Saturday, August 23, 2008

IOUSA (discussion with DiamondDave)

Category: Issue 13

Burchell: Have you seen the film “IOUSA”?  If so, what did you think?
Scotese: Diamond Dave!
Scotese: Haven’t seen it.
Burchell: hi!
Burchell: give it a look
Burchell: I think you’ll like it
Burchell: We saw it Thurs night in OMA…
Scotese: I was just checking it out.
Burchell: after there was a panel discussion with Pete Peterson, Warren Buffet, and others.
Burchell: That Buffet is one very quotable guy!
Scotese: I have a question.  What is the main thing you do to help solve the problem the movie is about?
Burchell: Buffet’s answer: work up to your full potential
Burchell: so i guess that means I should find a better paying job
Scotese: lol
Burchell: the amount of money one earns is a measure of the amount of value one provides (or so goes the theory)...
Scotese: Actually, it depends on whether you’re supporting the activities that produced the problem, or challenging them.
Burchell: so i suppose i should contribute more.
Burchell: true
Burchell: I’m going to support realistic candidates for office…
Scotese: The activities, as I see it, are spending more than we earn.  But there’s only one institution that does that as a matter of course.
Burchell: however, it takes just the right conditions for the courage to act to take hold, it seems.
Burchell: The thing that suprised me most in that film was how low the national debt was at the end of the Clinton years.
Burchell: I had no idea it had been reduced as much as it had.
Scotese: Apparently, the treasury department is about to bail out Fannie May and Freddie Mac because…
Scotese: China and Russia, together, are owed 46% of the money that those two companies have guaranteed homeowners will pay.
Burchell: Yeah, there is a problem there:
Scotese: But they won’t pay it.
Scotese: So taxpayers will pay it instead.
Burchell: Fannie May is a for-profit company, in which private people invest and reap rewards from the profit…
Burchell: but now that they are in trouble they get a gov’t bailout.  What’s up with that??
Scotese: My 10,000 foot view is that people in power have tapped into “normal” people’s willingness to follow rules like “give us X% of your paycheck”, and that willingness has been converted into a crisis in order to maximize the value of X.
Scotese: In my mind the fundamental problem is that people give up their earnings not only to get what they want (which is good) but also to avoid punishment (which is bad).
Burchell: the trouble is not giving up a percentage of our paychecks.
Burchell: That’s routine.  Nothing wrong with paying taxes.
Scotese: Doesn’t that depend on what the taxes are used for?
Burchell: Like many other things, when used right, taxes are good.
Scotese: Ok.
Burchell: yes, agreed.
Scotese: But then they wouldn’t be taxes.  Not by my measure of what’s right.  If they were used right, they would be payments from willing clients and customers of the government.
Burchell: nope, it doesnt work that way
Scotese: Like how it started in the late 1700s when rich merchants agreed to support our new nation with a 1% tax.
Burchell: For payments (“taxes”) to be optional, benefits must also be optional.
Scotese: Amen.
Scotese: I know it doesn’t work that way.  That’s why it doesn’t work.
Scotese: Have you read anything on mises.org, or heard of Austrian Economics?
Burchell: Can you find a way to protect only those who volenteer to pay from disease?  Then send a bill from the CDC to those individuals?
Burchell: Ooops, you might not like what Warren Buffet has to say…
Burchell: He seems to think that taxes are too low.
Scotese: I know.
Burchell: He seems to like paying taxes, as if it is a small price for living in the USA.
Scotese: A large part of his wealth comes to him because people pay taxes.
Scotese: He’s smart enough to game the system in a perfectly legal manner.
Scotese: I am too, I just feel it’s immoral.
Scotese: I’m getting better though.
Burchell: It would be nice if no one needed to pay taxes, but sadly, we don’t each live on our own island.
Scotese: If I ever encourage or argue for more taxes, it will be because I have lost my faith in general human intelligence.
Burchell: For payments (“taxes”) to be optional, benefits must also be optional.
Scotese: Check out mises.org.  See if Austrian Economics makes any sense to you.
Burchell: sure thing.  But what about opting out of benefits?
Scotese: That’s an excellent idea.
Scotese: choice is the key.
Scotese: Take choice away, and you ruin everything.
Burchell: Ok, so how could you bring choice in?
Scotese: And that is what taxes do.  You can vote however you want, but you still have to pay taxes.
Burchell: right, taxes are (by definition) not optional
Scotese: Respect people’s wishes not to support the various government activities with which they disagree.
Scotese: Do you discourage such people?
