Taxes & Profit

Thief (soundtrack)

Thief (soundtrack) (Photo credit: Wikipedia)

One of the rather useful aspects of philosophy is that it trains a person to examine underlying principles rather than merely going with what appears on the surface. Such examinations often show that superficially consistent views turn out to actually be inconsistent once the underlying principle is considered. One example of this is the matter of taxes and profits.

One of the stock talking points in regards to taxes is that taxes are a form of theft. The rhetoric usually goes something like this: taxes on the successful/rich/job creators is taking the money they have earned and giving it to people who have not earned it so they can get things for free, like food stamps, student financial aid and unemployment benefits.

Under the rhetoric seems to be the principle that taking the money a person has earned and giving it to those who have not earned it is theft and thus wrong. This principle does have considerable appeal.

This principle, obviously enough, rests on the notion that earning money entitles the person to that money and that not earning the money means that a person is not entitled to it. Simple enough.

A second stock talking point in regards to wages for workers, especially the minimum wage, is that the employers are morally entitled to (attempt to) make a profit and this justifies them in paying workers less than the value of their work.

Not surprisingly, those accept the first talking point also accept the second. On the face of it, they do seem consistent: the first says that taxes are theft and the second says that employers have a right to make a profit. However, these two views are actually inconsistent.

To see this, consider the principle that justifies the claim that taxing people to give stuff to others is theft:   taking the money a person has earned and giving it to those who have not earned it is theft and thus wrong.

In the case of the employer, to pay the worker less than the value of his work is to take money the worker has earned and to give it to those who have not earned it. As such, it would also be theft and thus wrong.

At this point, it might be objected that I am claiming that an employer making a living is theft, but this is not the case. The employer is, like the worker, entitled to the value of the value she contributes. If she, for example, provides equipment, leadership, organization, advertising, and so on, then she is entitled to the value of these contributions.

Profit, then, is essentially the same thing as taxing a person to take their money and give it to those who have not earned it. As such, it should be no surprise that I favor justice in regards to both taxes and wages.

My Amazon Author Page

My Paizo Page

My DriveThru RPG Page

Enhanced by Zemanta
Leave a comment ?

13 Comments.

  1. Mike, as usual your analysis of “value” is unmoored from any factor that would give the empty word a meaning. Similarly, you miss an opportunity to anchor the legitimate value of the contribution of government in the marketable advantages it creates even as you also miss the underlying parallels between taxation and theft.

    Value in Government vs. Theft

    What virtually everyone, left, right, and center, misses about government is that it operates as though the entire economic entity under its jurisdiction is an individual firm. The various organizational layers of the government are presumably each adding some contribution that make the whole “firm” function in a way that makes it more effective in a larger world of competing interests. In theory this is all well and good. An ideal government will only contribute those services that add to the overall effectiveness of the economy, and will thus have to charge the economy only for valuable services. The question, then, is not whether government is important. It clearly is. It is whether the government provides only those functions it is best adapted to provide for the good of the whole economy.

    Where, then, is the possible parallel with thievery? It comes with a misunderstanding about the relationship between effort and work. One of my favorite illustrations of this relationship comes from having watched a congressional debate, probably in the 1980s, about reducing paperwork. Senator Edward Kennedy argued stridently against the reductions because people’s jobs depended on the work. But, really, if the paperwork could be eliminated and all that is lost is jobs was it doing work? No. Despite the effort for which people were being paid real resources taken from the rest of the economy, the secretarial and clerical staff doing all that paperwork were laboring in Sisyphean futility. In the economy as a whole, as in Physics, no amount of effort applied to the net failure to move an object can be counted as work.

    The trouble with government is that, as can be seen in Kennedy’s impassioned concern for the continued employment of those laboring so hard to accomplish so little, it is often difficult to see up close what effort has real value and what effort does not. That is where the thief paradigm gains traction. Most people who make a living in crime are really struggling. Their lives require a good deal of effort even if their efforts do not contribute to the overall well-being of society. When they see others seeming to have an excess of resources they are able to justify the application of coercion to creating involuntary transactions so that they may be sustained.

