Brent Nyitray
Fairlington Blade
Let the mutherfuker burn!
jnc4p
Kevin S. Willis
Michigoose
lmsinca
markinaustin
Arcanaut
novahockey
quarterback
ScottC
yellojktVital Statistics:
| Last | Change | Percent | |
| S&P Futures | 1185.4 | 32 | 2.77% |
| Eurostoxx Index | 2197 | 85.720 | 4.06% |
| Oil (WTI) | 99.62 | 2.850 | 2.95% |
| US Dollar Index (DXY) | 78.964 | -0.646 | -0.81% |
| 10 Year Govt Bond Yield | 2.07% | 0.11% |
Markets are rallying this morning without any major catalyst. Reporters are searching for reasons for the rally, and have offered a rumor of an 800 billion euro rescue package by the IMF (subsequently denied) and a better than expected Black Friday. If you got in your car this morning and wondered why the S&Ps are up 32 handles, well, there isn’t an earth shattering reason. Sometimes there just isn’t an obvious catalyst. Volatility begets volatility.
The National Retail Federation put out its report on Black Friday Weekend sales last night. The average consumer spent $398.62 over the weekend vs $365.34 last year, a 9.1% increase. Total spending was over $54 billion. Strong promotional activity brought out shoppers, so some caution is in order – we may have only been pulling December sales forward. That said, it is more evidence that consumers are spending, even if the sentiment indicators suggest they are not.
The WSJ has a piece on unemployment this morning that discusses how the US employment market is beginning to resemble Europe’s. While the US labor market doesn’t have nearly the amount of rigidity that characterizes Europe’s labor market, one of the big symptoms of sclerosis – a lack of mobility – has begun to flash warning signs here in the US. The US has always had a very flexible labor force, where the unemployed could easily move to areas of the country where employment was rising. We have seen the Rust Belt lose population to the Sun Belt for decades. However, Americans have been changing jobs and moving locations less frequently than in prior decades. The housing bust of the last 5 years explains some of this, but not all. Demographics and health care may explain some of it. But it doesn’t bode well for a rapid decrease in unemployment.
Filed under: Uncategorized |
All Things in Moderation 
The housing crisis has put a major dent into worker mobility. Until the real estate market allows for quicker relocation, the recovery will be spotty and irregular.
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I've had to replace an above ground pool (one that's plowed 2.5 feet into the ground, which is more than you think, but still) and now have to scrape together $2300 for a new bathtub. Both cars are old, so that comes up frequently, as does the fact the oldest will be driving age in 2 years. I'd prefer not to be spending money, but . . . Eventually, the folks putting purchases off out of trepidation or concern over the future have to make them anyway. Or come up with something. This is true of businesses. Business cycles should be driving new purchases out of necessity in the next year or two. Only so long you want to keep chugging away at that 3-now-4-year old computer. Past 5 years? Seems unlikely. I agree there will not be a rapid decrease in unemployment, however.
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@ScottC:Near the beginning of the Assuming Economics thread, you asked me:What does it mean to you? Does your understanding of "fair" render a progressive tax to be "fair"? How so?I really don't use the word 'fair' anymore. I try not to anyway. I find it laden with a lot of unsaid assumptions and emotional reactions, which later come up in unexpected and usually unpleasant ways.A group of decision-makers at one point managed to push through the idea of a progressive tax system. I happen to agree that progressive taxation is appropriate, but that doesn't make it 'fair'. I also think the mortgage interest deduction should never have made its way into the tax code, but that doesn't make it 'unfair', nor do I ignore it when filing my tax return.Government needs money to run things. There are various ways it can raise the money, but the one that's become most institutionalized is to tax the citizenry and businesses. Government then felt it needed a story, i.e. a public relations effort, to convince those being taxed to pay up. And thus we ended up with the values and fairness dialog.
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Hey, Barney Frank's retiring.One of those congresscritters about whom few lack an opinion, I suspect.
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I don't understand the enthusiastic criticism of the allegedly unfair progressive tax, but the lack of criticism for unfair compensation.
