Monday, July 04, 2005

Analysis:
A Bad Idea Made Better for Tax Reform

This is the second installment in a series on tax reform. As noted last week in the first installment, "A Bad Idea for Tax Reform," President Bush in January created a commission to study and make recommendations for overhauling the U.S. tax system. Many progressive economists see recommendations by a commission comprising primarily those sympathetic to broader neo-conservative economic goals as a means by which the Bush Administration can gain cover for radical overhaul of taxes that will favor the wealthy and military/industrial interests at the expense of those not favored in their agenda as that plan has been laid out in documents produced by groups such as the Project for the New American Century.

Although most people are aware of the "tax cuts" enacted by the Republican Congress at the behest of the Bush Administration, perhaps not as many understand that these obvious changes in the tax code were only part of a systematic and subtle re-alignment of that tax code to shift the burden of taxes toward income generated by labor and away from income generated by capital. The degradation of estate taxes enacted in the last Congress is an example: while publicly using anecdotal evidence of people of modest means suffering heavy taxation on the modest estates of their deceased benefactors, little was said about the overwhelming benefit of eliminating estate taxes accruing to the massive estates of the very wealthy in intergenerational transfer.

Another example of the shift of the tax burden to labor can be found in the elimination of the so-called "double tax" on dividends. Those in favor of this "reform" pointed to the obvious unfairness of taxing income at the corporate level and then taxing as ordinary income upon stockholders any part of those corporate earnings that were received as by individuals as dividends. Virtually no mention was ever given in the run-up to that vote the fact that dividends accruing to corporations that hold stock in other corporations were already partially exempt from taxation. Moreover, despite the claim that some substantial amount of all dividend distributions accrue to "ordinary" people investing in the stock market, a number of financial instruments already exist that cause dividends to roll back into investments and thereby avoid taxation. Effectively, the vast majority of the benefit from elimination of the double taxation of dividends was realized by those who are large-scale shareholders and/or insiders in corporations, along with those corporations that hold subsidiaries from which they want to drain cash flow through dividends issued by the subsidiaries.

From Here to There
The current tax system in the United States is based upon progressivity of the marginal tax rate for both individuals and corporations: as taxable income rises, the last dollar of that income is subject to a higher and higher tax rate. As pointed out last week, this does not mean that all income gets taxed at a higher and higher rate as income rises: it means only that higher and higher tiers ("brackets") of income get so taxed.

That progressivity has as one of its consequences the taxation of capital in a focused way: individuals who make more money are more likely to have a larger percentage of that income generated by investments rather than by the sweat of their brow. Anecdotally, the wealthy entrepreneur George Soros, whose financial portfolio is estimated in the billions, declared that the elimination of the double taxation on dividends alone was a boon in the tens of millions dollars to him, indicating that an extraordinary amount of his annual income is generated by capital investments he has made, primarily, it must be presumed, by acquiring ownership positions in corporations.

It must, therefore, be an important feature of tax reform for the neo-conservatives that progressivity be drained from the tax structure. That has already been in the works for years. The number of tiers of income subject to higher and higher marginal tax rates in the United States was in overall decline at the point where the Reagan Administration and a compliant Congress reduced to three the number of tax brackets. Furthermore, the highest marginal tax rate has been falling, as well.

Even though the number of tax brackets is now higher than it was during the Reagan Administration—thanks in no small part to none other than President George Herbert Walker Bush—the desire to level out the tiers is just as strong as ever, but there is just not enough political will to do away entirely with tiers of progressively higher marginal tax rates, and that indicates something quite important about how the neo-conservatives must proceed if they are to switch the U.S. tax system from one that is progressive to one that is not. This article will conclude with a means by which that neo-conservative fear of openly attacking progressive taxation can be used against them as they attempt to furtively do away with it via a national sales tax.

As the dynamics are now moving, though, the tax structure is slipping decidedly toward something closer and closer to a straight, proportional income tax, while at the same time easing down the tax rates on the upper tiers of income, where it is more likely to be the result of investments rather than labor. It could be argued, then, that a proportional income tax structure, rather than a progressive one, is just a matter of time. It would, therefore, seem to be in the interest of those who want this kind of a tax system to merely bide their time: simply get sympathetic politicians to continually press for more "tax cuts" and "tax relief" as a pretext for eventually, quietly, and without undue notice, achieving the final goal of a perfectly proportional tax structure that assesses the same percentage tax rate on all income, no matter how large it might be.

The problem is that this would be like trying to move a large pig sty into the living room of the American House of Tax Code. It might work to put some of the walls in, convincing everybody that it's merely redecoration for functionality. It might even work to put the slop troughs in, convincing everybody that it's a dining room for unwanted relatives; but sooner or later, the pigs have to be brought in, and everybody's going to notice them, even when folks are assured that the pigs are nothing but house maids hired to make life easier. Pigs are not people, and just about everybody can tell that: a proportional tax is not a progressive tax, and just about everybody can tell that, too. Sooner or later, the American Electorate—fully and for almost a century living in a country that taxes the rich more than the poor—is going to see that the system has fundamentally changed to the favor of the rich. Eventually, those good voters might also figure out, were the tax rate the same for everybody, that people who make a lot of money without lifting a finger to do a day's real work get to pay the same tax rate as those who bust their hump and have barely enough to cover their bills. And perhaps just as importantly, this favor is accruing to a tiny, powerful class of folks, while the vast majority of tax revenues the government is pulling in come from a staggering majority of people in the United States, taxpayers who make less than a tenth of what the small, American aristocracy makes, as evidenced by the income distribution graphic at left.

Plastic Surgery for Pigs
Enter the national sales tax. In last week's installment in this series, the story of two brothers, Byron and Barton Binkwater, was told. These brothers made significantly different incomes; but under a national sales tax, the wealthier of the two actually paid a lower tax rate on income, simply because poorer people use far more of their total income on consumption, which would be what is taxed under a national sales tax. This example went to the heart of the old saying in macroeconomics that a proportional tax on sales is a regressive tax on income.

In this way, a national sales tax is more than a dream-come-true for wealthy people: it's not even a proportional income tax; it's a regressive income tax. That means, the richer a person is, the smaller the percentage of his total income that gets paid in federal taxes: this would be a tax structure that actually rewards the rich for their propensity to save at higher rates, which by no small coincidence means rewarding future income generated from capital rather than from actual work. This, then, is a prescription for the rich to get richer, year over year and generation over generation. Better still, in its relatively purer forms, a national sales tax could be sold as an enormous tax simplification since a check-out register tax wouldn't require people to go through the yearly nightmare of filing federal income tax forms that sometimes vex even tax professionals. And for one more thing, a national sales tax would promote that old-fashioned notion that saving is better than consuming. A national sales tax has so many promotable features that lower income folks might not notice that it's a regressive tax on income.

The Smell Comes Through
Under a national sales tax, purchases would be socked with some added percentage of the retail price, but income put into long-term savings would not be taxed. This would give people at least some incentive to put more money into savings. People who don't make much would have more of a problem with this than people who make a lot, since every dollar saved would be a larger percentage of disposable income, and few would be so bold as to argue that saving money is a good substitute for consumption. More importantly, even though that money in the savings accounts could be used later for consumption, "later" is not a good substitute for "now." It just isn't. Whereas a well-to-do person is going to have plenty of money both now and in the future, the poorer person isn't going to have both at the same time. Creating a tax incentive for future consumption constitutes a coëercion to accept more of a less desirable good and less of a more desirable one.

