Got Data?

[Brandon_Smietana]

Robertson Richard wrote:

[From
Dick Robertson,2009.08.24.2034CDT]

An interesting idea. It ought to call out those people who have been
claiming that they need tax reductions to make them want to create
business and jobs.

Best,

Dick R

From: Shannon Williams Date: Monday, August 24, 2009 5:21 pm
Subject: Re: Got Data?
To: > [Shannon Williams (2009.08.24.1730 CST)]

OK. So the reason that raising taxes improves the economy > is because
it ensures that the money gets spent. What if instead of > taxing a
percentage of income we just said:Â You can make as much > money as you
want, but you have to spend it. If you don’t spend it the > governmentwill. No one is allowed to save more than a set > amount. (The billion
dollar trust fund companies would be out of business.)

The undertaxed American

Well… Our tax rate is already among the highest in the world…
The opinions people express on taxation are just completely ad-hoc.

···

verbingle@GMAIL.COM

CSGNET@LISTSERV.ILLINOIS.EDU

http://blogs.law.harvard.edu/philg/2009/04/19/the-undertaxed-american/

A friend visiting from Berkeley had
recently completed his taxes. Â As a Millionaire for Obama, he
complained that he didn’t pay a very high percentage of his income in
tax. Â Most of his money came from dividends paid by U.S. public
corporations and the tax rate on “qualified dividends� is only 15
percent, so he thought he hadn’t done his fair share for our new
Washington-run command economy (and more importantly that other fatcats
hadn’t paid their share).  I explained that, as an investor in these
companies, his profits had already been taxed at some of the highest
rates in the world (source)
through state and federal corporate profits taxes. Â The final 15
percent tax at the personal level was just an icing on the cake that
gave the federal government close to a 50 percent share of any profits
earned by a U.S. corporation. Â Not to mention California state income
tax at 9.3 percent.

“It should be more,� he noted.  How much more could it be before
the
company would move offshore? Â Or stop paying a dividend and use the
money to repurchase its shares (thus driving up their value for
eventual cashing in as a capital gain)?  �Tax rates used to be a lot
higher on guys like me,� he noted. thinking of himself as a truly rich
guy. Â Back in the FDR days, the top rate was indeed high, but it
started at $5 million per year in annual income, equivalent to a $75
million/year salary today (AIG wages! Â (source)).

http://www.taxfoundation.org/publications/show/22917.html

A growing body of academic research indicates that foreign direct
investment (FDI) can be quite sensitive to the corporate tax rates
imposed by a state or country. One recent study of the effects of
corporate income taxes on the location of foreign direct investment
(FDI) in the United States found a strong relationship between state
corporate tax rates and FDI—for every 1 percent increase in a state’s
corporate tax rate FDI can be expected to fall by 1 percent.⁴

A
new study of income tax rates in 85 countries by economists at the
World Bank and Harvard University found a strong effect of both
statutory and effective corporate tax rates on FDI as well as
entrepreneurship. For example, the average rate of FDI as a share of
GDP is 3.36 percent. But a 10 percentage point increase in the
statutory corporate rate can be expected to reduce FDI by nearly 2
percentage points.⁵

[rsmarken]

[From Rick Marken (2009.08.29.1150)]

I think Brandon Smietana sent this:

The undertaxed American

http://blogs.law.harvard.edu/philg/2009/04/19/the-undertaxed-american/

Well… Our tax rate is already among the highest in the world…

I can’t believe that that’s true. But whether it is true or not seems irrelevant to the question of whether we pay enough taxes in the US. Taxes are the revenue that the government uses to cover the expenditures that the duly elected representatives of the people (this is a representative democracy, after all) have decided to spend on the “common space” of the condo building that is our Republic.