    The firm-like-ness of government can be mirrored in actual firms, of course. But in the larger economy multiple private firms perform the same function. If one has lots of people doing futile efforting for which the rest of the firm is being charged and its competitors do not its costs will not permit profitable operation. It will fail.

    History is littered with national governments failing from not being able to tell the difference between make-work and work. This is an excellent reason for placing the maximum number of societal functions under the aegis of multiple, competing firms/ corporations/ systems/ governmental subunits (as in American states).

    Value of Labor

    In addressing the “value” of work in the present day it is very difficult NOT to miss the point. It is economically not possible to pay workers less than they are “worth” without the collusion of government. That is because the value of some economic contribution is related to the availability of that contribution when compared to the availability of substitutable contributions and also to the marketability of the product to which it contributes when compared to the products that could substitute for it. If that sounds conceptually difficult you have grasped the obvious. This is a process that has close parallels in evolutionary biology.

    To pay people less than their labors are “worth” one must be able to constrain their ability to market their labor to multiple potential purchasers of labor. If there is no such restriction, however, and the sale of their labor will not provide for their needs the truth is that the “value” of their labor is not sufficient to sustain them.

    I can feel people recoiling in horror at that last sentence, and it would be simplistic to leave it at that. As I said above, it is not possible to pay people less than they are worth without the cooperation of government. So, for example, if a large underutilized labor pool is available and no firms are jumping in to use them something is almost certainly making the apparent or anticipated cost of using their labor too high to make a business appear viable.

    These apparent costs could be in the form of barriers to entry to markets such as regulations on incorporation, testing requirements, minimum wages, etc., that cause firms not to form in the first place, or to grow more slowly once they are established. High barriers to entry reduce competition for established large firms and artificially inflate their profitability while simultaneously stunting technological dynamism. By the same token established firms maximize the profitability of established products by reducing reliance on low-skilled labor in economies that can easily substitute one employer for another. They either automate processes or use labor in poorly established economies.

    In a dynamic economy this is countered by small firms that create substitutable products people find more desirable. In the 1980s young people bought “boom boxes” to provide the new experience of portable stereo. That made jobs for unskilled labor for a while. Boom boxes were replaced by CD players, and then I-Pods, and then cell phones. All along the way the creation of substitutable novelty in these and other fields challenges the hegemony and profitability of established products and the firms that exploit the market niches they occupied. It also created opportunity for unskilled but adaptable labor to have “value”.

    There is no value without context, and the amount it costs a worker to live is irrelevant to his or her value in an actual market. One of our deepest problems in dealing with all these concepts is that we are tempted to want to hold some aspects of our consideration constant so that we can examine the resulting stable (or at-equilibrium) economy as though it were a science experiment. That’s a little like attempting to study the metabolism of an animal by first killing it. Another problem is that we are confused by faith-based moral concepts like “fairness”. In biology the cells that are justified merely by their existence are called “cancer”.

    People making value judgements on Economics could take a lesson from that.

  2. Lee Jamison,

    A trap you can walk into, the trap the Soviets walked into, and surprisingly or not, the trap the western world is in.

    Theories.

    Reality is obstinate in its’ bad behaviour. And it’s not the irrationality of people alone; if they were consistently irrational then we might be able to structure functioning theory around this irrationality. But every time you think you’ve found the answer they go changing the question, with another paradox, and new contradictions.

    A simple paradox. The Russian planners in charge of producing shoes, saw that there was a high demand for certain designs of shoes that were in limited production. To make the people happy, they upped production. But paradoxically, the more of these fashionable designs they produced, the more unfashionable the shoes became. And they were left with vast stores of shoes no one wanted – and the people were unhappy.

    Before you think you’ve cracked their problem, I’ll say that this is an irresolvable paradox. Whichever way you look at it you lose. If shoes are in limited production it can mean that they’re unfashionable. But if they’re fashionable it can be because they’re in limited production.

