What if Romney is Batman?  http://tvtropes.org/pmwiki/pmwiki.php/Main/RichIdiotWithNoDayJob

Will investors who make all their money off capital gains still be called job creators?  It’s not like plausibly someone’s boss, who could hire a new employee.  I guess that whole argument is a red herring anyway, but it seems like a less fitting cover in this case, compared to the rich CEO who technically has a job.

I don’t know if any of Romney’s wealth is inherited.  I am going to assume for my post that it’s not significant.  He’s not just “in possession of a giant pile of cash”.  He accumulated it in the Bain Capital activities and the like.  While one can argue the social utility of what he did, it was work of a sort and no one has suggested Romney accumulated his wealth illegally. 

What Romney’s tax return highlights is the essential unfairness of a markedly favorable tax treatment of long term capital gains vs. earned income (i.e. wages).  To qualify for the favorable rate, the asset sold which produces the gain must have been held for one year.  I wonder what effect changing the holding period to 5 years would have? 

Tax policy experts could explain better than I why a favorable capital gains rate helps us all.  I gather it has something to do with using the tax code to encourage investment activity that might not otherwise occur.  Sounds like one of the dreaded “tax preferences that distort our economy” like Mitch Daniels said last night

These are phrases that, when used by wingnuts, appear to be referring to some kind of alternate reality:

“job creators”
“productivity”
“the real world”

“Productivity” has somehow come to mean use money to make more money, even though you’re not, y’know, producing anything. The lie behind “job creators” is a natural extension of this faux-productivity. And “the real world” invariably refers to the upper-class business bubble that wingnuts are convinced is somehow more “real” than the world of a working-class family that actually has to worry about whether or not it’s going to have enough money for food this month.

Preach it.

Kevin Drum also points out that Romney’s sons, thanks to some crafty estate planning, are paying even less in taxes on their inheritance:

http://motherjones.com/kevin-drum/2012/01/mitt-romneys-kids-pay-even-lower-tax-rate-he-does

The thing is, Romney probably did work extra hard at Bain Capital, probably stayed late at the office and worked weekends, until he got his hundreds of millions.  The only problem I have with him is that he thinks that makes him special somehow.

I really wonder if the lowered tax rates on upper incomes not only isn’t producing jobs, but works against it.  I’ve been working for the same company for over 20 years.  It seems like, compared to the 90’s, management is less likely to spend money on things like a fancy Christmas party for employees.  We used to have a dinner dance at a hotel, with prime rib.  Now it’s sandwiches in the cafeteria.  Is that because, in the 90’s, they lost a larger cut of profits to taxes, while if they plowed it back into the business or spent it on employees, it was deductible, while now they can take home giant sacks of cash if they don’t spend it on the business?
And yes, I’m envious of people who can sit around on giant sacks of cash when I’ll be working until I drop.

What drives me nuts is seeing these arguments repeated (on Facebook, etc) by people who have no idea how money works.  I saw this argument about a college economics class that averages out grades—because that’s just what we want, right?  Take money away from those who have and give it to those who have not?  And grades are the same thing?

I have to restrain myself from arguing back, because I don’t have that kind of time in the day.  But it’s tough.

I don’t know if any of Romney’s wealth is inherited.

It is, his father successfully ran AMC for about a decade.  Hence why Romney was able to join/Form Bain Capital at the near top of the structure.  If his father hadn’t of been wealthy with a political bent Mittens would be off being a work-a-day shmuck, instead he got to be governor of Massachusetts and now runs for President as a hobby. 

Gretchen hit the nail on the head, 91% corporate tax rates in the 1950s sounds incredibly high, right?  WRONG.  By investing back into the business through higher salaries, increased expansion, and general advancement most corporations paid closer to 30% and share holders were paid a dividend that was appreciable but wasn’t enough to make you rich independent of further ownership.  In other words the system was self-perpetuating.  Once the rates were slashed and tax cuts shifted to capital gains it became a short-term market with the end game being the collapse of industry (as we’re starting to see).

I really wonder if the lowered tax rates on upper incomes not only isn’t producing jobs, but works against it.

In answer to your question, gretchen, yes.

It encourages less R&D, more firing of employees and squeezing productivity like toothpaste out of a tube from the employees who remain, like a modern-day Simon Legree(who, many people forget, was a Northerner who came to the South to make his fortune from slavery,).

Another factor is that in companies where the founder runs things, the personality of the founder determines the overall work environment, whether it’s the three employees of “Elmers’ Free-range Chicken and Egg Stand” or the thousands of those who work for Joe Blow, Sr.

Nowadays, unless the founder has a clear succession plan, the usual response to the founder dying or leaving a company is “Devil take the hindmost and the employees we don’t need as well.”

@ Cendare @6 - I saw that same argument.  I made a couple of false starts to argue against it, then just defriended the person (a cousin) instead of commenting.  I’m not interested in getting right-wing poison when I check on what my friends are doing today.

@ #6: cendare,
Just last night a Facebook friend posted that college professor story and I ranted for several paragraphs against it, and included my view that the story was apocryphal.  Your post today sent me to Snopes.  Sure enough:  http://www.snopes.com/college/exam/socialism.asp

I saw this argument about a college economics class that averages out grades—because that’s just what we want, right?  Take money away from those who have and give it to those who have not?  And grades are the same thing?

Wingnut analogies always consist of a ridiculously inapplicable analogy, combined with a smug “gotcha!” expression. It’s like the “joke” about the college student who works hard and has a 4.0 GPA, and she tells her dad about her friend who parties all the time and has a 2.0 GPA. Her dad’s like, “Well what if you could give her one of your points, then you’d both have a 3.0. That’d be fair, right?” And the girl, of course, is like “Aw hell naw, I worked really hard for that GPA blah blah blah.” And the dad’s all, “lol stupid lefties, am I right?”

Better analogy: A college student has a GPA of 8000.0, 6000.0 of which she has because of her parents’ academic achievements at that same college. She tells her father about her friend who has to work three jobs to pay for college, and as a result is struggling to keep up with her classes. As such she has a GPA of 2.0 and will probably soon be put on academic probation. Her father says, “Well, why don’t you give her one of your points. Then you’ll still have a 7999.0, and she’ll have a 3.0 and won’t get kicked out of college.” And the girl’s like, “Aw hell naw, I worked really hard for that GPA, I shouldn’t be punished for it, plus my GPA helps everyone by bringing up the college’s average! No way I’m going to give any of it to some lazy mofo who only has a 2.0!” And the dad’s all, “lol stupid lefties, am I right?”

Once the rates were slashed and tax cuts shifted to capital gains it became a short-term market with the end game being the collapse of industry (as we’re starting to see).

Exactly! Noam Chomsky made this point a few years ago. These days, corporations are all about short-term profits instead of building anything that will last and provide a sustainable economy for our future. What they basically did leading up to the current recession is pilfer the real estate and mortgage market for every penny they could extract from it. The fact that they did serious harm to the economy matters not one bit to them, because they still have the money.

People have a real mind disconnect when it comes to just how obscenely wealthy the wealthy are. The same way the obscenely rich have no idea how the rest of us actually live, the rest of us have a hard time grasping how the obscenely rich are living.

You know how the whole OWS made “the 1%” into a tangible context? Like, seriously, 1% of the people receive the majority of the wealth produced in this country in a year. Now, get this: every *week*, Mitt Romney makes enough money to qualify him as part of the 1% *even if he didn’t make any more money for the rest of the year*.

THAT is how obscenely wealthy Mitt Romney is, and he’s not even one of the worse examples in the USA.

TLDR: Mitt Romney makes more in a single week than 99% of Americans do in a year.

MiddleageLiberal -

I don’t know if any of Romney’s wealth is inherited.  I am going to assume for my post that it’s not significant.

Which would be highly likely to be incorect as he was 1 of 4 children af an auto exec (CEO of GM) with enough money to run not just for Governor (which he won) but also for PotUS (which he did not), a mother with enough money to run for senator, named in part for his father’s friend hotel magnate Marriot, attended private schols from prep HS through Harvard Law.  His inherited wealth - monetary and social - is why he had a job with BCG or Bain, so it was hell of a lot significant.
You don’t have to wonder what effect the differential tax rate or holding time requirement has, as it has not always been taxed differently nor fixed at 1 year. (see http://en.wikipedia.org/wiki/Capital_gains_tax_in_the_United_States )

Comment #8: Alex P. Keaton on 01/25 at 12:34 PM

-2 / 10

Tax policy experts could explain better than I why a favorable capital gains rate helps us all.  I gather it has something to do with using the tax code to encourage investment activity that might not otherwise occur.

Nope.  Making the assumption that GDP growth is a good thing, the historical evidence is that the US GDP would grow fastest with a top marginal rate over 60%.  Not 15% - over 60%.

http://presimetrics.com/?p=658
http://www.angrybearblog.com/2010/12/top-marginal-income-tax-rate-should-be.html

The sad thing is that what Romney is saying is basically Microeconomics 101. It’s what educated people the world over are learning. And it’s oh so wrong. Now, it was probably right at a given time, or even for certain people, where there’s tons of overtime and flexibility of scheduling so people are actively choosing how much they work. But those days are long gone. Lowering taxes doesn’t encourage people to work more or less, because for most people this is something that is determined FOR them based on other factors. Mainly if we need to get a 2nd or a 3rd job or not to survive.

And yes, the problem is that lower capital gains rates encourage short-term stock valuation over long-term dividend returns. This is a huge problem, and why the first thing I would do if I were king would be to reverse it, where capital gains rates are actually HIGHER than normal taxes.

I saw this argument about a college economics class that averages out grades—because that’s just what we want, right?  Take money away from those who have and give it to those who have not?  And grades are the same thing?

Actually, you can use that to illustrate that wingnuts don’t understand money.

“At the start of term, an economics professor wanders in and tells the class that everyone attending has a C pass - exactly 50%. Anyone working to get a higher grade would get it at the expense of other people - she would be taking points off others to award to better workers, so if someone had a 75% pass, someone else would have to get 25%.

So the students thought about that for a moment.  Then one put up his hand and said “Wait a minute - even if we all work hard and learn the material, half of us are going to fail?”

“Yes”, says the professor, “Any grade points I give you will come at the expense of other people”.

“But that doesn’t make sense”, says the student, “you can make up those points out of thin air!  You can give everyone who deserves it a pass, or even an A if they deserve it.”

“Yes”, says the professor, “but I need to balance the books, don’t I?”

“No”, says the student, “goddammit, you can just create grade points as needed to reflect our effort!”

“Well done”, says the professor, “now let’s discuss the role of a sovereign government in taxing, spending, and running debts in a currency it can create out of thin air…”

Slightly, OT.  I would expect Romney to have a huge charitable donation deduction, no matter what he wished, as unless they have drastically changed the way they operate, the Mormon church does audits and sends you a bill for your tithe.  The time I know about, it was 10% and no deductions.  Why the US government should subsidize any church to that level is beyond me.

