Monday, November 19, 2012

Krugman's Twinkie Economic Myths

I remember when Dan White, the former San Francisco city supervisor employed the infamous "Twinkie Defense" in his 1979 trial for the murder of the city's mayor, George Moscone, and fellow supervisor Harvey Milk. Apparently, the jurors were bamboozled by this nonsense and convicted him not of first-degree murder but rather voluntary manslaughter, leading to a sentence of seven years (for which he served five).

Most of us had not thought much about Twinkies and their supposed threat until Hostess recently announced its intention to shutter its operations because of an ongoing strike and its inability to compete in the present economy. However, in recent years, Twinkies supposedly had become famous because of their long shelf life, something that was exaggerated with people claiming the sugar-laden snacks could survive nuclear holocaust.

Well, the company that created them has not survived Barack Obama's economic holocaust, but the economic myths of the era in which Hostess cakes did very well also have outlasted the combination of sugar and chemicals, and who better to perpetuate these myths than Paul Krugman? In a recent column, Krugman harkens back to the 1950s -- the "Golden Era" for Twinkies -- and claims that the economy then was strong because of high taxes and union workforce dominance. He writes:
Needless to say, it wasn’t really innocent. But the ’50s — the Twinkie Era — do offer lessons that remain relevant in the 21st century. Above all, the success of the postwar American economy demonstrates that, contrary to today’s conservative orthodoxy, you can have prosperity without demeaning workers and coddling the rich.

Consider the question of tax rates on the wealthy. The modern American right, and much of the alleged center, is obsessed with the notion that low tax rates at the top are essential to growth. Remember that Erskine Bowles and Alan Simpson, charged with producing a plan to curb deficits, nonetheless somehow ended up listing “lower tax rates” as a “guiding principle.”

Yet in the 1950s incomes in the top bracket faced a marginal tax rate of 91, that’s right, 91 percent, while taxes on corporate profits were twice as large, relative to national income, as in recent years. The best estimates suggest that circa 1960 the top 0.01 percent of Americans paid an effective federal tax rate of more than 70 percent, twice what they pay today.

Nor were high taxes the only burden wealthy businessmen had to bear. They also faced a labor force with a degree of bargaining power hard to imagine today. In 1955 roughly a third of American workers were union members. In the biggest companies, management and labor bargained as equals, so much so that it was common to talk about corporations serving an array of “stakeholders” as opposed to merely serving stockholders.

Furthermore, Krugman argues that the road to prosperity is for the government to have massive tax increases and a unionized workforce:
Along the way, however, we’ve forgotten something important — namely, that economic justice and economic growth aren’t incompatible. America in the 1950s made the rich pay their fair share; it gave workers the power to bargain for decent wages and benefits; yet contrary to right-wing propaganda then and now, it prospered. And we can do that again.  

So there it is. The economy was prosperous because of high tax rates (the same rates Krugman told me in response to a question in 2004 that were "insane") and because labor unions were driving up the cost of doing business. Capital had nothing to do with it. The fact that the USA was the one industrialized nation that had not been on the receiving end of mass bombing and artillery attacks had nothing to do with it.

No, the prosperity of the 1950s (when at least a third of Americans officially lived in poverty) was due to massive wealth transfers. However, Krugman fails to point out that during this era, business owners and entrepreneurs did not have to deal with the massive influx of  government regulations at all levels, although I am sure that he would tell readers that had government been even more restrictive at that time, the economy would have prospered even more because higher costs of business translate into more wealth for owners of factors of production, and higher costs are the real source of prosperity.

Not surprisingly, Krugman misses a bit of history along the way. By the end of the 1970s, as these unsustainable policies of high taxes and inflation continued, the U.S. economy was in crisis, and the 1980 election occurred in that atmosphere. Far from creating the prosperity of the 1950s, these policies which Krugman praises led to less capitalization down the road, and when they reached their natural end, it was clear that much of the capital stock of this country was still stuck in the postwar decade while Japan and other nations had moved well past the ruins of the aftermath of World War II.

Paul Krugman's economic missives are full of fallacies, and his latest column is no exception. He employes the Post Hoc Ergo Propter Hoc Fallacy, not to mention the Broken Window Fallacy along with his belief that government policies can eliminate the Law of Opportunity Cost.

Yes, Krugman wants to do what all good Progressives claim is heresy -- "Turn Back the Clock" -- and his views are as mistaken as the notion that Twinkies really constitute health foods. I doubt seriously that if the government were to slap down even higher tax rates and force unionism on every firm that out of that would rise prosperity.

No, out of that would rise Argentina of the 1950s and 1960s, and we know how well that little experiment worked.

95 comments:

ptwalker said...

My friends and I have been discussing the idea of just plain ignoring any commentary that uses economic data from 1946 to 1976 as their justification for implementing a policy today. How is it not a big, huge bold type asterisk that this period is the outlier to the whole of human history and that nothing can be accurately compared or extrapolated to times prior or after? 20% of the planet and its population destroyed plus 60% of the planet moving into a post-colonial existence and there exists only one real marketplace in the US. Labor peaces, ever increasing wages, wealth transfers and bigger and better programs - all seemingly feasible without global competition or as you state the regulatory structure that will eventually start to stifle competitiveness. They probably could have guaranteed everyone a puppy and a lollipop before bed, but that would not mean it is a desirable, sustainable or repeatable policy in today's world. Krugman's piece was stupid, but you should check out Reich's in HuffPost if you want just delusional partisan hackery about what needs to be done to right the ship (hint: it starts with S and rhymes with pending, like 'pending doom' we are facing and is understood by those not unhinged from reality).

Anonymous said...

is there evidence that the top 1% were able to avoid most of the taxes due to loop holes and deductions?

Anonymous said...

Looking at a chart of tax revenues shows that they were not out of line with historical averages during this time, so it is highly unlikely people were paying a 70% effective rate. Remember that the IRS did not have the integrated computer systems they have now, and it is likely that people took advantage of the "honor system" that existed at this time.

Mike said...

Anonymous@ 1:27
“is there evidence that the top 1% were able to avoid most of the taxes due to loop holes and deductions?”

You mean other that the fact they continued to amass significant wealth during the period in question

M.P. said...

Can we get a link to Krugman calling those rates "insane"?

William L. Anderson said...

I have mentioned the "insane" comment many times. Joe Salerno of Pace University was sitting next to me when Krugman gave the answer to my question during the Q&A. The session, at least to my knowledge, was not recorded.

Would Krugman acknowledge what he said? Probably not, knowing him, but I remember the word that he said. Also, we chatted afterward and he told me he did not mind the question.

open interest said...

Dont mind that moron krugman. I think we should not give him any attention at all. Just not worth it.

Tel said...