Scotese: Or encourage them?
Burchell: Why would they financially support activities with which they agree?
Scotese: You mean disagree?
Burchell: no, agree
Scotese: In order to cause them to happen.
Scotese: Like…
Burchell: Ok, suppose I support government dredging of the harbor to increase trade in my city…
Burchell: Now, I can support this with my contribution, or not.
Scotese: We pay money for bananas, because that way the banana importers have money to import bananas.
Scotese: Yes, that’s great, you get to choose.
Burchell: But, because I don’t want to pay, and I just want the benefit of the better harbor, I enjoy the harbor but skip the payment.
Scotese: Does anyone support it evenn though they don’t want to?
Scotese: Then the dredging project will run out of money.
Burchell: Right, so it will not happen…
Scotese: Yay!
Scotese: Too bad for you though, eh?
Burchell: and well all miss out on the benefit, and we all remain poor.
Scotese: You should have paid.
Scotese: And advertsied.
Scotese: And helped the cause.
Scotese: Live and learn, right?
Scotese: We will miss out on the benefits of the dredging.
Scotese: And we will miss out on the damages of dredging too.
Burchell: Under such a system, the greedy stay wealthy while the generous give their resources away.
Scotese: What about the wise and the foolish?
Scotese: The wise teach the generous to be less foolish.
Scotese: As it is now, they don’t bother.
Scotese: They just sit back and encourage more taxes.
Burchell: The wise support a fair but mandatory taxation system.  The foolish argue for utopian economics in the face of very real looming financial crisis.
Scotese: No education necessary.
Scotese: Utopian meaning the best, or utopian meaning unreasonably optimistic?
Burchell: In this case, I suppose “utopian” means inaccurate or incorrect…
Burchell: because a model of only voluntary payments leaves out the concept of the monopoly or the common.
Scotese: The commons, yeah, as in the tragedy of the commons?
Burchell: yes, but also the triumph
Scotese: What’s that?
Scotese: The triumph of the commons?
Burchell: For example, I was recently in Montreal…
Scotese: Is that a Marxist thing?
Scotese: Socialism?
Burchell: They have a thriving city…
Burchell: at the backbone is an excellent public transit system.
Burchell: If we in the USA, esp. the midwest, used the power of taxes to build more such beneficial public works, we could enjoy a hight standard of living.
Scotese: But we’d have less money to spend.
Scotese: ...and less motivation to figure out how to spend it.
Burchell: Actually, no, we would have more.
Burchell: http://mises.org/ has a lot of stuff.  Can you point me to a starting point?
Scotese: Do you mean using existing taxes, or new taxes?
Scotese: Sure…
Scotese: http://mises.org/austecon.asp
Burchell: Existing or new?  existing I guess, because we have a lot of wastful programs we could get rid of.
Burchell: for example, we could pull out of Iraq
Burchell: save a few bucks
Scotese: Then I totally agree, we’d have more to spend because public works are slightly better than most of what the government does.
Scotese: But…
Burchell: also, the benefits under our social programs need to be reevaluated.
Scotese: If we paid NO taxes, we could never have gone to Iraq.
Scotese: and people would have plenty of money to build private parks.
Scotese: Businesses…
Scotese: campgrounds
Scotese: waterparks.
Scotese: monsateries.
Burchell: If we had no taxes, then how would we fund the triumphant common achievements?
Scotese: soup kitchens.
Scotese: Such as?
Burchell: public transit
Burchell: roads
Burchell: schools
Burchell: that sort of thing
Scotese: Well, look, someone in the City council comes up with a great idea about what to spend taxes on - good - like roads.
Burchell: sure
Scotese: So they have a choice…
Burchell: who?
Scotese: 1) force everyone to pay a certain amount and then try to get it done with what they have taken or…
Burchell: the city has a choice?
Scotese: The city council.
Burchell: oh sorry… ok..
Scotese: or 2) invest in a road in the one spot it would serve the best, and put a toll on it.  If they don’t have enough money themselves, they can advertise the idea.
Scotese: If enough people AGREE that the road is a “good investment” - then it gets built.
Scotese: If not, it doesn’t get built.
Scotese: sky scrapers are a good example.
Burchell: Well, in a way that’s exactly what we do now…
Scotese: Yes, almost.
Scotese: But we remove the choice and…
Burchell: We elect representatives, and they decide for us how to spend (invest) our money.
Scotese: end up with bridges that are rarely used or tunnels that collapse.
Burchell: If enough people think it is a good idea, then the thing gets built.