If I were a member of the condo board (US government) I would say that condo fees – er, taxes – were too low if we were running a chronic deficit. We started running a chronic deficit as soon as Reagan became President of the condo board (I tried to warn the residents); his successor on the board, George HW Bush, just continued to increase the deficit. The condo residents didn’t think that anything was wrong during this period because the board went into hock borrowing money in order to keep the condo common areas looking like they did when the responsible Presidents (the one’s before Reagan) were in office.

The next President, Clinton, raised condo fees (despite vigorous protests from the richest tenants) and not only did the deficit eventually turn into a surplus but overall things were getting better in the condo building as a whole. Then, because Clinton fiddled with a maid, the rich meanies in the condo building got one of their simple children elected to be President of the condo board, knowing that he would follow orders and cut fees (taxes). He did and the condo went right back into deficit.

When all the borrowing and financial shenanigans that were being done to keep the condo afloat finally led to financial collapse, the condo residents elected a new, responsible, wise and good person to be President: Barack Obama. This enraged the rich meanies who immediately demagogued the torch and pitchfork crowd into revolutionary fervor by framing the new President’s responsible approach to condo maintenance as “socialism”,“command economy” etc.

Anyway, I’ve attached a visual picture of what I described above. Note that from 1947 until 1981 the deficit rarely got larger than 1% of GDP (the little spike down to 2.5% in 1975 is clearly a result of the Vietnam War ending). The deficit was brought back to zero by the time Reagan took office (1981). Reagan reduced taxes and, I think not coincidentally, increased the deficit to nearly 3% of GDP by 1983. The deficit stayed large until 1993, when Clinton increased the condo fee (by a very small amount) and the deficit started to turn into a surplus (it’s at that point that one could have argued that taxes were too high; but I’m very conservative financially and like to have a surplus on hand in case of emergencies so I would have said that the taxes were probably just right). When Bush II entered office, in 2001, he immediately lowered taxes considerably (on the upper bracket mainly) and the surplus just as immediately started to plunge into deficit. Despite this, many residents of the condo building still believe that condo fees are too high. Go figure.

Best

Rick

···

–
Richard S. Marken PhD
rsmarken@gmail.com
www.mindreadings.com

[Martin_Lewitt]

Apologies, I still intend to get to our project this weekend, but have some pressing personal matters. But in the mean time thought to share a reaction I had to your “duly …after all” phraseology. You seem to be imbuing the representative process with authority. I think for many conservatives that is just another threat to their autonomy that they and the founding fathers saw a need to “check”. The concept of constitutional authority is a tool to try to preserve those checks. The type of “patriotism” on the right, then becomes, not an identification with a national will or collective, but with a system that is supposed to preserve their individual autonomy. The obligations (a social contract?) under this view, are not to be subjects of the collective, but rather not to abuse the representative mechanism and the anonymity of the ballot to exploit others or to reduce the autonomy of others. I think the concept of human nature underlying this is of an intelligent mammal valuing personal welfare, mating, progeny and that has evolved some of the valuing of some social relationships and behaviors (altruism, sacrifice, heroism, mutual defense).

– Martin L

mlewitt@comcast.net

– Martin

···

----- Original Message -----
From: “Richard Marken” rsmarken@GMAIL.COM
Sent: Saturday, August 29, 2009 12:47:54 PM GMT -07:00 US/Canada Mountain
Subject: Re: Got Data?

I can’t believe that that’s true. But whether it is true or not seems irrelevant to the question of whether we pay enough taxes in the US. Taxes are the revenue that the government uses to cover the expenditures that the duly elected representatives of the people (this is a representative democracy, after all) have decided to spend on the “common space” of the condo building that is our Republic.

[rsmarken]

[From Rick Marken (2009.08.29.1550)]

Apologies, I still intend to get to our project this weekend, but have some pressing personal matters.

No problem. Take your time. I sure hope the personal problems are not serious. And thanks for your comments below. They look very interesting but I’m sure I’ll need your help on understanding them. Again, I think the problem for me will be getting at your notion of autonomy. I’ll just tell you that for me autonomy is synonymous with hierarchical control.