Obama's speech at Yangoon University was actually a pretty good speech. Lots of stuff about the virtue of freedom and a constitutional democracy.

http://iipdigital.usembassy.gov/st/english/texttrans/2012/11/20121119138848.html

"And we'll work with organizations like the World Bank to support small businesses and to promote an economy that allows entrepreneurs, small businesspeople to thrive and allows workers to keep what they earn."

...

"I appoint some of our judges, but I cannot tell them how to rule, because every person in America -- from a child living in poverty to me, the President of the United States -- is equal under the law. And a judge can make a determination as to whether or not I am upholding the law or breaking the law. And I am fully accountable to that law."

I thought it sounded very presidential, although somewhat hypocritical when you consider what's been going on, sadyl I doubt he believes much of what he says.

Anonymous said...

Krugman dreams of returning to a time when blacks had to to drink from different water fountains and sit in the back of the bus... see how easy his "they want to turn back the clock" nonsense is?

yofed2 said...

i think krugman, in his intellectually dishonest way, fails to mention that we saw three recessions during the 1950's, 1953, 57, and 1960. which is why jfk cut taxes when he was elected. or perhaps, which is more likely, he has no knowledge of history.

the only other reason for making such ridiculous statements is to, perhaps, take a stand so far left on this issue, that the president actually looks like a man of reason. but i doubt it. it is more because he is indeed an idiot.

JG said...

Paul Krugman: "you can have prosperity without demeaning workers and coddling the rich."

William Anderson: "So there it is. The economy was prosperous because of high tax rates and because labor unions were driving up the cost of doing business."

Did everyone see that? That's what is known as dissembling. It's a cute way of saying tricky. When you take someone's actual words and misrepresent them on purpose that's a form of dissembling.

I like that word because you don't hear it used much anymore but every time I read a blog post by Anderson that word always comes to mind for some reason.

Jimmy Joe Meeker said...

Also the golden era for Hostess was an era before central bank fueled vulture capitalism. Before the silver was taken out of the money. Essentially what seems to have destroyed the company has been inflation eating away its products and price points that eventually made the company a target for the vultures.

Perhaps I am wrong but that's what the root cause looks like to me. But we can't expect Krugman or any of the other cheerleaders to ever attempt root cause analysis.

What I always find interesting is the term 'tax the rich'. To me this means 'tax the guy down the street who makes more than me' or at the outside 'tax those professional entertainers and athletes more'. Essentially a manipulation of people's emotions, of jealousy. Much like the experiment with the monkeys. If one starts to climb the ladder the others will pull him down out of conditioning.

Anonymous said...

"Did everyone see that? That's what is known as dissembling. It's a cute way of saying tricky. When you take someone's actual words and misrepresent them on purpose that's a form of dissembling."

How is Anderson misrepresenting what Krugman said? He's posting entire excerpts directly from Krugman's article and then offering his own commentary on it. Just asking.

Bala said...

JG,

"When you take someone's actual words and misrepresent them on purpose that's a form of dissembling."

Was Krugman making a policy prescription that essentially translates to "We need the economy to crank up again. So, raise tax rates on the top whatever %"? Just asking if there is an implied "So" in PK's statements.

I too noticed the point you were making when I read Prof. Anderson's post and followed it all the way to the end of the article but when you see it in the context that PK is making a policy prescription to tackle depressed economic conditions, I think Prof. Anderson is justified in using the word "because". Without the "because", implicit though it may be, PK cannot make such a policy prescription.

Anonymous said...

Bala,

You're being too nice... no intellectually honest person can read "economic justice and economic growth aren’t incompatible" and think that "So there it is. The economy was prosperous because of high tax rates " is a fair summary or corollary.. The whole article (and specially the quoted parts) explicitly reflect PK's belief that top marginal tax rates do not have much of an impact, one way or the other, on growth.. How Prof. Anderson can read causation into it just beats me...

_at best_ you can look at the phrase "yet contrary to right-wing propaganda then and now, it prospered" as implying even if indirectly some kind of causation, but even that would be extremely obtuse...

Now maybe somewhere in Krugman's writing, here or in the past, lies a proper defense of higher taxes as ipso facto growth enhancers, but its certainly not here...

Even Prof. Anderssons normal (and often valid) rhetorical defense, that some of his hyperbolic statements are simply the extreme logic consequence of PKs comments or ideas cannot possibly apply here as far as I can see...

Lord Keynes said...

"In a recent column, Krugman harkens back to the 1950s -- the "Golden Era" for Twinkies -- and claims that the economy then was strong because of high taxes and union workforce dominance. ...

The economy was prosperous because of high tax rates (the same rates Krugman told me in response to a question in 2004 that were "insane") and because labor unions were driving up the cost of doing business. Capital had nothing to do with it.
.

One can only marvel at Anderson's straw man arguments - his own statements are then refuted by his actual quotation of Krugman.

In fact, this is what Krugman said:

"Above all, the success of the postwar American economy demonstrates that, contrary to today’s conservative orthodoxy, you can have prosperity without demeaning workers and coddling the rich. "

In other words, the economy prospered despite high taxes and stronger labour rights back then - which contradicts some right wing myths about economics.

And meanwhile Anderson demonstrates his laughable incompetence.

Why would anyone take seriously someone who can't even accurately report Krugman's views?

William L. Anderson said...

I think that Krugman's November 19 blog post solidifies the claim that Krugman is claiming that high taxes and unionization were the CAUSE of prosperity:

http://krugman.blogs.nytimes.com/2012/11/19/the-europe-in-rubble-excuse/

For that matter, if the economy did well DESPITE the high tax rates and unions, then think how much better it would have done with lower taxes and more economic freedom. By the way, notice that Krugman does not hold the late 1970s as an example, even though the high tax rates, unions, and high levels of economic regulation still were the norm.

JG said...

Anderson,

Nowhere in the November 19 blog post does Krugman say anything about taxes at all. That was an article about post-war trade.

I'll give you the benefit of the doubt and assume you sent the wrong link. But my more cynical instincts suspect that was just you blowing smoke.

And for the record, Krugman does not say that high taxes CAUSE prosperity. His position in his latest column is that high taxes and economic growth can coexist for decades, which undermines the prevailing conservative talking point that high taxes kill economic growth. Essentially, growth and taxes are largely independent of one another and anyone who tries to say high taxes kill growth is ignoring decades of American experience that illustrate otherwise.

Lord Keynes said...

(1) "I think that Krugman's November 19 blog post solidifies the claim that Krugman is claiming that high taxes and unionization were the CAUSE of prosperity

He says no such thing, and you continue to prove the point that your comments are a straw man.

What Krugman says in the recent post you link to:

Whenever I point out how well America did with strong unions and highly progressive taxation after World War II, I can count on conservatives trying to resolve their cognitive dissonance by saying “but it was easy then — all our competitors were in ruins!” ....