Scotese: Exactly, but we don’t get to choose which representative decides - or if we want to decide on our own.
Scotese: We are forced to pay them.
Burchell: We have a vote for our representative, that’s why it is called representative democracy.
Scotese: Right.
Burchell: No, we are not forced, we choose which people we elect…
Burchell: and they take our interests into account…
Burchell: and build and tax accordingly.
Scotese: but we still don’t have a choice about where (some of) our hard earned money gets spent.
Scotese: They are people, not angels.
Scotese: We heap upon them far too much responsibility.
Scotese: They can’t help but take advantage.
Burchell: It is not so hard earned. The only reason we have somuch money is because so many money-making things were done by all of us together (as a government).
Scotese: The entire lobbying industry is built upon human self-interest, magnified and perverted by politics.
Burchell: Agreed.
Scotese: It is easier in America to earn money than anywhere else.
Burchell: But it does not follow that a new system will necessarily be better than the present one.
Scotese: That’s not because of taxation, but because the nation was born from a rejection of taxation.
Burchell: No, the nation was born of the rejection of taxation sans representation.
Scotese: Taxes were so low for so long that the engine of the industrial revolution suddenly appeared.
Scotese: That is the way they put it, yes.
Scotese: But what’s the difference?
Burchell: The industrial revolution was spurned by the federal government.
Scotese: It’s ok for you to take my money as long there’s someone arguing against it for me?
Scotese: Spurned?  As is the fed tried to stop it?
Burchell: Uncle Sam ordered rifles from Eli Whitney, who invented the milling machine and an entirely new way to create goods to fill the order!
Scotese: Or do you mean spurred?
Burchell: sorry. not spurned; spurred!!
Burchell: smile
Scotese: no worries.
Burchell: Yes, it is ok for us (not just me i hope!) to take your money if you had the chance to put your vote in to choose a representative.
Scotese: I suppose it was.  A lot of kids who have a friend who is very good at some sport encourage the playing of that sport - especially while on the same team.
Scotese: That says nothing about the skill of the kid.
Burchell: Will you join Warren Buffet and me in demanding that the tax rate on investment income be raised to a more reasonable level?
Burchell: We can’t afford tax policies that drive us, as a nation, into poverty.
Scotese: How many of my friends do I need to agree that you have to give me 30% of your paycheck so I can… ummm… I know, buy you good stuff to read… as long as one of them is YOUR friend, so that you’ll actually pay me?
Scotese: Poverty is not driven by low taxes.  It’s driven by the increasing burden placed on people who create jobs by starting businesses, and by regulation that hampers the starting of businesses.
Burchell: We need higher taxes to ease the burden on innovators and small businesspeople.
Scotese: Higher taxes won’t ease burdens!
Scotese: They will enable invasions of more little countries.
Burchell: As it stands, our crushingly low tax rate on unearned income is discoraging work, innovation, and wealth creation.
Scotese: Unearned?
Scotese: Like what politicians make?
Burchell: well now, we have lower tax rates and higher invasion rates today than we did under Pres. Clinton.  So does that tell us there is a corrolation between the two, or the opposite?
Scotese: Oh you mean people who buy assets that are low in value and then sell them when they are more valuable.
Burchell: Unearned == not worked for
Burchell: Yes, investment is a form of unearned income
Scotese: Correlation, yes, causation, no.
Scotese: I see.  But doesn’t someone need to put their money where their mouth is when they say something is worth more than the current owner is letting it be?
Burchell: huh?
Scotese: Isn’t it important to distinguish between businesses that are crappy and about to fail and those that could benefit many more people?
Scotese: If you buy something and you think its value will go up and you turn out to be right, you’ve helped establish it as valuabl.
Burchell: no, it is important that the government not invest in/support those businesses at all, so people can vote with their dollars to support good businesses and punish bad ones.
Burchell: sure, but i didn’t earn anything,i simply invested.
Burchell: nothing wrong with that.
Scotese: Vote with their dollars as consumers, rather than owners, you mean?
Burchell: investment is good for america, even for americans that do not invest.
Burchell: no, vote both as owners and consumers.
Scotese: If you tax an activity, there will be less of it.
Burchell: well, maybe, if that’s all that happened, but you can’t look at that single thing by itself.
Scotese: But really, if the whole of society should decide how to spend a certain part of your income, shouldn’t you be the one who decides what part that is?
Burchell: no
Scotese: Then who?
Burchell: the whole of society, as you say, should decide that as well.
Burchell: in theory, that’s what we do now.
