This Comment Of The Day covers a wealth of ethics issues, including the ancient ethics debates over what is a fair share on societal wealth and who decides when someone has “enough” wealth. It also is an Ethics Alarms first: Chris Marschner’s Comment of the Day is on his own Comment of the Day!
And here it is, his Comment of the Day on his previous Comment of the Day on the post, “Sunday Ethics Warm-Up, 1/12/2020: Broken Ethics Alarms, An Ethics Conflict, And “Who Are You Going To Believe, Me Or Your Own Eyes?”
The point I was making was that people use economic data to illustrate all kinds of things. Typically they use charts and graphs to illustrate a point THEY want to make. The values within those charts and graphs need full examination before drawing a conclusion. For example, Reagan dropped the unemployment rate overnight by including the military in the labor force. In that case the number employed went up and the labor force went up as well. Given that the unemployment rate is the number unemployed/labor force if the denominator rises the UE rate falls.
Conversely, between 2008 and 2012 the unemployment rate showed a downward trend because the Labor force participation rate (LFPR) shrank and not because more people got jobs. People gave up looking for work so they were no longer treated as unemployed and the number of people working grew relative to the LFPR. Since 2016 the LFPR has been growing and the UE rate is dropping. That means that there are more people are working. That is a good thing because it puts upward pressure on wages.
For some, higher wages have overtaken what is known as an individual’s reservation wage. The reservation wage is the minimum amount needed to get a person to accept the offered job. Unfortunately, we have a great number of people whose true reservation wage has been distorted in both psychological and real terms. Reservation wages have been growing because of the growth in governmental income maintenance programs. Imagine how many will decide to live only on Yang’s guaranteed $12K a year. Couple that $1000 a month with housing assistance, food stamps, childcare, Medicare, and WIC you can live quite well on the dole. Oh I know, Yang says he would replace all those other programs to fund his guaranteed minimum income. Name a program that ever went away. We just layer one atop another.
These are not my opinions but well established facts and fundamental economic theory that is taught in first year Econ classes. I know because I taught those courses for 20 years.
I did not put any words in Bloomberg’s mouth. In fact, the remark about capping income was based on comments President Obama made regularly about people at some point have enough money. Many on the stump right now are mimicking that sentiment. The government can effectively cap incomes through tax policy . Currently, there are two rationales for increasing taxes on the uber-wealthy that have nothing to do with correcting income differentials: First is that they are not paying their fair share; the second is that they have more money than they can ever spend in a lifetime.
Let’s address the first sentiment. I challenge anyone to define fair share. Tax rates should reflect what society determines each quintile should pony up to fund public operations. If we say that the one percenters should pay 20% of the total tab then the rate should reflect that amount. If overall taxable income rises then the rate should fall and vice versa. But to be fair since that is the crux of the matter, shouldn’t the one percent get a larger say in how big that total tab will be? Should the top 20% of income earners that pay about 80% of all the government’s costs have 80% of the say in how much that will be; to be fair of course? That is not how it works. If we are going to demand fair share for payment then we must also demand a fair share in the overall decision process and not simply let the majority that have more votes determine the size of various entitlement programs.
On the second rationale; “they have enough already”. This is a function of envy. What someone else has is irrelevant to me if the income was legitimately earned. This philosophy of “having to much is unfair” permeates far too many. What is the difference between a street gang that mugs you because you have something they want and a electoral mob choosing candidates that will strip you of your wealth because you have too much in their eyes. Elizabeth Warren and Bernie Sanders have pledged to do just that.
As we go down the road of demanding other people pay taxes so we don’t have to, many will argue that corporations make money from the roads and bridges that tax payers fund. I disagree. Consider that the actual benefits accrue to consumers. Businesses are value creators. They make things consumers want. Consumers trade their dollars for things that make their lives better. Does an iPad sitting on the shelf at BestBuy deliver any satisfaction to the stockholders of BestBuy? Of course not. Without roads and transportation infrastructure most people would starve to death, find income generating suitable work that best suits their talents, be unable to download the latest video because they would have to go to the factory wherever that is (if it exists) to obtain products to do so. You also need to consider that corporations are inanimate beings. The income earned winds up in someone’s household and unless the cash is hoarded in a mattress it becomes someone else’s income.
In addition most of the funds that pay for education and first responders are locally derived. Given that the average cost to fund one kid in public school is about 12 grand and that property taxes pay for education but a homeowner in MD with a property with an assessed value of 200,000 only pays about $4,000 annually in property taxes. Business taxes, whether they are property taxes, inventory taxes, franchise taxes and so many more at the local level subsidize virtually every citizen. So when you see that mega corporation eyeballing your town for expansion you need to realize that they will be providing you with more money for education, more opportunities for income growth for everyone, and more revenue that could lower everyone’s tax rate if constant yield is the law.
When I see charts and graphs being used to promote X or Y I know that they portray what the presenter wants to convey which may be factual but does not represent a true picture of reality.