But businesses and individuals who are capital investors by virtue of their greater disposable income are going to have a field day. As the amount of savings rises, banks and other lending institutions will have a greater supply of lendable funds; and with greater supply will comes lower interest rates. That means businesses will have a lower cost of capital, and individuals with the means to invest will be able to use more leverage in their long-term investments, which will enhance the so-called "gains to leverage" they realize by using more debt in their total investment money. It will also serve to give businesses more of the same incentive: rather than issuing equity to grow, they will be able to use more debt because it is becoming cheaper.

Ah, but this same lower interest rate environment should help the less well-off, too, since lower interest rates mean mortgage-backed loans should be cheaper. Well, that would depend upon whether or not houses are subjected to the national sales tax. If they are, they become just another consumption item whose purchase gets deterred by that tax. If they aren't, a whole world of complications arise. New homes would start to be sold as packages including all manner of big-ticket consumption items that would otherwise be exposed to the national sales tax; money borrowed to "improve" a home could be the subject of redirection as exempt expenditures having nothing to do with the house and land, themselves; and the wealthy would howl that they need exemption from tax on two, three, or maybe more properties they want to own. Yes, purchases of homes would probably end up being exempted, but that will turn into a way by which the wealthy can turn the national sales tax to their advantage, making it even more regressive than by its nature it already is.

In Defense of Pigs: The Classical Economists and Economic Growth
Before the world of Keynesian economists, who held that government had a duty to help the poor and to stabilize the economy, Classical economists ruled the world of economics. They believed first and foremost that long-run growth was all that mattered. Regardless of whether or not there were short-term business cycles, as long as the economy was on a long-run growth path, the situation was just fine. This meant that they were unconcerned about the misery and poverty of the working class; and structural shifts in the economy that left millions of people starving were irrelevant because, in the long run, the labor supply would adapt to the new technologies and become complementary to them. Technological change that displaced workers, families, households, even entire classes of people were merely the necessary way of an economy as it grew. The government had no business interfering with business by burdening it with regulations and laws, in general, and consumer protection and labor considerations in particular.

The labor supply would adjust, even if it required time measured in generations and wrecked lives measured in the tens or hundreds of millions.

To this end, then, any structure of taxation that attends to differentially taking capital from the rich is certainly bad because it is the wealthy who finance the engine of entrepreneurial innovation, business formation, and enterprise growth. Without those who can afford to invest, there will be no jobs for those who choose a lesser life.

And yes, the Classical economists firmly believed that unemployment—and that means all unemployment—is voluntary. This point is pressed home in most principles of macroeconomics textbooks; for example, in Chapter 6 ("Economic Growth, Business Cycles, Unemployment, and Inflation") of the popular undergraduate textbook, Economics, 5th Ed. (2003), McGraw Hill/Irwin, author David Colander—by no means a "liberal" economist—the point is pounded in with eerily parsimonious objectivity.

More to the point of the Classical economists' philosophy was a "law" of economics that years ago, under the onslaught of the progressive, demand-side Keynesians, fell into much-deserved disrepute but has now managed to become unassailably doctrinal to their neo-conservative progeny. It's called "Say's Law": Supply creates its own demand; and on the face of it, the logic is deceptively reasonable.

When investment is made by those capable of such endeavors, factory capacity expands; and in so growing, the need for labor is increased. As more workers are employed, their households have more income with which to demand the very goods and services that are being produced by the factories that gave them jobs in the first place. As they want and can afford more goods and services, those in a position to invest can add capacity, which will create even more jobs, which will increase demand even more.

Supply creates its own demand.

Nice proposition, but it doesn't work. First, providing the wealthy with the means to invest in enterprises that will create jobs doesn't mean they will actually do that; and even if they do invest, there is no assurance at all that they will invest in technologies that are labor intensive. In fact, they would be crazy to invest in technologies that require large numbers of workers when they can invest in machinery that will actually replace workers. Moreover, even if those wealthy, entrepreneurial sorts actually do invest in technologies that need lots of workers, they're going to put those factories where they can draw from a labor supply curve that provides the lowest prevailing wage rates possible consistent with the skills needed. That means factories and other hotbeds of employment will be built where labor is cheap.

And guess where labor is not cheap. That's right: here in the United States.

So if wealthy people invest, they're going to invest in the substitutes for labor like machinery, computers, and robotics. If they must invest in industries that are labor intensive, they're going to do so in other countries where they can exploit workers who have not a clue that they could have better lives if they organized and resisted the temptation of subsistence wages.

This is, of course, fine to the current breed of Republicans. Although they'll pander for votes to the working class, they draw their inspiration from those who saw individuals and households of workers as distractions worthy of the academic considerations only of the socially conscious who didn't understand that the process is what matters, not the state of the economy and the difficulties of its laborers at any given moment or in any given generation.

Moving the Pigs into the Living Room
Given the utter resolution with which historical taxation trends seem to be moving toward some kind of regressive tax on income masquerading as a proportional tax on sales, it would be a favor to the neo-conservatives and their Republican political enablers to perhaps allow the national sales tax to become the system for the United States. This might seem at first wrong to simply surrender one of the most basic parts of the whole economic world of the 20th Century; but a relatively modest twist might make it not only fair in some national sense, but also preserve the core value the neo-cons were claiming to promote.

To show how this would be done, the continuing saga of the brothers Byron and Barton Binkwater must be revived. Recall that Byron makes $20,000 a year, and Barton makes $80,000 a year. Both of them need to spend $8,000 just to keep going, and any expenditures over and above this fulfill consumptive wants, not actual needs. As demonstrated in the last installment in this series, in a world where a 15% national sales tax was applied to their consumption, and both Byron and Barton saved every penny they didn't simply have to spend to keep body and soul together, the numbers worked out as follows:

Byron spends his $8,000, on which is assessed a 15% tax; so his national sales tax bill is
    15%×$8,000 = $1,200,
so this means Byron pays an income tax rate of
    $1,200÷$20,000 = 6%.

Barton spends his $8,000, on which the same 15% tax is assessed; so his national sales tax bill is the same
    15%×$8,000 = $1,200,
so this means Barton pays an income tax rate of
    $1,200÷$80,000 = 1.5%.

This demonstrates that, by any measure one would choose for a definition of "fairness," this national sales tax is beating up poor Byron quite a bit more than it's bothering his brother Barton.

It will serve the purposes of what is about to be proposed if we now introduce the Binkwater brothers' old friend, Mary Ann Mirthmutton, a wealthy entrepreneur who earns $240,000 per year. Now, Mary Ann has a darned good argument that she deserves every penny of what she makes, considering that she grew her business from the ground up, working long days and nights to the end of ensuring that her business flourished and she was able to employ a number of people, one of whom is Byron, whom readers might recall works at the EZ-Lube on the south-east side of town, a franchise that Mary Ann just happens to own. As coincidence would have it, even Barton owes his job to Mary Ann, considering that she's a significant shareholder in Purcell's Parts, where Barton is a junior executive primarily because Mary Ann saw to it that he was given a shot at the executive ranks.

If Mary Ann is an extraordinarily frugal woman who spends only that which is absolutely necessary, she—just like Byron and Barton—will spend $8,000 and thereby be exposed to the 15% national sales tax only on that part of her earnings. Doing the numbers for Mary Ann returns the following:

She spends her $8,000, on which is assessed a 15% tax; so her national sales tax bill is
    15%×$8,000 = $1,200.
This means she pays an income tax rate of
    $1,200÷$240,000 = 0.5%.

That's right: under a consumption tax designed as a 15% national sales tax, Mary Ann's income tax rate is just half-a-percent.

Of course, this means Mary Ann is going to have incentive to save quite a bit of the $232,000 she doesn't absolutely need to spend, thereby contributing to the pool of lendable funds that can be borrowed by other businesses to grow. But even the most stalwart of the New Right Republicans are not going to want their low-income constituents to hear about this kind of nonsense.