Scotese: Ok.  You aren’t really socialist, but you’re close.
Burchell: Look: under communism, in theory, the tax rate was 100%.  I think we can agree that this did not work, as incentive for working hard was removed.  Agreed?
Scotese: yep
Burchell: ok
Burchell: so, think of that harbor again…
Scotese: The tea party?
Scotese: Oh the dredging.
Burchell: what incentives do we need to get that project going?
Scotese: Incentives?
Scotese: Knowledge of the future?
Scotese: What if that project is bad?
Scotese: What it…
Scotese: there are smart people who explain that it’s bad and why it’s bad.
Burchell: (the tea party was about taxes imposed by others who were not elected by the people being taxed.  The objection was “taxation without representation”.  Do you agree?)
Scotese: But there are politicians who don’t care because they want to be re-elected?
Scotese: Ok.  Let’s assume the dredging is good.
Scotese: Like… saving your grandma is good.
Burchell: well now hold on… how do you know it is good to save my grandma?
Burchell: Shouldn’t that be my choice?
Burchell: explain why YOU should pay for MY grandma.  Is she as useful as a harbor?
Scotese: So should we A) Ask people for help to do it, showing benefits and offering a piece of the financial benefits that the project will produce for its owners, and thereby get money from the best investors and minds to get it going or…
Scotese: B) Make people pay for it without bothering to convince them that it’s a good idea, so that even the people who say it is NOT a good idea will benefit?
Scotese: We’re just assuming it’s good.
Scotese: Start from the assumption.
Scotese: If we want to revisit the possiblity that it isn’t good, then we need to also revisit the possiblity that dredging isn’t good.
Burchell: The problem with this line of discussion is that there is only one harbor that the entire city shares.  Ergo, no decisions made about the harbor can be isolated to one group of citizens.
Burchell: Because the harbor is a common resources it should be managed collectively.
Scotese: But the whole city shares your grandma too.
Scotese: lol sorry.
Scotese: I meant as a…
Scotese: Soothsayer.
Burchell: Oh, ok, you got me,  grandma did sort of get around in her younger days.
Scotese: She’s a prophet.
Burchell: lol
Scotese: So it is in everyone’s self interest to keep her around.
Scotese: Ok, yeah, I see the common property problem.
Burchell: hey did you just “edit” that?  how did you do that!
Scotese: I have a non-tax, non-government solution for that.
Scotese: Hit the up arrow and you can edit your last message.
Burchell: oh damn!  i didn’t know you could do that!
Scotese: cool
Scotese: very well done.
Burchell: That’s cool!  yay Skype!!
Burchell: LOl
Burchell: LOL!!!  ok now you are patronizing me!
Burchell: Please, also patronize my grandma…
Scotese: Ok, so here’s how we avoid stealing from people, but still get the harbor dredged…
Burchell: she needs the money.
Burchell: stealing?
Burchell: who said anything about stealing?
Scotese: Some people came up with the idea, no?
Burchell: sure, and if they like they can advocate for the idea.
Burchell: (dredging project)
Scotese: Oh sorry.  Taxes & stealing are both taking money from people who wouldn’t give it willingly if they had no fear of punishment.
Scotese: So I use them interchangeably.
Scotese: Ok, so we’ll call them advocates.
Burchell: I find your misuse of the word “stealing” to be disrespectful.
Burchell: You will need to use the terms according to their correct definitions in order to convey accurate meaning.
Burchell: brb
Scotese: I tell my kids that when two or three of them want something they are supposed to share, they can easily figure out who should get it by bidding.  The highest bidder gets it and pays half her bid to each of the other two.  The beauty of this is that I don’t have to be involved.  Of course, if there is lying or cheating or fraud or theft, I would get involved.
Burchell: When you call “taxation” “stealing”, are you lying?
Scotese: no.
Burchell: Ok, are you ignorant of the distinction?
Scotese: no.
Scotese: The disitinction is that taxation is legal.
Scotese: Because it’s legislated.
Scotese: But it’s still taking money from people who wouldn’t give it up willingly if they had no fear of punishment.
Scotese: You could call it legal theft, I guess.
Burchell: Stealing is, by definition, illegal.
Scotese: ok.
Burchell: There is no “legal theft”.  Theft, by definition, is illegal.
Scotese: Do we have a word that just means “taking without being freely given”?
Burchell: Yes, “taxation”.
Burchell: Why not just say “taxation” when you mean “taxation”?
Scotese: So stealing is illegal taxation.
Scotese: That makes sense.
Burchell: No.