    No one has cracked the puzzle. The Russians ended up with mountains of unwanted shoes – but western companies, may not have the mountains of shoes, but they have to spend billions upon billions, in an effort to convince the fickle public to buy their shoes. And it doesn’t always work. The laws of supply, demand, pricing, etc, they are simply not well behaved.

    For all the economic resources Nike throw at their product, all it might take is catchy pop tune associating Nike with uncoolness, and Nike will not be able to give their shoes away. Or that fickle change in taste may come from nowhere. A child may see the most unfashionable child at school wearing Nike, and that child may set off a ripple of distaste that brings down the Goliath.

    But these paradoxes are not limited to shoes. If you look at the Dotcom bubble and collapse – post hoc rationalisations sound coherent; it’s easy to shoot a hole in the side of a barn, then draw a bulls eye around it. “The Market” – ostensibly adults, not children coveting running shoes, behaved absurdly. Governments behave like this too. Every time the paradoxes present, the theoreticians smoke their pipes, and stroke their beards. They have their eureka moment and apply a patch to the dam wall – and a leak, of course, springs somewhere else.

    The arguments you have made are largely theoretically sound.

  3. Lee Jamison,

    “As I said above, it is not possible to pay people less than they are worth without the cooperation of government.”

    Sadly, this is precisely what does happen. The “inflation rate”, which in contemporary economic practice is theoretically controlled by upping the central bank benchmark rate. The inflation indices are not based on the prices of all goods – assets that wealthy people own are exempt. Generally it’s the food basket of the typical worker. In the last 40 years this has been very effective at transferring wealth from the average worker to the average very rich person.

    The trick works because people don’t like inflation. The rich because it devalues their cash. And the worker thinks everything is becoming more expensive. For the wage earner this is true in the short term. The riches percentile have more than doubled their wealth in the last 40 years. And this has been purely due to this transfer trick with interest rates. And absurdly, by the end of the current global crisis, they may have more than tripled their wealth for the same period.

    “So, for example, if a large underutilized labor pool is available and no firms are jumping in to use them something is almost certainly making the apparent or anticipated cost of using their labor too high to make a business appear viable.”

    This is another perversity. Big capital wants a pool of skilled unemployed people. It’s called NAIRU. The non-accelerating rate of unemployment. It’s a theory of Milton Friedman’s. Look it up on Wikipedia.

    Governments apply NAIRU, but so do big corporations. They can go to the technical colleges, specify the skills they’d like taught, then when the hapless graduates graduate, some get jobs at much reduced rate, and many find themselves unemployed.

    That isn’t some leftie conspiracy theory, that is how it works. Milton Friedman was no leftie.

    Absolute fairness can never be achieved. If you consider anyone to be below average intelligence to be stupid, then whatever way you play it, 50% of the population will always be stupid. In terms of productivity, 50% will always consume more than they produce. There is no other way to do it. 50% will always be short changed. This is something you have to really think about – it is an iron law. For 50% of the population under whatever system you can imagine there will be injustice.

    But in terms of injustice – could you justify any situation where 1% of population consume more than the 99%.

    Leadership my ass. If Sheryl Sandberg didn’t have some system of coercion to back her up, she’d be only able to motivate me to the level of enthusiasm of a Soviet era Peoples canteen worker – that’s right, bribe me or I serve your tea cold – a little more and I won’t spit in it.

    *The communist ideology of the Soviets was blamed for a lot of their poor treatment of the working class. But many of the techniques originated with the Tsarist regime. Serfs were effectively, even defined by law, as partially free slaves (very partially). The threat of deportation to Siberia as a tool of executive encouragement was a Tsarist innovative – though often ineffective, as serfs would flee to Siberia to escape forced labour on Tsarist farms.

  4. JMRC,

    I have no illusions that the problems are easy, but poor quality thinking on the issues is fraught with mirages of seeming understanding that evaporate as one gets closer to what we thought we saw. That is why I spend so much time on the subject of value. Most people have a concept of value born of ideas of fairness. Fairness, however, is an essentially religious concept, a moving target at best and an invitation to a circular firing squad at worst.