Or you could try an analogy of a family with 3 kids, aged 12, 8, and 3.  They’re hunting for Easter eggs, and the 12 yr. old finds 10 eggs, the 8 yr. old finds 2 eggs, and the 3 yr. old finds none.  Should they share the eggs on a more equal basis, or should they eggs go to the person who found them?  They all had the same opportunity, right?  It’s not the 12 yr. old’s fault that s/he is bigger and smarter than the 8 yr. old and particularly than the 3 yr. old.  So, tough luck to the 8 & 3 yr. olds.  Fair’s fair; it’s a dog-eat-dog world, toughen up, right?

And this is the guy who strapped a dog cage on the top of his car instead of paying for the dog to be boarded while he was on vacation? Good grief, what an incredible jerk.

What’s interesting here is that students who are in this mythical kind of situation fail if they retain the “I got mine” strategy combined with the “not going to do anything I don’t have to” strategy.

The successful students could work with the students who are not doing so well and help them raise their grades so everyone’s grade goes up.

This is based on a strategy or worldview that Traditionally Black Colleges have employed for decades.  If you see that your brother/sister is failing, work with him or her to get them up to speed.

The extra bonus is that you learn things EVEN BETTER when you teach them.

Update about stupid grades=money thing: I ended up posting back about how traditionally, men made all the money and had to share it with women and children.  And strangely, that didn’t make men stop working, even though they were giving their money to people who “weren’t working”.

The response was “yeah, but women weren’t lazy, they were working.”

I don’t have the energy to go point out “and so are the 99%”.  You can lead a horse to water, but you can’t make it think.

And, goddammit, people who want to argue about “work deserves money” have to decide: are you going to reward effort, or are you going to reward results?  It’s not the same thing, and it ends up with different policies.  (You can do both, which is more sophisticated, but when I argue with people on Facebook they don’t acknowledge such subtleties.)  And also, it makes no sense to reward results with money if you define “results” as “making more money”.  Which, I think, is where this argument goes a lot of the time.

So federal taxes don’t create interstate highways, support the military, provide for the postal service, create and upkeep national parks, pay for the FBI and (*spit) Homeland Security, pay our representatives, provide Social Security and disability benefits, Medicaid, and Medicare?

Damn, I never knew that.

I’m sure glad to be educated by someone who takes on the name of a character from a sitcom whose purpose was to illustrate the worst of 1980’s selfishness in contrast to his more compassionate parents.

Federal taxes destroy money, nothing more.

And stimulus puts that money back into the private sector. So it’s not “destroyed” in the irreparable sense.

APK -
Taxes do not take money out of the economy, they pool it for whatever the society via government decides needs a bigger source of money than individuals and private organizations can or are will to provide.  No matter how it is used, tax money returns to the economy while money stuffed in a matress goes nowhere and that in isolated bunches is generally limited in effect for most of us.
Are you really this dumb, or is it that you think we are?

Taxes move money from the private sector into the public sector, where it makes its way back into the private sector through public services. Nothing more. Except when corruption, excessive secrecy, opportunism, militaristic adventurism, etc. enter the picture. That’s why the idea of “the people” holding governments accountable for their actions, you know, exists.

We started out as a more-or-less decent republic, spent a couple hundred years improving it, but then the fucking wrecking crew started howling, notably immediately after revolutionary gains in the civil rights, women’s lib, and (especially) environmental movements.

It brings to mind the most loathsome quote I know: “There is no such thing as society.”

are willing to provide

I agree, wealth should belong solely and without limit to the people who create it!

This of course means the Romneys will all have to go out and get jobs in which they create something . . . .

@27

There’s the barest hint of a legitimate point in what Alex is saying, in that the federal does remove money from the private sector via taxation. But like I said, it can also put money back into the private sector via stimulus, which is pretty much just buying shit. When the federal government spends tax money on a road, it has to buy material, contract someone to build it, pay engineers to design and plan it. Companies get paid, people get employed, those employed people buy food, which in turn means other companies get paid, etc., etc. The economy grows.

So the notion that the money is destroyed is pretty ridiculous. Even if the money disappeared into a black hole after it was spent, you still have a road. Infrastructure also contributes to productivity.

The bare hint of a legitimate point I was referring to is that the federal government can drain money from the private sector via taxation, if sound economic policies aren’t in place to give it back to the private sector in constructive ways. “Constructive,” fyi, does not include buying things that are going to end up burning in a desert in Afghanistan.

Or what DEstlund said more succinctly @30…

APK @26:

(I see other have chimed in already while I was writing this.)

The post you link to doesn’t say what you say it does.  It seems to argue two things: (1) deficit spending is necessary in a recession (I don’t know if the author realizes that’s what he’s saying, but it’s sensible), and (2) taxes should be lowered on the less-than-super-wealthy, rather than raised on the super-wealthy.  He doesn’t say why that should happen or why you couldn’t do both.  It certainly isn’t because “federal [not state?] taxes destroy money,” as you say; all taxes simply change who spends the money and what it is spent on.

Taxes take money away from the American people and thus out of the economy, which is bad.

That is just stupid.  Most federal taxes go back into the economy.  Do you think federal employees and soldiers don’t get paid?  Do you think construction workers on federal highways don’t get paid?  Do you think seniors don’t spend their pension or social security checks?  Do you think people on food stamps don’t buy groceries?  Do you think the government doesn’t pay companies for the pencils and paper and airplanes and rifles it buys?  Government spending transfers money, it doesn’t destroy it. 

(And why don’t state taxes destroy money?)

@Alex P. Keaton: Wow, that may have been the dumbest thing I read all week, and I’ve read transcripts of the Republican debates. Here’s something you should think about it: when the government taxes people, the money isn’t destroyed, it’s transferred to the treasury, which then redistributes the money according to the federal budget. Now the main concern when determining tax rates is whether or not the redistribution of money via the federal budget is more or less efficient than how taxpayers would otherwise utilize that money. But since we are in an economic slump and a liquidity trap, people aren’t spending money, they are saving it. Therefore, by redistributing idle money into productive and stimulative pursuits such as SNAP, infrastructure projects, and, yes, unemployment, the government can increase growth and decrease unemployment. Unfortunately, the teatards in congress have opposed, at every opportunity, any effort to enact such changes. But, like most wing-nuts, I strongly suspect that you just don’t give a shit about anyone who isn’t you, so just want the government to cut your taxes to zero so you can just do whatever the fuck you want, and to hell with everybody else. But there is one thing you should remember, and that is that taxes pay for many, many things that you need, and my guess is that you aren’t so obscenely wealthy that you can afford to hire your own fire department or police force. Taxes have also paid for such wonderful things as our sewer systems (would you like to go back to chamber pots?), electricity, the internet (I know you like using this), and cable network infrastructure (even if you don’t watch TV, most people do, and enjoy it). So please, do us all a favor and get a fucking clue.

“At the start of term, an economics professor wanders in and tells the class that everyone attending has a C pass - exactly 50%. Anyone working to get a higher grade would get it at the expense of other people - she would be taking points off others to award to better workers, so if someone had a 75% pass, someone else would have to get 25%.

So the students thought about that for a moment.  Then one put up his hand and said “Wait a minute - even if we all work hard and learn the material, half of us are going to fail?”

“Yes”, says the professor, “Any grade points I give you will come at the expense of other people”.

“But that doesn’t make sense”, says the student, “you can make up those points out of thin air!  You can give everyone who deserves it a pass, or even an A if they deserve it.”

“Yes”, says the professor, “but I need to balance the books, don’t I?”

“No”, says the student, “goddammit, you can just create grade points as needed to reflect our effort!”

“Well done”, says the professor, “now let’s discuss the role of a sovereign government in taxing, spending, and running debts in a currency it can create out of thin air…”

To some extent, the situation described above describes how grading in intro STEM weedout courses work….except the grading patterns can actually be harsher in actual practice.  Many university STEM departments have specific proportional breakdowns of the maximum percentage of students who could be awarded A-level and B+/B type grades.   

The two intro CS courses for majors I took in college had 30% or 50% flunkout rates….which were considered on the low-average side by HS classmates, friends, and colleagues who were STEM majors/minors. 

Many friends who were pre-med or STEM majors at other universities/colleges experienced STEM weedout courses where over 60% flunked out at the end.  I’m talking Ds and Fs here. 

As for the apocryphal story about equating grading distribution with criticism of progressive economic policies, the fears which those stories are based on do have some grains of truth to them which allow it to gain currency among conservatives and the center-right.

Some examples include frequent complains I’ve overheard and read in local newsmedia about how public school teachers and administrators at some schools/districts encourage lowest common denominator teaching to the slowest students, actively discourage students/parents from taking courses beyond their grade level…even when they are more than ready for them, abysmal lack of support for academic achievers on the college track at some mainstream high schools, attempts by local politicians/misguided activist groups to shut down public magnet high schools because they’re “too elitist” without much discussion about how that will mainly hurt working-class/lower-middle-class families with highly capable students….or the fact many of those politicians/activists/public school teachers send their own kids to great private schools with tuitions rivaling those of elite private colleges, and last…but not least…their perceptions of how CCNY and the CUNY system went completely to seed after the implementation of open admissions in 1969. 

The last especially sticks out in my mind as I’ve lost count of how many neighbors, teachers, and high school classmates’ parents in the ‘80s and ‘90s ranted about how CCNY/CUNY used to be the “Harvard/Ivy league of the proletariat” before it went to seed because of open admissions which caused the system to be overwhelmed by woefully unprepared students, watering down of curriculum to accommodate, and driving out some of the best faculty members.

Alex, the only way to destroy money (at least in the US) is the government selling t-bills. When the government spends money, it goes back into the private sector. The idea that Federal taxes destroy money doesn’t even make logical sense, never mind having any basis in reality.

Try reading more of the blog from which I provided a link.

I read your link.  It’s a mix of parroted MMT along with teabagger ignorance.

If taxes “hurt the economy”, then why did the US economy grow faster with higher top marginal rates than it has now?

91% corporate tax rates in the 1950s sounds incredibly high, right?  WRONG.

Historical Corporate Top Tax Rate and Bracket: 1909-2010:

http://www.taxpolicycenter.org/taxfacts/Content/PDF/corporate_historical_bracket.pdf

If we really want to talk about methods for destroying money, taking the brakes off of free market capitalism and focusing all policy on asset growth at the expense of wage growth seems to have done a very good job. What was it, 11 trillion dollars destroyed in 2008? Pretty good work considering the USA GDP is around 14 trillion.

To some extent, the situation described above describes how grading in intro STEM weedout courses work….

Yeah, but the key point there is “weedout courses”.  I’ve never gone through a weedout course; every course I’ve taken tried to encourage everyone to pass by mastering the material, since the goal is to teach rather than to act as a filter for limited resources (ie access to higher level courses).

But the key point there is that a “balanced budget” is an artificial, arbitrary limitation - the government is perfectly able to make up (or destroy) money as it sees fit, and it is in no way morally obligated to be in balance as teabaggers seem to think.  The government’s role is not to act as a player in the economy, but to encourage the economy as a whole - which, for the US, means running a public deficit to allow for a trade deficit and for reduction of private financial debt.