Burchell: Stealing is stealing; taxation is taxation.
Scotese: Isn’t stealing “taking without being freely given”
Burchell: No, that’s not what stealing is.
Scotese: Then what is it?
Burchell: What is what?
Scotese: stealing
Burchell: Do you have a dictionary handy?
Scotese: You might diagree with it.
Scotese: I’d rather use your personal definition.
Scotese: to take (the property of another or others) without permission or right, esp. secretly or by force (dictionary.com)
Scotese: So if the legal right is established, it isn’t stealing.
Burchell: The question here is use of the word “stealing” in place of the word “taxation”.  The definition of “stealing” is not what we are talking about.
Scotese: No worries.
Burchell: Unfortunately, I detect that there is a fundamental problem with our discussion.
Scotese: I can stop using it if it makes you uncomfortable.  The distinction in my mind is legislation, and therefore unimportant to me.  I have my own means of determining good and evil.
Scotese: We’ll stick with taxation.
Burchell: You have used inaccurate, explosive rhetoric in the discussion of public policy.
Scotese: I wanted to get back to the dredging anyway.
Burchell: This indicates to me that you are not sincere in the discussion.
Burchell: Are you an anarchist?
Scotese: I am kind of passionate, it’s true.
Scotese: But not insincere.
Scotese: I don’t know what you mean by anarchist.
Burchell: Can you be bothe passionate and accurate?
Scotese: I do my best.
Burchell: When you conflate “stealing” and “taxing” you show that you are not doing your best.
Burchell: You know those two concepts are distinct.
Scotese: I believe in freedom, but not chaos.  I have faith in human intelligence and its ability to organize without force and threats.
Burchell: You confuse the debate by ascribing incorrect definitions to common words.
Scotese: They are not distinct to me, but yes, I know they are distinct to most people.
Burchell: You do not have the option of redefining the English language to suit your whims.
Scotese: It’s a basic principle of Libertarians, isn’t it?  “Taxation is stealing”?
Scotese: http://nothirdsolution.com/2008/02/06/taxation-is-theft/
Burchell: If any political group holds a basic principle that can be easily dismissed as a simple contradiction, then they do not bring useful discussion to the debate.
Scotese: Really?  I always thought that useful discussions could be had with just about anyone.
Scotese: As long as they are willing to answer questions and pay attention…
Scotese: and here’s an argument that says they are different: http://onegoodmove.org/1gm/1gmarchive/2003/01/is_taxation_ste.html
Scotese: Though that second one suggests that as long as the thief leaves you something in return, he’s not stealing.
Scotese: I’ll see if I can find a better one…
Burchell: You are arguing in bad faith
Burchell: You use definitions you know are wrong of common words to polute and confuse the discussion.
Scotese: Pollute?
Scotese: Like Carbon dioxide?
Scotese: It’s what plants breathe.
Scotese: I only mean to suggest that my insinuation about taxes - that the legislation of them is unimportant as far as making them moral - is meant to feed a different kind of thought process.
Scotese: I can see it as pollution too, which is why I agreed to use taxation instead.
Burchell: Why not make your point without using incorrect definitions?
Scotese: OK…
Burchell: So tell me this:
Burchell: Have you considered pushing for lower taxes instead of pushing for no taxes?
Scotese: Ok, so here’s how we avoid taxing people, but still get the harbor dredged…
Scotese: I have considered and rejected it.
Scotese: What is needed is an escrow, and that would cost money.  I propose that the escrow company provides an “Application to Own” which asks for: 1) The escrow fee, 2) Instructions on how to deliver the proceeds of the sale, 3) Ten percent of their bid, and 4) Instructions on how to collect the rest of the bid should they win, and 5) The property the applicant wants to own.  The escrow company could set up “Commons” property auctions to allow for this and provide a website where interested parties could get the application and become bidders.
Burchell: Have you thought about advoating less government spending, starting with the things that clearly are not related to “the public good” or “shared resources”?
Scotese: Yes, I do that all the time.  But I don’t choose what to start with.  Anything would do.
Scotese: This is a way the escrow company can make money by providing a good service.
Scotese: So anyone interested in controlling what happens to the harbor can bid for that control.
Burchell: i’ve got to go… get out of the habit of redefining words to suit your whims and more people might listen to what you have to say
Burchell: catch you later
Scotese: Good night.
Scotese: Hey, can I post this discussion?

Burchell: “I’m sure I sound like a goof in the above discussion, but that’s what I get for starting a flame-off after midnight.  And yes my spelling sux.  Go Warren!!”