Recall that Barton Binkwater would have to have used $32,000 in consumption spending before he would have hit Byron's 6% income tax rate; and the problem is magnified in Mary Ann's situation: she could spend a whopping $96,000 before she'd be paying the same 6% tax rate on income that Byron pays just by purchasing his necessities of life. (Mary Ann spending $96,000 and paying 15% sales tax would pay a total of $14,400 in sales tax, which is 6% of her $240,000 income.)

Any politician worth his or her most earnest and righteous bluster could hammer the point of this unfairness like a wood stake through the heart of a Republican standing up for such an obviously, egregiously anti-working class tax outrage. But a compromise is available, one that would accept a national sales tax, encourage savings, discourage consumption, and yet still retain at least some hint of the old gospel of progressive income taxes that the neo-conservatives fear killing off in broad daylight.

Let the Pork Barbeque Begin
First, regardless of how a consumption tax would actually work, there would have to be a sound definition of what constituted "savings": throwing money into a checking account for 29 days isn't savings. Neither is putting money into the stock market for six months.

Buying something like a house is controversial because the primary purpose of a home is to consume the flow of amenities arising from living there. The capital gain realized through sale is not the primary reason for purchasing shelter, or at least it shouldn't be. That having been noted, the gain is, in retrospect, the product of a long-term capital investment decision, even though in most cases a considerable amount of the money used for the capital investment came from a lender, with actual income of the homeowner only slowly replacing that huge punch of someone else's money that was used up front to make the buy.

One way or the other—and there would be a whole lot of wrangling on what asset purchases were true savings rather than consumption—solutions would be found that were palatable to disagreeing tax writers and politicians, and a list of what were actually uses of income for "savings" would be brought forth.

Now, here's the radical part. The Internal Revenue Service would no longer have as its best-known role the bullying tax collector of the federal government. Instead, it would be the tax rebater. To see how this would work, first note that the IRS would have no idea how much a given taxpayer had spent on consumption, and therefore, it would have no idea how many dollars any given taxpayer had paid in national sales tax over the course of a given year. However, because every last taxpayer could demonstrate net additions to or depletions of savings through statements from their financial institutions, the IRS could be shown how much each taxpayer spent on consumption: it would be total income minus net additions to or depletions of qualifying savings. That means the IRS would be able to determine—pretty closely, anyway—how much a taxpayer had paid in consumption taxes in a given year.

Now comes the new role of the IRS as rebater.

Establish income brackets that reflect greater and greater ability to cover basic necessities of life without beating up total income. For a fellow like Byron, since he blew $8,000 of his lousy $20,000 total income, he ended up paying $1,200 in national sales tax. The New Tax Code would rebate this entire amount to him. In fact, just to bend over backwards, give Byron the benefit of the doubt about how much he simply must spend to keep going and say it's $16,000 instead of $8,000. The IRS would send Byron a check for $16,000×15%, or $2,400.

Notice that Byron has a huge incentive not to spend nearly $16,000 in consumption of goods and services, since for every dollar less than $16,000 that he saves instead of using for purchases, he's getting money back from the government that he didn't even pay in national sales tax.

Let's go on to Barton. No slack for this boy, but nothing adverse, either. Out of absolute necessity, he spent $8,000, so the IRS rebates to him $8,000×15%, or $1,200.

Now, what to do about Mary Ann. The answer is simple: nothing. The woman's making $240,000 a year, for cryin' out loud. Even if she got the same $1,200 that Barton received, she'd probably put it in her Chump Change Purse. But that's not the real reason she doesn't qualify for a rebate: the real reason she doesn't get money back in recognition of some of the national sales tax she paid during the year is because she is wealthy, and it's the neo-conservatives and the ghosts of the Classical economists who possess them who keep howling about how we should recognize that it's the well-off people who are the big investors in future productivity. Why on Earth would the New Tax Code give them any reason at all not to fulfill their destiny as the great providers of capital investment? Rebating national sales tax to Mary Ann is nonsense: she's a saver by virtue of her economic standing. It would be illogical for the government that wants each and every citizen to save at the maximum of his or her ability and nature to give a certain class of people any incentive at all not to do what it wants them to do and what they would do by the socio-economic nature.

The lobbyists and the political apologists for people of wealth would bawl at the top of their lungs about the "unfairness" of this. Shutting their pie holes would be a matter of demonstrating that, if the system doesn't work this way, the entire tax structure becomes exactly the regressive income tax that neo-conservatives for decades have hoped for but cowered at the prospect of forcing into open, public debate.

Cleaning Up the Mess the Pigs Left
A massive, fundamental tax overhaul that strips the Internal Revenue Service of its most well-known role as muscleman tax collector, scaring the wits out of taxpayers, would be hugely popular in and of itself. Effectively, the IRS's role in collecting taxes would be reduced to a mechanized organ of overseeing retail operations that would be charged with collecting a national sales tax of 15% on every non-exempt purchase. This is precisely what state and local government tax agencies do all the time. And retailers understand quite well how to manage sales taxes. And the IRS would learn quickly enough how to act like a state sales tax collection operation to do the same thing that states and municipalities have been doing for decades. In its role as a rebater, the IRS would find that its entire reason for interacting with the public would change fundamentally.

As far as the details of such a New Tax Code would be concerned, there would have to be ramp-ups in rebatable income in recognition of dependents. Life-saving and life-preserving medical care and prescriptions would have to be exempt, although a well thought-out national sales tax could be an effective disincentive to people spending on wholly elective surgeries and certain types of medications that neither save nor preserve life. Lobbies for other industries would line up for their exemptions, too; it would require a will of iron to resist every petition for exemption from the national sales tax, and that means a whole lot of unnecessary exemptions would be granted.

Beyond the national sales tax on private consumption would be the need for something equivalent in the corporate world. This would be partially addressed just because businesses would be paying the tax on their purchases in the same way that individuals would. The difficulty would lie in dealing with corporations that purchase through "wholesale" and foreign channels that could slip through the net of a poorly designed sales tax.

A national sales tax would be difficult to construct, of that there is no doubt. But everyone should recognize that it's something the neo-conservatives want, and it's something the President's commission on tax reform might very well recommend; as such, refusing to consider its merits, as modified in outline in this article, not only defeats the hopes of the luminaries of neo-conservatism, but also defies the earnest desires of the President of the United States, himself.

It is, then, worth considering a national sales tax to replace the current income tax system in this country, if for no other reason than that such a national sales tax could end up being a much worse deal for the rich than they ever imagined as they were sending in their campaign contributions to the Republican radicals in Congress and to their inspirational leader, President George W. Bush.



The Dark Wraith has spoken.

<< 57 Comments Total
 Wild Clover blogged...

Oh no, first response, whatever will I say???

I will begin by saying that I see that any National Sales Tax would, as in your scenario, become so riddled with exemptions and add-ins that if we think our present code is a nightmare, this would be far worse. Calculating income is fairly straightforward. Calculating consumption for purposes of exemptions or whatever would be a nightmare.

My own humble proposal for a tax AND welfare reform....

1)begin from the premise that ALL income is subject to taxation-this includes your food stamps and rent assistance. 2) Secondly, ANY American is entitled to the use of social service programs funded by the gov't no matter what their circumstances. 3) All individuals have an exemption on income taxes equal to the MEDIAN income. The only other deductions are for major medical expenses. 4)All income above this deduction is taxed at an horrendous 50%. Income which does not equal or exceed the median is due a subsidy equal to 50% of the difference...this subsidy being subject to taxation the following year.