I misspoke when I said “free market capitalism;” what I should have said is financialism. There is no such thing as a free market, and the more an economy turns to the absurd notion of money making money on money and ignoring actual productivity, the more convoluted and prone to gross distortions its markets become. There used to be laws that tried to contain that, but, you know how it goes.

If taxes “hurt the economy”, then why did the US economy grow faster with higher top marginal rates than it has now?

Because if you a running an economy within the Keynesian Consensus, growth will correlate to high taxes…not because high taxes produce growth, but rather because low taxes (and increased government spending) do (on a less than fully employed economy).

That more or less explains the relationship between the 40’s and 50’s…with the latter featuring higher taxes and lower spending

I read your link.  It’s a mix of parroted MMT along with teabagger ignorance.

Let’s be specific - the blog you link to, APK, seems to have taken the MMT point that a sovereign government can create currency at will and twinned it with the teabagger “taxes are Teh ICKY!” without further reading into MMT or, indeed, any critical thought.  Taken to its logical extreme, the blogger seems to think the government can fund any amount of spending through the creation of currency.

MONEY IS NOT WEALTH - it is a token for measuring wealth.  An economy can only produce so much wealth (actual goods and services) at one time; taxing and spending is the means by which the government determines how much of that will be allocated to the private and public sectors. If you tried funding a government’s spending without taxation, that money would be quickly degraded, with secondary effects leading to hyperinflation.  In the present circumstances, there is a limited exception to that in that the economy is not performing up to its potential and increased spending need not drive inflation - but that exception is very limited.

@Comment #26: Alex P. Keaton on 01/25 at 02:02 PM

Taxes take money away from the American people and thus out of the economy, which is bad.

Federal taxes destroy money, nothing more.

Try reading more of the blog from which I provided a link.  I think you’ll find it enlightening.

No, you dangerously stupid person, taxes don’t destroy money or take it out of the economy. They move it from citizens to the state. The state is a participant in the economy just as the citizens are.

Do us all a favor and never leave your house without adult supervision.

It would be correct, however, to assert that during the prosperity of the 50s, federal tax rates on personal income were quite high.

The only logical conclusion I can come up with to the idea that taxes destroy money is that government spending thus creates money. And since indiscriminate production of money brings inflation (which I suppose would start a feedback loop of the government having to create increasing amounts to keep up with the cost of the services it provides), taxes are then necessary to keep things balanced. Which brings us around to the same point—money in and money out need to be weighed against each other in some fashion. And if government spending flat out stopped….well, that defeats the purpose of having a formal government.

Yeah, I can’t figure out a way that ‘taxes destroy money’ is a useful argument.

Phoenician @19: that’s awesome, one of the best brief explanations I’ve ever seen.  (That might say more about me than anything else, though.)

Comment #2: MiddleageLiberal on 01/25 at 11:37 AM

What Romney’s tax return highlights is the essential unfairness of a markedly favorable tax treatment of long term capital gains vs. earned income (i.e. wages).  To qualify for the favorable rate, the asset sold which produces the gain must have been held for one year.  I wonder what effect changing the holding period to 5 years would have?

I suspect it would disproportionately fall on the middle class.  Basically, the wealthier you are, the easier it is for you to (a) leave your equity investments untouched for longer periods of time, (b) get creative and thorough tax advice and planning services.

Tax policy experts could explain better than I why a favorable capital gains rate helps us all.  I gather it has something to do with using the tax code to encourage investment activity that might not otherwise occur.  Sounds like one of the dreaded “tax preferences that distort our economy” like Mitch Daniels said last night

As I understand it, the leading justification for the favorable capital gains rate is “no double taxation.”  The way I understand this theory, it has two prongs:

1. Capital gains and dividends should not be taxed, because the underlying corporations already have to pay taxes on their earnings.

2. Corporations should not be taxed on their earnings, because individuals are taxed on capital gains and dividends.

Krugman has been attacking the favorable capital gains rate recently.

The gleeful, tag-team pummeling of wanton self-satisfied stupidity is one of the things I love most about Pandagon’s commentariat. 

@22Jodi: and this is the guy who strapped the dog on top of the car so he could keep his exquisite leather luggage inside.  Most of us would put the luggage on top, and the dog inside, so he would be safe and comfortable.  Luggage doesn’t need to be comfortable.

” There is no tax revenue to be redistributed because all the money collected through taxes is instantaneously destroyed.”

...and yet, when Halliburton gets checks paid for by that “destroyed” money, they spend just as well as if the money had never been “destroyed”.  And when Dick “I Deserve to be in Prison” Cheney gets some of that taxpayer money as Halliburton dividends, it spends just as well for him too.  And when the waiter at the restaurant where Cheney ate — BTW, he ate a wonderful salad of baby greens, with a light vinaigrette, and topped by real sauteed babies — got a little bit of it in tips, that money spends just as well for her too.

Funny, but this economic stuff seems to be way more complicated than some idiot with a borrowed name seems to think…

So federal taxes don’t… provide for the postal service

No, they don’t.  The USPS is *entirely* self-funded, while it has to follow Congress’ expensive and ruinous policies.  Guaranteeing their pension for 70 years, which no other government entity has to do, is destroying the postal service, especially since any increase in prices has to be approved by Congress.

Please don’t repeat that right wing lie that the USPS is taxpayer funded.

There is no tax revenue to be redistributed because all the money collected through taxes is instantaneously destroyed.

C’mon, you guys.  Haven’t you been to the huge tax-dollar bonfire held at the National Mall every April 15?  It’s fucking awesome.  Don’t forget the marshmallows!

@32:  Yay, Dr. Psycho!

Because if you a running an economy within the Keynesian Consensus, growth will correlate to high taxes…not because high taxes produce growth, but rather because low taxes (and increased government spending) do (on a less than fully employed economy).

That doesn’t even make sense, Manju.  You’re stating that high taxes correlate to growth because low taxes cause growth - what?  That’s like claiming that high waves correlate to high wind speeds because small waves cause higher wind speed.  You could be trying to put together a timing argument - but the regression analysis here

http://www.angrybearblog.com/2010/12/top-marginal-income-tax-rate-should-be.html

already works on analysing the GDP growth from t to t+1 based on tax at time t.

If you’re trying to refer to Keynesian counter-cyclical spending, then (firstly) it’s more common for governments to use expenditure as a tool rather than tax changes (a stimulus is a lot more effective than tax cuts, for example), and (secondly) the correlation noted in the analysis is the top marginal tax rate not total taxation.

We’re not talking about the amount of money the government takes in, which is what Keynesianism might look at.  We’re talking about how much it takes out of income at the very top range. And the data suggests that the economy would be better off if the top marginal rate was over 60%.

@Comment #53: Alex P. Keaton on 01/25 at 03:10 PM

I politely direct you to my comment #45.

Oooh, stupidity expressed in big impressive words! Why, this might even be a real ideologically rigid journal written by real-life academic morons! Too bad it doesn’t make any fucking sense.

There’s a book I read when I was 12 years old called “The Screwing of the Average Man” which probably influenced my economic thinking more than anything else I ever read. It had a long chapter about the capital gains tax rate scam—and this was in the early 1980’s.

One of the clearest things in the argument made by the book was that it really doesn’t matter whether the lower rate stimulates investment or not. That’s a red herring. The point is, you can’t run a society where the main form of income earned by the rich is barely taxed while the main form of income earned by the poor and middle class is significantly taxed. That violates basic norms of fairness.

It’s been 30 years and I still carry that argument in my head. (The book’s probably available on Amazon.)

@43PIATOR:  Weed-out courses.  Imagine a country where we had enough education resources to educate everyone to the maximum of their abilities, rather than saying”  “We can only afford to educate half of you, so this is the course that decides which of you will get an education and which will spend your lives as Wal-Mart cashiers.  You have brains and abilitiies?  Who cares?  We can afford to waste them! We’d have to spend precious tax dollars to let you fulfill your potential!”

That doesn’t even make sense, Manju.  You’re stating that high taxes correlate to growth because low taxes cause growth - what?

I’m saying boilerplate Keynesianism is this:

1. Increase spending / lower taxes during a downturn.
2. Reverse this during Recovery

If this is practiced, high growth will indeed correlate to low taxes (and lower spending)…but only because it was the low taxes (and increased spending) that jump-started the economy toward maximum capacity in the first place.

Can you produce a legitimate study that proves higher top marginal rates produce higher growth?

You mean apart from the link I’ve provided twice:

http://www.angrybearblog.com/2010/12/top-marginal-income-tax-rate-should-be.html

Well, let’s see -

There’s peer reviewed economic analysis:

http://krugman.blogs.nytimes.com/2011/11/22/taxing-job-creators/

or, you know, the actual historical record

http://www.washingtonpost.com/blogs/ezra-klein/post/tax-rates-and-economic-growth-in-one-graph/2011/05/19/AGLaxJeH_blog.html

Let’s clarify here - the analysis is not claiming that growth is caused by tax alone, but that the link is clear.  As the analysis says, the R-squared value for the tax variables is only 0.176 - only 17.6% of growth can be explained by tax - but the P value is pretty convincing.  Further on, Kimel brings in more variables and gives a more naunced view.

From this output, we can see that this version of the Kimel curve (I do like the sound of that!!) explains 36% of the variation in growth rate we observe, making it twice as explanatory as the previous one. The optimal top marginal tax rate, according to this version, is about 64%.

As to other features of the model – it indicates that the economy will generally grow faster following increases in government spending, and will grow more slowly in the year following a tax increase. Note what this last bit implies – optimal tax rates are probably somewhat north of 60%, but in any given year you can boost them in the short term with a tax cut. However, keep the tax rates at the new “lower, tax cut level” and if that level is too far from the optimum it will really cost the economy a lot. Consider an analogy – steroids apparently help a lot of athletes perform better in the short run, but the cost in terms of the athlete’s health is tremendous. Finally, this particular version of the model indicates that on average, growth rates have been faster under Democratic administrations than under Republican administrations. (To pre-empt the usual complaint that comes up every time I point that out, insisting that Nixon was just like Clinton in your mind is not the point here. The point is that in every presidential election at least since 1920, the candidate most in favor of lower taxes, less regulation and generally more pro-business and less pro-social policy has been the Republican candidate.)

Now, I admit I may be cheating by bringing actual facts like the Washington Post graph with the historical data into the argument - what exactly have you been offering to back up your statements again, Alex?

@Comment #62: Alex P. Keaton on 01/25 at 03:28 PM

This is why the federal government (unlike state and local governments and unlike the euro nations) never can run short of dollars, never needs to tax, never needs to borrow and never can be “broke” as so many uninformed politicians like to claim.

This is like my three-year-old nephew explaining to me that his stuffed dog Kanzow can beat up Harry Potter. Except that you’re not cute.

Imagine you own a business. You look at your balance sheet and find your liabilities exceed your assets. You have a negative net worth and can’t pay your bills. What do you do? If you’re our Monetarily Sovereign, federal government, you have the power to change the numbers and voila! You now have a positive net worth, and can pay all your bills.