Best

Rick

···

On Sat, Aug 29, 2009 at 3:27 PM, Martin Lewitt mlewitt@comcast.net wrote:

But in the mean time thought to share a reaction I had to your “duly …after all” phraseology. You seem to be imbuing the representative process with authority. I think for many conservatives that is just another threat to their autonomy that they and the founding fathers saw a need to “check”. The concept of constitutional authority is a tool to try to preserve those checks. The type of “patriotism” on the right, then becomes, not an identification with a national will or collective, but with a system that is supposed to preserve their individual autonomy. The obligations (a social contract?) under this view, are not to be subjects of the collective, but rather not to abuse the representative mechanism and the anonymity of the ballot to exploit others or to reduce the autonomy of others. I think the concept of human nature underlying this is of an intelligent mammal valuing personal welfare, mating, progeny and that has evolved some of the valuing of some social relationships and behaviors (altruism, sacrifice, heroism, mutual defense).

–
Richard S. Marken PhD
rsmarken@gmail.com
www.mindreadings.com

[Brandon_Smietana]

Martin Lewitt wrote:

> From: "Richard Marken" <rsmarken@GMAIL.COM>
> Sent: Saturday, August 29, 2009 12:47:54 PM GMT -07:00 US/Canada
Mountain
Subject: Re: Got Data?

> I can't believe that that's true. But whether it is true or not
seems irrelevant to the question of whether we pay enough taxes in the
US. Taxes are the revenue that the government uses to cover the
expenditures that the duly elected representatives of the people (this
is a representative democracy, after all) have decided to spend on the
"common space" of the condo building that is our Republic.

Apologies, I still intend to get to our project this weekend, but have
some pressing personal matters. But in the mean time thought to
share a reaction I had to your "duly ...after all" phraseology. You
seem to be imbuing the representative process with authority. I think
for many conservatives that is just another threat to their autonomy
that they and the founding fathers saw a need to "check". The
concept of constitutional authority is a tool to try to preserve those
checks. The type of "patriotism" on the right, then becomes, not an
identification with a national will or collective, but with a system
that is supposed to preserve their individual autonomy. The
obligations (a social contract?) under this view, are not to be
subjects of the collective, but rather not to abuse the representative
mechanism and the anonymity of the ballot to exploit others or to
reduce the autonomy of others. I think the concept of human nature
underlying this is of an intelligent mammal valuing personal welfare,
mating, progeny and that has evolved some of the valuing of some
social relationships and behaviors (altruism, sacrifice, heroism,
mutual defense).

-- Martin L

mlewitt@comcast.net <mailto:mlewitt@comcast.net>

-- Martin

Well...

http://blogs.law.harvard.edu/philg/2009/03/16/how-rich-countries-die/

···

> ----- Original Message -----

[Shannon_Williams]

[Shannon Williams (2009.8.30 00:45 CST)]

Martin Lewitt wrote:

Well...

http://blogs.law.harvard.edu/philg/2009/03/16/how-rich-countries-die/

Rather than discuss the myriad of inter-connected references expressed
in that URL, I propose we start with a small simple model of human
interaction that every one would agree on. We then develop it into a
working model that conservatives and liberals alike (who view the
world through PCT) would agree explain the myriad of references
expressed in that URL.

I will start:

There is a man named John Doe who lives on a small island of 101
people. In 2009, John does favors for each of the other 100 people on
his island. In return, those 100 people do favors for John. Here we
have a society in 'exact balance'. If we consider money simply as a
unit of trade, then we could say that John collected $1 for each favor
he performed and paid $1 for each favor he recieved. Notice than in
order for the society to stay exactly 'in balance', John must recieve
as many favors as he gives.