If the rich don't like paying so many taxes, they simply spend $$$ in increasing the median income by seeing that incomes rise. OH...savings &/or investments are not taxed until they become income...if I put $500 in the bank on Jan 1, and have $500 one year later, it doesn't count as income. If I draw it out the following year, it becomes income. You do much better financially by working at a shit job than not working, someone who can't work(or won't), will find themselves with an early windfall, but returns diminish, and since society ends up paying for these types anyway... you have an incentive to save since savings lower your income until you use them. Business has an incentive to flatten their pay scales, and an incentive to CEOs to forgo some of the heretofor untaxed perks. This should make business more profitable, as well as giving more $$$ to consumers.

My 50% tax rate is just a number I picked from the sky. I have no idea the actual rate it would need to be.
An additional savings would accrue by making all the means testing and paperwork and case managers and fraud hunters in the welfare departments excess baggage. The fellow who makes 100 grand could decide one month when his liquid assets were needed for a major purchase that foodstamps and child-care assistance would let him do this without borrowing. Of course this is now income. Yeah, he's only paying back 1/2 in taxes, but he was the source of some of that revenue to start with. Though I think it still will be mostly folks on the edge and low income who would use the social programs. And the uninsured. Here's another case where self interest of the haves, who want lower taxes, would possibly get companies back into the habit of providing insurance.

We'd save shitloads on Social service admin costs, everyone would be assured of a basic living amount no matter what, healthcare no matter what(which saves money)if they sign up, taxes would be vastly simpler, saving $$$.

Part of the deal would be that the rate lowers or the amount of the deduction rises as the deficit is paid off. Then the national debt. After that, it should be the minimum to keep things balanced. Tax rates go up if we have a war or other disaster.

I'm tired and this is my short version, so I'm hoping this all made some sense. Happy 4th of July, well, slightly late..

Tue Jul 05, 01:11:58 AM EDT  
 oldwhitelady blogged...

Good afternoon, Dark Wraith.

I like the way you used pigs in your article. You've noted that pigs would be noticed, once brought in. If Orwell's to be believed, pigs can be taught to walk on their hind legs and wear clothes.:)

I'm sorry for being a smart-ass. There's a lot to re-read and think about in your article.

Tue Jul 05, 05:59:49 PM EDT  
 My Pet Goat blogged...

Recall that Byron makes $20,000 a year, and Barton makes $80,000 a year. Both of them need to spend $8,000 just to keep going, and any expenditures over and above this fulfill consumptive wants, not actual needs.

This demonstrates that, by any measure one would choose for a definition of "fairness," this national sales tax is beating up poor Byron quite a bit more than it's bothering his brother Barton.


It seems to me that the current level of consumer spending indicates that spending on consumptive wants is very real, and should be considered (although I suspect you don't to make your point more apparent).

While I suspect Barton would not spend four times as much on his wants, he will likely spend more compared to Bryon. Ms. Mirthmutton will likely spend more relative to Bryon also, but might spend more or less compared to Barton.

Tue Jul 05, 11:41:30 PM EDT  
 PeterofLoneTree blogged...

Do you believe that a National Sales Tax would ever be levied on medical services?

And if so, would a doctor have a legitimate claim if he accused the government of "taxing his patients"?

Tue Jul 05, 11:42:38 PM EDT  
 Dark Wraith blogged...

Good evening, Wild Clover.

There's an interesting concept in your income tax proposal: tie tax rates for the wealthy to their ability to raise the standard of living for everybody. Good Lord, such radicalism: fiscal incentives to drive the rich to behave as if they participate in a society larger than their own self interests.

Something along that line has existed in the whole theory of progressive tax systems. Although the radicals of conservatism have always howled about how unfair progressive taxes are, the idea was that the wealthy owed more to society because of their wealth. The rich claim that's not true, that they worked to get to where they are, and they are being punished merely for succeeding where others failed or declined to venture in the first place.

My sentiments about "working one's way to wealth" are a bit jaded. My experience has been that, aside from a very few examples, massive financial success is just about always a combination of some degree of intelligence blended with no small shares of mendacity, cravenness, and/or sheer luck of the draw.

I was a business consultant for too long to believe that success merits all that much unusual respect by the society. One of the few quips I remember from my father, who worked quite hard his whole life and died in poverty, was that, "Behind just about every self-made man is a self-made story."

However, progressivity of taxes has a somewhat better justification than merely that the rich "deserve" to pay more on the last dollar they earn (or get, as the case may be). The wealthy in any society, be it a monarchy or a republic, have far more power than those who are not wealthy. People of wealth matter: their needs matter, their political desires matter, their values matter; and all of these things matter in a way that is fundamental to the way the society will end up constructing itself. The successes and errors that are made as a society lives and grows are propelled far more by those whose voices stand on a stack of money than by those calling from the streets and shacks. That's just how it is; and most of the time, even when the poor strike out in anger, frustration, or just plain hopelessness, they are crushed.

The wealthy matter; and as such, the wealthy should pay more for their privilege because it is their world, not ours. Veneers of democracy are, for the most part, merely perfunctory blessings for those who were already destined to greatness.

We love the stories of the underdogs who rise to become something more than the destiny of their lot. I wish, whenever a story like that is told, that a certain ratio would flash on the screen: number of wretches who tried versus number of those wretches who succeeded. The number on the left would truly dwarf by many orders of magnitude the number on the right. Maybe 1,000,000:1, maybe more.

The Honorable Barack Obama of Illinois got up before that crowd and gave his self-made man story, and the crowd ate it up. Everybody loves a downtrodden kid rising to the top. Perhaps it would have been too much to ask Mr. Obama to have taken a moment in that speech to explain how the Illinois Democratic machine works.

Perhaps it would be too much for me to explain to my students what the job picture looks like for them when they graduate.

Tonight, Wild Clover, I was explaining to my night class a point about the "target unemployment rate" in Keynesian theory, and at some point I made the comment about the parallel issue of median and average income levels associated with unemployment rates, since it's one thing to have a low unemployment rate, but it's quite another to have low unemployment rates and living wages at the same time. I was rather shocked, since this is a night class where just about all of the students work during the day or on 3rd shift, to find out that not one person in that class—not ONE—pulled over $30,000 last year, even though maybe three-fourths of them work full-time or multiple part-time jobs.

To what do they aspire? I shouldn't even ask them. Most want only to work and be paid enough to have a little easier time. A few of the kids talk about their wild dreams of success as musicians or artists.

Am I looking at people who will control the destiny of the nation? Certainly not.

Standing in front of a class of young people at the small, private, very expensive liberal arts college is another thing. There, I really am looking at people who will control the destiny of the nation.

You know, Wild Clover, last year, one of the sororities at the nice college worked up the idea to have a night every week of going over to the big regional community college to tutor students and help out. In retrospect, all I can think to say to ideas like that is, "Kids, just finish your degrees, make your millions, and pay your taxes.

"Oh, yes: and leave your lessers alone; they need you tax money, not your concern."



The Dark Wraith wishes he had not become so bitterly cynical.

Tue Jul 05, 11:52:59 PM EDT  
 Guy Andrew Hall blogged...

Good evening, Dark Wraith. Question. And since it is a long post, with many big words, I did not read it all. I have to go to bed. Anyway, which came first: Tax burden shifted to labor. Or the outsourcing of labor jobs?

I am just wondering if the Republicans started shifting the tax burden after the outsourcing of most labor jobs? What with their seeming irrational desire to reduce revenue for the government while at the same time spending more money and increasing the size of government.

Wed Jul 06, 12:01:26 AM EDT  
 Dark Wraith blogged...

Good evening, Mr. Goat.

