Torture, economics and animals

First, I've mentioned before that I went through a vegetarian/pescatarian phase. We now eat white meat and fish, simply due to losing the will/interest in maintaining the diet. Also, I gained quite a bit of weight (and muscle mass) when I gave up chicken. Here's an animation that might make one reconsider:


Next, a few points on taxes and economics:

• Pearlstein writes convincingly that, "The old Republican fantasy was that tax cuts were the magic elixir that would solve every problem. Now that the public has finally rejected it, it's disappointing to see Democrats offering up the equally fantastic notion that Americans can have all the government they want while getting someone else to pay for it." He goes through the numbers and shows that all of us are going to have to pony up some more to get the budget in good shape.
• Dean Baker writes, "Too-often ignored, the basic economic principles of marginal-cost pricing and gains from trade have much to offer in the area of health care. They need to be brought into the discussion." Why does running a medical scan that requires a few dollars of electricity and a few hundred dollars of technician and doctor time to run and read (respectively) get billed at thousands upon thousands of dollars?
• Simon Johnson believes politics, rather than pure economics, lay at the foundation of our country's financial woes. "His argument, in a nutshell, is that the last 25 years have seen deregulatory policies driven by the banking interests, leading to an over-large financial sector that has captured the political process. Financiers promoted free-market ideals, served in government, and funneled millions into the political process. Now, the risky behavior of major financial institutions, combined with the public policy they promoted, has created a major crisis. But the bankers' political power hasn't waned, and they are preventing the government from acting aggressively to start recovery." Sounds reasonable to me -- the people with their hands on the levers of power before Obama's inauguration haven't disappeared overnight, and they tend to be disproportionately connected to Wall Street.
  
• Of course, Johnson has his critics (Scheiber), " The logical chain is typically something like: 1.) I've seen corrupt elites prevent governments from resolving financial crises in emerging markets. 2.) The finanical crisis dogging the United States shares some features with emerging-market crises--for example, overleveraged institutions enjoyed an outsize share of corporate profits prior to imploding. 3.) Ergo, it must be the case that corrupt elites are preventing the U.S. government from resolving the crisis. Problem is, the third point doesn't necessarily follow from the second. Logically, it's like saying: 1.) Cancer patients don't get well when they're treated by witch doctors. 2.) The top oncologist at Mass General has lost a few patients lately--some of them inexplicably, under mysterious circumstances. 3.) Ergo, the top oncologist at Mass General was practicing witchcraft. Maybe, but it would be much more persuasive if you could establish causality."
  

Finally, one of my favorite blogs to read for political commentary has an excellent summary of the ineffectiveness and immorality of torture.

Income Inequality in America

Following up on an earlier comment on taxes and teabaggers, I wanted to pass along two charts showing how the historical drop in tax rates on the wealthy has contributed to growing inequality. First, notice the median after-tax income growth in real (2006, inflation-adjusted) dollars for that 27-year span:

As percentage growth:

Paul Krugman wrote in Rolling Stone in 2003,

According to the federal Bureau of Labor Statistics, the hourly wage of the average American non-supervisory worker is actually lower, adjusted for inflation, than it was in 1970. Meanwhile, CEO pay has soared — from less than thirty times the average wage to almost 300 times the typical worker's pay.

The widening gulf between workers and executives is part of a stunning increase in inequality throughout the U.S. economy during the past thirty years. To get a sense of just how dramatic that shift has been, imagine a line of 1,000 people who represent the entire population of America. They are standing in ascending order of income, with the poorest person on the left and the richest person on the right. And their height is proportional to their income — the richer they are, the taller they are.

Start with 1973. If you assume that a height of six feet represents the average income in that year, the person on the far left side of the line — representing those Americans living in extreme poverty — is only sixteen inches tall. By the time you get to the guy at the extreme right, he towers over the line at more than 113 feet.

Now take 2005. The average height has grown from six feet to eight feet, reflecting the modest growth in average incomes over the past generation. And the poorest people on the left side of the line have grown at about the same rate as those near the middle — the gap between the middle class and the poor, in other words, hasn't changed. But people to the right must have been taking some kind of extreme steroids: The guy at the end of the line is now 560 feet tall, almost five times taller than his 1973 counterpart.