Except, of course, that when the government changes the numbers, everyone in that country who uses those numbers (the currency it issues) has to go along - meaning inflation and, with secondary effects, an inflationary spiral.  Oops.

You are correct in that the government doesn’t face the contraint of having to balance teh books.  You are incorrect in taking that to mean that it doesn’t face any constraints, such as those which might require it to tax before spending.

@PiatoR: Exactly. While it is technically possible to simply print money like mad to account for government spending it inflates the currency, and reduces purchasing power, and can eventually become self-defeating if people begin demanding payment in alternate currencies. Don’t forget that wealth comes from labor and nothing else. However, it is possible for that wealth to be taxed, stolen, given away, or otherwise redistributed. The governments aim with regards to taxation should be to tax enough to provide necessary services and promote the general welfare of the nation. Now, in times of economic crisis, the government can take on higher debt as necessary to provide services without placing an incredible burden on people suffering economic hardship. Problems arise when a government takes on so much debt and refuses to tax to pay for it, that creditors begin to suspect that the government will not be able to pay them back. This is a political problem, not a monetary one. Seriously, go read Krugman’s blog, all of it. When you come back, maybe you’ll have learned something about how taxation and public debt actually work.

Correction: I should have indicated after that first sentence that I was talking to APK, not PiatoR. Didn’t meant to make it look like I was arguing with the wrong person.

Imagine you own a business. You look at your balance sheet and find your liabilities exceed your assets. You have a negative net worth and can’t pay your bills. What do you do? If you’re our Monetarily Sovereign, federal government, you have the power to change the numbers and voila! You now have a positive net worth, and can pay all your bills.

This is why the federal government (unlike state and local governments and unlike the euro nations) never can run short of dollars, never needs to tax, never needs to borrow and never can be “broke” as so many uninformed politicians like to claim.

Imagine you’re in a car. You look ahead of you and find that you’re driving toward a cliff. What do you do? If you’re in a rocket car, you have the power to engage your rocket engines and fly off the cliff unharmed.

And that’s why The Fifth Element proves that cliffs never kill anybody.

Triplanetary FTW.

I actually don’t mind when right wingers chime in here to offer their uninformed and ignorant opinions. I even find it sometimes amusing when right wingers here make disingenuous arguments in an attempt to get a rise out of us liberals. But what really fucking annoys me is douches like “Alex P. Keaton” acting out some kind of performance art/persona routine for their own gratification, wasting everyone’s time.

I’m trying to figure out how a bogus analogy about my own magic business in any way addressing the truth/falsehood/something-else of this statement: “There is no tax revenue to be redistributed because all the money collected through taxes is instantaneously destroyed.”

Money has value because we all agree that it has value.  Money collected by the government is no different in that respect, which is why that money can be disbursed again and the recipients can spend it just the same as any other money.

If I was an economic genius like Keynes, or JKG, or Krugman, perhaps I would understand that there is some obscure philosophical point in economics being made.  Otherwise, at any normal level of understanding, the statement is utter bullshit.

I suspect it’s the nonsensical ravings of some Reichwing, Koolaid-drinking wingnut with an agenda, a person for whom the truth is only useful when it’s convenient, and otherwise lies work as well or better…

Weed-out courses.  Imagine a country where we had enough education resources to educate everyone to the maximum of their abilities, rather than saying”  “We can only afford to educate half of you, so this is the course that decides which of you will get an education and which will spend your lives as Wal-Mart cashiers.

The purpose of having weed-out courses isn’t solely or always due to lack of educational resources.

They also exist to weed out those who are woefully unprepared, the unserious/uncommitted, and/or those who don’t have the minimal aptitude and work-ethic necessary to maximize chances that even those who graduate from the bottom of the class are able to pass mandatory licensing exams and minimize the chances of killing/severely injuring someone because of the lack of sufficient work-ethic and diligence applied on a given project. 

Moreover, this mentality doesn’t just exist in the US, but also in many ostensibly socialist/Communist countries.  If anything, their educational weed-out policies makes the US education system look extremely open in comparison. 

For instance, in 2007, less than half of all Mainland Chinese national college entrance examinees scored high enough to gain admission to ANY higher educational institute which has actually been mostly the norm since the 1949 Communist Chinese Revolution. 

The only exception to this was the Cultural Revolution(1966-1976+) when the few universities which remained open selected faculty solely for their ability to toe the party line and admitted students on the basis of good political and “peasant/worker” backgrounds….regardless of whether they were prepared for college-level academics…or sometimes even literate.  As a result….the older cutthroat and highly elitist national college entrance exams came back with a vengeance by the late ‘70s and most employers/government agencies made a note to severely scrutinize/avoid hiring anyone who attended university during the Cultural Revolutionary period.

sacundim@52

the leading justification for the favorable capital gains rate is “no double taxation.”

Yeah, that’s what the plutocrats always claim.  But every dollar is taxed multiple times.  You pay tax on the money you earned this week.  When you spend some of it on groceries the supermarket pays tax on those dollars again.  Double taxation!  When the supermarket spends some of those same dollars on their rent, the land owner has to pay taxes on that.  Triple taxation!  And so on, ad infinitum.

What is taxed is the transaction.  Capital gain to Mitt is another transaction in addition to whatever the corporation did to increase its capital.  All the transactions are taxed.  This double taxation claim is just a way to pretend that letting rich peoples’ transactions be taxed at a lower rate than everyone elses’ transactions has a reason other than rich people own more legislators than we do.

@43PIATOR:  Weed-out courses.

Places with weed out courses generally have relatively open admissions. The purpose of weed out courses is to figure out who is qualified to continue because the school was not willing to put resources into screening out applicants to begin with. People who got weeded out probably wouldn’t have had a chance in the first place.

In any case, when it comes to higher education, the US is distinctive among its western peers for the open availability of it and infinite second chances available to you. The barriers are more about structural problems in the economy, availability of jobs, lack of safety net, etc.

Also, few classes are graded on anything other than a beneficial curve. Curves usually take the class average, designate that somewhere around a B or a C, and then give out grades based on where you fell on that range. And since in my science classes, he average was in the 60s or below, if you failed a class, you probably deserved it. If the class average were consistently in the 80s, the class wouldn’t be curved in the first place. Curves happen not to ensure that some people fail but because of there were no curve, then almost everyone would fail. And the few geniuses who manage to score in the 90s still get to keep their A’s.  It isn’t a zero-sum game.

Money has value because we all need it to pay taxes.

And to buy food. And to have a place to live. And to provide for our children. And to obtain healthcare. Seriously, a comment like that sounds like the kind of oblivious thing a 1%er would say because he spends so little, relative to his income, on necessities like food that he barely registers them as expenses.

When I get my paycheck every two weeks, it has extreme value to me because it means I’m not going to be living on the street in the near future.

I just want to chime in and point out that it’s highly likely that Mitt Romney actually paid a much lower rate of taxes in the years before 2010. Those deposits in off-shore tax havens are incredibly suspicious, as is the fact that he’s not following his father’s footsteps and releasing 10 years worth of tax returns. Anyway, in regards to nonsense from @Alex P. Keaton I completely agree with @Phoenician in a time of Romans #47. Neither he, nor that blog he linked to actually understand Monetary Sovereignty/MMT. Without taxation, a currency literally has zero value, because there is no obligation to use/possess it when it’s not mandated for at least some use, by law. If the United States didn’t require its citizens to pay their taxes in dollars, why would anyone want to own dollars for anything? Businesses and individuals would be just as happy to use Euros or some other form of currency as the cost of providing goods and services if the dollar wasn’t mandated as a form of payment for taxes.

That said, there are also plenty of other reasons why taxes are necessary for a functioning society. I realize this argument doesn’t play well for a lot of people, but I think a progressive income tax is valuable as a form of wealth equalization. I’m proud to live in the state that has the highest top state income tax rate in the country, as well as the highest ratio of federal taxes paid to federal spending received. Conservatives would argue that this would impoverish the state, yet NJ has the highest (or 2nd highest) GDP per capita/median income in the country, and a much lower Gini co-efficient (more equality) than the other two states in the tri-state area. The fact is, when tax dollars are taken from the rich and given to the poor (or transferred from rich states and given to poorer states), that just means that more people can afford to pay for products and services. This is exactly what’s wrong with the Eurozone, in that Germany (as well as the upper class) refuses to share it’s wealth with the people who form its major export markets (including the working class). Without a tax policy that focuses on wealth equalization, you create enormous trade imbalances, and a society where too few people can afford to participate in the majority of the economy.  That is a recipe for recession and depression.

But the most important reason for justice in taxation is the one that Amanda pointed out. We need to tax activities that don’t actually benefit anyone but the 1%, and encourage people to actually spend money instead of hoard it. The fact is, top tax rates should be at least 70%, and anyone arguing otherwise is just a toady for the already super-rich and powerful. The effect of our already too low and distorted taxation system is that people like Mitt Romney have the incentive to just hoard their money and keep it out of the real economy so they can pass on as much as possible to their heirs. We need to both close loopholes AND raise rates, and I can’t believe anyone on the left or right is getting away with arguing otherwise.

Places with weed out courses generally have relatively open admissions.

Not necessarily.  Weed-out courses also exist in highly selective colleges and universities…such as what one Tufts bio/non-pre-med major classmate experienced in his intro bio weedout course where over 60% of his classmates flunked.  Experienced what most STEM major/minor friends, colleagues, and HS classmates regard as a “light version” of this in the two intro CS courses for majors I took at my LAC to fulfill my science requirements.  Heard similar stories from friends, relatives, and classmates at other respectable/elite private universities…including some Ivies.

Granted, the Profs in my STEM courses weren’t even intending to make those courses with labs “weed-out courses”....they just ended up functioning like them in practice due to departmental grading policies and how the students actually performed. 

In some ways, this mentality is similar to how an older cousin described the US military’s pilot training programs.  Being selected for pilot training is highly selective to begin with…and they keep weeding out trainees at each phase of the program until only the very best finish. 

Curves happen not to ensure that some people fail but because of there were no curve, then almost everyone would fail. And the few geniuses who manage to score in the 90s still get to keep their A’s.  It isn’t a zero-sum game.

Unfortunately, those with 90’s….especially the ones with cutthroat competitive personalities tend to feel their performance is “degraded” if they get the same/slightly higher grades than classmates who scored in the 80s and below. 

Amusing considering the STEM classmates who tend to get high 80s and 90s tend to be those who took the same course in high school or community college or did the equivalent self-study beforehand so they’re already starting from third base.

exholt - 2nd semester calculus at UIdaho in the 1980s was the big weed out course for engineering.  UI had open enrollment; if you graduated from a public ID HS, you could attend.  There were twice as many Freshmen in Engr as there were slots for Sophmores.  How did they solve this delima?  By flunking 50 % in Calc II for one thing.  The first day of class, the grad student teaching it said look left, look right, only 2 of the 3 of you will still be in this class at the end of the term and half of you will have a grade below a C.