    If we’re going to make important decisions about economics we should be clear what we’re deciding on. If you make business decisions based on “value” understand what makes something valuable and why what is of value today may not be of equal value tomorrow. Then, if you do not want to be a cut-throat society that sets its unneeded or unwanted infants and weak individuals outside the city walls to be eaten by bears, make clearheaded positive decisions about how we deal with the people who are worth more socially to us than they can be worth to us in the formal economy.

    This is one of the most important areas in which allowing subunits of society to conduct experiments can benefit everyone. If the central government is to be the first and last arbiter of every possible social experiment economically and socially disastrous failures are inevitable. On the other hand, if each of the many subunits of a government, such as the states in the U.S., are allowed to conduct contrasting experiments there may be many failures and some successes. That gives the voters of the several states many examples of different ways to look after their interests while attending to the “general welfare”.

  5. Lee Jamison,

    People sometimes say I am unhinged, so I am happy to add unmoored to my collection. :)

  6. Mike, in fairness, I do draw a distinction between you and your analysis. That said, it is not hard to imagine an extensive Calder-style mobile swinging through wind-driven arcs with labels of all the various negative descriptions that have been applied to me by critics over the years.

    It would probably be too large to hang.

  7. Lee Jamison,

    “Fairness, however, is an essentially religious concept, a moving target at best and an invitation to a circular firing squad at worst.”

    Yes, but this is what religion deals with; materialism. In the absence of, or even with, formal indoctrination people will invent their own religious rules and religious beliefs, concerning materialism.

    The whole gamut of materialism is covered by formal religion. Eating, drinking, and sexual relations, as well as economic. Of course, churches focusing on the sexual conduct of the Others, has been their way of avoiding discussing elements of materialism they’d rather not. Pope Francis has announced his intention to draw the Catholic Church back from those issues – it will be interesting to see how that works.

    Economic disasters, simply by their nature, are man made. The Irish potato famine was caused by a blight fungus, but the deaths of over half a million people, and the subsequent halving of the population of Ireland (they fled to Amerikay – and many more were deported to Australia as forced labour) was the result of English central government greed. As incredible as it sounds, the English withheld emergency aid from Ireland, and even confiscated aid corn from America, on the grounds death through starvation would teach the Irish personal responsibility.

    The current crisis in Europe, is not the result of central government, it’s due to the greed of local government piggies. Economic disasters are not caused by the poor and powerless – they’re nearly always the result of selfish, greedy, and stupid social elites. The local governments of the PIIGS, (Portugal, Ireland, Italy, Greece, and Spain), ran up huge debts using Germany’s credit rating – Germany sat back and neither said nor did anything. The money wasn’t wasted on socialist spending . It was mostly private banking, and Ponzi scheme property speculation. Capitalism in Pig states is a little different from German capitalism. In a pig state, a porcine rural conservative of high social standing, could trot into a bank, the bank manager; another fine specimen of intuition over intellect, would fill his wheel barrow with absurd amounts of cash, for the purpose of harebrained and lazy schemes – mostly involving property.

    The bank managers were not completely stupid – typically, in malfunctioning states, the local elites can always depend on local government to rent or buy their speculative purchase at above market rates. If the market fails for these elites, the local government (constituted from the same pool of elites) can be depended on to intervene and confiscate from those ungrateful workers in the vineyard, and give to the son of the vineyard owner. So that the Kingdom of Heaven can continue on earth, with its’ rightful lords and ladies in their paternalistic place. Whatever you want to call this, it’s not capitalism. In the long run it doesn’t work. The basket case economies of Europe are perennial failures because their local elites are feckless and greedy. The Germans, the real power in the central government, would not allow quantitative easing to be used to bail out the feckless, because they’re well aware, that would not force the political and social change required. The same greedy pigs would dig their heads in the swill, lick the trough clean, and then squeal for more.