Not a word about how these were supposedly the cause of post-war II prosperity at all.

Mike said...

JG Said “Essentially, growth and taxes are largely independent of one another and anyone who tries to say high taxes kill growth is ignoring decades of American experience that illustrate otherwise

LK said “Whenever I point out how well America did with strong unions and highly progressive taxation after World War II, I can count on conservatives trying to resolve their cognitive dissonance by saying “but it was easy then — all our competitors were in ruins!”

The lack of thinking in both of these statements is stunning. You both should be smarter than a superficial simpleton’s analysis.

William L. Anderson said...

Either the higher taxes and unionization help the economy or they hurt it. They cannot be neutral.

JG said...

"Either the higher taxes and unionization help the economy or they hurt it. They cannot be neutral."

Well, as we've seen from the example Krugman used in his column the 1950's saw economic growth coincide with high taxes and strong unions. So what does that tell you?

Ike said...

Allow me to dispel a myth regarding the Twinkie Defense.

White's attorneys NEVER tried to make the case that the Twinkies (or the sugar involved) were the cause of anything. Not erratic behavior, nor temporary insanity.

The legal argument was the White had diminished capacity due to clinical depression. The consumption of Twinkies was proffered as evidence that he was behaving well out of character, as everyone who knew him considered him a fitness and diet fanatic.

There was a lot of other evidence presented to substantiate that claim, but the media went crazy for the Twinkie reference, and popular culture completely distorted the nature of the defense.

None of which changes the fact that Krugman's argument lacks both the nuance of the Twinkie Defense, and the gravitas of the Twinkie's filling.

William L. Anderson said...

Thanks, Ike! I learned a couple of things. First, if I depend upon the mainstream media for the facts of a criminal case, I never will know the facts. (And I should have known better here.)

Second, you have a very good way with words. Thanks for posting.

Zack said...

Very well put Mr. Anderson. I get Krugman's articles in my local paper every tuesday and was incensed that this partisan hack continues to represent himself as an honest economist. I knew a couple of these sites existed so I had to come check it out.

His cherry-picking of facts really annoys me. You pretty much summed it up but Krugman doesnt seem to understand that the same policies he advocates caused the U.S. to stall in the 60's-70's. Also he puts no weight behind technological factors that lead to growth in spite of economic policy. For instance in the 50's many people were still without T.V.s and appliances that helped fuel a consumer driven boom for years. Much the same way the internet revolution carried the Capital boom in the 90's.

Mike said...

JG, said “Well, as we've seen from the example Krugman used in his column the 1950's saw economic growth coincide with high taxes and strong unions. So what does that tell you?

It tells me you have the inability to distinguish the differences of correlation and causation as well as Bastiat’s seen and unseen.

Michael Maier said...

"Straw man"? Only someone that doesn't read Krugman in the context of the man's entire career pushing for more regulation, higher taxes, more borrowing & spending & deficits and unionism could say such an utterly stupid thing.

I would like to see these two (JG & LK) demonstrate anywhere on record Krugman has pushed for the opposite of these idiot "liberal" positions.

JG said...

I love watching you guys desperately avoid confronting the central point of Krugman's article, which is that the 30 years that saw American's best economic performance are also the years that we had the highest tax rates and strongest labor unions.

Anderson has decided to completely ignore this fact. Mike thinks that merely stating correlation does not equal causation somehow settles the discussion without bothering to offer any further insights. And Zach seems to this that 30 years of economic boom were the result of people rushing out to by color TVs and appliances without acknowledging that without high paying union jobs consumers wouldn't have been able to afford all those great new gadgets.

Since none of you seem capable of offering your own hypothesis how about this for causation: high taxes funded massive investments in infrastructure and research, which enabled further development, which resulted in greater wealth for everyone. Coupled with millions of working class consumers who had unions to negotiate higher wages and you get a consumer class that for the first time had enough disposable income to fuel even more growth. That's my thesis, and apparently Krugman's as well. I'm still waiting for the Austrian thesis to explain the boom years of the 1950s.

Mike said...

JG said “Mike thinks that merely stating correlation does not equal causation somehow settles the discussion without bothering to offer any further insights.”

No, actually I simply said you appear to have the inability to critically think through the differences. But thanks for misrepresenting my statement.

While I’m at it, I will state the following:

Your analysis on matters is insular, myopic, simplistic, shallow and devoid of critical thinking. I’ve offered you extensive insights on another topic and you waved them away like an adolescent as “excuses.”

Apparently you define “insights” as only those things that are consistent with your statist view of the world. I attempted to be constructive with you and you demonstrated gross immaturity.

Enjoy the collectivist society you advocate and support. The only ones that will benefit from it are the elite. It’s a very small club and you’re not in it. You fall into the category of what Mises described as "confused and misguided sympathizers", or if you prefer the pejorative, Useful Idiots.

You are incapable of an intelligent dialogue and I will not take you seriously until such time as you evolve.

Thanks for stopping by

JG said...

Mike,

If my thoughts are so shallow and simplistic then why have you been unable to refute them? I just presented my thesis for the post-war economic boom and you have not offered a competing thesis or even attempted to refute the one I put forward.

Anonymous said...

Mike, calling JG a collectivist, a useful idiot and a statist will only cause him to debate even more incoherently for some reason. Don't even waste your time.

Mike said...

Anonymous, fair point. Deal

Anonymous said...

Even if you try to refute his so-called thesis, JG will find even more problems with what you said, argue over semantics and cry red herring and every logical fallacy ever written, causing the debate to go nowhere. Cheers!

JG said...

"Even if you try to refute his so-called thesis, JG will find even more problems with what you said, argue over semantics and cry red herring and every logical fallacy ever written, causing the debate to go nowhere."

Translation: We don't have a serious response to your thesis so we'll just ignore you and hope you go away.

Anonymous said...

I guess that's a facepalm from the both of us.

JG said...

Looks more like a retreat to me.

Anonymous said...

PK makes persuasive and well reasoned arguments, but I've been looking for someone to engage his arguments and prove them wrong. All you ever get is name calling and argument by incredulity. This blog is mostly the latter. Can anyone direct me to someone who can refute PK?

JG said...

I don't think you'll find that anywhere. This is mostly a blog for angry libertarians to vent their frustrations. Not a forum for deep thinkers.

Anonymous said...

What do you think of the Laffer Curve, JG?

JFF said...

"PK makes persuasive and well reasoned arguments..."

This is debateable and highly dependent on which ghost writer/research assistant is writing the particular piece.

"...but I've been looking for someone to engage his arguments and prove them wrong."

If you want a little more nuance, try Bob Murphy:

consultingbyrpm.com/blog

Dennis said...

