here is to "punish" the wealthiest ones for their great contributions. It's unethical but it doesn't work, anyway. The companies that need high-paid managers will offer them whatever the salary is needed so that the required manager has, after the taxation, whatever he needs to have. So the before-tax salaries for such people grow so that the after-tax income stays pretty much fixed. At the end, the burden is spread among pretty ordinary people, anyway. The only result of progressive taxation, against-the-rich taxes, and similar Marxist policies is a distortion of the market, attempts of people and company to look for stealth fake routes to pay that lead to lower taxes, general chaos, as well as state-sponsored endorsement for jealousy and hatred.

    Your/Greenspan "visas" argument is pure rubbish, too. Even if the immigration of foreign workers were banned altogether, the U.S. as well as every country would still see that the higher tax rate for the wealthier ones is just an unfair "class struggle" policy. Moreover, your comment about "lower competition" is a lie, it's upside down: the high-skilled foreign workers have an *easier*, not *harder*, access to the U.S. job market as imigrants, so they actually face a tougher competition, relatively speaking, than the "middle class", "working class", or whatever is your favorite name of the moment for the class that is supposed to benefit from your disgraceful Marxist lies and policies.

  3. you are right that the US is not a capitalist country but you gave the wrong reason. your wealth came from the time you were more capitalist - 30 - 40 years ago and i don't see you rebounding any time soon.

  4. I think it is misleading to claim that the US has progressive taxation, Lubos. American citizens pay an effective flat tax rate except for the very poor and (some) of the very rich, who pay a smaller fraction of their income as taxes. If you add up all of our taxes, including sales tax, FICA (social security and medicare), real estate taxes, vehicle and other registration fees, our taxes amount to about 35-40% of gross income for almost everyone. That is a very big number but we do get quite a lot for it.

    I agree with you that much of the NYT article is rubbish and that government expenditures must be reduced at all levels but our tax system is about as fair as is possible.

  5. if it was fair so many of your companies wouldn't be leaving and there would be no economic crisis.

  6. You are right; our system is not entirely fair but I don’t know what system would be perfectly fair. That, I think, is an illusion.

    As they say, “Don’t tax me; don’t tax thee; tax that feller behind the tree”.

    The economic crisis is mostly due to a big speculative bubble which had several roots. Tax policy was not really a factor. Federal guarantee of housing loans was a big factor but mostly it was caused by wishful thinking. All bubbles come from this human foible.

  7. Since when has the editorial board of NYT, or any other paper for that matter, been wise?