People you buy your necessities from accept your money because they, too, need it to pay taxes.

Okay. So you’re describing the mechanism by which government valuates currency. You haven’t explained why that’s a bad thing or why the money disappears once taxed, despite the fact that the government can turn around and spend it right back.

@APK: Way to misrepresent me, dimwit. I didn’t say that deficit spending caused inflation, only that printing money willy-nilly to finance government services causes inflation. I guess it’s a good thing that we haven’t really done that then, isn’t it? Also, money has value because we pay debts with it. Any debt will do, whether it’s to your landlord, your utility company, your credit card company, or the government. Its worth is predicated on the government keeping the money supply relatively steady, and not just deciding to dump trillions of dollars into the economy, which would devalue everyone else’s dollars. As long as the money supply increases steadily, and doesn’t grow significantly faster than annual economic growth, it isn’t a big deal. But seriously, go read some actual, evidence-based economics, not the ramblings of some random dude on the internet who saw some youtube video that “enlightened” him. Also avoid the economic theology of the freshwater economists and the Austrians, it will only make you dumber (this is likely impossible).

A Keaton,

I looked at the Mitchell fellow’s site that you link to in your post @77.  I don’t know if that guy has any degree in Economics or Finance but I have both and I’m not impressed.  I also did a quick google search on the guy.  One of the top search results is to his USER page on Wikipedia which looks to be written deceptively into appearing like it was a real Wiki article on the guy…excepts there’s no references or sites or, you know, evidence to his assertions.

I’m already sorry that I wrote this because I have concluded that you are either so woefully malinformed and indoctrinated into this zero taxes magical thinking that you’re not recoverable or that you’re simply trolling this site, throwing written hand grenades into the thread to hijack the discussion away from anything useful.  However, I had already written paragraph 1 and it’s hard to really learn the meaning of a sunk cost in your gut.  Plus, people making such bald nonsense assertions about the U.S. economy and the roll of taxes and government spending got my goat.

p.s.  Hi, everyone!  I wish I had made my first post here some other than feeding the trolls.

Tufts bio/non-pre-med major classmate experienced in his intro bio weedout course where over 60% of his classmates flunked.

Hm. I suspect an unreliable narrator. You sure this wasn’t just a lazy whining Tufts student trying to convince you that it was soooooo hard there?

There simply aren’t that many geniuses out there. If you’re failing a class, it’s probably because you’re not studying very hard. If half the class is failing, it’s probably because even if there were no curve, they’re unprepared.

Show me a class where people are scoring 70-80% on tests and not passing because of a curve, and I will concede the unfairness of it all. But in practice, that doesn’t happen. If a lot of people are failing, it has less to do with the grading policies and more to do with a combination of the qualifications of the students and the difficulty of the class. Weed-out scenarios are more like the ones helen w. h. describes.

But being unable to unplug is increasingly a part of even salaried and hourly employees’ lives.

A little off-topic in this thread, but I took my first 2-week vacation in almost a decade this summer and did at least 8 hours of work helping a manager work on a project I handed off to him. Half of that time was spent reminding him that I was on vacation and had handed the project off to him well in advance of my vacation.

To add to my comment @85 - the open enrollment was required by the state constitution.  I beleive both that and the no tuition allowed, but direct fees are ok have been recended in recent years.

They also exist to weed out those who are woefully unprepared, the unserious/uncommitted, and/or those who don’t have the minimal aptitude and work-ethic necessary to maximize chances that even those who graduate from the bottom of the class are able to pass mandatory licensing exams and minimize the chances of killing/severely injuring someone because of the lack of sufficient work-ethic and diligence applied on a given project . . .

. . . who then go on to complain that universities discriminate against conservatives.

Money has value because we all need it to pay taxes.

And to buy food. And to have a place to live. And to provide for our children. And to obtain healthcare. Seriously, a comment like that sounds like the kind of oblivious thing a 1%er would say because he spends so little, relative to his income, on necessities like food that he barely registers them as expenses.

He’s regurgitating half-remembered bits of MMT theory, mouthing the words but missing the point.  Countries ensure a continuing domestic demand for their currency by requiring taxes, but it’s the use of money as a circulating medium of exchange which makes it really useful.

@Triplanetary #86 He’s making an MMT argument but without all of the other implications of that theory, which is a pretty clear sign of either bad faith or complete ignorance. Basically, the argument runs that because the government can create money out of thin air, essentially at will, taxation is analogous to destroying money and spending is analogous to creating it. Essentially, there’s no need to pay for spending with taxation (though as I said in my previous comment, there are still plenty of other reasons to tax). The idea is that the only reason to constrain spending is to prevent hyper-inflation (and also that hyper-inflation is a lot less likely than one would predict under conventional/Neoclassical economics). Alex P. Keaton is leaving out half the theory in order to argue for some Libertarian fantasy. But the conclusion that taxes should be zero does not flow from the premise that there is no link between government tax receipts and government spending (of course, at the state level, MMT doesn’t apply at all because state governments can’t create their own money).

I also want to correct my earlier post a bit. Obviously, in parts of Europe a lot more of taxing and spending is focused on creating equality than in the U.S. However, in lots of Europe, this is not the case (like Portugal and Ireland especially). Regardless, in Germany for more than a decade, there has been a concerted effort to prevent rises in worker wages in order to increase exports. Unfortunately, under the Euro, this means that Germany’s natural trading partners in the poorer parts of the Eurozone are also having their wages depressed, and consequently the working class in those countries are having their incomes systematically drained toward German corporations. Here is a clip breaking it down, from a former German deputy finance minister and current Chief Economist of the UN agency for World Trade and Development http://www.nakedcapitalism.com/2011/12/class-war-low-wages-and-beggar-thy-neighbor.html

Hm. I suspect an unreliable narrator. You sure this wasn’t just a lazy whining Tufts student trying to convince you that it was soooooo hard there?

No.  He was part of the 40% who passed and actually did well in that intro class.  He was still stunned at how the majority of his class flunked and remarked about that.  Heard the same thing from HS classmates, colleagues, and friends at other private elite colleges…..and the narrators were all ones who passed/excelled in those very same courses or in a few cases…later taught those very same courses themselves. 

There simply aren’t that many geniuses out there. If you’re failing a class, it’s probably because you’re not studying very hard. If half the class is failing, it’s probably because even if there were no curve, they’re unprepared.

Agreed with the first sentence.  However, the vast majority of those admitted to the elite colleges are also NOT GENIUSES. 

Hence, the plausibility of most flunking out of weed-out courses both because of overwhelming rigor/courseload and because they may not have been well-prepared.  Not surprising considering even many elite colleges have had to offer remedial courses for some incoming first-year students.

exholt, my point that I keep trying to make is that the curve is not the cause of the failure rate. A combination of the rigor of the class and preparation level of the students causes it. When a class has a high weed-out rate, it’s not because, despite their 70s and 80s on the tests and good performance on the problem sets, that they “don’t make the cut” because of curves. It’s that they’re scoring 40s and 50s on a test when class ave is in the 60s. There simply do not exist enough smart hardworking students to ensure that a very rigorous class would have a low-to-no failure rate (though most students are smart enough to drop the class before the F appears on a transcript).

To add to my comment @85 - the open enrollment was required by the state constitution.  I beleive both that and the no tuition allowed, but direct fees are ok have been recended in recent years.

Helen w.h.,

The system you’re describing is similar to how some Profs I’ve had/met described how the midwest state universities they attended in the ‘50s used to deal with that mandate for in-state students. 

Admit all who are interested in attending and then institute weed-out policies ACROSS-THE-BOARD so that half the entering in-state first-year class is weeded out by the end of their second year.  They didn’t even have to go through that much effort as most of those weeded out were woefully unprepared to begin with or weren’t willing to put in the time and effort to meet the university’s minimal academic standards. 

Weed-out courses.  Imagine a country where we had enough education resources to educate everyone to the maximum of their abilities, rather than saying”  “We can only afford to educate half of you, so this is the course that decides which of you will get an education and which will spend your lives as Wal-Mart cashiers.  You have brains and abilitiies?  Who cares?  We can afford to waste them! We’d have to spend precious tax dollars to let you fulfill your potential!”

Weed-out courses aren’t always (or even usually) used to weed people out of college altogether, but out of courses of study—to remove people from science and engineering programs who aren’t qualified to be in those programs, presumably so that they can pursue a course of study they are better suited or more qualified for. 

“Educating someone to the maximum of their ability” does not mean encouraging them to study a subject they are not actually qualified to study.  Given that students pay tuition, I strongly suspect that colleges would prefer that students not flunk out altogether.

Question:

Is Alex P. Keaton the MRA troll from awhile back or are they a different contributor?

(Typical fucking Pandagon - you try to construct one half-assed analogy, and suddenly five or six people are arguing with each other over a complete tangent)

Touché, PiaToR.

Is Alex P. Keaton the MRA troll from awhile back or are they a different contributor?

The guy has all the markings of a persona invented for the lulz.

Given his pseudonym, yeah, I think it’s a persona invented for the lulz. I mean, really? Alex P. Keaton? The sweater Republican from an 80s TV show?

Gah, my bad the USPS comment. I was just overwhelmed by the extraordinary stupidity of the concept that taxation “destroys money” I started throwing out whatever federal program came off the top of my head without consideration. The fact that the USPS IS self-funded is one of the largest reasons they sadly are having to cut back services in a big way, due to competition from the electronic world and private parcel carriers. Yay capitalism!

I’m stocking up on venom for Pandagon.  I just never seem to have enough, given all the targets of opportunity.  Anybody know of a good blowout sale, or closeouts, dealer incentives, or a factory overstock on quality venom I can take advantage of?...

The fact that the USPS IS self-funded is one of the largest reasons they sadly are having to cut back services in a big way, due to competition from the electronic world and private parcel carriers. Yay capitalism!

Eh, the USPS was getting along pretty well for a while. The Republicans sabotaged it by legally requiring them to pre-fund 70 years worth of pensions, a common-sense requirement with a long history of not having been imposed on any other government service ever because it’s fucking bullshit.

“The Republicans sabotaged it by legally requiring them to pre-fund 70 years worth of pensions, a common-sense requirement with a long history of not having been imposed on any other government service ever because it’s fucking bullshit.”

...I’m left wondering how how exactly the Galtian Overlords on Wall Street will get their hands on that money and leave USPS retirees with nothing.  I figure it’s only a matter of time, so the question is how they’ll do it.  Maybe we can start a pool…

I’m stocking up on venom for Pandagon.  I just never seem to have enough, given all the targets of opportunity.  Anybody know of a good blowout sale, or closeouts, dealer incentives, or a factory overstock on quality venom I can take advantage of?...

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Seriously, PiaToR, what’s wrong with you?

Eh, the USPS was getting along pretty well for a while. The Republicans sabotaged it by legally requiring them to pre-fund 70 years worth of pensions

House Vote: Postal Accountability and Enhancement Act

Y: Democrats: 201   Republicans: 208
N: Democrats: 0     Republicans: 20

http://www.govtrack.us/congress/vote.xpd?vote=h2005-430

Seriously, PiaToR, what’s wrong with you?