Now, there is also a man named Jack Doe who lives on an island of 1010
people. In 2009, Jack does favors for 1000 of those people. However,
he does these favors with the help of 9 other people. Again consider
money as simply a unit of trade where a favor costs $1. Now, each of
the 1000 islanders pay $1 to Jack. To analyze what happens next,
remember the principle: In order for society to stay exactly 'in
balance', each person must receive as many favors as he gives. In
monetary terms this means that each person must spend as much as he
makes.

Does anyone agree with this description so far? If so, then we can
analyze what happens to society based on 1) whether Jack chooses to
receive favors, and if he does not, then 2) whether the bank decides
to print more units of trade so that trade can continue without Jack's
participation, and if it does then 3) how does Jack outstanding units,
that he can redeem at any time, affect the unit of trade.

We can also analyze what happens to society based on what happens when
Jack does not let his 'help' participate in favor swapping, and what
happens to islander's behavior when they percieve 'Jack' as the only
person of interest in the favor swapping.

···

--
Shannon

[rsmarken]

[From Rick Marken (2009.08.30.0935)

···

On Sat, Aug 29, 2009 at 6:51 PM, Brandon Smietana bjs35@buffalo.edu wrote:

Well…

http://blogs.law.harvard.edu/philg/2009/03/16/how-rich-countries-die/

Well? If this is a reply to my post about taxes and deficits, then I don’t see it’s relevance. But it is nice to see conservatives (like these apparently are) doing comparative economics. If they did it with health care they would find out that the US pays twice as much for healthcare (as % of GDP) and has worse outcomes (in terms of longevity and infant mortality) than all other comparably wealthy industrial democracies.

The main difference between the healthcare system in the US and those in these other countries is that in the US, health insurance is for profit (except for those over 65) . And it’s going to stay that way because the US health insurance industries can use those profits to demonize attempts to provide affordable heathcare for all. Even if Obama has a very, very clever move hidden away in this chess game, I think his attempt to civilize health care in the US will, like all previous attempts, be a failure since the insurance companies always win by getting the yahoos to dash the pieces to the ground.

Best

Rick

Richard S. Marken PhD
rsmarken@gmail.com
www.mindreadings.com

[Bill_Powers1]

[From Bill Powers (2009.08.30.0844 MDT)]

Shannon Williams (2009.8.30 00:45 CST) --

I propose we start with a small simple model of human
interaction that every one would agree on. We then develop it into a
working model that conservatives and liberals alike (who view the
world through PCT) would agree explain the myriad of references
expressed in that URL.

I will start:

There is a man named John Doe who lives on a small island of 101
people. In 2009, John does favors for each of the other 100 people on
his island. In return, those 100 people do favors for John. Here we
have a society in 'exact balance'. If we consider money simply as a
unit of trade, then we could say that John collected $1 for each favor
he performed and paid $1 for each favor he recieved. Notice than in
order for the society to stay exactly 'in balance', John must recieve
as many favors as he gives.

If this is in reply to my suggestion about making a working model, there are some preliminaries to get through. "Doing favors" suggests that the favors are wanted. The first question is, what kinds of favors are they? Suppose the favor is to give you a used lawnmower that you can keep. Clearly, the one who did that favor can't do it again, nor would you want another used lawnmower. Your reference condition for lawnmowers has been satisfied and will stay so as long as the used lawnmower cuts your grass without too much effort.

On the other hand, suppose the favor is to give you some food. This will satisfy your reference level for food for perhaps six to twelve hours, after which you will need the same favor again. You have no choice about asking this favor if you have no way to get food for yourself. If you don't get it, you will die.

If everyone has a dollar then everyone can buy a favor, and if everyone sells a favor everyone will end up with $1. But where does that first dollar come from? And if some people need the same favor more than once, where does the favor come from, if it's not just some personal service? Also, if only some people can supply the kind of favor you need, what do you do if it's a vital one like food and the food suppliers have sold out? You can't eat your dollar. And what about people who temporarily don't need a favor from anyone, and who therefore collect $100 during each cycle of favor-giving and -getting by doing favors for everyone else? And after one round of that, where will all the others get another dollar to buy their next favor?

