24 October 2008

VooDoo Economics

Lots of folks spouting Comrade Obama's line...
"Tax the rich. Spread that income around."
And you know what, on the surface that doesn't sound so bad...
Until you start using your brain a little.

I've blogged before about basic Sociology and Psychology.
No one refuted my comments then, they just ignored them and repeated the Socialist Party line...

"Stick it to the rich guy. He got that money through greed anyway."

As I see it, there are three problems with that thinking:
1. You are still rewarding poor behavior, and therefore will get more of it.

2. Obama's plan to soak the rich by increasing Capital Gains taxes, while eliciting a "go get those fat cats, Tiger", from the low-IQ crowd, will work negatively in another arena he hopes to improve- Job creation.
If I'm a "fat cat" and you increase my cost of doing business, I'm either gonna slash my costs, maybe by laying off employees, or pass those costs off to taxpayers and consumers as an expense-
the cost of doing business. Or alternatively I'll move my production facility offshore to avoid those costs altogether. Fat Cat won't pay them at all...

The consumer, and frequently the POOR consumer, will suffer most.

3. And back to Capital Gains tax increases-
Think this will only hurt the upper 5%?
Think because you aren't as rich as "Joe the Plumber" you don't pay Captital Gains taxes?

You own stocks, right?
Like me, you have stock in BIG OL' TERRIBLE OIL, right?

Are you sure?
Got an IRA?
Got a 401k or 403b or any other retirement plan?
Own a mutual fund?

If you answered yes to any of those questions, you probably own oil stocks.
You also pay Capital Gains taxes, either personally or as an expense of the plan.
Barack Obama wants to give you a tax increase.

Where's he coming up with this "95% won't pay more in taxes" lie?
Why aren't the masses catching on to the impossibility of what he's promising?


rodolfo said...

You wrote: You are still rewarding poor behavior, and therefore will get more of it.

How is giving a tax break to the majority of average American *workers* rewarding poor behavior? Sounds like giving relief to those who need it.

You wrote: I'm either gonna slash my costs, maybe by laying off employees, or pass those costs off to taxpayers and consumers as an expense-
the cost of doing business. Or alternatively I'll move my production facility offshore to avoid those costs altogether. Fat Cat won't pay them at all...
The consumer, and frequently the POOR consumer, will suffer most.

Reality check: That's what's happening NOW under the current economic philosophy.

Getting taxed on capital gains is somewhat irrelevant right now considering most accounts have lost money. I hope most people who invest in the stock market diversified as opposed to just buying oil stocks.

Greybeard said...

You use the the word "irrelevant" a lot when talking about your candidate, ever notice that?
Irrelevant to you, maybe, but just 'cause you say diarrhea is chocolate pudding...,
don't make it so.

... Been a lot of smelly chocolate pudding showing up here lately.

jinksto said...

Reality Check? Here's a reality check for you: There's no "tax break". What tax break? Look, it's simple economics:
I own a store selling bread.
You sell me flour every morning.
I make bread and sell it back to you. If you raise the price of my cost of business by raising the flour prices 10 cents then you're going to get charged an extra 10 cents for the bread you buy. You charge me higher taxes, I charge you higher prices AND I charge you the the standard retail tax.

Reality Check Version 2:
Diversification doesn't help. In this instance because 1) GB didn't say bought all oil, he said bought ANY oil. 2) He was providing an example, the thought applies to ANY company making more that 300k/year not just oil which essentially means EVERY company you're likely to have in your portfolio. They're all going to get hit hard by this tax. That's going to cost them money. Either they pass that cost on to you or the stock loses value and you lose money.

Reality check Version 3: Irrelevant right now? It's not irrelevant at all! Taxes aren't something that happen this weekend. When the market goes back up they'll still be sitting there waiting. Not to mention the fact that the market will recover more slowly because all of those companies that you're invested in are invested in others and they're paying capital gains on every dollar. Less money for them means less money in the bank which means a lower stock price which means less money for you.

I've been seeing these arguments all over the internet and I keep screaming at my screen, "it doesn't WORK that way!" It's frustrating to see so many people engaged in group ignorance and unwilling to listen.

rodolfo said...


cj said...

Rodolfo -

I've got a suggestion for you. Go do some research on Jimmy Carter. Pay attention to his campaign promises... and then pay closer attention to what he actually did once he was in office.

Then come back and we can chat about why Greybeard and I realize how phony a Democrat is when he says he's going to cut your taxes...

I'll even give you a link to get you started.

GB -

It's the fact that too many people have bought into the whole 'let Papa Government take care of you' rap that the liberals have been spewing for years. Sad, isn't it?

rodolfo said...

*Long sigh* Okay CJ. I'll take a look at that link. I don't know what I'll learn that will be devastating for my support of Obama and Biden but at this point I'm gonna agree to disagree with you and GB.

The world is not static. It never was and probably never will. My generation's problems are different from yours. But my naivete and even ignorance in your view of history has been tempered by the brutal reality of these past eight years.

I honestly could vote for either McCain or Obama. But your team gave it their best shot for eight years. This anecdote alone will make me vote for the Democrats.

Flightfire said...

It's amazing to me that people just can't see the forest through the trees.