I bet Mike gets the allusion.

There simply do not exist enough smart hardworking students to ensure that a very rigorous class would have a low-to-no failure rate (though most students are smart enough to drop the class before the F appears on a transcript).

Unfortunately, some of those STEM major friends who are now STEM Profs have found that if the weed-out rates are less than 50%, their departmental chairs tend to consider their classes “too easy” and would tell them to increase the rigor. 

Moreover, I know of a few older relatives who were in STEM classes where you could fail with 80s or 90s as the final grade if the class average is extremely high.  One recalled the class average was a 96 so the classmates he knew with an 88 and 90 as their final grades ended up with Fs due to the curve.  Granted, I don’t think this is practiced much anymore. 

What’s interesting here is that students who are in this mythical kind of situation fail if they retain the “I got mine” strategy combined with the “not going to do anything I don’t have to” strategy.

The successful students could work with the students who are not doing so well and help them raise their grades so everyone’s grade goes up.

This is based on a strategy or worldview that Traditionally Black Colleges have employed for decades.  If you see that your brother/sister is failing, work with him or her to get them up to speed.

The extra bonus is that you learn things EVEN BETTER when you teach them

Oldfeminist,

The above would actually be detrimental to most STEM majors trying to ensure they pass in a grading context where Profs are limited in the percentage of B to A+ level grades they can award based on departmental policies and passing grades unless everyone has test scores in the mid-70s and up.

Moreover, if that actually happens….there’s a tendency for department chairs to chide the Prof for “being too easy” and if word gets out to prospective employers/grad schools….for them regard the students/graduates with deep skepticism. 

In the case of pre-meds…it is even more antithetical to their interests considering med school admissions has gotten so competitive most pre-med advisors would advise anyone with a cumulative GPA below -A and/or a B+ or below in pre-med core courses like Organic Chem to forget med school as their chances of admission are practically nil.

From a 2004 article published in the Intl Journal of Political Economy:

“The theory of the monetary circuit brings about the rigorous proof of the Lerner-Wray proposition (Bell 2001; Wray 1998), according to which, since taxes destroy money, they cannot be a source of funds. The state imposes tax liabilities to squeeze the private sector aggregate income and therefore ultimately consumption (a rigorous proof of this ultimate consumption squeeze is to be found in Parguez, 2003). Since taxes cannot generate revenues that fund outlays, the very redistribution doctrine, deemed the ‘Robin Hood’ paradox, is at odds with the existence of money. There is no tax revenue to be redistributed because all the money collected through taxes is instantaneously destroyed.”

This is some industrial grade bullshit. It’s not circular logic, it’s spiral logic. Because some sitcom parody quotes Bell and Wray who quote Parguez we have multiple “rigorous proofs” that tax collector magic makes tax money all gone as soon as it’s collected. Did Smokey the Bear know this? Maybe he should have demanded that he be given gold instead of bear chow.

Triplanetary,
People you buy your necessities from accept your money because they, too, need it to pay taxes.
James Galbraith has explained taxes quite well, if you’re interested in a Google search.

Yeah - you can do a Google search. The only reason merchants accept your money is so they can use it to pay taxes so the money will magically disappear - or something like that. What if I tip the waiter? Is that money just for the furnace too?

TheRealistMom,
Submitted for your education:

[Our federal] government is the issuer of the [American] currency… [It] doesn’t “have” or “not have” dollars. There is no vault or lock box where it “keeps” its money. In fact, it makes all of its payments simply by electronically crediting private bank accounts and there is no practical limit to which it can change those numbers up. Spending by the federal government always creates new money in the system, while taxation destroys it. When households and firms pay taxes, the money does not go anywhere; the government simply debits those private bank accounts by electronically reducing the amount of reserves they hold, i.e., by changing the numbers in those bank accounts down.

Government is constrained only by the inflation it can create by over-spending, but its ability to spend is numerically unlimited. Households are constrained by their ability to get dollars from some form income and from borrowing, and both of those have real limits.

~Pavlina R. Tcherneva, Assistant Professor, Franklin and Marshall College

Wow, a real professor. Must be right. Before electronic money transfer the government had to inefficently print money to collect and destroy by taxation - because somehow or other government never spends money. In the inner tubes era government can skip the printing and burning part and just put a bunch of random numbers in a spreadsheet and deliriously delete it. All gone. Hard to say how the government spreadsheet drones survive when the money they get paid from tax funds magically combusts.

I can’t help but notice that “Alex P Keaton” is less intelligent than Mallory…

Anyway here’s the thing. Yes, the government can make money up out of thin air. But there’s a little thing called inflation—if the US Government chose to pay off all its debts at once, what would happen to the value of the dollar?

One way for conservatives to ensure more people believe their sketchy arguments:

http://news.yahoo.com/blogs/ticket/republicans-vow-protect-high-school-dropouts-barack-obama-184402291.html

The fact that the USPS IS self-funded is one of the largest reasons they sadly are having to cut back services in a big way, due to competition from the electronic world and private parcel carriers.

For a while the USPS was doing okay and their customer business was transferring more from first class mail to shipping packages. Sure, we think about how we don’t buy stamps to pay our bills anymore but we don’t realize how much we use the post office to get our ebay and Amazon purchases. (Notice that, insipid “send your mom a letter” campaign aside, the post office’s ads tend to be about Priority Mail) It’s been a while since I last looked, so I don’t know if that trend continued.

As someone who had a few jobs that included a lot of shipping, USPS is incredibly competitive for domestic shipping. I regularly had to send out 100 parcels. UPS and FexEx rates were more complex and they usually would charge $25 for something the USPS could ship for $10. Think about how any business would be affected if a regular $10 cost ballooned to $25.

From a 2004 article published in the Intl Journal of Political Economy:

“The theory of the monetary circuit brings about the rigorous proof of the Lerner-Wray proposition (Bell 2001; Wray 1998), according to which, since taxes destroy money, they cannot be a source of funds. The state imposes tax liabilities to squeeze the private sector aggregate income and therefore ultimately consumption (a rigorous proof of this ultimate consumption squeeze is to be found in Parguez, 2003).

This is not science. “proof” only exists in alcohol and theorethical mathematics, not in actual science. What “rigorous proof” here seems to translate to is “we made the numbers do this”. If this were research, it wouldn’t be “rigorous proof”, it would be evidence and likely conclusions and statistically significant correlations etc.

They also exist to weed out those who are woefully unprepared, the unserious/uncommitted, and/or those who don’t have the minimal aptitude and work-ethic necessary to maximize chances that even those who graduate from the bottom of the class are able to pass mandatory licensing exams and minimize the chances of killing/severely injuring someone because of the lack of sufficient work-ethic and diligence applied on a given project.

that’s not an argument for “weedout” courses. such individuals would fail a rigorous class all by themselves, no need for grade-quotas.

Curves happen not to ensure that some people fail but because of there were no curve, then almost everyone would fail.

then there’s either a problem with the difficulty of the course, or with a lack of preparatory work. Or, you know, maybe sometimes it would be ok for almost everyone to fail, if the point was to only have the best continue in that track. So I still don’t know what actual good grading on a curve is supposed to do

Moreover, if that actually happens….there’s a tendency for department chairs to chide the Prof for “being too easy” and if word gets out to prospective employers/grad schools….for them regard the students/graduates with deep skepticism.

well, that’s the height of stupidity. judging a professor highly based on how many students he didn’t manage to teach? I can’t tell whether thant’s just assessment-laziness on behalf of admin, or actual elitism (AKA creating scarcity to falsely increase value)

“Educating someone to the maximum of their ability” does not mean encouraging them to study a subject they are not actually qualified to study. 

Yeah, if you’re that upset about how many students are failing, you could always hold their hands and pass them anyway. If you like living in a country full of grade-inflated, ignorant, entitled assholes, then keep on keeping on.

Sure, some students fail because they’re working three jobs and don’t have time to study. Others fail because they’re pissing away their time not studying and not learning. That most of them end up with degrees anyway is how we spent eight years with a sea cucumber for a president.

Moreover, if that actually happens….there’s a tendency for department chairs to chide the Prof for “being too easy” and if word gets out to prospective employers/grad schools….for them regard the students/graduates with deep skepticism.

In my experience with non-elite education, the exact opposite problem happens, where instructors are punished, sometimes heavily, for failing too many students, and are forced to inflate grades to keep the administration and the students happy. When employers and grad schools catch on that these colleges are graduating underqualified students, sometimes with very high GPAs, they develop the appropriate skepticism about the quality of those institutions. Employers need people who can actually do the work their credentials suggest they can.

@Comment #103: Alex P. Keaton on 01/25 at 06:27 PM

Okay, just got home from work and read everyone’s comments to me.  Some were rather vicious, and I’m not sure why.

It’s because you’re an idiot.

House Vote: Postal Accountability and Enhancement Act

Y: Democrats: 201   Republicans: 208
N: Democrats: 0   Republicans: 20

All right, Manju, you managed to make a good point for once. I don’t know if you expected me to defend the Democrats or what, but I won’t. Fuck ‘em.

Manju, as always, is a bit of an ignorant weasel. The Postal Accountability and Enhancement Act is an omnibus bill covering many aspects of postal regulation, of which the pension front-loading was only a small (Republican sponsored) part.

exholt @97 - Most of those engineering students transfered to other majors and there either finished or dropped out, but there were actually a lot of remedial classes offered and open.  Since the engineering course work was offered in such a way as to virtually force it into a 5 year degree, an additional year of remedial work, or even a semester of it, could stretch that to 7 or 10 years.  It was possible for someone really dedicated to overcome the barriers, even if woefully unprepared by the always underfunded Idaho public schools, but the deck was decidedly stacked.

pepperlad @117 - there are places where the USPS delivers that the for-profit companies just wont go, or charge an exorberent rate for, and where their “overnight” can take a week or more.  This Xmas, I sent a package via regular mail to Emmett, ID that arrived in 3 days.  UPS would only promise within a week and cost more.  Ditto outside of Faribanks, AK, except 5 days vs 10-12 days. FedEx wont deliver to my brother outside of Usk, WA for less than twice USPS rates, last time I checked.

Oh, and you can’t send packages APO or FPO unless you send them via USPS. FedEx and UPS will not deliver to the folks serving our country.

FedEx and UPS don’t support are troops! We’d better write up an angry email with lots of repeating exclamation points!!!!! It’ll be in every conservative’s inbox by this time next month.

On weeder courses - when I was in school, the two physics classes required for all engineering students were almost academic hazing. About 80% of your grade for the class came from exams, which were multiple choice, with no partial credit for showing work, and the answer choices were designed to test whether you made a simple math error (e.g forget to carry a decimal or multiply -1, etc.) rather than whether you understood the concept. Example of a typical multiple choice answer: A: 1.0; B: -1.0, C: 2.0; D: -2.0; E: None of the above. The exams were graded on a curve, and the typical passing grade on an exam was a little above 20%, meaning that you had, statisically, as good a chance at passing the class by guessing as you did by actually doing the work. One of my friends passed electrical physics doing this on his third time through.