Your point about Mary Ann Mirthmutton is well taken. At some level of income, rises in consumption become somewhat less certain. I have seen no formal studies, but I would bet that, in a certain swath of people in the lower range of what we might call "the wealthy," we would see a rather stable dollar amount being spent on consumption items. At very high levels of income, I suspect that consumption as a percentage of income begins to drop pretty steeply for most, although I suppose some super-rich really do spend money like the rest of us drink water.

One way or the other, the real action in consumption is happening—at least in my considered judgment—in the range of incomes from Byron to Barton to Mary Ann. Below and above that range, it's not quite as interesting. That's why a national sales tax, and the supporting structure I set forth, would have to have its greatest impacts on taxpayers in these ranges.

I've been running some simulations, and the whole thing works out rather cleanly, but the national sales tax rate would be awfully steep to get the entire trick to work properly and provide enough money for a modern government to operate with some breathing room. However, because many people would be getting some kind of a rebate, I can't help but think it might be something people would buy into, especially when they heard that they would no longer be paying the IRS ever again.

My hope is that, if the neo-cons in the tax reform commission pop their heads out of the sand with a consumption tax, as I think they're going to, this will be on the table as a paralleling alternative that does what theirs does, but twists it around in such a way that it blunts the inevitability of their regressive version.


The Dark Wraith can only hope.

Wed Jul 06, 12:08:36 AM EDT  
 Dark Wraith blogged...

Good evening, Peter of Lone Tree.

'Taxing his patients', indeed.

Proctological exams would obviously not be subject to the tax: I mean, after all, those patients have already taken it up the butt, now haven't they?

Neither would rug dealers be subject to my proposal: who's going to respect a law that allows for carpet tax?



The Dark Wraith returns volley.

Wed Jul 06, 12:16:01 AM EDT  
 My Pet Goat blogged...

I have seen no formal studies, but I would bet that, in a certain swath of people in the lower range of what we might call "the wealthy," we would see a rather stable dollar amount being spent on consumption items.

I haven't either, but this makes interesting reading (but I don't know how accurate it is) The Millionaire Next Door
The Surprising Secrets of America's Wealthy

Wed Jul 06, 12:37:12 AM EDT  
 Dark Wraith blogged...

Good evening, Guy Andrew Hall.

Your question has all kinds of very cool sidestreams and nuances.

First, I've been poring over old tax laws off and on for some time, now, trying to see patterns and trends. Essentially, I've been trying to see if tax law is a window on the evolution of more general government policy in an effort to predict, at least loosely and qualitatively, where we are headed.

My first pass at answering your question refers to the graph in this article of the top marginal tax bracket over the past many decades. Notice that the trend has been unambiguously downward. That means the highest income earned by the wealthy in the United States has been subject to lower and lower tax rates since the Kennedy/Johnson years. And it is those high, high levels of income that are the most likely to be accrued as the fruits of capital investment rather than through genuine work at labor. That means this shift of the bulk of the tax burden away from capital and toward labor has been going on for decades!

Also, when you hear about tax "loopholes," you're most likely hearing about mechanisms within the tax code by which income can be shielded, but that usually has to do with shielding income generated by capital, not by labor. Try to think of a couple dozen ways you can avoid paying taxes on your paycheck. Well, I can tell you right off the top of my head about that many ways you could defend capital-generated income from taxes.

Now, you might be thinking to yourself that a classic way to shield labor income from high marginal tax rates is to get married: the two incomes put together by a married couple won't get hit as hard in the top marginal bracket as a single income of the same amount. However, as our astute Mr. Goat pointed out in a previous thread, that couple is more likely, with the dual income, to be saving more, via 401(k) plans, term life insurance, house purchases, etc. That means even the "marriage penalty tax" relief embedded in tax law is actually more of a benefit to those constructing future income from capital investments rather than from labor.

Also, we can go even a step further and look at what SB Gypsy caught so nicely in her post over at The Gypsy's Caravan about inflation: inflation is a tax; it is a means by which the value of future money becomes less because too much is printed in the here and now. But think about it this way: if you are a net lender (a person or other entity that generates income through capital investment), you don't want inflation, especially the unexpected kind, because it erodes the purchasing power of the money you're going to get in the future. That means inflations are more of an issue to the wealthy than they are to the poor, and they are more of a problem for those who anticipate future income from capital. Hence, the Federal Reserve—which is charged with maintaining stability of the aggregate price level (in other words, keeping inflation under control)—is going to be far, far more aggressive in fighting inflations that start to creep in if the goal of the macroeconomic policy is to protect the purchasing power of income generated from capital. In other words, because inflation is a significant tax on future capital income more than it is on current labor income, the government that wants to lighten the burden of taxes on capital is going to work very hard to keep inflations from getting out of control for too long.

That, I would argue, is why we have, and have had, aggressive monetarists controlling the Fed for the past two-and-a-half decades.

Interestingly, the outsourcing of jobs is going to be highly problematic in a world where the burden of financing government operations is going to fall more and more on labor. My suspicion is that, if the plans of the Project for the New American Century continue and labor for consumer goods continues to shift overseas to Third World counties, there will come a time when our government will begin to talk about some kind of declaration of authority over labor in other countries. That might sound rather bizarre, but if you look at what's happening right now with the United States declaring rights over the global Internet and over the destinies of what it sneeringly calls "failed states," I will bet you my bottom dollar that, eventually, it will declare taxing authority by one means or another over labor income generated in other countries that produce goods for delivery to American markets.

I do recognize this sounds wild, but I would encourage you to consider just how hegemonic our current policy actions are. If the U.S. government is going to have enough money to prosecute, over a long period of time, the type of expenditure patterns to which it is now committing us, it's going to need a robust source of tax revenue; and that means it's going to have to squeeze as much money as it can from labor, since it has no intention of turning the long-term trend around that has seen capital getting closer and closer to a completely free ride with respect to taxation.


This is how the Dark Wraith sees it all coming down.

Wed Jul 06, 01:03:38 AM EDT  
 DuWayne Brayton blogged...

Having computer crisis - took several minutes to get here, Writing fast befor it glitches again. I will return soon when the computer is again functional.

Wed Jul 06, 01:07:15 AM EDT  
 Dark Wraith blogged...

Good evening, DuWayne Brayton.

I swear, life was easier when we had stone tablets.

Except for e-mail. Mr. Goat used to get so fussy when I'd lob him one of these super long policy articles to him on 20-foot granite slabs.

He never even tried to catch them on their way in. He always said he'd read them later, when he had some time and after he'd repaired his roof again.


The Dark Wraith was always a little hurt by that.

Wed Jul 06, 01:21:07 AM EDT  
 oldwhitelady blogged...

Good afternoon, Dark Wraith.

The way they pushed the Estate tax was to make the small fry think they were in a position to lose their inheritance to taxes. The way I understand it, the biggest share would not have had much tax to pay. It's the wealthy that the estate tax laws would have (and did?) hit. They really shouldn't mind. The biggest share of the
inheritors didn't do anything to earn the money except be born into the family... which is a reason why I feel sorry for Anna Nicole Smith!

Wed Jul 06, 01:34:22 PM EDT  
 My Pet Goat blogged...

The Dark Wraith was always a little hurt by that.

Don't feel bad; I didn't try and catch what Moses threw at me either, and those tablets were small.

Wed Jul 06, 02:47:32 PM EDT  
 Dark Wraith blogged...

I don't suppose anyone has noticed what happens now when you mouseover links in the sidebar or on the graphics in the article above.

So much for that cute little trick.



The Dark Wraith might have to try something else to capture some oohs and ahhhs from the crowd.
[And don't ANYONE tell me you've seen my mouseover trick a zillion times before.]