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bsimon – i think that should be "allegedly unfair compensation"…
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MsJS: I also think the mortgage interest deduction should never have made its way into the tax code, but that doesn't make it 'unfair', nor do I ignore it when filing my tax return.Damn straight. I'm also not a fan of class action suits, but when I'm eligible for one where I might end up with a gift card from Wal-Mart, I submit a claim. 😉 Government needs money to run things. There are various ways it can raise the money, but the one that's become most institutionalized is to tax the citizenry and businesses. Approaching it from a fairness standpoint, especially from a perfect fairness standpoint seems doomed, to me. Let's say we find some system that is a flat fee, with sufficient exemptions to people with limited resources that we all agree that it is perfectly fair. Except I can't afford a car, and yet what little I pay is going towards some roads. And you pay a lot, as does Scott. However, Scott drives constantly, using the roads thousands of hours a year, while MsJS only drives sparingly, using the roads now and again. This clearly isn't fair. Or, it's not perfectly fair. So, we scrap that general charge, and revert to user fees. This results in a system where almost everything features a user fee, and administration costs are very high, but it's now fair. If you want to drive a block, you have a toll for driving that block. If you walk it, you pay a much lesser walking toll (still have to cover the expense of those sidewalks). The oil companies pay the necessary fees for their to be sufficient military power to protect their international interests. Things like the post office and libraries disappear much more quickly under this system, because a user fee system will stop funding obsolescence long before a general fund from broad taxation. I can't come up with an immediate objection to user fees. They seem fairer, more market-based, and more efficient. Government programs often outlive their usefulness–market products, not so much, as their lack of utility ends up with the products ceasing production. I would likely continue to contribute to Medicare and SS as products, not wanting to lose the value of my past contributions, and wanting to access said entitlements as a senior citizen. Foodstamps could be funded by grocery license and liquor license fees. Various other government programs could be funded with gambling fees. And so on. Public schools would have user fees associated with them, but could be subsidized by other fees or limited "school-zone" property taxes (i.e., you only pay taxes for schools in your school zone–don't want to pay those user fees, go rural or live in an apartment where your user fee is collectivized, and you don't see it, and is probably lower per square foot).
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@bsimon: "but the lack of criticism for unfair compensation."Because compensation represents an elective individual contract between parties, if both parties have "agreed" upon the terms, it is reasonably considered "fair". If I sell you my timeshare for a dollar (this is a common transaction), thought I paid several thousands of dollars for it, and it is the same thing, but I'm just sick of the maintenance fees and don't travel enough and just want to be rid of it, and yet you were in the market and looking at timeshares being sold for thousands of dollars when I came along . . . yet, we agree to the terms, it's fair. If you use eminent domain to take my house from me because the community would benefit from the higher taxes a retail establishment would pay if on the same property . . . I think that's unfair, even if you give me "just compensation", because I did not agree to that arrangement.
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Also: Although I have often been unfairly compensated in my life, in every case I either corrected it by lowering my work level to the level of my compensation, finding a position where I was more fairly compensated (or biding my time until such opportunity, not worrying about the "unfair compensation" because I knew it was a matter of time before I was more fairly compensated), or I continued to be unfairly compensated for an extended period because I was young and naive and it took me a while to come to my senses. 😉
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The only problem with highly localized 'school zone fees' (also known as property taxes in most places) is that the public good is served by all students getting a decent education, not just the ones in your neighborhood. One could argue that schools in poor areas need more funds than ones in rich areas.There are states that require revenue sharing among school districts to even out inequities.
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"public good is served by all students getting a decent education"This was in the WaPo over the weekend. it's about the increasing use (but still very small) use of virtual schools.anything that breaks to the mold of state-run, 8am-3pm, with 3-months off in the summer is step in the right direction.
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I would be in favor of both a longer school day and a longer school year, but that could easily be 50% more expensive than the current system so the odds it ever happening would be infinitesimal.
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bsimon:I don't understand the enthusiastic criticism of the allegedly unfair progressive tax, but the lack of criticism for [allegedly] – SC] unfair compensation. Kevin is quite correct. That one is compulsory (ie law) and the other is consensual makes all the difference.
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"Because compensation represents an elective individual contract between parties, if both parties have "agreed" upon the terms, it is reasonably considered "fair"."Its not fair to the person who has to take a minimum wage job because they never got an education because their mother got pregnant as a teenager.If a flat tax is fair, why wouldn't flat wages be fair?