    “If the central government is to be the first and last arbiter of every possible social experiment economically and socially disastrous failures are inevitable.”

    It greatly depends on the nature of the central government. The central government of Britain, was and is located in England. The parliamentarians who represented the other states; Ireland, Scotland, and Wales, were essentially English. England, the seat of central government, and precisely; the south of England, was enriched at the expense of the other countries. The central government of the US and the EU is nothing like the historical government of Britain. Though the blowhards of America misrepresent Warshington as such.

    Warshington is depicted as homosexuals and non-traditional Americans dipping their straws in the great land of America, and drinking the milkshakes of fine conservatives wealth creators, who live in the personal responsibility states. They drink your milkshake – drink it all up.

    Of course when you look into who has been dipping whose straws in whose milkshakes, it’s a very different picture. Look at the photos of any Tea Party rally, and those fine people look like they’ve been enjoying many a helping of government cheeseburger, sides of federal fries, and washing it all down with a long cool drink of Warchington milkshake.

    Florida receives $1.39 for every $1 they pay in federal taxes. What is their Tea Party protesting about? “Get your goddamn guberment hands off our guberment cheese!”

    West Virginia get $2.83, for every $1 dollar paid. Talk about “Free Stuff”. West Virginia has a Tea Party. A never ending Tea Party.

    http://www.ritholtz.com/blog/wp-content/uploads/2012/02/give-take-small-final.png

    “On the other hand, if each of the many subunits of a government, such as the states in the U.S., are allowed to conduct contrasting experiments there may be many failures and some successes.”

    The US states are not independent units running experiments. In many cases the experiments are complete failures, depending on direct wealth transfers through federal taxes to keep them afloat. And strangely, many of these states have Republican governments. The big difference between the EU and the US, is the failed states of the EU can’t vote themselves tax money from the successful states. Many American states are economic basket cases far worse than Greece.

    Imagine Italian conservatives after blowing billions of German taxpayers’ money on Bunga Bunga parties, then lecturing the Germans on the need for lower taxes, and personal responsibility. Or told the Germans to cut their socialised health care, so Italian “wealth creators” could get to keep more money.

    “That gives the voters of the several states many examples of different ways to look after their interests while attending to the “general welfare”.”

    Yeah, I’m all ‘live and let live’. If kids want to have some kind of conservative hippie commune, I’m fine with that. But they can’t come around neighbourhoods where there are people working, pan handling, and lecturing folks on their sexual morals. (not everyone wants to life that sexual life style)

    There is a great irony in the American federal system. Since 1945, the American controlled IMF and World Bank, has been dictating economic policy to states of the world and heavily penalising them for non-compliance. The IMF is currently a partisan of the European Troika. Countries under Troika control do not have democratic independence. They have to do as they’re told, until their house is in order. They have been brutal to countries. If a bellyaching American state seceded as they often threaten. Far from finding new freedoms, the IMF would pounce like a hungry wolf. Forget pork barrel, there wouldn’t even be pork bones. A Maine cop, would find his salary cut in half, his taxes doubled, and whatever funny money the Republican Peoples Republic of Maine printed up not much use outside or even inside the new nation. He would likely find himself turning to crime; drug trafficing and people smuggling, or fleeing to the United States; over that Iron Curtain, to land of the “free stuff”. All the free stuff they hand out to illegal immigrants, like free below minimum wage jobs, free accommodation for three months in prison awaiting deportation, free sanctimonious lectures. Bumper stickers that say “Speak English, you’re not in Maine now”

  8. JMRC,

    Was all that intended to dispute something I said?

    For example, you mention the Irish Potato Famine. My recollection of the famine was that there were multiple issues attendant with the potato blight. What has me puzzled about your use of the famine is that it is such a classic example of a central government creating perverse economic conditions (absentee landlords, rents paid out of Ireland, religious oppression, tone-deaf and insensitive public administration, etc.) and then killing the patient with the cure that it seems rather ill-fitting for a complaint of local failures.

    Similarly, your complaints about PIIGS is fascinating principally because none of it would have been possible but for the centralized access to suckling on the economic power of Germany- made possible by the creation of the European Union. Local national governments could not have spent money as they had for the last fifteen or twenty years as freestanding units. Nor could their bank managers have been so profligate without that centralization of massive access to cash that seemed to have neither bottom nor risk.

    When you discuss the amount of money going to Florida (or, indeed, ANY American state) you’re really discussing something that is possible only because of-
    1. federal mechanisms carefully constructed over more than half a century to make states dependent on federal coffers and-
    2. massive deficit spending which, in recent years has ventured into a fantasyland in which one in every four federal dollars was a figment of someone’s imagination. If you believe as I do that debts are theoretical but products are real Florida’s actual product flow is very close to equilibrium if the federal monetary inflows are only 39% over outflow. Even there, though, the issue arises BECAUSE of the central government and the capacity it provides to people who would otherwise have to live in a far more chaste fiscal environment to use influence and personal relationships to pretend reality is not a constraint on the well-connected.

    To add to problems with banks there is the perverse incentive of bankers who make lots of money in commissions if they take big risks and win, but lose nothing if they lose big money. All the while they work for banks so big they can hold national governments hostage. When the banks risk themselves into insolvency the central banks make them whole.

    You can claim that is a lot of examples of local people being bad, but is it not clear as the Sun in the sky that when you pay people handsomely for doing bad things, and even set up systems virtually designed to make those bad things PROBABLE you will get more bad things? I’m capable of thinking like an amoral banker. The prospect of being worth only $150 million after I’ve gotten caught and paid my fines and legal bills strikes me as not a huge disincentive. On the other hand, before I’m caught I have in hand half a billion or more and can pay senators to carry my golf clubs, Then, perhaps, I can make it so I never have to pay the price of using the power of a central government and central bank to distort local and regional economics to favor me.

    But you go right ahead blaming ambitious people for seizing the profitable opportunities spread at their feet by politicians in control of vast resources.

  9. Lee Jamison,

    “For example, you mention the Irish Potato Famine. My recollection of the famine was that there were multiple issues attendant with the potato blight.”

    Yes, it was a very complex catastrophe. The blight itself is literally the straw that broke the camel’s back. It isn’t the case there were no warning signs – it was England’s relationship with its’ colonies. There were similar famines in India, for similar reasons.

    “What has me puzzled about your use of the famine is that it is such a classic example of a central government creating perverse economic conditions ”

    The point I was making is not all central governments are the same. If you look at Britain, even today, you see the effect of bad central government. All the wealth of Britain was sucked into a small corner of south east England. Even now, there is a permanent economic distortion that keeps the other large cities permanently depressed.

    For comparison, the central government of the US is nothing like the central government of Britain. If it had been, all the wealth of the US would be concentrated in a single state. Even Germany has a federal system – so there is a greater distribution of wealth around the country. The central government of the EU is actually very weak. Nowhere near the powers of the US federal government. (In the EU or US, there isn’t a central government wealth grab, for the sake of the seat of central government – this makes them historically very different from forms of government that have gone before.)

    “Similarly, your complaints about PIIGS is fascinating principally because none of it would have been possible but for the centralized access to suckling on the economic power of Germany- made possible by the creation of the European Union.”

    First I’ll say, the major benefits of the EU were and are easy and open interstate trade. And the single currency was and is very useful for this. Even Germany would be in big trouble without these things.

    All countries in Europe are different from each other, some are more different than others. And Germany, behaved very differently from the others over the last few decades.

    There wasn’t wealth transfers from Germany to the other states – as happens in the US. In fact it’s been the other way around. The Germans used the market very well, so they had net inflows.

    There are upsides and downsides to the single currency. The downside is any member being irresponsible with it – or worse, several members abusing it at once.

    It’s the case of a family credit card, with a low interest rate. Very useful for all members of the family for essential purchases – but if a slightly wild teenage daughter or two goes on a mad shopping spree – you get the picture.

    The thing about entering the single currency is everyone was aware that this could happen – and the individual governments swore blind for years before hand they would be responsible. Which in reality, in a way, many were – what they did not do is slam the breaks on their private banks.

    “Local national governments could not have spent money as they had for the last fifteen or twenty years as freestanding units.”

    No, they wouldn’t have, because they couldn’t have. The markets would not have let them get away with it. They would have hit their credit limit very fast. And had the wolf of the IMF breaking down the door, eating all the little pigs. The root of the problem is a political one. The governments of the PIIGS, believed they would get a gentle bail out. They believed they could abuse the European Central Bank. I’ll say this, it’s not just the governments, it’s their elite class. In normal circumstances they could get away with murder in their own countries – completely abusing the political and financial system. The economic consequences for the majority of the populations were terrible. But they may not know, or find out for decades, if ever, what really happened.

    For Europe to stay together there has to be huge changes. It doesn’t make sense, that after southern Europe borrowing and spending so much money, that the average southern European was much poorer than a northerner even when times were good. In all likelihood, the missing cash is sitting in German banks.

    “You can claim that is a lot of examples of local people being bad, but is it not clear as the Sun in the sky that when you pay people handsomely for doing bad things, and even set up systems virtually designed to make those bad things PROBABLE you will get more bad things?”

    But that is a strong argument against the devolution of powers to local governments. With the case of Ireland, planning (that’s permission for building and infrastructure) had been centralised, but the strong argument was made that local governments knew better, and would better in response to local needs. They even had skin in the game, as it was their own local habitat. Planning powers were devolved to local government.

    Local governments, especially in rural areas tend to be made up of the local elites – the big fish in the small pond. All kinds of social and familial ties between local business and local government, the local bank manager. A whole system of clientelism. Small minded, shortsighted, individuals playing with explosive materials. You don’t even need bribery and corruption for it to go horribly wrong. It would be comical if the results weren’t so devastating – even for the architects of the projects.

    A planner in a remote location, central or otherwise, with no connection to local parties, will nix an absurdity before it has the chance to get off the ground. And if the locals aren’t happy, they can always find some way to have a dialogue. But “we want to build an apartment block and shopping centre in the middle of nowhere because my cousin owns the field, and my other cousin has a little building company.”, is not going to cut it.

    Spain now has more airports than Germany. And in locations where the planners never gave a realistic thought to any real people – that is people from beyond the realm of wild Iberian fantasy – would ever want to fly there.

    “But you go right ahead blaming ambitious people for seizing the profitable opportunities spread at their feet by politicians in control of vast resources.”

    We’re not talking about astute and industrious entrepreneurs, who put their shoulder to the wheel, we’re talking about idiots. And the schemes of idiots have a habit of taking down many innocent bystanders as well themselves.

    “If you believe as I do that debts are theoretical but products are real Florida’s actual product flow is very close to equilibrium if the federal monetary inflows are only 39% over outflow.”

    It’s a lot more complicated and there’s no real way of telling. The states would be at economic equilibrium if the if the net federal flow was 0% – and the other net flows were at 0%.

    39% is just so large, you cannot not expect it to have a huge distortion on the economy. If you cut it, you’d have to very painfully rewire the economy – or more watch the economy rewire itself. But if you look at Maine; where it’s 89%. For the size of the state, size of the population, resources available. They could probably live as well as a Scandinavian country, without the transfer. If Texas were to secede, they would likely lose the benefit of their oil and gas, resources often distort the economy of the resource providers – it’s called the resource curse. Venezuela is having terrible inflation problems at the minute. Their government could manage it a little better or a little worse, but it’s simply their economy cannot absorb that much oil money. Every way they lose.

    The reality is though, and it’s the same reality with Europe, is that if Florida did secede, it’s not like the rest of North America is going to float away off into the sea. That’s the real world. And Disney Land it is not.

  10. Doris Wrench Eisler

    It is good to see the issue constructed as possible theft on the part of the employer who doesn’t provide remuneration due the worker. It is theft and also bad economics because economics doesn’t exist in a vacuum but in a society, and it is failed economics if the society doesn’t work for lack of circulating money in the hands of potential consumers. There is hardly a point to higher productivity if those goods and services can’t be sold. Every depression, which we now call recession, came about for that very reason. It is that balance between employer/employee remuneration that has to be fairly determined for the good of all, and therefore can’t be left to the exploitative who see nothing ethically or practically wrong with forcing the lowest possible wage on the worker because he is a mere individual pitted against the powerful corporation. That is the situation we now have with the 1%/99% divide even now defended by some economists, brought about both by squeezing the worker and fraudulent banking and mortgage practices. We have been taken to the cleaners – but it won’t wash.

  11. JMRC,

    You write- “For comparison, the central government of the US is nothing like the central government of Britain. If it had been, all the wealth of the US would be concentrated in a single state. Even Germany has a federal system – so there is a greater distribution of wealth around the country.”

    Sadly, an examination of the distribution of wealth, and particularly of extreme wealth in the United States show we are losing ground on that decentralization of power. According to Forbes Magazine, five of the six richest counties in the United States are within fifty miles of Washington, D.C. The U.S. is becoming a serf state.

  12. Lee Jamison,

    “Sadly, an examination of the distribution of wealth, and particularly of extreme wealth in the United States show we are losing ground on that decentralization of power.”

    Between states there are huge economic differences. But very crucial, within states there are huge inequalities of wealth.

    Take a look at this map.
    http://visualeconsite.s3.amazonaws.com/wp-content/uploads/us_income_inequal_5_15_2006.jpg

    “According to Forbes Magazine, five of the six richest counties in the United States are within fifty miles of Washington, D.C. The U.S. is becoming a serf state.”

    Yes, the counties around DC are very wealthy. But they’re are also lots of other facts about these counties. They have the most educated work force in America. Infrastructure is not simply roads and bridges, it’s people. All kinds of businesses with no direct connection to government move to these counties because they have access to a highly skilled and educated pool of labour.

    And another very crucial, and important fact about these counties if you look at the map showing wealth inequality in the US, you’ll see that those counties have a great degree of wealth equality. The wages in those counties are incredibly good, and the average standard of living is very high (if you don’t mind the DC weather). In parts of DC and Baltimore, you will find terrible poverty, but in surrounding counties – it’s non-existent. I lived in Montgomery county, there was a eerie lack of even the faintest signs of poverty.

    But here is a kicker, look at the poorer southern states. There’s huge inequality. Wages for most working class people are terrible. If most people have very little money, how can they spend to create more wealth. If your daddy owned an oil well, the same states might be paradise – lots of poor desperate people fighting each other for the opportunity to mow your lawn, and serve you milkshakes – and you get to pay them so little they still need food stamps. You might want to keep the inequality as it is.

    If you want to increase the wealth of the poorer states but maintain the inequality, you have to expect the poorer people to educate themselves, become skilled, and then accept lower wages. Sounds fair? I’m sure the wealthy people would think that deal was incredibly fair.

    If you don’t have the social or familial connections to get you a good paying job in these states, if you’re skilled why bother staying?

    Another thing about DC. Whenever the administration changes, thousands skiddadle out of there, back to their states of origin. GW Bush couldn’t wait to get back to his mansion in Texas. I don’t know why, but they can’t stand Warshington.

    “The U.S. is becoming a serf state.”

    No, the US has had a long historical relationship with slavery.

    But the outoftowners while they’re in DC, do cart off as much pork as they can carry back to their own states. But they can’t round up the highly skilled labour of the surrounding counties, and ship them back home to work as slaves.

  13. Lee Jamison,

    Ah, now I want a mobile of my own. Or at least a virtual one. :)

Leave a Comment


NOTE - You can use these HTML tags and attributes:
<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>