Just for s's and g's, I decided to plot Krugman's numbers and make two charts. He didn't give a specific number for the growth in the poor income, so I used the exact same percentage growth to calculate its change as for the median income -- 33% -- because he said "the gap between the middle class and the poor, in other words, hasn't changed":


And in percentage terms:

The takeaway lesson? Rich people's incomes quadrupled during that period in real terms while the rest of us nudged up by a third of their original amount. The old saying, "A rising tide lifts all boats," is true, but a yacht gets lifted about 13 times the amount that a dinghy or life raft does.

Both tax cuts and tax increases represent a "redistribution of wealth" for all earners. The former increases income inequality -- making the rich richer and the poor poorer -- the latter increases employment and opportunity for 99% of us -- decreasing inequality.

Taxes and conservative economics

Following up on my catalog of a few useful links that I have found to be integral to arguing with conservatives about economics, check out this helpful concise set of talking points against conservative rhetoric on taxes from TPM.

Ezra Klein has been on a rampage lately with graphs of taxes and tax burdens, probably due to the approach of April 15 and the (laughable) T.E.A. baggers...

Here are a few great recent posts of his on taxes and economics:

1. America vs. OCED countries on tax share vs. income share
2. State and local taxes
3. Graph of income share / overall tax burden
4. Explication of the "tax share" vs. "tax burden" problem
5. Graph of income share and tax burden with after-tax data
6. Effective federal tax rate versus income bracket graph
   

Also see Leonhardt on marginal tax rates in the NYT:

It’s well known that tax rates on top incomes used to be far higher than they are today. The top marginal rate hovered around 90 percent in the 1940s, ’50s and early ’60s. Reagan ultimately reduced it to 28 percent, and it is now 35 percent. Obama would raise it to 39.6 percent, where it was under Bill Clinton.

What’s much less known is that those old confiscatory rates were not as sweeping as they sound. They applied to only the richest of the rich, because yesterday’s tax code, unlike today’s, had separate marginal tax rates for the truly wealthy and the merely affluent. For a married couple in 1960, for example, the 38 percent tax bracket started at $20,000, which is about $145,000 in today’s terms. The top bracket of 91 percent began at $400,000, which is the equivalent of nearly $3 million now. Some of the old brackets are truly stunning: in 1935, Franklin D. Roosevelt raised the top rate to 79 percent, from 63 percent, and raised the income level that qualified for that rate to $5 million (about $75 million today) from $1 million. As the economist Bruce Bartlett has noted, that 79 percent rate apparently applied to only one person in the entire country, John D. Rockefeller.

Today, by contrast, the very well off and the superwealthy are lumped together. The top bracket last year started at $357,700. Any income above that — whether it was the 400,000th dollar earned by a surgeon or the 40 millionth earned by a Wall Street titan — was taxed the same, at 35 percent. This change is especially striking, because there is so much more income at the top of the distribution now than there was in the past. Today a tax rate for the very top earners would apply to a far larger portion of the nation’s income than it would have years ago.

Here's the catalog of a few useful links:

update: 12/18

Although federal income taxes are progressive (get larger as income gets higher), all taxes do not, and as a share of one's income, the overall amount of taxes paid is fairly flat across all incomes. It literally comes down to a few points difference in total tax burden for people in the 2nd-5th quintiles of income.

Ezra Klein on the changes over time in overall tax burden (graph 1 source, graph 2 source)
Chart showing overall tax burden (CSM)
State and local tax burdens (NSN)
Washington Monthly on overall tax burden
NYT graph on overall tax burden (NYT article)
NYT graph on tax code changes and beneficiaries (NYT article)

11/1

Income inequality under Dems v. GOP (Bartels)
Income inequality under Dems v. GOP (chart, Krugman)
Income inequality under Dems v. GOP (Rolling Stone, Krugman)
Explanation of the causes of the financial crisis (Stiglitz)
The $3T War (Stiglitz)
Overall economic comparison of Dems v. GOP (Slate)
Overall economic comparison of Dems v. GOP (NYT, Alan Blinder)
How the GOP went from a $5.6T surplus to a $3.8T deficit (CBO)