All these variations and as many more as you can devise are designed to test the completeness and self-consistency of the model. Without challenging the model in this way, you don't really have a model, because you're saying in effect that because the model works in one circumstance, it will work in all, which is by no means assured.

The principle of circular flow that you suggest is a good one and is the basis for more than one macroeconomic theory. Goods must be priced so that there is just enough money to pay for the costs of production including a profit. Producing the goods must put enough money in the hands of the consumers (as wages, interest, and capital income) to buy all the goods that are produced, neither more nor less. Those costs also must be adjusted to make it all come out even. Of course each adjustment must be accounted for in the model.

As a temporary measure, the modeler can simply say that enough money exists to allow the required volume of circulation. Sooner or later, however, the model is going to have to include sources of new money and credit.

Then we have to start asking "why?" and "How much?" Why does the consumer need or want goods? How much does the consumer need? Why does the supplier need or want a profit, and how much? What is the difference between a need and a want?

Bit by bit, as each new loose end shows up, the model must be expanded to account for all the variables. What we end up with is a collection of system functions and variables, and a collection of independent variables that are set by nature (or the modeler). The output of each function is an input to one or more other functions, or exits from the model and is lost (for example, the heat generated by operating a lathe).

Making a working model is a matter of accounting for all loose ends, and of testing for realism after every change is introduced. One doesn't have to be a programmer to do this, but one does need the services of a programmer. It is not possible to analyze a system by looking at just one part of it. There are closed causal loops that make the variables depend on their own prior values as well as on independent variables outside the system. You don't have to add many complexities to a model before its properties get too complex for unaided human comprehension. The ONLY way to predict how it will behave is then to run the model.

I suggest that one of our programmers program Shannon's model as it stands now, for the 101-person island. What has to be done to make the model actually run cycle after cycle will be interesting, and a report on that should be posted. I'd do it myself, but right now all the modeling effort I can stand is going into looking at an apparent relationship between variations in the oxygen saturation level in my blood and my heart rate which I hope to use in persuading my doctors to let up on the use of Rythmol, which seems to be preventing my heart rate from increasing enough with exercise, and anyway is costing $500 per month which will soon run me into that doughnut hole in the prescription benefit unless congress passes a decent health care bill, which I can't count on.

It's not necessary to arrive at the full final model all in one jump. The trick is to pick the parts that can be modeled now, guess at the values of variables not yet modeled, set trial initial conditions, and get the model to run. Then its performance can, as Rick points out, be compared with data, and the differences will tell us what needs to be changed or added. Revise and test is the main idea.

Best,

Bill P.

[Shannon_Williams]

[Shannon Williams (2009.8.30 23:30 CST)]

[From Bill Powers (2009.08.30.0844 MDT)]

There is a man named John Doe who lives on a small island of 101
people. �In 2009, John does favors for each of the other 100 people on
his island. �In return, those 100 people do favors for John. �Here we
have a society in 'exact balance'. �If we consider money simply as a
unit of trade, then we could say that John collected $1 for each favor
he performed and paid $1 for each favor he recieved. �Notice than in
order for the society to stay exactly 'in balance', John must recieve
as many favors as he gives.

If this is in reply to my suggestion about making a working model, there are
some preliminaries to get through.

OK. Cool.

As a temporary measure, the modeler can simply say that enough money exists
to allow the required volume of circulation. Sooner or later, however, the
model is going to have to include sources of new money and credit.

OK.

Bit by bit, as each new loose end shows up, the model must be expanded to
account for all the variables. What we end up with is a collection of system
functions and variables, and a collection of independent variables that are
set by nature (or the modeler). The output of each function is an input to
one or more other functions, or exits from the model and is lost (for
example, the heat generated by operating a lathe).

Sweet! What a cool project!

I suggest that one of our programmers program Shannon's model as it stands
now, for the 101-person island. What has to be done to make the model
actually run cycle after cycle will be interesting, and a report on that
should be posted.