Fact #1.
We have had 8(count em), 8 years of "trickle down" theory put into practice.

Fact #2.
The top 5% of earners in this country have gotten VERY rich.

Fact #3.
The bottom 95% of earners have seen their wages barely keep up with inflation (especially with prices the way they are now).

Fact #4.
At the end of 8 years, we are facing a financial collapse, and are on the verge of another Depression.

What about those facts suggests that trickle-down theory works? You can scream all you want about the details of the theory. How taxing companies will lead to gloom and doom for the economy, and while I'm not arguing that I'm right, I can say with certainty (and 8 years of evidence) that you and your theory are WRONG. Trickle-down economics doesn't work.

When a scientist has their theory disproven, they go back to the drawing board and make a new theory.

Not Conservatives

You have consistently shown that you will completely disregard anything that doesn't agree with your ideology, whether it is science or economic reality. You reason like philosophers as you work out the details of how enact your monetary policy, but when all evidence is screaming in your face that you are wrong, that you need to reverse course now or face dire consequences, you ignore it.

Imagine if you did that in a helicopter. You know better than anyone that aviation mistakes don't just happen because of a simple event. They are preceeded by a series of pilot errors that ultimately lead to catastrophe. An instrument starts to give faulty readings, and you follow it to your death because you forgot to crosscheck the other instruments.

Your faulty instrument is the misguided faith that giving more money to rich people will cause it to trickle down. It makes perfect sense to you and fits with your other theories about how the world works. But just like a faulty attitude indicator fits with your semicircular canals in a nosedive, we are about to crash headfirst into the ground and it's time to re-evaluate the faulty instrument.

I honestly can't tell you where the theory is wrong, but 8 years has shown pretty convincingly that it is. I implore you to re-evaluate your theory just like you would a faulty instrument.

wksaz said...

flightfire, I'm having difficulty with believing that you are "starting to figure it out" as your blog tagline says.

True intellect is being able to tell the difference between reality and indoctrination.

NO, I am not calling you dumb! On the contrary, I am disappointed at your educators for not teaching critical thinking. Your true potential has been marginalized by a broken higher education system. I hope you will seek other points of view.

Your position reminds me of people that have never even visited a particular place, but can tell you all about it and what they like and or dislike about that place.

You have not been there yet.

Let us know how you feel after being in professional practice for 20 years and then tell us how you feel about redistribution then. The real criminals of this world are the re-distributors.

I keep hearing about this "95% of people" figure from all of the socialists. Lumping the 95% together is a misleading figure and meant to be. The difference from the 250k per year figure to the bottom or even middle of the scale is too great to be of statistical interest.......It is irrelevant data.

The 2007 average per capita income in the U.S. is around $37000 per year. I'm sure you hope to be paid better than average when you enter practice.

I have a few things for you to think about.....

Have you been or do you think you will be offered gainful employment by a poor man's company? Would that even be possible?

If redistribution is the answer, then why has it failed and led to revolution every time it is tried?

If you are paid the same(after redistribution)to be a great doctor as you would be to be a bottom of the classer, then why would you want to go through all of the work?

If a good grade is arrived at through "hard work" then shouldn't it be shared(taxed)as well? After all, its just basic fairness to share.

If the excess money that "the rich" have is redistributed to "the poor", then who will endow hospitals, city parks, UNIVERSITIES, etc.? The poor? As a collective? Where would you go to school? "The U of A's Poor Downtrodden Minority Americas Fund College of Medicine"???

Who will invest money into new technologies and companies to work for? Uncle Sam???? The Collective??

How will you finance retirement if you are not allowed to grow wealthy?

And lastly what do you see life for your born or unborn children like? Do you want them to be exceptional individuals, or do you want them to be cogs in a big wheel?

These are the issues of the NEXT 8 to 80 years! That is what we are voting on....not the man, not the party, and definitely not history.


rodolfo said...

wksaz wrote: True intellect is being able to tell the difference between reality and indoctrination.

I've never heard that one. Does that apply to religious indoctrination? Is the Judeo-Christian-Muslim deity simply a function of indoctrination and not reality?

wksaz wrote: The real criminals of this world are the re-distributors.

Heard this one yesterday. But if that what the GOP wants to go with then I don't know how anyone can vote Republican this year. Wasn't Islamo-Facism the *transcendental* evil of our time? We ought to be more concerned about them than programs like Social Security, Medicare, Medicaid, Veterans Benefits, Earned Income Credit and other forms of *government redistribution*.

texasnana said...

rodolfo & flightfire - i am old enough to remember the carter years. they were extremely difficult. our first mortgage had an 18% interest rate thanks to jimmy. i predict if obamma wins things will be even more difficult when he is finished - unfortunately, there does not seem to be a reagan waiting in the wings.

i also find it ludricous that bush is such an idiot and yet is solely responsible for all things wrong in this country. i vaguely recall an election two years ago that gave the dems the majority they said they needed to "fix" things. not working out from my perspective. i also remember bush sounding the warning bell regarding fanniemae and barney screaming everything was fine. barney and dodd got their millions and look who is left holdng the bag. it is not the government - it is US!

i have been praying that God would give us the president we need, however i fear He will give us the president we deserve.