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"I would be in favor of both a longer school day and a longer school year, but that could easily be 50% more expensive than the current system so the odds it ever happening would be infinitesimal."Biggest bang for the buck is the same number of days and hours but with vacation time spread so that summer is five weeks, not 12. There are many studies that support this and there are schools in other nations with 183 actual class days that do better than we do, with the single variable that makes the most difference being the much shorter summer vacation.Any elementary school teacher will tell you that the first six weeks of the Fall is lost to "review".In TX, the big prob with the short summer would be the AC load. The 12 week summer is an agrarian leftover.
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"The 12 week summer is an agrarian leftover."In VA this is known as the King's Dominion law. The amusement park wants the labor day crowds and the kids working. http://dcist.com/2011/08/kings_dominion_still_rules_old_domi.php
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Block classes are also helpful. We tend towards daily periods in America, but block classes (more common at the college level), where you have perhaps 3 classes a day, each 2.25 hours or something similar, get better results as regards test performance, retention and comprehension. I had never had a block class until I went to college. I may not have chosen the best college course (art), but as for efficacy of class-based education, block classes were a revelation.
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bsimon: Its not fair to the person who has to take a minimum wage job because they never got an education because their mother got pregnant as a teenager.This goes back to arguing definitions, but it seems perfectly fair, to me, though hardly desirable. However, just because an arrangement is fair–I've offered you a wage, and you've agreed to take it–doesn't mean that it's ideal or even desirable. If a flat tax is fair, why wouldn't flat wages be fair?Well, I don't think a flat tax is particulary fair, without sufficient exemptions to make it effectively progressive, but then that that wouldn't be fair because . . . But again, the compulsory nature of it is part of the problem. I haven't agreed to the progressive tax in the same way I agreed to slave wages (i.e., as an individual). I could arguably not take that job, seek another job, better myself to make myself more valuable and seek another job, live with my parents indefinitely, etc). However, I do not enter an individual contract where I consent to my tax rate with the government, and I am charged differently for arguably the same services based on my wage, marital status, number of dependents, whether or not I pay a mortgage, what my losses were in the stock market, etc. Thus, it is less fair simply because it is not consensual and I have very limited say in the matter. This may be of practical necessity, but is not, per se, a fair arrangement.
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Sure you have a choice. Don't like gas taxes? Buy a leaf, or walk. Don't like sales taxes? Barter. Don't like income taxes? Don't work. Don't like progressive taxes? Take a minimum wage job. That so few people make those choices to avoid taxes implies we're undertaxing – doesn't it?
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Biggest bang for the buck is the same number of days and hours but with vacation time spread so that summer is five weeks, not 12.I would go for that in a heartbeat. My wife is a teacher and I hate having to vacation only in the summer. Four three week vacations spread around the calender (Christmas/Winter, Easter/Spring, Summer, Early Fall) would be fantastic.Summer loss is real and measurable.
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Our school district has experimented with every conceivable variation on block classes imaginable and has finally reverted back to a traditional 7-50 minute classes a day format.
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yellow? why did the system switch back to the traditional schedule?
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bsimon:Its not fair to the person who has to take a minimum wage job because they never got an education because their mother got pregnant as a teenager.Matters of justice or fairness relate to interaction between people, not the happenstances of life on earth. When a person's house gets wiped out by a tornado that leaves his neighbor's untouched, that may be an unfortunate tragedy, but it isn't "unfair" or "unjust". When thinking about an instance of perceived injustice or unfairness, I try to ask myself who is inflicting this injustice upon the victim. If I can't come up with a person or persons, it probably isn't an instance of injustice.In your example above, apart from possibly the mother herself, it is hard for me to come up with anyone who has inflicted this perceived injustice upon your hypothetical person. Certainly, in any event, it is not all the other workers in the economy, so it is hard for me to understand the relationship you apparently see between their wages and this hypothetical person's plight.If a flat tax is fair, why wouldn't flat wages be fair?For one reason, as Kevin already explained, wages are consensually agreed to by individuals, while taxes are not.
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The double classes were just too long to hold the student's attention. In some configurations, you only took a core class half the year which, depending on your schedule, sometimes meant you went nearly a year without cracking a math textbook. They could never quite fit everything into double blocks which drove the teachers crazy having to pace two different schedule formats. It was just a logistical nightmare with no measurable increase in performance.