Ninety-one percent sounds like a very high tax rate...but at what income level? That makes a huge difference. I was not born in the 50's so I would be interested to know what the other tax rates were and at what income levels they came in at.

I think it's a valid point that the U.S. at that time was the only major industrial nation in the world not devastated by war. Ninety-one percent tax rates may have looked good if you are the only place around for investing. But by the 1960's countries like Japan were on the mend and by the 70's were leaping ahead of the U.S. in industrial production.

ptwalker said...

And Dennis nails it on the head. No one on Krugman's side of the aisle wants to talk about the 70s where everything came crashing to a halt in the face of global competition. You see the rewrite going on all the time, that what Reagan did was a con job on the American people and that if we only went back...What no one addresses, especially when they throw around how this last recession was the absolute worst thing that ever happened since the 30s is stagflation. Would you like to trade what we just had for year over year double digit inflation, unemployment and interest rates as it was 79 to 81? Imagine a 14% car note, how does that sound? We see people advocating greater regulation, higher taxes, greater unionization and protectionism. The rust belt didn't die with Reagan, it died with being caught flat footed and unable to react to market changes brought on by the Japanese and the Germans. People will say 'sure Reagan brought back jobs, but what KIND of jobs?' as if you could have somehow brought back $20 an hour (in 70s dollars mind you)bolt turning assembly line jobs to the Midwest. I will stick by my first comment, anything 46 to 76 should have an asterisk, just too much of an outlier

Anonymous said...

"PK makes persuasive and well reasoned arguments, but I've been looking for someone to engage his arguments and prove them wrong. All you ever get is name calling and argument by incredulity. This blog is mostly the latter. Can anyone direct me to someone who can refute PK?"

Peter Schiff has also done several critiques on Paul Krugman's work. Just search his YouTube channel and type in Paul Krugman.

http://www.youtube.com/watch?v=lCQ_N9wj41Q&playnext=1&list=PL4F4D901983367D9E&feature=results_video

Edward said...

JG,

Very few people paid the high tax rates of the 1950's. there were a HUGE amount of deductions for the rich and even the middle class, so Krugman is being a bit disingenuous and dishonest by citing the high ON PAPER tax rates. You think hollywood celebrities of the 50's paid 90% of their income? do you think the Kennedy clan, Frank Sinatra and the pack, Howard Hughes and countless others actually paid those rates.

Of course they didn't. I heard somewhere, , that while the top income tax rate in the 50's was 90% the capital gains tax rate was 25%. CEOS were paid in stock options.

As to the rest of the prosperity, The deficit spending during the war helped create savings that lasted for a while, coupled with a more relaxed attitude about deficits in general, and monetary policy was not obsessed with hard money lunacy.

Also, while more industries were regulated, federal government spending as a percentage of dap was lower 18.5%, i think, rather than 20% later on and the 24% we have now.

Another thing, nobody ever said governments the u.S. government isn't good at fighting wars. One of the reason why government might have worked better then is the cynical reason that we had an enemy, namely the Soviets. There was a sense of unity amidst the threat of nuclear armeggedon. Kennedy didn't choose to go to the moon just because, he choose to go because he wanted to beat the soviets at something. Same goes for investments in infrastructure and education. Thats one other reason government workers might have been more motivated

FInally, we cannot observe a counterfactual, how much better the economy would have done without unecessary regulations that had nothing to do with the Great Depression, like the civil aeronautics board and regulations in trucking.

Edward said...

dap should read. GDP

Dennis said...

By the 1970's Britain had some of the highest marginal tax rates in the world: around 98% on fairly low incomes. The result was a flight of entrepreneurs out of the country along with whatever capital they could manage to take with them. The economy remained moribund with extremely high unemployment until Margaret Thatcher slashed rates dramatically.

Anonymous said...

You mischaracterize the Krugman quote about the 1950s. He isn't saying high marginal rates cause prosperity, he's saying that prosperity can still exist when marginal rates are high. It's an important distinction, which he made clear in the quote you reprinted.

JG said...

Anonymous,

Regarding the Laffer Curve, I think it's a concept that is true as your approach a 100% tax rate and less true the farther away you get from it. And since the top US federal tax rate is nowhere near 100% that means those who invoke the Laffer Curve as a justification for opposing tax increases are being disingenuous. The National Bureau of Economic Research did a study a few years ago that suggested that the Laffer Curve doesn't actually kick in until after an effective tax rate of 70%. So when people invoke the Laffer Curve as an arugment against raising the top rates from 35% to 39% they're just blowing smoke.

To the other Anonymous,

I would be careful about taking anything Peter Schiff says seriously. He is a media hound, not an expert in economics. His track record with making economic predictions is piss poor. Just look at his predictions on inflation and the US dollar. He's an expert in economics just like Dr. Phil is an expert in psychology.

Edward,

The deficit spending during the war ended shortly after the war did. But the prosperity continued for another 30 years. I wouldn't credit temporary war spending with the post-war boom, it was the emergence of a large middle class of consumers who got their foothold on prosperity through strong unions, a strong social safety net (including private sector safety nets like employer funded benefits) plus a massive infrastructure upgrade funded by higher taxes. And yes, you're right that most people didn't pay the highest rate of 90% there were many who paid 40% or 60% or 70% so the overall tax base was much deeper back then.

Anonymous said...

" would be careful about taking anything Peter Schiff says seriously. He is a media hound, not an expert in economics. His track record with making economic predictions is piss poor. Just look at his predictions on inflation and the US dollar. He's an expert in economics just like Dr. Phil is an expert in psychology."

Thanks for the input, though Dr. Phil never attended UC Berkeley in his life or majored in finance or accounting. I wouldn't go that far in your comparison, but I understand what you're saying. These economic discussions are quite insightful in terms of the various schools of economics.=

Edward said...

JG:

"And yes, you're right that most people didn't pay the highest rate of 90% there were many who paid 40% or 60% or 70% so the overall tax base was much deeper back then."

Are you sure? Even the middle class and the lower wealthy had a large number of deductions back then. Factor those in, and the post war might have seen LOWER tax rates in reality, even though the post Reagan period had lower PAPER rates but a lot fewer deductions

Also many things of the middle class weren't taxed back then that are taxed now, such as unemployment benefits and Social Security.

JG said...

Even when you factor in the deductions and other offsetting items the effective tax rates back then were still higher than today. The CBO website has a table on effective tax rates going back to 1979 and effective rates were higher back then for all tax brackets, more so for the higher brackets. And keep in mind, the 1950's had higher statutory rates than in 1979 so it's a fair assumption to make that the effective rates were higher back then as well.

Anonymous said...

I think a common fallacy among the more ideologically inclined economists is to try to always find causation between events in a certain country or region and its political shifts at a local level and sort of miss the big picture; I think any economics discussion about the 70s without talking about the oil embargo the 80s without referencing the consumer electronics revolution have to be at best incomplete...

Remember, the 70s were a period of global sluggishness but not all countries had a socialistic buildup or a Jimmy Cartah... Conversely, the 80's were a time of great growth and transformation but not every region had Thatcher or a Reagan..

More concretely, for instance, Sweden had a somewhat reversed political shift as the US, towards higher taxes and more welfare in the early 80s but experienced roughly the same economic trends as the rest of the world...

In the end, I think fiscal policy has much less an impact than most experts would like to believe...

Will "take no prisoners" Hart said...

Nobody ever paid close to 91% back then. There were deductions, loopholes, and shelters up the ying-yang and it wasn't until the bipartisan and revenue-neutral Tax Reform Act of 1986 that a lot of that stuff got disinfected. Krugman, per usual, is asserting causality when it cannot be proven.

Pulverized Concepts said...

He isn't saying high marginal rates cause prosperity, he's saying that prosperity can still exist when marginal rates are high. It's an important distinction....

So what? Collective prosperity doesn't pay for my new bicycle or my Bichon Frise's shampoo or a salmon filet. The ideological conflict isn't as much about economics as it is about morality. Is it moral for ideologues to use the coercive powers of the state to confiscate private property, no matter to what use that property is put?

David in Liberty said...

He isn't saying high marginal rates cause prosperity, he's saying that prosperity can still exist when marginal rates are high. It's an important distinction....

What an asinine distinction. Your economic condition is always the result of past decisions, so pointing out such a freaking sophomoric idea that prosperity can still be there even after you put in tyrannical tax rates, does you no good.

The freaking level of stupidity from Keynesian lunatics is always astonishing.

Anonymous said...

David, you definitely won the contest for the highest adjective to substance ratio (infinity) in this thread!

JG said...

"Is it moral for ideologues to use the coercive powers of the state to confiscate private property, no matter to what use that property is put?"

Translation: I enjoy the perks of living in a modern society like police, fire departments and paved highways but I really hate paying for these things.

Bala said...

"Translation: I enjoy the perks of living in a modern society like police, fire departments and paved highways but I really hate paying for these things."

Translation of translation: I love being a thug but since I like to feel good inspite of the fact that I am a thug, I like to create moral justifications for my criminal behaviour.

Mike said...

“Translation: I enjoy the perks of living in a modern society like police, fire departments and paved highways but I really hate paying for these things.”

It’s such shallow and tired tripe. Statists love to hide behind the skirts of public safety to deflect and obfuscate their true nature. When that fails you are labeled a “racist” because you don’t support the National Welfare State.

Anonymous said...

"It’s such shallow and tired tripe. Statists love to hide behind the skirts of public safety to deflect and obfuscate their true nature. When that fails you are labeled a “racist” because you don’t support the National Welfare State."

I'm a bit confused, Mike. Do you really hate paying to have the police, fire departments, and paved highways?

Also, do you consider yourself to be a conservative, a traditionalist, a libertarian, or a reactionary, or an independent who doesn't specifically fit 100% with any of those political philosophies. I just wanted to know and I'm not trying to bash you or anyone else who has left comments on this blog.

Mike said...

Why are you confused? If you pay any attention to what passes for public policy discussion today it should be obvious. Criticize government spending and you are accused of not supporting police and fire. Criticize federal spending on education, and you’re accused of being “anti-child.” Criticize the welfare state and you’re accused of using “coded” words to imply racism. The whole thing is preadolescent prattle.

Did I say I hate paying for police, fire and roads? No. I recognize the proper role of a limited constitutional government. My distain is for those that hide behind legitimate limited government to rationalize a statist philosophy.

I’m a Libertarian/Constitutional Conservative/Jeffersonian-Classical Liberal. We have bastardized the language so badly; we end up arguing about the meaning of words instead of the substance of matters.

Anonymous said...

Understandable. I just wanted some clarification. "Liberalism" and "conservativism" have had a variety of different definitions and associations in the past. It's interesting how these philosophies have evolved overtime, especially in an economic sense.

Mike said...

I don’t believe the core philosophies have really evolved all that much. What has changed is the labels due to manipulation of the language. Goebbels and Bernays would be proud of what they have accomplished.

JG said...

You libertarians love to be melodramatic. All this talk about coercion, thuggery, tyranny....all this drama just to describe having to pay taxes. Every time you're faced with the possibility of having your taxes raised to help pay off the national debt you start dropping comparisons to Soviet oppression or Josef Goebbels or some other nonsense about how paying your fair share of taxes is tantamount to being oppressed. Just be honest and admit this has nothing to do with liberty or freedom and that you just don't want to pay money for services that other people will benefit from. Be honest and drop the holier-than-thou, freedom figher act because it's transparent and tired and nobody is falling for it. Own your selfishness, own your greed and stop pretending this is about something noble like freedom.

Anonymous said...

I think I've seen a classic example of a debate between liberal and conservative here. Thanks for the laughs, JG and Mike. It just keeps getting better. Keep it up! One side thinks you're greedy, don't pay your fair share in taxes, and you want to support the corporations and the opposing side believes that there is too much government and too much of everything resulting in a welfare state. I have no idea who is right.

JG said...

Anonymous,

If you have no idea who is right then consider this:

Here is a list of the lowest taxed countries in 2012 (as a percentage of GDP): Algeria, Haiti, Iran, Kuwait, Libya, Nigeria, Oman, Qatar, Saudi Arabia, and the United Arab Emirates.

Here is the list of the lowest taxed countries in 2012: Austria, Belgium, Bosnia and Herzegovina, Denmark, Finland, Germany, Iceland, the Netherlands, Norway, Sweden.

Where would you rather live? Where would you find a higher standard of living? What direction would you prefer the US to move towards? Do you want to the US to look more like Sweden or Nigeria?

If you still don't know the answer then you aren't really trying that hard to figure it out.

JG said...

Typo - meant to say "highest taxed" in the second grouping of countries, as I'm sure you figured out by the context.

Bala said...

"Just be honest and admit this has nothing to do with liberty or freedom and that you just don't want to pay money for services that other people will benefit from."

ROFLMFAO. Of course I do not want to be forced to pay for anything. Why don't you whatever-Keynesian thugs admit that you want your gang to be able to use force to take away what belongs to me so that you could give it to the parasite of your choice?

Bala said...

"Be honest and drop the holier-than-thou, freedom figher act because it's transparent and tired and nobody is falling for it."

ROFLMFAO again... When any libertarian talks of "freedom" he is talking of his own freedom. You don't understand freedom and liberty, do you?

" Own your selfishness, own your greed and stop pretending this is about something noble like freedom."

Ha! Ha! Ha!! Selfishness, greed and freedom are related and noble. It is claims of selflessness that can make you ignoble (especially when you can know that you are plain wrong but ignore that which shows you up).

Bala said...

"all this drama just to describe having to pay taxes."

Whatever-Keynesians are amazingly hilarious. The way they twist and turn to try to create "moral" justifications to evade the simple point that taxes are coercive expropriation is absolutely entertaining.

Mike said...

JG@10:43
I referenced Goebbels and Bernays in a narrow context with Anonymous about how we have bastardized our language. You tried to make it into something else. You are either ignorant or disingenuous. Or in the alternative perhaps both, which makes you perfectly suited for public office

Mike said...

JG@11:44 “Where would you rather live? Where would you find a higher standard of living? What direction would you prefer the US to move towards?”

Standard of living. That’s your primary criteria?

How about the following standard of living for the individual

Free housing to protect you from the elements
Free meals. Three a day
Free medical care
Free access to a gym facility
Free access to education. Earn a degree or specialty skill for free.
Free access to basic media

Sounds pretty good eh? It has all the makings of a progressive utopia. In fact to someone living in the squalor of the third world they would be ecstatic to “move towards” that standard of living.

I just described the average conditions of a US prison.

See, the problem with people like yourself JG is you confuse access to information with knowledge and wisdom. They are three different things. So yourself a favor, stop doing Google searches and start reading a few books that challenge you and make you think.

Mike said...

JG, While we are on the subject of thinking, exactly what is a person’s “fair share?” Please define it and support your definition morally, constitutionally and economically. Or is all you have to offer is regurgitated talking points from the progressive playbook.

JG said...

Mike,

I just gave you a list of prosperous, successful and free countries that have eschewed your libertarian philosophy. These examples are real world rebuttals to your worldview and yet you make no attempt to address them. Instead you make silly comparisons to being in prison.

This is the core of what is wrong with your worldview: when the real world contradicts your libertarian model of how the world SHOULD work, you ignore the real world and embrace the model even more. This is the time to either put up or shut up, so either reconcile how so many prosperous and free European nations could reject the libertarian model and still prosper or else acknowledge the flaw in your model.

JG said...

"See, the problem with people like yourself JG is you confuse access to information with knowledge and wisdom."

Stop confusing your opinions for wisdom. Facts matter more than opinions so start incorporating them into your arguments.

JG said...

"JG, While we are on the subject of thinking, exactly what is a person’s “fair share?”

If everyone else is paying an effective tax rate of 28% and you're paying only 15% then paying your "fair share" means paying the same rate as everyone else. Does that satisfy your moral and constitutional sensibilities? Or am I just regurgitating talking points?

Mike said...

JG
I challenged you’re your premise that standard of living as the primary foundation of measuring the value of one’s life. Once again you evade and obfuscate. Or you didn’t understand the point.

The real world? That is what you define as acceptable. The real world is filled with history of oppression of the individual by the collective or elite. Apparently you choose to roll over and accept it. What is you hostility to maximum individual liberty? Why do you insist at worshiping at the altar of the collective? Do you hold so little regard for yourself as an individual?

Facts mean nothing without context and understanding. You continue to demonstrate your deficiency in both categories. Stop confusing your Google searches with knowledge and wisdom.

You didn’t answer the fair share question. Shall I infer that you think everyone should pay the same rate on the same type of income? What exactly are your moral and constitutional sensibilities? You seem to hold the constitution and associated rule of law in low regard.

JG said...

Standard of living is probably the single greatest measure of how well a society is functioning. But freedom and liberty are also part of how you measure the success of a society. The nations I listed provide greater material comfort to their citizens AND tend to have greater freedom and protection of civil liberties than lower taxed nations like the US. And all of those nations reject your approach to taxation and public spending. That's why I put them out there as proof that the libertarian, taxes-are-tyranny, attitude is simply untrue. If you're going to take a stand and fight for the libertarian worldview then you need to have an answer for real world contradictions to that worldview. Does your libertarian model of the world have an answer for this problem or not? I'm betting you don't have one.

And yes, I did answer the fair share question. Fair share means everyone pays the same rate regardless of type of income. Do I need to elaborate further?

And regarding the Constitution, I have no problem with it or the rule of law. However, I have a huge problem with dishonest conservatives who twist its meaning to suit their own agenda. The perfect example of this is that snake Alito who says money equals speech. That's not what the founders had in mind when they wrote the Constitution and he knows it. Whether it's bizarre interpretations of what equals speech or shady interpretations of the commerce clause, conservatives tend to pay lip service to the Constitution while undermining its intent. So when I hear Libertarians invoking the Constitution as their excuse to dismantle laws they don't like I tend to view their claims with extreme skepticism.

Mike said...

JG@10:59
“That's why I put them out there as proof that the libertarian, taxes-are-tyranny, attitude is simply untrue.”

Your argument is nonsensical and misleading. Any reasonable understanding of a libertarian philosophy does not state taxes are tyranny. It does acknowledge that taxes are by their very essence coercion under threat of force and as such should be confined to funding only the necessary functions of government as called for under the Constitution.

Respects taxes, yes elaborate further. Accordingly you are against a progressive tax structure. Is that correct?

Please explain your definition of “shady interpretations of the commerce clause.”

It’s not about Libertarians “dismantling” laws they don’t like. It’s about only having laws and the operation of government in accordance with the Constitution and following the rule of law not the rule of man. There is plenty of intellectual hypocrisy by both liberals and conservatives respects constitutional application.

JG said...

A few points:

1) I've asked you several times to address the real world contradictions to your libertarian model. Specifically, the long list of European (and other) countries that have rejected libertarian ideas and yet still prospered tremendously in terms of material wealth and in personal freedom for their citizens. Please address this issue because it represents a real world case study that refutes every one of your beliefs. Please stop evading this topic.

2) I believe in a fair tax system, which means a flat effective tax rate. The key word in that sentence being effective. However, you accomplish a flat effective tax system by imposing progressive statutory tax rates. Why, you may ask? Because the wealthiest individuals and corporations have proven quite skillful at deploying lobbyists to manipulate the tax code to their favor to lower their own effective tax rates. Therefore, you need to adjust the statutory rates in a progressive manner to even out the effective tax rates, and even that doesn't always work, see exhibit A: Mitt Romney and his 15% effective tax rate last year.

3) I've been coming to this blog long enough to notice libertarians invoking the Constitution as their excuse for opposing any and all attempts to promote social program spending by saying that such programs (like Obamacare) are "uncontsitutional". For those self styled constituational literalists out there I refer to Article 1, Section 8:

"The Congress shall have power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common defence and general Welfare of the United States"

I read that to mean it's within the federal government's rights to impose taxes to pay for things it deems to be in the "general welfare" of the nation. Enough said.

Mike said...

JG
Numbered below to correspond with your numbered points:

1) Don’t confuse your interpretation of a libertarian model as you may understand it as “mine.” There are a number of variations on the theme just as there are different interpretations of what it means to be a Republican or Democrat.
I’m not evading your “European example” you’re not recognizing the fallacy of using them as proof of a collectivist philosophy can create wealth and freedom. Each one of those countries has a unique culture that affects all the inputs and outputs that is not replicated in the US. In addition you reach a conclusion based on an aggregate snapshot of today and not what the prospective logical conclusion of such policies will be based on core human behavior that transcends culture.

2) You and I agree on the manipulation of various parties’ respects the tax code. But you are incorrect in your thinking that it can be addressed with a progressive system that “attempts” to correct the deficiencies of the previous deficiencies. It becomes circular and all you do is create the monster we have now as a tax code. The only way to produce a true effective flat tax system is one rate, no deductions, no exceptions.
By the way corporations don’t pay taxes. People pay taxes. Corporations are merely middle men facilitating collection and payment. Corporate taxes are inevitably imbedded in the price of the product or service or through reduced wages of the employees working inside it.
Romney paid 15% tax on non wage income. It is income that was already taxed once at a corporate level. You’re mixing apples and oranges.

3) Your interpretation of “general welfare” in article 1 section 8 is incorrect. The vernacular of the time defined welfare to be prosperity or well being. The word “general” was intended to mean that Congress was prohibited to legislate for the specific welfare of any one individual(s). The legislation had to be for the whole.

The typical progressive interpretation that Congress can has unlimited power to pass legislation under the “General Welfare” language is completely nonsensical as it not only conflicts with the collateral writings of the founders that provided insight to the intent, but it also would make the articulation of powers in Article 1 Section 8 superfluous. The construct of the document is limited enumerated powers.

You should not take solace in rulings by the USSC. I’m happy to point out opinions by them that deviated from original intent that even a progressive would be offended by. One of the problems with law schools today is they teach USSC history and not constitutional history which then infects the judiciary in a incestuous manner.

Mike said...

Forgot to mention on the Tax issue. According to CCH, the 2012 tax code has over 73,000 pages in it. Thats what happens when you compound "fixes" to make things "fair" and every special interest has their own definition of what "fair" is and advances it buy buying off errr I mean lobbying Congress. No wonder every body wants on Ways and Means Committee.

JG said...

Mike,

1) My definition of the libertarian model is that of limited government, relatively low taxes and minimal spending on social programs. I think that's a pretty fair assessment of what most libertarians hold as their economic beliefs. And regarding your comments about those European nations that reject this model:

"Each one of those countries has a unique culture that affects all the inputs and outputs that is not replicated in the US."

All of those countries are Western, developed, industrial nations with cultures that are not that different than the US. The cultural differences between the US and any of those nations are superficial and don't explain why a robust public sector in Sweden is successful there but cannot be imported here. To say that we don't have the cultural sensibilities to replicate their success makes no sense.

2) When one side has their finger on the scale and you can't get them to remove it then you must counter that with your own finger on the scale. Maybe in an ideal world we could have a flat statutory and effective tax rate but in the real world the wealthy have strong incentives to game the system in their favor so progressive tax rates will continue to be needed to offset that dynamic.

By the way, if corporations enjoy the legal and now free speech benefits of being people then they must incur the costs of personhood as well, which means paying taxes. Legal separateness of corporations from their shareholders is what shields shareholders from legal liabilities of the corporations they own. Taxes are the price they pay for that legal protection.

Also, regarding Romney's non-wage income, you're confusing capital gains with dividend income. Dividend income is taxed twice at the corporate and then individual level, but the corporation doesn't pay any taxes on the capital gains of the shareholders. Romney's income was mainly from capital gains and therefore only taxed once.

3) The General Welfare clause is one of the enumerated powers and the language is quite clear that it covers any activity deemed by the Congress to be in the general welfare. That's a pretty broad mandate and it was writtenly broadly on purpose. It takes some serious verbal and logical gymnastics to twist the meaning of those words to anything but a broad empowerment of Congressional taxing authority.

Bala said...

"why a robust public sector in Sweden is successful there"

Post hoc ergo propter hoc.

Zachriel said...

Bala: Post hoc ergo propter hoc.

Well, no. The claim isn't that mixed economies necessarily result in prosperity, just that they don't preclude it. Pointing to a single example should be sufficient. While you might say one or the other is exceptional, as the exceptions multiply, even that position becomes less and less tenable.

Mike said...

JG,

1.) Liberty can be defined as the maximum absence of coercion. Since the very essence of government is coercion under threat of punishment, then yes limited government would be an applicable element in the definition.

What puzzles me is why any self respecting person would not embrace such a philosophy.

I think Bala properly identified the logical flaw in your perpetual citation of other “Western” countries for your argument. In addition the fact they “Western” proves nothing. By that same logic when asked “Why do birds fly?” You would answer the question “Because they have wings” Tell that to the Ostrich, Chicken, Penguin or Emu.

2.) Ideal world? Nonsense. You either do it or you don’t. Either you put a straight forward tax law in place that says here is the flat rate no deductions no exemptions or you don’t. Your answer is that since there isn’t the will to do so, the solution is a progressive tax structure to try and address the perceived inequities. +73,000 pages of tax code proves otherwise.

The legal construct of corporations doesn’t change the economics. I will state it again. Taxes are a cost of doing business. Corporations don’t pay them. People do. They are passed through in some combination to the shareholder, employee or consumer.

Respects dividends and capital gains. You are correct. Dividends are taxed twice. Stupid economic policy. Treating dividends at a lower tax rate was supposed to be some rationalization for that aspect. Here we go again with complicating the tax code to address a faulty premise.

You are correct. Capital gains are not directly taxed prior to being recognized by the shareholder. HOWEVER there is imbedded indirect taxation of capital gains. For example, a component of share price is book value. Book value contains retained earnings that the corporation has already paid tax on. In addition, capital gains tax is not indexed for inflation. The share holder is paying tax on phantom gains as a result. Inflation is a form of taxation.

3.)Your assessment of the General Welfare Clause is completely incorrect. It is an “enabling clause” not an enumerated power. It provides Congress with the power and the framework of how to execute the enumerated powers listed. You need to understand the distinction. Even if you know nothing about constitutional history, you analysis fails simple logic. You are conflating an enabling clause with an enumerated powers clause. To use your logic, Article 1 Section 8 would be redundant after the words “… throughout the United States;” That is not the history, intent and fact.

JG, that fact you choose to read and engage a blog like this would indicate there is the probability you have a higher than average intellect. After all, instead of spending your time reading material like this you could be watching Dancing with the Stars. So for that I commend you. That said, may I, with all due respect suggest you start moving into the deeper end of the critical thinking pool on some of these matters. Start challenging your premise which can be clouded by perceived political party affiliations. Jettison some of the garbage you were taught in school. When I started to do what I am suggesting, and I continue to do it, a whole new perspective opens up.

I always try to stay mindful of the following:

“It is difficult to get a man to understand something, when his salary depends upon his not understanding it!” - Upton Sinclair


The smartest person in the world is totally worthless once he accepts a false axiom as truth, and seals himself off from the possibility that he is wrong. -Unknown

“Sometimes people don’t want to hear the truth because they don’t want their illusions destroyed.” – Friedrich Nietzsche

"It's not what people don't know that's the problem. It's what people think they know that just ain't so."
-Will Rogers


Cheers

JG said...

Mike,

1) You're getting off track regarding the European examples. Forget about them being Western or not. You attributed their cultural differences to why mixed governments work there but could not work here. I say that is nonsense, Europeans are not that different from us culturally and even if they were that wouldn't explain why they've been able to successfully combine a large role for government with prosperty and freedom that they enjoy.

2) The tax code belongs to the lobbyists and those who pay them. Until that changes you will never have anything resembling a flat tax. As long as that is true then any attempts to flatten the tax rate will serve only to have a regressive impact on effective tax rates. For example, eliminating the mortgage deduction will have the effect of flattening the statutory tax rate but will fall more heaviliy on the less affluent, which would result in higher effective rates for the middle and working classes than for the wealthy. I'm not willing to sacrifice the substance of fairness for the appearance of fairness.

3) I'm not getting into a legal argument about the geography of the General Welfare Clause in the document itself because I'm not a lawyer or someone who has studied the subject enough to speak with authority. However, based on the way the clause is written I find it hard to believe that the framers of the document would describe such a broad mandate for providing for the general welfare and then hamstring that mandate by not providing a clear source of funding. It makes no sense and I find it to be a highly questionable interpretation.

Finally, I come to this blog because I believe it's important to expose myself to as many points of view as I can, even those I disagree with. Too many people, especially on the political right, live in an ideological isolation chamber where they are insulated from any point of view that might contradict their own. I think that surrounding yourself with only those people who agree with you is about the stupidest thing anyone can do. You'll never get exposure to the larger world that way and you'll never learn new things.

That being said, I find libertarianism to be a fatally flawed economic model. Parts of the model sound reasonable in theory but it makes too many assumptions about markets and about human behavior that simply aren't valid. That's why I don't belive liberarianism could ever work in the real world as a basis for public policy. It assumes markets are efficient (they are not), it assumes the government is the only source of coercion (it is not), it fails to take into account nuances like the impact of information asymetry on markets or externalities beyond the primary parties to bilateral transactions. In summary, libertariansm is a simple and tidy model that cannot handle the rigors of a complex and messy world.

Mike said...

JG
1.) As I recall you were the one that originally cited them as being”Western” to support you proposition. I simply cited that differ cultures, as well as host of other factors, make a comparison non supportive.
2.) The Tax Code belongs to the Lobbyists because that is what Congress desires. There is no “fairness” in the tax code and it is an illusion to think can be accomplished under the current structure. The regressive argument is a straw man. The cost to feed one’s self 2,000 calories per day is “regressive”
3.) Study the Constitution and what you will find hard to believe is the nonsense you may have been taught. You don’t need to be a lawyer. In fact, it’s probably easier if you are not since you will less to unlearn. Your interpretation is incorrect but that is easily fixable if you want to spend the time to study it properly.

Libertarianism is a political philosophy. Politics and economics should not cohabitate. The assumptions you state about Libertarianism are overly simplistic. For example, an object Libertarian would not assume that government is the only source of coercion. The difference is coercion under the color of law and law adjudicating coercion that infringes upon an individual’s rights.

Anonymous said...

Mike, could you explain the differences of consequentialist libertarianism and deontological/natural rights libertarianism? There are so many different schools and variants of libertarianism that it's sometimes hard to keep track of how they differ from one another.

Mike said...

Anonymous

Your're being a smartass as evidenced by the fact you can articulate the labels which means you have the capactiy to look them up yourself and understand the distinction.

Anonymous said...

No sarcasm intended. I was being sincere, but you present an excellent point. Very well. I apologize for coming across as a smartass and genuinely wanted to learn more about these important concepts. It's hard to tell whether someone's trying to be an ass solely based on what they type on the Internet.

Mike said...

Anonymous
If that was not your intent, then I apologize. And yes it is difficult to distinguish between serious questions and sarcasm. Which is why we need a sarcasm font.
But really. My interpretation was that if you were smart enough to ask that question you are smart enough to understand the difference and prospective nuances with a simple search.

JG said...

Mike,

As I had said earlier, libertarianism is a model for how the world SHOULD work. Based on what I've read on this blog and from following public libertarians like Ron Paul, when the the real world doesn't follow what their model predicts they go into denial or otherwise find some excuse that allows them to go on embracing the model despite the model having failed to reflect what happens in the real world.

An example of this is in our discussion here. I've presented you with numerous examples of modern day nations whose mixed economies reject the small government ethos of the libertarian model but still enjoy increasing material prosperity and unsurpassed personal freedom. And yet your response has been to dismiss these examples with the catch-all dismissal of their cultures being different. You didn't try to explain what specifically in their cultures enabled them to prosper despite rejecting the libertarian model, and you certainly didn't explain why any cultural traits would override the economic fundamentals that all nations are subject to. Instead, you chose to simply dismiss these examples with a rather vague and poorly supported theory about supposed cultural differences so that you could go on believing the libertarian model is true and wise despite these living contradictions. Your model didn't have an answer for these anomalies so you found a way to simply ignore them.

The test of any model is how well if reflects reality. When you continue to believe something despite it not being supported by reality then you leave the realm of political philosophy and enter the realm of religion.

Mike said...

"Most people want security in this world, not liberty."
-- H. L. Mencken

"Most people do not really want freedom, because freedom involves responsibility, and most people are frightened of responsibility." - Sigmund Freud

None are more hopelessly enslaved than those who falsely believe they are free
Von Goethe.

JG said...

"Far from advocating a 'minimal state', we find it unquestionable that in an advanced society government ought to use its power of raising funds by taxation to provide a number of services which for various reasons cannot be provided or cannot be provided adequately by the market."

- Friedrich Hayek, "Law, Legislation, and Liberty"


"One of the more pretentious political self-descriptions is 'Libertarian.' People think it puts them above the fray. It sounds fashionable, and to the uninitiated, faintly dangerous. Actually, it's just one more bullshit political philosophy."

- George Carlin