Wed Jul 06, 10:58:52 PM EDT  
 oldwhitelady blogged...

Hi Dark Wraith -
So, I took the mouse over to the side links and let it sit on each link. It had the little hand so I could click on the links...

Was it supposed to do something different?




Just kidding...... The pop-side boxes are neat! I am impressed!

[...and here are the Oooohs and Aaaahs]

Wed Jul 06, 11:45:50 PM EDT  
 Dark Wraith blogged...

Cute, Old White Lady. Real cute. I read the first part of your comment that ended with, "Was it supposed to do something else?" and I almost had a heart attack. I checked and re-checked this new script in every browser I could, up and down the versions, and across machines of different strengths and connections to the Internet, and it looked pretty much right on the money everywhere.

Then, I read your question, and my back leg went up and down. I swear, woman, I almost called the monastery to see if they had a bunk I could crash on for a couple of decades.


The Dark Wraith is trying to get his sense of humor into gear so he can say, "Haw-haw, that was a good one, Old White Lady."
[I'm almost there as I'm finishing this comment, but not quite.]

Thu Jul 07, 12:35:46 AM EDT  
 Dark Wraith blogged...

Haw-haw, Old White Lady. That was a good one on me. You sure had me going there for a minute. You should've seen the look on my face. Why, I swear, you'd have thought someone had just shot me in the south end of my old, scrawny caboose.

Durned, but that was a knee-slapper.



The Dark Wraith has found his sense of humor.

Thu Jul 07, 12:39:26 AM EDT  
 Black Wraith blogged...

You're scaring the regulars, Dark Wraith. The doctors warned you about developing a tolerance to the meds, y'know.


The Black Wraith is concerned.

Thu Jul 07, 12:45:08 AM EDT  
 Dark Wraith blogged...

If it just me, Black Wraith, or do you show up only when I'm already off my game and trying to re-establish my sense of purpose in the face of pounding evidence of irrelevance that borders on hemorrhoidal Existentialism?



The Dark Wraith needs to brew some more coffee.

Thu Jul 07, 12:51:03 AM EDT  
 oldwhitelady blogged...

Good morning, Dark Wraith.
What can I say? It's a gift!..

I did check each and every one to see the little descriptions. That was a lot of fun.

Is this one of the fun little tricks you're going to write about?
Though, it sounds like it may be a lot of work....

I hear you with the coffee - it's off to work I go. I logged on to find out about the explosions in London. My alarm is the radio and the guy just said 6 explosions 3 dead.

Thu Jul 07, 06:54:37 AM EDT  
 oldwhitelady blogged...

Heya Dark Wraith:

I think I figured out the answer to my question. That mouseover stuff isn't HTML, is it? It sounds like it's Javascript, or other.

Probably not something easily explained, either.
It is pretty darned cool, though!

That Black Wraith guy sounds like he's worried about you. What a nice guy! Why am I thinking that he's your twin?

Thu Jul 07, 12:45:27 PM EDT  
 Dark Wraith blogged...

Good morning, Old White Lady.

The Black Wraith is an unwelcome interloper from beyond the grave. He shows up to make unneeded and wholly irrelevant counter-point commentary intended to annoy, vex, and otherwise trouble my evenings.

Now, about the fancy "tooltip" boxes. They are, indeed, the product of a javascript script that creates for the Website a non-standard javascript event handler.

I am a bit concerned about this script. To me, it seems to be slowing down the page load just enough to be noticeable, and the slow page load is something I had just overcome last month. I don't know: it might not be enough to get annoying for visitors, but I have to be mindful of this issue because slow loading seems to be a major reason a number of people don't visit a blog.

I might back off this new tooltip trick unless I can find a way to speed up the script load.

I guess it really is true: a mother's work is never done.



The Dark Wraith presses on with the blog fancies.

Thu Jul 07, 01:07:22 PM EDT  
 My Pet Goat blogged...

Good afternoon Mr. Wraith.

When I saw the title of your latest poll I initially assumed is had something to do with Old White Lady giving you a good once-over on your mouse trick. Maybe one of those CNN thought provoking polls like Does the Dark Wraith deserve to be teased?, or Do you think the Dark Wraith really would have had a heart attack?

------------

From my perspective your blog loads very quick, and at worst, maybe a second or two longer than before if I refresh. The blogs that I personally don't care for are the bloated ones with scads of photos/graphics and/or many, many articles that take forever to load, let alone scroll through them all. Your blog fits neither of these cases.

Thu Jul 07, 03:12:15 PM EDT  
 Dark Wraith blogged...

Well, Mr. Goat, that's a relief to me. I shall retain the script, but I'll still work on it to speed it up a bit. The script has a lot in it that I don't want to use, and stripping it down should increase the calling speed from browsers.

Perhaps at some point, I'll have one of the polls do something of a more personal nature:

The Dark Wraith Forums is...
◊ arrogant, pompous, and overbearing.
◊ in need of medicinal therapeutics.
◊ big-nosed.
◊ w-a-a-a-a-y too verbose in those policy articles.
◊ BORRRR-ing.
◊ in need of some new material.
◊ all of the above.

Maybe that'll get more people to take these polls. And by the way, it's really strange how many people look at the results, but how few of them actually vote in the polls.

But I'll tell you what's even stranger: a lot of hits every week come from google searches; and although that's not strange, about a couple dozen of those hits every week come from google where the search string was "dark-wraith.com"!

Why on Earth would someone key in a domain name instead of just running it in the Address window of the browser to go to the site?!

That's a complete mystery to me. Perhaps someone here has an explanation for that.


The Dark Wraith is at a loss.

Thu Jul 07, 06:57:53 PM EDT  
 Wild Clover blogged...

DW-
I oftimes will stick a domain name into google if I can't recall if it has a www. prefix, or if it is .org rather than .com. It then gives me the site I want without my having to retype everything several times to include all the variations. If I were to type in www.dark-wraith.com into my browser, I'd get a site not found error. Google is for us lazy folks.

Thu Jul 07, 11:23:09 PM EDT  
 Dark Wraith blogged...

Wild Clover, I don't know whether it should worry you or not, but that explanation actually makes complete sense to me.



The Dark Wraith might have had the mystery solved for him... or at least part of it.

Thu Jul 07, 11:52:49 PM EDT  
 Dark Wraith blogged...

And by the way, Wild Clover, how is this blog loading in your Opera? I ran it though my copy of Opera, but I'm using the full version.


The Dark Wraith is waiting for someone to shoot down his latest little enhancement to the blog.

Thu Jul 07, 11:55:01 PM EDT  
 oldwhitelady blogged...

Hiya Dark Wraith!

You said about a couple dozen of those hits every week come from google where the search string was "dark-wraith.com"!

I have to admit that once in awhile, I do that. Why? Who knows? If I'm in google, and decide to see what's happening over here, just enter the addres and go from there.

Fri Jul 08, 12:37:38 AM EDT  
 oldwhitelady blogged...

and, sometimes, the address, too...

Fri Jul 08, 12:39:15 AM EDT  
 oldwhitelady blogged...

Heya Dark Wraith - I was over at google, and decided to put in your address in.

Oops, I did it again:)

Fri Jul 08, 01:18:30 AM EDT  
 AuntieRoo blogged...

Good Morning Dark Wraith,

Kudos on the mouse-overs. They are a nice addition to the blog.

I really don't have any comments just wanted to stop in and say hello to everyone.

Fri Jul 08, 03:44:14 AM EDT  
 SB Gypsy blogged...

Good Morning, Dark Wraith,

I don't recall how I got there, but there is this site that had me laughing my a-- off!

here

Fri Jul 08, 09:42:54 AM EDT  
 SB Gypsy blogged...