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Interesting. They started block scheduling at my high school shortly after i graduated. my brother went through it and I never heard of similar issues.
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bsimon:Sure you have a choice. Don't like gas taxes? Buy a leaf, or walk. Don't like sales taxes? Barter. Don't like income taxes? Don't work. Don't like progressive taxes? Take a minimum wage job. One imagines, then, that if congress were to place a special tax on, say, anyone who worships at an Islamic mosque, your response would be "Hey, you have a choice. You don't like it, don't worship." That so few people make those choices to avoid taxes implies we're undertaxing – doesn't it?No.
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"wages are consensually agreed to by individuals, while taxes are not."Like it or not, every tax you pay is the result of a choice you make.You have probably more choices to make about tax avoidance than that hypothetical person does about employment.
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The mosque tax would trigger a freedom of religion argument. If the gov't stopped subsidizing religions and taxed them the same as other businesses (particularly property taxes), I would not object.
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"Its not fair to the person who has to take a minimum wage job because they never got an education because their mother got pregnant as a teenager.If a flat tax is fair, why wouldn't flat wages be fair? "How is a flat wage fair to the person who spent hundreds of thousands on med school or law school?It is up to the employer and employee to determine what is fair, not some third party.
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bsimon:Like it or not, every tax you pay is the result of a choice you make.You are trying to steal a base here. There is a substantial difference between a choice being offered to you which expands the range of actions you can enjoy, and a choice being imposed upon you which restricts the range of actions you can enjoy.When a local mobster offers local businessmen the "choice" of paying "protection" money or leaving town, it isn't on quite the same order as when the local businessman offers to residents the choice of working for him for a given wage.Surely you recognize the difference.
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bsimon:The mosque tax would trigger a freedom of religion argument.That is neither here nor there. The issue is not the constitutionality of such a tax. The issue is whether it becomes just/fair simply because it can be avoided by refraining from certain behavior.If the gov't stopped subsidizing religions and taxed them the same as other businesses (particularly property taxes), I would not object. Would you object if it taxed just one religion? Or if it imposed a "progressive" tax in which, say, atheists were taxed at one rate, Christians at another, Jews at another, and Muslims at an effective rate of 0%? That way, if you wanted to "choose" to avoid the tax, you could always just convert to Islam. Would this be at all objectionable to you on grounds of fairness or justice?
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"You are trying to steal a base here."I am trying to make the point that fairness is in the eye of the beholder. Progressive taxes are extremely fair by putting the burden of funding the government on those who most benefit in our society.
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"Progressive taxes are extremely fair by putting the burden of funding the government on those who most benefit in our society."I think this conflates society with government. Progressive taxation is extremely unfair because it completely undermines the notion of equal rights under the law. My personal finances should have nothing to do with what my "fair share" is. I can't think of any other aspect of life where the question of "how much does it costs" is answered with "how much have you got?" I also reject the idea of the marginal utility of money. But even if that last dollar earned is somehow worth less that doesn't justify taxing at a higher rate.
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"Progressive taxes are extremely fair by putting the burden of funding the government on those who most benefit in our society."We should institute progressive voting as well. I.e. you get to vote your "shares" in society. For each tax bracket you are a part of, you get the same number of votes. So if there are three tax brackets, say 10%, 20% and 30%, then the person in the 10% bracket gets one vote, the one in the 20% bracket gets two votes, and the person in the 30% bracket gets three votes. If you don't pay taxes, then no votes at all. Same basis of "fairness" as progressive taxation.
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"I think this conflates society with government."Of course it does. Without gov't – the armed forces & the courts in particular – and we don't have this society. It costs money to provide those services. Our system of government allows for accumulation of wealth in enormous amounts. The people with the wealth have the most to lose if the system changes. Therefore they should pay the most to maintain the system we have.
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jnc4p: So if there are three tax brackets, say 10%, 20% and 30%, then the person in the 10% bracket gets one vote, the one in the 20% bracket gets two votes, and the person in the 30% bracket gets three votes. If you don't pay taxes, then no votes at all. Same basis of "fairness" as progressive taxation.I love that idea. Never going to happen, but . . . nothing wrong with voting shares. If they truly should pay more because they have more invested in a stable society, then they should get more votes!