Nitpick: It’s dividends that aren’t supposed to be taxed because of double taxation. longterm capital gains weren’t supposed to be taxed because of sweat equity, and this made somewhat more sense back in more equally-distributed days when marginal rates were higher and the tax code was missing certain exemptions.

The basic question is: how do you tax something that someone works on (or holds onto) for a bunch of years but only gets a lot of cash out of once, when they sell it? Without a capital gains rate (and the homeowner exemption, which came later) but with a strongly progressive system, somebody who bought a house for $100K (with $10K down) and lived in it for 40 years and then sold it for $1M would pop up into the 70% or higher bracket for the year of the sale and see most of their profit vanish. Same thing for someone who started a small business for next to nothing, worked a career long on building it up, and sold out when they retired. You can’t tax them on the increasing value as the years go by, because they don’t have the money, and the value might not increase after all, but you don’t want to tax them as if they were pulling down that kind of money every year. (And there used to be income-averaging, but that basically means giving all your money to an accountant…)

So on the back of that conundrum was erected the wealth-favoring mess that is the current capital-gains rate, with the problems compounded because there’s no real progressive tax structure on top of it, and because the most common reason for needing the capital-gains rate disappeared when the homeowner exemption went in. But it wasn’t entirely insane to start with. And a 5-year minimum would certainly be a good start. And maybe a bar against invoking the rate in every year you file, because if you’re in the business of holding things for a long time and selling them, and you make more than enough money doing that to live on, you really don’t need the subsidy.

the pension front-loading was only a small (Republican sponsored) part.

Sponsor: Rep. Thomas Davis [R-VA11]

Failure to disclose material facts:

Co-sponsors:
Danny Davis [D-IL7]
John McHugh [R-NY23]
Henry Waxman [D-CA30]

http://www.govtrack.us/congress/bill.xpd?bill=h109-6407

Voice vote, IIRC, ether means the vote was so uncontroversial that they didn’t bother to record names…or it was so controversial that…well…ditto.

Given bipartisan sponsorship and Unanimous Consent in the Senate,  I would go with the former. The vote breakdown on the original bill should tell us what we need to know, unless there is some quirk I’m not aware of.

OK APK, since you keep coming back for more, here’s what I think everyone would like for you to provide: evidence. You can’t just strut about saying that the government can just print more money to cover deficits and that the economy would still grow if you aren’t going to back it up with evidence. Just saying that the other guys are wrong and you are right is religion, not science. The funny thing about Krugman is that he backs up his statements with data and statistics, not dogma.

@exholt: From my experience as a STEM major (MechE, Georgia Tech, 2009) most classes didn’t need to be curved down, they needed to be curved up. There were several classes that I got an A or B in with a 75% average because the whole class was averaging 40-50%. Some of my other classes didn’t really need a curve, per se, but were graded on a more generous 15 pt increment scale, rather than the standard 10 pt increment scale. It seems to me that if a class has an average of 90+%, the test material isn’t being made challenging enough, or the somehow got the smartest people ever in an intro engineering class.

OK APK, since you keep coming back for more, here’s what I think everyone would like for you to provide: evidence. You can’t just strut about saying that the government can just print more money to cover deficits and that the economy would still grow if you aren’t going to back it up with evidence. Just saying that the other guys are wrong and you are right is religion, not science. The funny thing about Krugman is that he backs up his statements with data and statistics, not dogma.

What APK is calling for is what Imperial/early Weimar Germany tried.  Guess what? In avoiding to increase taxes to pay for WWI, Germany cranked up their printing presses to print papermarks.  That caused its value to start dropping as the war went on and when they lost….they kept on printing which caused one of the worst cases of hyperinflation in modern history.  The papermark became so worthless that people had to use a wheelbarrow just to buy daily groceries and often used the worthless notes for wallpaper and fuel for cooking their meals. 

You may also want to examine the case of the Hungarian Pengo right after WWII. 

In my experience with non-elite education, the exact opposite problem happens, where instructors are punished, sometimes heavily, for failing too many students, and are forced to inflate grades to keep the administration and the students happy. When employers and grad schools catch on that these colleges are graduating underqualified students, sometimes with very high GPAs, they develop the appropriate skepticism about the quality of those institutions. Employers need people who can actually do the work their credentials suggest they can.

This tends to be less likely in the STEM fields where the prevailing culture seems to be “If less than 50% of the students in an intro course fails….then the course isn’t rigorous enough”. 

Moreover, employer/grad school skepticism could happen with just the mere assumption that unqualified students with inflated grades are being graduated….even if the actual evidence shows that may not the case. 

That’s a common perception among ‘80s and early ‘90s employers about CCNY/CUNY graduates….even though they don’t count remedial coursework as credits to graduation and most who graduated after 1969 continue to demonstrate they’re more than qualified for employment/grad school. 

On the other hand, the phenomenon of unqualified business majors being allowed to graduate is perceived to be such a problem by one former employer that they made it a point to only hire those from top undergrad business programs like Wharton, NYU-Stern, UMich, UCBerkeley, UVA, etc. 

They found it was the only way they could ensure the prospective candidate has the ability to write coherently and perform the most basic mathematical operations(Mostly arithmetic with a touch of basic algebra) after getting “burned” in the past by undergrad business major grads from lower-tiered regional schools.

This tends to be less likely in the STEM fields where the prevailing culture seems to be “If less than 50% of the students in an intro course fails….then the course isn’t rigorous enough”. 

And what would you know about the culture of STEM fields? Go to any top-25 university in the country, and you won’t find half the class failing the introductory subjects, and you particularly won’t find this at the most STEM-focused universities. Where you may find it is at 3rd tier universities which have engineering departments but aren’t able to attract enough qualified students that would be able to make it through their programs.

And what would you know about the culture of STEM fields? Go to any top-25 university in the country, and you won’t find half the class failing the introductory subjects,

Some of the accounts I’ve heard are from people who attended top-25 universities as STEM majors/minors.  A few of them are even TEACHING those courses now at other top-25 universities as tenure track Profs and were confronted by their department chairs for making their courses “too easy”.

exholt, it’s always kind of funny, to me, how people who self report high failure rates in classes aren’t the ones who failed them. There is a tendency for both the narrator (and you, who comes to the table with your own agenda) to exaggerate the situation, especially when you’re so disconnected from it. No, half the students do not fail intro STEM classes at any reputable university in the USA. You’re so completely isolated from STEM culture and academics that I’d honestly appreciate it if you would stop pontificating about it as though you were some kind of authority on the matter. The days of “look to your right, look to your left, one of you will not be here by the end of the year” are long gone, of they were ever that common in the first place. I have no idea if you are just very gullible or you’re telling yourself some personal narrative to (unnecessarily) justify your decision to be a humanities major (for most of us, the decision to go the humanities or STEM route was a choice, either of which we were qualified to do). But whatever the case, the picture you’re painting is not reality for those who attend universities and colleges with selective admissions.

@exholt #135 Not to defend AKP’s reliance on a disjointed understanding of Modern Monetary Theory, but the Weimar example doesn’t apply here. After World War I Germany owed millions of dollars in reparations to be paid in gold, not their own currency. If they were allowed to pay in their own currency, they could have just printed a bunch of marks and it wouldn’t have caused hyperinflation (because that huge injection of money into the economic system would be instantly sucked out by the payment of the reparations, and only slowly filtered back in through international trade). Currently, MMT is only applicable to three countries in the world who have the ability to print their own money in alignment with whoever makes budgetary decisions, pay their debts in that money, and their money isn’t pegged to some other value, like the price of gold, or the euro/dollar. Those three countries are Japan, the U.S., and the U.K. The Eurozone isn’t one of them, because the European Central Bank isn’t even slightly accountable to any democratic authority, and it’s not politically aligned with the source(s) of budgetary decisions. In the U.S. the federal reserve is only slightly politically aligned with with source of budgetary decisions (Congress), but it’d be almost unthinkable to have a situation where the Fed would say that they refuse to print any more money because Congress has been spending too much (which is basically what was happening in Europe). This is the reason why Eurozone countries with much lower outstanding national debts and budget deficits (like France) were downgraded by ratings agencies, but the UK was not.

Of course, in the U.S. we would benefit from a lot more transparency and democratic accountability at the Fed. Last October it was revealed that the Federal Reserve secretly gave the banks $7.7 trillion during the financial crisis. Nobody ever even suspected this was happening, but every conventional economist’s models predicted that such a huge injection of money into the economy would cause hyper-inflation. I love Paul Krugman, but not even he was calling for a $7.7 trillion stimulus. Yet there was no major inflation as a result. Imagine what would have happened if the Fed had given just $1 trillion of that money to the real economy, which could actually be invested to increase wealth in real goods and services. As another example, Japan has the highest debt on the planet, yet inflation and bond yields aren’t even close to a problem there. It’s safe to say that the U.S. (and any country with monetary sovereignty) could increase it’s debt levels to at least to the levels of Japan, and we wouldn’t have a problem with inflation or bond yields.

Sorry, I forgot to post this link about the $7.7 trillion secret Fed loan.

http://pandagon.net/index.php/site/comments/what-to-remember-when-republicans-whine-about-punishing-success

SORRY! My c key (for control+c) was stuck. http://abcnews.go.com/blogs/business/2011/11/fed-gave-banks-trillions-in-bailout-bloomberg-reports/

Here are some other blogs (filled with evidence, graphs, charts and such) you should visit to get a better understanding of economics: Multiplier Effect, billy blog, New Economic Perspectives, and The Center of the Universe.  I also recommend visiting the University of Texas Inequality Project.

Uh-huh.

Definitive proof that I am right can be found in _War and Peace_, _Infinte Jest_ and _The Lord of the Rings_.  Go and read them closely enough and you’ll find the evidence.

Envious? Hell yeah, I’m envious.

I got up at 1:30 this morning.

I dressed in darkness, packed my breakfast and lunch, and went to work.

I worked from 2 AM to 12:30 PM. I drove 350 miles and moved freight weighing between 3 oz and 250 lbs per piece. Without mechanical aid.

I will spend my afternoon writing a novel to increase my family’s income, or working on my fledgling publishing company, also to increase my income, or crocheting stuff for my etsy shop.

I’ll make dinner for my family and go to bed hours before any of them even think of it, for about 6 hours of sleep, if I am very lucky.

And by three o’clock this afternoon, Mittens, simply by breathing in and out, will have made as much money as I will make all year.

Damn right I’m envious.

There is a tendency for both the narrator (and you, who comes to the table with your own agenda) to exaggerate the situation, especially when you’re so disconnected from it. No, half the students do not fail intro STEM classes at any reputable university in the USA.

That’s contrary to what I’ve heard from nearly every STEM graduate…even those who attended some of those top-25 schools you were talking about.  Moreover, it goes against what I saw in several such STEM departments where exam and final grades/distribution for everyone in a given class were posted for everyone to see….except they used student ID#s instead of names. 