This guy makes eating spam seem positively pedestrian...

Fri Jul 08, 09:52:45 AM EDT  
 Dark Wraith blogged...

Good morning, Old White Lady.

Yep, I asked for it. I checked my stats, and now I have even more hits from Google using the search string "dark-wraith.com"!

I should've left well enough alone.

One funny aspect of it all is that Google isn't supposed to show blogs in its hit list, but I've seen plenty of them there, especially more recently. With the number of blogs easily over 25 million, now (and realistically probably closer to 50 million), it would be pretty hard for any search engine not to step into a pile of them any way it turned on the Internet, these days.

Among other things, that means the news blogs are going to easily swamp out the mainstream press in any news search... oh, wait, they won't because the search engines pegged the mainstream news media so their news usually comes first in the hit list. At least, sometimes it does, but not always.

One way or t'other, the blogs are on the march.

Talk about the lunatics taking over the asylum.


The Dark Wraith grabs the keys to the warden's kitchen.

Fri Jul 08, 10:10:54 AM EDT  
 Dark Wraith blogged...

Hey, Auntie Roo, I really am glad you stop by and drop a comment every now and then, even if it's just to greet everybody. It weirds me out a little when people just vanish here in cyberspace. There've been a couple of commenters here who were really good who just stopped commenting. It's almost impossible to find out whether they just got bored with coming to the blog or if something bad happened to them.

And by the way, the fun never seems to stop over at BlondeSense. For anyone reading this who hasn't been over there lately, Auntie Roo and the other regulars over there have been having a smackfest with some trolls who keep popping in to make some odd comment.


The Dark Wraith enjoys sitting on the sidelines watching the fur fly when the trolls go too far.

Fri Jul 08, 10:16:16 AM EDT  
 Dark Wraith blogged...

Good morning, SB Gypsy.

Here's the sad part: just about everything that guy was talking about, I've eaten... and in large quantities.

Not the dog food stuff, but all of those food products. Potted meats have been on my regular menu since I was a child. Pickled pigs feet are a favorite of mine. I'm not big on tripe all by itself, but it's okay as a filler in a few of my "po' folk" recipes.

At the expensive, private college where I teach from time to time, my three-hour, end-of-the-semester review session for the final exam always features snack foods for the students: I make sure to have all kinds of Vienna sausages, pickled pigs feet, potted meat products, smoked oysters, and sardines. I have had students literally come to the verge of blowing their groceries when they saw the pigs feet and the oysters. It's amazing how many young people these days have never seen those old-fashioned foods.


The Dark Wraith wants everyone to know what real food looks like.

Fri Jul 08, 10:24:24 AM EDT  
 SB Gypsy blogged...

Good Afternoon, Dark Wraith,

It always amazes me when I think about how homogenized and pasturized our (western) diet has become. When the coming collapse of the food net catches up with us, and our regular 10-15 foods go bust, I think most of us will starve!

And, not because of squemishness - the first "Survivors" tv show witnessed the contestants cheerfully eating rats. It will be ignorance, and the habit of waste that will do us all in.

There's a reason our forbears ate haggis, and pig's feet and other such, and it's not because they were weird or crazy...

Fri Jul 08, 10:57:39 AM EDT  
 Dark Wraith blogged...

You are right about that, SB Gypsy. After my father passed away and I had to move to a rustic farm life, I found out about the old ways, one of which is that there is nothing on an animal that should go to waste. I wasn't too thrilled about some of the parts, but it didn't take long to get used to an amazing variety of animal tissues that are no longer acceptable to the tastes of consumers.

Unfortunately, it's a little complicated nowdays because some of the organ tissues that would have been fine to eat probably aren't all that safe anymore because of toxins that tend to collect in them. I still eat chicken gizzards like there's no tomorrow, but I wouldn't use chicken neckbones to make a broth because of the chemical residues that tend to settle into that part of the bird when it's alive. The same thing goes for cow liver: it's still something I'd eat if necessary, but it concerns me that the animal's liver had been dealing with what could have been a tremendous load of chemicals that had gone into the cow from agricultural chemicals entering the food chain below the beast.

That having been said, I'll tell you this much: if you have to eat some less tasty parts of a cow, the few chances you get to have steak are like Heaven on Earth. Heck, even hamburger tastes pretty darned good if you've eaten fried brains a couple of nights in a row.


The Dark Wraith just realized that there's the distinctive sound of "BLAH-HA-HAWWWW" coming from some of the readers right now.
[Sorry.]

Fri Jul 08, 11:20:19 AM EDT  
 SB Gypsy blogged...

(chuckle) euuuww...including me, I'm afraid...


I think I'll save that revelation for after the coming collapse!



But a fat little coney over a campfire might be tasty.

Fri Jul 08, 11:27:50 AM EDT  
 Mr. Shakes blogged...

Good Morning, SB Gypsy.

Oh why did you have to mention haggis? Delicious haggis. Spicy haggis. Sweet scrumptious haggis. Haggis served with neeps and tatties. Haggis washed down with an 18yr old malt. My word, does this Scotsman miss his haggis. I’d even be prepared to go to the trouble of hunting one, if only this Dark Continent was home to the noble haggis. How I wish the Golden Hind had taken the haggis west; it would, after all, have made a fair exchange for the potato.

Yes, I would like some haggis.

Fri Jul 08, 11:56:26 AM EDT  
 Dark Wraith blogged...

The Dark Wraith is truly delighted by the culinary trend this thread has taken. Perhaps, Mr. Shakes, we can meet in the Highlands someday to eat haggis and blog about the experience as we are doing so.

We could have a real-time video feed and include interviews with locals about their variations on the basic recipes.


The Dark Wraith contemplates the blog hit counter racking up millions of visitors.

Fri Jul 08, 12:05:53 PM EDT  
 Mr. Shakes blogged...

Mornin', Wraith.

That's one hell of an idea. We could be the Internet's answer to Martha Stewart. If we are really smart about it we might even be able to license a line of highly overpriced kitchen and household wares, to be distributed through a nation-wide chain of mega stores.

We might want to consider investing our profits somewhere other than with Merrill Lynch, though.

Fri Jul 08, 12:17:29 PM EDT  
 SB Gypsy blogged...

Good Afternoon, Mr Shakes!

Haggis - My best friend (I'll call her Betty) has a daughter (Heather) who lives in Scotland.

Betty was visiting Heather, and had the brainstorm to buy some haggis & take it home & warm it in the microwave..... Heather's husband banned haggis from the household after he got a whiff of the stench of warmed-over haggis!

Fri Jul 08, 12:51:15 PM EDT  
 SB Gypsy blogged...

...Betty said it was just about the most disgusting thing she'd ever smelt - and we were vegetarian for about 15 years, and I've cheerfully eaten whey, yogurt, sprouts, homemade cheese and homemade tofu even.

Fri Jul 08, 12:56:16 PM EDT  
 Dark Wraith blogged...

Good afternoon, SB Gypsy.

Whey, yogurt, sprouts, homemade cheese and homemade tofu aren't even in the same league.

Now, cooking up an old he-moose on the kitchen stove... that will make a whole neighborhood uninhabitable for days.



The Dark Wraith looks back in angst.

Fri Jul 08, 02:06:51 PM EDT  
 Mr. Shakes blogged...

Afternoon, SB Gypsy.

Yes, preparing haggis in a microwave is probably not a good idea. Deep fried haggis, though, is a different matter. There's nothing like a sheep's stomach, stuffed with offal and oatmeal and coated in thick crust of coagulated fat to satisfy one's appetite.

DW - Seems like people are getting rather excited about the employment numbers. What was it: 140,000 new jobs in the last month? Is that really enough to keep ahead of population growth/immigration, etc?