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"Of course it does. Without gov't – the armed forces & the courts in particular – and we don't have this society. It costs money to provide those services. Our system of government allows for accumulation of wealth in enormous amounts. The people with the wealth have the most to lose if the system changes. Therefore they should pay the most to maintain the system we have. "The thirteen colonies had a society without the Federal government in it's current form. Conflating the Federal government with the country is mistaken. Consider this piece of famous political rhetoric with the substitution:"ask not what your country can do for you – ask what you can do for your country." "ask not what your government can do for you – ask what you can do for your government."Regardless, the level of government spending required to maintain the armed services, the courts and all the rest of "domestic discretionary spending" is trivial compared to the expense of entitlement spending. The coupling of progressive taxation and entitlement spending and the resulting redistribution of wealth is the crux of the issue, as it implies that someone else deserves your money more than you do.
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Also, worth noting:Judge rejects SEC-Citigroup settlement"By David S. Hilzenrath, Updated: Monday, November 28, 1:30 PMA federal judge Monday rejected the SEC’s plan to settle a major case against Citigroup and ordered the two sides to prepare for a trial.In a powerful rebuke to a federal agency responsible for policing Wall Street, U.S. District Court Judge Jed S. Rakoff said that if the charges against Citigroup are true, the SEC settlement is too weak to hold the bank accountable."…"“Even in our nation, apologists for suppressing or obscuring the truth may always be found,” Rakoff wrote. “But the S.E.C., of all agencies, has a duty, inherent in its statutory mission, to see that the truth emerges; and if it fails to do so, this Court must not, in the name of deference or convenience, grant judicial enforcement to the agency’s contrivances.”"Fiat justitia ruat caelum
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bsimon:Of course it does.Interesting admission.Without gov't – the armed forces & the courts in particular – and we don't have this society.That is true, but that doesn't justify the conflation. Society is comprised of a lot of things. Government is just one component. Society does not equal government.It costs money to provide those services.Yes, but not even close to the amount the government (with your approval?) demands. And perhaps more importantly those costs are only tangentially correlated to the benefits any individual obtains from "our society".Our system of government allows for accumulation of wealth in enormous amounts.I think you would be better of arguing that it facilitates the accumulation of wealth in enormous amounts. But the way in which it does so is by protecting the rights, and in particular the property rights, of individuals. Those rights it protects have implications for this discussion.The people with the wealth have the most to lose if the system changes.That depends rather a lot on what it changes to.
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"egardless, the level of government spending required to maintain the armed services, the courts and all the rest of "domestic discretionary spending" is trivial compared to the expense of entitlement spending. "I'm not defending the status quo of entitlement spending; but one result is it keeps the masses down. Recall that the safety net is a reaction to the great depression, when the poor suffered while the rich did not. Elimination of those programs would trigger a populist round of class warfare that will see the return of confiscatory tax rates for upper income earners.
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Also, Medicare/Medicaid & SS take up 43% of the budget. DOD & discretionary take up 39%. That's closer to matching than dwarfing.http://en.m.wikipedia.org/wiki/United_States_federal_budget
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On the same page; revenue from payroll tax (social security & social insurance label) makes up 40% of revenue. If you take away SS & MM, do you eliminate the payroll tax too? If so, there's still something of a hole in the budget.
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bsimon:If you take away SS & MM, do you eliminate the payroll tax too?Of course.If so, there's still something of a hole in the budget. How so? 60% of the revenue to pay for 39% of the budget. Sounds like a recipe for balancing the budget to me.
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bzzzt. look again.
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Social Security, Medicare & Medicaid Expenditures:$1,494 billionSocial Security, Medicare & Medicaid Revenue:$865 billionNet deficit spending due to entitlements: $ 629 billionUnited States federal budget
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Total spending, ex SS, M&M: $1,962 BillionTotal revenue, ex Payroll tax: $1,297 BillionNet deficit spending due to DOD, discretionary, other mandatory spending & interest: $665 Billion.In percentage terms, we move from revenue covering 62.5% of the budget to covering 66.1%. Perhaps entitlements aren't the only problem that needs solving.
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