Granted, I do know one exception whose experience agrees with yours…a cousin who graduated from Caltech.  However, even he says his experience is atypical….especially when compared to his brothers at other Top-25 schools and his experience as a TA/Instructor at the elite university where he got his PhD. 

I’m not promoting this to hype up the phenomenon….heck I agree with some of those friends who are STEM Profs who are HORRIFIED at this practice and mentality among their department chairs. 

Unfortunately, one common false dichotomy which commonly comes up in US discussions about educational issues is one where we intensively ramp up the cutthroat weedout to emulate systems like those in East/South Asia or relax the “elitist standards” to the point even those who haven’t developed minimal levels of competency are allowed to graduate with passing…or sometimes even respectable grades. 

In short…I don’t agree with either of these extremes….especially after seeing the real damage both extremes cause to both students and potential employers. 

@exholt #135 Not to defend AKP’s reliance on a disjointed understanding of Modern Monetary Theory, but the Weimar example doesn’t apply here. After World War I Germany owed millions of dollars in reparations to be paid in gold, not their own currency. If they were allowed to pay in their own currency, they could have just printed a bunch of marks and it wouldn’t have caused hyperinflation (because that huge injection of money into the economic system would be instantly sucked out by the payment of the reparations, and only slowly filtered back in through international trade).

I was including Weimar because the inflation of the paper mark actually started not too long after WWI started and Imperial Germany entered into it.  Their policies of not increasing taxation and cranking up the printing presses to pay for wartime expenses after 1914 started the inflationary trend that continued into the Weimar era. 

The effects of Germany’s defeat and the Versailles treaty only turned this inflationary trend into a deep plunge into the abyss. 

Exholt, that’s a good point. Also, I forgot to mention Argentina (and possibly other currencies) as a current example, and one that weakens the MMT case a little, too.

Honestly, I’m still undecided about whether MMT arguments are persuasive, but I tend to find most economic theories to be way too detached from empiricism for my tastes anyway. Here is a 6 part series on the topic that I found compelling (although part 5 is mostly just polemic without content, so it’s probably worth skipping) http://www.nakedcapitalism.com/2011/12/public-money-for-public-purpose-toward-the-end-of-plutocracy-and-the-triumph-of-democracy.html I’d also recommend David Graber’s history of debt, though I haven’t finished reading it yet.

I then produced this quote from Galbraith:

AXP, dear boy, that’s a random quote from someone, with not even a link to where it was said and the context in which it was said. And it covers a small part of what you’ve been saying. That’s not evidence, that’s just further assertion.

You are, I’m afraid, a classic case of a little knowledge being a dangerous thing.  You’ve read some things that sound clever, you’ve learned some words and phrases, you probably think you understand, but really, really, truly, you don’t.

Does Keaton give off a Tyler Healy vibe to anyone else?

APK notwithstanding, my curiosity has been piqued by some of this discussion.  It sounds like MMT is rather new.  I see references to “fiat money” in the discussion; is it linked to Ron Paul’s criticism of the Fed?  I see statements that governments (at least the US government) can print money to pay down debt with no effect; is it linked to Atrios’s repeated calls for the government to just give money to people instead of banks?  Is it linked to a political ideology?

I know this isn’t the spot for a full discussion, but I’ve appreciated a couple of the links and wondered if anyone else had suggestions for a place to start.

Thanks.

Crissa @74

I am relaying my experiences with the current technology (or current as of 5 years ago, my current truck line doesn’t use the VORAD) I am not saying my reflexes are faster than a computers. I am saying the gradual braking the VORAD implements is sometimes slower than it needs to be for the situation at hand.

And until the computer can compensate for all the random factors of human drivers, road conditions and a jillion other things most people don’t even notice, self-driving cars will only be feasible on closed demonstration courses

Something not mentioned, but dealt the USPS a fatal blow, was that all government interactions were to be changed to digital, if possible.  So millions of tax returns are gone, you’re supposed to pay someone (usually far more than a stamp) to do it digitally (although yes, if you make under X there are free services).  No more treasuries through banks and the mail.  Other departments are the same.

Re: Comment #152: Angelia Sparrow on 01/26 at 06:56 PM

A human driver, on average, can’t compensate for all the random factors.  Don’t be silly.

Personally, I want to put a tuning bar in the back of my car and sense auto-braking signals and fake-out tail-gaters in BMWs into stopping.

Exholt, that’s a good point. Also, I forgot to mention Argentina (and possibly other currencies) as a current example, and one that weakens the MMT case a little, too.

You mean the Argentina that explicitly tied its currency to the US dollar with a set exchange rate, effectively giving up its sovereignty over a fiat currency?

No, it really really doesn’t.

To others who may not have immediately cottoned to MMT as explained by Alex Keaton.  There really isn’t much new about “MMT”.  MMT is just the economics that everyone learnt before the economics profession went insanely stupid around the 1970s, just when these insane stupidities lost the last pretense of applicability. If you learnt a bit of econ in the 1970s, from somewhat older books, as I did, then you realize that the only thing wrong with MMT is that they don’t make this clear enough. They are just doing a better, more systematic, more logical, scientific exposition and elaboration of old-fashioned “Keynesian” or Institutional monetary economics, which was an incredible worldwide intellectual and practical success, leading to the greatest period of prosperity in human history, the postwar boom. All that MMT boils down to is accounting, and understanding what money is.

You do not have to have any specific views on taxation to believe in MMT=accounting. I for one am quite sympathetic to taxing the rich and many corporations a lot more, unlike APK.  Rodger Mitchell is a good guy, but he goes too far some times. Governments do need to have the power of taxation or something to create the demand for the currency they create.  And I think that the rich now have far too much money (usually obtained by government welfare-for-the-rich programs) for their own good & everyone else’s.

To comment on some other views here - BrianX: Alex, the only way to destroy money (at least in the US) is the government selling t-bills. When the government spends money, it goes back into the private sector. The idea that Federal taxes destroy money doesn’t even make logical sense, never mind having any basis in reality. Expounds the incorrect “mainstream” view very well.  In reality, T-Bills are just another kind of money. Currency is just a kind of T-bill or bond. The MMT term is “NFA”.  Federal taxation certainly does destroy (base) money / NFA,  the only way to do so other than burning dollar bills. Federal spending is the only way that (base) money is ever created. The private sector gets all of its money from the government, not vice versa. Everybody used to understand this. Bond sales are a sideshow, whose main purpose is to deceive people into the weird ideas that BrianX has been deceived by.

When deficit-spending, the only source of money in the economy, there is the choice of doing it by just printing money, or printing bonds (= print money, print bonds, sell bond for money (currency), so that the new NFA / money the private sector gets is in bonds rather than currency). Centuries of evidence and simple arguments indicate that in the long run, “government borrowing” = “printing bonds, etc” / high interest rates, tends to be a more inflationary way to deficit-spend than just simply printing money / low interest rates.

There are many people here who seem to have a good understanding of MMT, but Phoenician:  increased spending need not drive inflation - but that exception is very limited.  reverses things, historically. Governments tend to underspend based on ridiculous ideas of “sound finance”. So it is generally the case - worldwide, for the last 30 odd years, that increasing deficits will NOT drive inflation, but just allow the economy to create more real wealth, by NOT forcing people to be unemployed. The normal, infinitely sustainable case of a monetary economy is deficit-spending = private sector saving. Government budget surpluses (& really even balanced budgets) are what is not sustainable.

The idea that MMT only applies to a few economies is very, very wrong. It applies, with no modification from the US/UK/Japan cases to practically every economy on Earth, with the exception of the Eurozone since the 90s. And with a little bit of extra care, it applies to every monetary economy ever.

@Phoenician a time of Romans Correct me if I’m wrong, but I thought Argentina transitioned off the dollar peg about 10 years ago. Obviously, the dollar peg is what caused the crisis in the first place, but my point was that Argentina’s current inflation rate under monetary sovereignty weakens the MMT argument (though I guess if you view the situation as a comparison between pre and post peg, it doesn’t).

@Calgacus I’m pretty sure MMT only applies where there’s monetary sovereignty, and that’s clearly not the case for large parts of the world. Russia and China are the two biggest examples in this regard.

Weed-out courses aren’t necessarily for weeding the person out of the school, but often for weeding them out of a particular MAJOR - since STEM fields are often very competitive, and there are a lot of kids pushed into those degrees by parents who just want them to make a ton of money and never bothered to check if their kid has an aptitude for or interest in the subject. I go to a certain school in Baltimore known for its illustrious medical programs. The majority of undergraduates in the School of Arts & Sciences come in thinking they’re going the pre-med route. A lot of them will not get the point that they’re not cut out for it except with the trial by fire.

I realize this thread is now defunct at this point, but I just read this today, and I think it speaks to basically every issue in the prior MMT discussion. I guess I was too quick to concede the point about World War I inflation in Germany, because it seems like Weimar hyperinflation really was caused by the reparations system (as predicted by Keynes), not prior war debts.

http://www.nakedcapitalism.com/2012/01/michael-hudson-banks-weren’t-meant-to-be-like-this.html

@ScottInOH MMT is basically the opposite of gold standardism/austeritarianism (sic)/monetarism The question for me is whether it goes too far in the opposite direction. I do appreciate the one point of convergence between Ron Paul-ities and MMT people, which is the desire to audit the fed. But, the Paulites want to audit the Fed as the first step toward ending it, whereas MMT people want to audit it so that it’s more responsive to democratic accountability.

Curiouscliche: MMT applies most easily when there is a normal, sensible, unconstrained fiat monetary system. This is what most of the world uses today, except for the Eurozone for the past dozen years or so. This was also the original monetary system of the Sumerians, Egyptians etc, and the monetary system of most war-time economies, e.g. the US in the Civil War. Fiat money is what money intrinsically is and always was.

When nations operate under the delusion of a commodity money system, what they are really doing is having a fiat currency, but running a government store. I.e. a gold standard is the same as an official “We Buy & Sell Gold!” US Treasury Gold Shoppe, that will exchange gold at a set dollar price. Now, running a store can be a sensible or stupid thing. #1, if you run a store, you should take care to have enough of the thing you are selling. So in 1849, with the California Gold Rush, and the rest of the world gold-mad, the US on a gold standard is not a crazy idea. Nowadays a gold standard, a Government Gold Shoppe is a crazy idea, except maybe for South Africa.

It’s pretty clear that the same accounting will work for all types of monetary systems. If you have a gold shoppe, you just gotta keep track of the gold too. A very good way to think of the Job Guarantee proposal of MMT - the most important MMT advance beyond old-fashioned postwar Keynesianism - is that it is a labor standard. A labor standard for the dollar that stabilizes the value of a dollar exactly the same way the gold standard did, but without the negatives, without the deflation, the financial instability, the unemployment, the running out of gold problems.

After reading this thread, I have a thought: instead of asking the rich to pay higher taxes (which seems to be a political non-starter until at least 2013), why don’t we encourage them to donate more to the Red Cross?