Sounds like folks are beginning to snatch at straws.

Fri Jul 08, 02:17:23 PM EDT  
 Dark Wraith blogged...

Cripe, Mr. Shakes.

I'm staring at the jobs numbers and grumbling to myself, 'This isn't good at all'.

Good Lord, these numbers are pitiful, and yet we have the mainstream media pundits wetting all over themselves about how the stock market is "soaring" because of the good jobs numbers report.

---------------------------

MEMO

TO: Mainstream Financial Media Pundits
FR: Dark Wraith
DATE: 8 July 2005
RE: You ignorant hoehandles

No, stocks are not going up because the jobs figures released this morning are spectacular. In fact, 146,000 belongs on a Website with the URL thatsucks.com.

Investors are happy because the new jobs report was so weak, especially in light of the fact that it missed the consensus forecast on the downside by a mile.

So, Mainstream Media Pundits receiving this memo, why would the investors of the world be happy because the jobs report was not good?


encl:/
cc:/ TDWF
bcc:/


---------------------------


The Dark Wraith is expecting them to respond any minute now.

Fri Jul 08, 02:58:19 PM EDT  
 SB Gypsy blogged...

Because that would mean that the very expensive american labor is being aced out of all the worldwide new jobs by poor suckers in India and China who will work for 20 cents an hour...

(Have you noticed that our money is so devalued that we no longer have a "cents" sign on our keyboards???)

Fri Jul 08, 03:04:33 PM EDT  
 Dark Wraith blogged...

Well, SB Gypsy. I can give my two ¢ worth, or I could give a €, or I could £ the point home, or I could have ¥ for something a little different; but I cannot, as of yet, provide an entity code for the yuan symbol.


The Dark Wraith considers that a good sign.

Fri Jul 08, 03:18:11 PM EDT  
 Mr. Shakes blogged...

Tres amusing, Mr. Wraith!

I recently began work for what, I suppose, would best be described as a young and upcoming asset management firm. A big change from the microscopic little broker-dealer I was hiring out my services to before. Anyway, my cubicle is situated right next to the trading desk, which is a good place to be, since they have a television set that they will tune to the Cubs games as they come on. When the Cubs are not driving me mad by being slaughtered in the charnel house that is Wrigley Field, the TV is tuned permanently into Bloomberg. As a result, I am forced to listen to the ebb and flow of enthusiasm evinced by the financial media pundits, as they bat back and forth the days’ economic data.

I tell you, it is extraordinary. Even I, who have no formal education in finance or business, am regularly amazed by the incredible shallowness and stupidity with which they dissect the numbers. As you intimated in your memo, in a market for which the greatest fear is rising interest rates, bad news is good news, as it reduces the chances of the Fed continuing to raise rates as quickly as they have been. As a result, after a major piece of economic data is released, the indexes often behave in a very contrarian manner, at least for a short while. Not once today have I heard this mentioned by the “experts”. Not once have they wheeled out even the most fleeting segment addressing the downsides of this new data.

Their worst trait, though, is not their enthusiasm for turning bad news into good news, but the delirious euphoria that they reserve for the slightest piece of positive data. Last week, when oil prices dipped slightly for a couple of days, their joy and optimism soared to truly orgiastic levels. Predictions of $40 a barrel by the end of next month, and $20 a barrel by next year were made without the slightest hesitation, and when anyone had the temerity to disagree, they were shouted down in disdain. Now that we’re back up into nose bleed territory, all they talk about is how oil prices are being inflated by as much as $20 a barrel by speculators, and that the price is sure to fall eventually. Isn’t it interesting how those who are so contemptuous of people claiming that a housing bubble is in play, are always the same ones who are so quick to claim there is a bubble of titanic proportions in the oil market?

Such optimism! Such self assurance! Such contempt for the Doom-and-Gloomers! Oh, it must be fun to be such a cock-sure ass.

Until tomorrow comes, and the dawn breaks and the party is over.

Fri Jul 08, 04:08:55 PM EDT  
 Dark Wraith blogged...

Well, first of all, Mr. Shakes, you hit it right smack-dab on the money about why the stock markets jumped today. Yes, the bad jobs numbers increase the probability—actually, it's more like 'the hope'—that the Fed will lay off the interest rate hikes in the near future.

To your broader point, I have seen so much of just what you're describing: this breathless enthusiasm for good news, even to the point of making up good news about the future. I've even heard that talk about $20 per barrel oil next year.

Yeah, right.

Mr. Shakes, I'll bet I could start my own financial news show and make a fortune just by giving people—especially investors—a break from the joy-a-minute stuff that pumps out of their TVs right now. People could tune in to The Dark Wraith Network and get somber forecasts and analysis 24/7. And just like even bad news is good news on the mainstream networks, The Dark Wraith Network would find misery and gloom in even the happiest, most wonderful news coming across the wires.

Yes, by cracky! That's an idea on which I need to move forward.

The Dark Wraith Network
You want gloom? HERE'S yer gloom.


The Dark Wraith sees big-time Neilson ratings.

Fri Jul 08, 04:26:50 PM EDT  
 Anonymous blogged...

DW, Your sales tax proposal is not identical, but nonetheless similar to the one proposed by Sen. Richard Lugar the year he ran (briefly, IIRC) for President.

- oddjob

Fri Jul 08, 11:28:36 PM EDT  
 Dark Wraith blogged...

Good evening, OddJob.

Now, that's really interesting to me. I didn't even know Lugar had made a full tax policy platform position.

I am tempted to look thoroughly through his proposal, but I think I shall wait until I've done the last installment in this series on Sunday; then I'll see if the two are entirely parallel. As I see it, the last part of my proposal might seem somewhat peripheral to what I've set forth so far, but it's actually entirely critical to the success of a national sales tax combined with a "reverse regressive" rebate.

Actually, I suppose I'll write the draft of my last article on tax reform, then look at the old Lugar proposal so I can at least acknowledge it in the third installment.

Thank you for letting me know that an idea like this has been offered before.



The Dark Wraith is, however, rather troubled that he is thinking (at least in a fiscal matter) like Richard Lugar.

Sat Jul 09, 12:08:27 AM EDT  
 Wild Clover blogged...

DW-

My, this thread is getting long. My version of Opera is the latest, just with ads, and does fine with your latest tweaks. Dial-up, slow processer, WIN98 and a tiny monitor all conspire to do weird things with the comment pages and poll pages. It does the same with Haloscan on AMericablog, so I'm figuring it as a problem on my end. Basically, my new windows for comment type links open off-screen to the bottom left and I have to maximize &/or move the new window. I don't believe this is a problem on a larger monitor(it got moved because this one fots better on the desk, and we were SUPPOSED to have a brand new bells and whistles system up and running months ago. Sigh. I think the bios chip in the NEW mother board gave up the ghost after having things up and running for about 6 hours. It has never booted again.)

Anyway, this my report from Operaland...excuse my babbling, I just got off work 1 1/2 hours ago and should be in bed.

Sat Jul 09, 01:54:12 AM EDT  
 Wild Clover blogged...

Correction...

I just opened Opera and got a notice of a new version, which I am downloading now. If there's any difference I'll let you know.

Sun Jul 10, 01:30:04 AM EDT  
 Dark Wraith blogged...

Opera has a new version? Geez, Wild Clover, I think I burn more time downloading new versions, patches, upgrades, and whatnot than I do loading actual Web content, these days.

I suppose I'll open Opera and find out how long the download is going to take.


The Dark Wraith was planning to hit the hay a bit early tonight... but n-o-o-o-o!

Sun Jul 10, 02:10:04 AM EDT