OMIGOD! This would be a perfect project for me. I see exactly what
you need. I am torn up because for the next couple of years the bulk
of my free time goes to my daughter. I have already realized that I
must give up leisure reading, exercise, friends, travel, etc. About
all I can squeeze in is quick trips to this list.

I'd do it myself, but right now all the modeling effort I
can stand is going into looking at an apparent relationship between
variations in the oxygen saturation level in my blood and my heart rate
which I hope to use in persuading my doctors to let up on the use of
Rythmol, which seems to be preventing my heart rate from increasing enough
with exercise, and anyway is costing $500 per month which will soon run me
into that doughnut hole in the prescription benefit unless congress passes a
decent health care bill, which I can't count on.

Keep on keeping on. Please. I wish I could help you feel OK.

It's not necessary to arrive at the full final model all in one jump. The
trick is to pick the parts that can be modeled now, guess at the values of
variables not yet modeled, set trial initial conditions, and get the model
to run. Then its performance can, as Rick points out, be compared with data,
and the differences will tell us what needs to be changed or added. Revise
and test is the main idea.

Awesome. I guess there is not much to talk about until the model is
built then? Without the model, we would just be speculating?

It is wonderful talking with you Bill.

Take Care,
Shannon

[Martin_Lewitt]

From: “Richard Marken” rsmarken@GMAIL.COM
Sent: Sunday, August 30, 2009 10:34:53 AM GMT -07:00 US/Canada Mountain

[From Rick Marken (2009.08.30.0935)

Well…

http://blogs.law.harvard.edu/philg/2009/03/16/how-rich-countries-die/

Well? If this is a reply to my post about taxes and deficits, then I don’t see it’s relevance. But it is nice to see conservatives (like these apparently are) doing comparative economics. If they did it with health care they would find out that the US pays twice as much for healthcare (as % of GDP) and has worse outcomes (in terms of longevity and infant mortality) than all other comparably wealthy industrial democracies.

The US has a luxury health care system, wastefully providing GPs with $150,000 educations and far more tests and screenings than are cost effective. This luxury does save lives and compares quite favorably to other countries on a per diagnosis basis for those who have coverage. Statistical measures that reward universal coverage miss the point, the 80% who have coverage will likely be worse off under a public option or single payer.

The main difference between the healthcare system in the US and those in these other countries is that in the US, health insurance is for profit (except for those over 65) . And it’s going to stay that way because the US health insurance industries can use those profits to demonize attempts to provide affordable heathcare for all. Even if Obama has a very, very clever move hidden away in this chess game, I think his attempt to civilize health care in the US will, like all previous attempts, be a failure since the insurance companies always win by getting the yahoos to dash the pieces to the ground.

Large non-union employers such as IBM and HP have high and rising medical costs even though they are self insured. They squeeze the profit out of the companies that manage their health benefits just like they do out of any supplier. Obviously there is more to the problem than insurance company profits. Tort reform will not only reduce the costs of malpractice insurance, but will reduce the level of defensive medicine. Larger risk pools and cross-state competition and portable policies with standardized coverages will take care of insurance company profit concerns. Tax advantaged healhcare savings accounts will increase consumer awareness of prices and impose more market discipline. Consumers should pay for their routine healthcare, insurance should be for accidents and expensive diagnoses. Government should stop restricting the supply of medical care providers and granting monopoly profits. It should also quit imposing unfunded mandates on the providers and other consumers such as it does with price controls in medicare. Americans love to consume healthcare, so even these reforms may not reduce the percent of GDP devoted to healthcare, but more Americans will be able to afford healthcare, and Americans will be able to get more healthcare for their money.

Best

Rick

Regards,

Martin L

mlewitt@comcast.net

···

----- Original Message -----
On Sat, Aug 29, 2009 at 6:51 PM, Brandon Smietana bjs35@buffalo.edu wrote: