Monday, November 12, 2012

God bless the child that can pay his own way.

Mitt Romney, May 17, 2012: 
“There are 47 percent of the people who will vote for the president no matter what. All right, there are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe that government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you name it. That that's an entitlement. And the government should give it to them. And they will vote for this president no matter what. And I mean, the president starts off with 48, 49, 48—he starts off with a huge number. These are people who pay no income tax. Forty-seven percent of Americans pay no income tax. So our message of low taxes doesn't connect. And he'll be out there talking about tax cuts for the rich. I mean that's what they sell every four years. And so my job is not to worry about those people—I'll never convince them that they should take personal responsibility and care for their lives.”

Bill O'Reilly, November 6, 2012: 
“It’s a changing country, the demographics are changing. It’s not a traditional America anymore, and there are 50 percent of the voting public who want stuff. They want things. And who is going to give them things? President Obama.”

What I found most shocking about these two quotes... and most similar... is the lack of any sort of acknowledgment that people might actually deserve “stuff”. Might actually be “entitled.”

Is it possible that, if you work 60 hours a week, moving constantly, doing the things that other people don't want to do for themselves, stuff that requires lifting belts and work gloves, where you don't get paid vacations or sick days, that you have earned health care, food, and housing? Is that enough for Mitt Romney? Is it enough for Bill O'Reilly?

Here in California, the minimum wage is $8.00/hour. Plenty of really grueling jobs pay that wage. I'm not an accountant, and don't even do my own taxes... but I'll keep things simple. Here's the math for a family of four with one full-time, one part-time job at minimum wage:

60 hours per week x 52 weeks per year x $8.00/hour: $24,960 gross pay possible

...but let's say four days per year, on average, they're too sick to work. Because they're “contractors” instead of full-fledged employees, they don't get paid sick time (it's rampant all over the place... my mother-in-law has been a tech writer “on contract” for the last 13 years). So take off...

8 hours x 4 days x $8.00/hour: $256 so the gross is now $24,704. This assumes no vacation, no taking a morning off to go see their kid's holiday pageant at school, nothing.

But, these are still wages, so in spite of no paid vacation or sick time, they still pay payroll taxes. They're kind of complicated; there's several different ones. At least the $110,000 wage cap for social security deductions doesn't come into play. Here's what your hypothetical family will be paying:

FICA + Medicare: 7.65% of gross pay $24,704 = $1,889.86
Federal Unemployment Insurance: 0.9%* of the first $7,000 = $63
State Disability Insurance: 1.0% of gross pay $24,704 = $247.04
State Unemployment Insurance: 1.5% to 6.2% depending on employer's record; using average 3.85% of first $7,000 = $269.50
There's also an Employment and Training Tax, but it maxes out at $7 and isn't paid by all employers, so I'll just ignore it for now.

* Usually FUI is 0.6%, but California is paying its bills late, so we have to pay more into the Federal system.

The grand total of all wage taxes paid in a year by this family is now $2,469.40. But they haven't paid income taxes yet, so they're still in that 47%.

What do they have left at this point? $22,234.60 per year, for a family of four.

So do they pay income taxes? Well, let's take a look at the standard deductions, and the Child Tax Credit:

This family, assuming they're married, middle-aged, and not blind, qualifies for a standard deduction of $11,600, though there's the whole part about deducting the children and the tax credit. Some sources say such a family gets a total of $15,200 in deductions, which makes their taxable income $7,034.60.

According to the IRS tables for 2011, this family will owe $703 in Federal income taxes. However, since they have two children and make less than $110,000/year, they can claim $2,000 in child tax credits. These are now the tax-free folks who actually get money back from the government after a negative Federal tax bill. They can receive a credit of $1,297, to add to the $22,234.60 they take home.

We haven't even looked at what that $23,531.60 will pay for. This family has no health insurance, no 401(k) or IRA, and has to buy housing, food, transportation, clothing, and utilities. (But we're upset that they might get an Obamaphone.)

Why aren't they working more hours, though? Surely if they worked 80 hours a week, they'd be taxpaying citizens?

A family with two parents who work a total of 60 hours a week can get by without paying for childcare. Once you have two parents working full-time, though, you have to pay someone to care for the kids when they're not in school (if they're not under five and still not eligible for free education... another thing we don't think these people deserve). At minimum wage, the math just doesn't work out. Some families can rely on a grandparent or other relative for childcare, but if this person is not working, the wage-earning family likely is still somewhat responsible for the caregiver's expenses.

But let's say that their local school happens to offer some sort of free after school program, so they can both work 40 hours a week. Or one works 30 and the other works two jobs... somehow they get to 80 hours. They are still not paying taxes. With two children, you need a taxable income of $19,000 or more to exceed the tax credit, and the 80-hour a week minimum wage four-person family is at $14,634.92. Even if they get bumped up to $9/hour and 80 hours/week, they're in the 47%.

All they had to do was back-breaking, often humiliating, sometimes dangerous work, cleaning up after other people, 80 hours a week. And they think that this entitles them to health care, food, and housing? They think that they should have stuff?

In the Republican world, poverty is not just a moral failing. Your economic standing is a measure of your worth as a human being. If you do not already have something, that is sufficient to determine that you are not deserving of that thing. 

Them that's got shall get, them that's not shall lose. So the Bible says, and it still is news.”

Saturday, November 10, 2012

The Invisible Hand is coming to get you!

The Invisible Hand works as well as it ever did... it was always a thought experiment. Adam Smith postulated that the Invisible Hand would act in a self-regulating market in the presence of three things: perfect information, perfect competition, and perfect mobility.

None of those are possible. However, labeling and fraud regulation bring us closer to perfect information. Anti-trust laws bring us closer to perfect competition. Perfect mobility is harder to accomplish through regulation, but the abolishment of Jim Crow laws, redlining, and other such practices that dictated where people could live and do business helped. More recently, the Internet (developed by the Defense Department and a public university) has done much to bring us closer to perfect mobility.

The Invisible Hand was never thought to prevent market fluctuations, though. In fact, Adam Smith and those who study him acknowledge freely that the efficient free market often *does not* address the needs of people. In a free market, those who can't perform will die. This is where the irrationality studied by behavioral economists comes in... we are social creatures, and so there is some "rational" behavior that gets overridden by our survival instincts. We know that if we always work against each other, we'll die. At first, only the weaker ones, but eventually, we will all die off because we fundamentally need each other.

Where the Invisible Hand seems to be failing, it is actually a failure of the very regulations intended to preserve it. Deregulation destroys a self-regulating market, by moving us further from perfect information (like information about what candidates the company donates money to), perfect competition (next I have to explain to the FCC why they shouldn't let AT&T buy T-Mobile), and perfect mobility (so long as we order on Amazon).

Monday, January 02, 2012

Talk is Cheap.

They say talk is cheap. They're right. There's no cheaper way to share information.

We went to the playground yesterday. D4S1* saw two people on the see-saw and said he wished he could teeter a totter. After noting that one of the people on it was a mom-looking person, I suggested he ask if he could join them, as he'd probably be successful. He did, and us parents followed R8S2 over to the track so he could ride his balance bike. We made visual contact every few minutes, but D4S1 is good at hollering if he doesn't think things are right, so he was pretty much on his own.

After a while, R8S2 asked to go play with his big brother. As we approached the zip line area, a woman who I belatedly figured out was the same one from the see saw came up to me and said "I just have to tell you how much fun my son is having playing with yours!" They'd been sticking together ever since the see saw, and having a ball.

We got to talking. I'll call her "Naomi." Her family was visiting from Springfield, Missouri, but she grew up in Orange County. She noted that she'd been homesick the whole last six years since they relocated, and they'd love to come back. We chatted about kids and their personalities, about home prices and their differences, and so on.

She asked about the Rose Parade... they were thinking of going. I couldn't help but share my fortune; I had two grandstand tickets, GREAT seats, and so D4S2 and I would be going. I was looking forward to seeing the Occupy the Rose Parade float.

Blank look. "You know... Occupy Wall Street? Occupy Los Angeles?" Shakes head.

"No... what is that?"

Now, I don't-- didn't, anyway-- consider myself completely disconnected from mainstream culture. Yeah, I make different choices; we don't have TV (we have a TV, which plays DVDs and console games), I don't read a newspaper... I get most of my news from links my friends post, and from my Google News Saved Search for things relevant to homelessness. But it really just floored me: there are still people who don't know that Zucotti Park on Wall Street in New York was occupied around the clock for nearly two full months; that the lawn around Los Angeles City Hall was similarly occupied for two months (starting and ending a couple of weeks later), and that similar protests have happened in cities across the nation.

So... I talked.

I knew little to nothing about this woman's political inclinations, history, background. I had no idea where here sympathies would lie, how her family earned money, what her gut reaction would be. I kept it simple, which is hard; it's complicated. I started with the what: thousands of people setting up camp in public places, in protest of corporate greed, the illegal actions taken by Wall Street firms that precipitated the financial crisis (with no charges filed), the people whose homes have been foreclosed illegally, the aggregation of wealth and political power with the 1%. I mentioned the pepper-sprayed UC Davis students (and even mimed the cop's casual stroll as he sprayed them), but didn't get into Scott Olsen.

Then I mentioned the evictions, the coordination services provided by the Department of Homeland Security, and the next phase, where some people are occupying foreclosed, bank-owned, vacant homes with families who have lost their homes in the financial crisis.

"Wow, I had no idea about any of that! I really need to start reading a newspaper."

And then I got to the really sad part: the newspaper probably wouldn't help much. Where mainstream media *does* cover Occupy, it tends to do so in a somewhat patronizing manner, focusing on things like littering or the homeless moving in, rather than the issues.

[Said in a perfectly reasonable, not at all self-righteous or dismissive, tone] "Well, maybe then these Occupy folks need to get better with the media..."

That's when I explained that they have a lot of people who are pretty good with media... but that there's no way to package this. I pointed out that it's leaderless; that you can't state in succinct, media-friendly soundbites what "the 99%" want. That it's a conglomeration of different ideas and goals and priorities. That it's about being heard, being represented; it's not about picking someone to be in charge and package the message. It's complex, and it has to stay that way, or it stops being what it is.

The boys stopped playing ball with a random family and got on the swings. As we pushed them (these swings are specially designed to be accessible; they're too big and heavy for the kids to swing themselves... which I suspect is why they like them so much), she asked me what I do, and I told her (grant writer for a homeless services agency). She asked me about feeding the homeless, and what I thought about whether it did any good (as a one-time thing). I told her I thought that, if done right, it could serve an important purpose in humanizing people who have felt dehumanized by their day-to-day experience. But on the other hand, hunger sometimes motivates people to connect to services, so isolating feeding people may prolong the time they spend on the street... so it could go either way.

As we headed back over toward the zip line behind our sons, I touched on NDAA and SOPA. She asked what I thought of Obama, and I told her. She confided that she finds herself consciously hiding her political beliefs; she fears what her community's reaction would be if they found out she voted for him. She mentioned religion in a positive light; I recommended The Christian Left, but she wondered what would happen if her neighbors saw she had "liked" it. I gave her some tips on double-talk for those situations ("Oh, I know, but they have some really good Christian messages...") and also mentioned that I have two Facebook accounts: one for work, and one for the rest of my life.

I was so uplifted by our conversation, the ability to share important information about the world with another person, the progress made in that hour... and dismayed by how isolated a person can be thanks to an intolerant community.

So I've decided: I need to talk more. I need to talk about what's going on. I don't need to lecture or advocate or evangelize... I just need to say "This is happening." Then people, like Naomi, at least have an opportunity to make up their own minds about it.

* For the sake of anonymity, I'm not using my children's actual names. I decided to give them codes, like they're Star Wars droids. The first letter is their first initial; the second is the last digit of their birth year; the third is their gender (S for son... it's the same for both, but would be D for any daughters I had in another universe) and the final digit is birth order.

The case for progressive taxation

I commonly hear people talk about how it's unfair when taxes are used to "redistribute" wealth.

I might agree with them, except, it's NOT redistribution. It's creating the infrastructure and resources that enable people to succeed, both modestly and wildly.

Say you have a great idea and some real business talent. You start a company. You get a bank loan; the bank can lend you that money because of the deposits of its other customers, many of whom are individuals saving for college, retirement, or a rainy day. They can save because they make more than they spend... they're middle class.

You hire people. The people you hire are literate and numerate. They know how to operate a computer and how to follow written and verbal instructions. They know how to communicate with their boss and their colleagues clearly and productively.

You buy equipment, much of it expensive. You get a fire/life/safety alarm system that automatically rings the police department or fire department if anything goes wrong.

You contact distributors via phone and email to get them to stock your products.

You manufacture your goods and ship them, via rail, roads, air, or sea. Shipping costs figure into your prices.

You are successful, and you become rich. But you ONLY were able to do it because of public services and infrastructure, including police, fire, schools, roads, rails, airports, sea ports, and everything that provides stability to the middle and working class so that money keeps flowing in the economy.

"Your fair share" of the costs of operating those things is GREATER, because you got MORE benefit out of them. Rather than benefiting just from sending your own kids to public school, you benefited from all the parents of all your employees being able to educate their children for free. You own more capital, so the expenses we have that ensure your capital is secure (fire and police) disproportionately benefit you. You're making heavier use of the transportation infrastructure, and most of that use doesn't include user fees intended to pay the full costs of building or maintaining that infrastructure.

Sad thing is... the elites who succeeded wildly in business used to understand this. When did we forget that stability, infrastructure, and education are requirements for a successful first-world economy?