Should we "Redistribute the Wealth"?

So Barack Obama made what is probably the biggest error in his campaign when, just before the final presidential debate he told "Joe the Plumber" that his tax policy will "redistribute the wealth." Or words that John McCain took to that effect.

But why shouldn't we redistribute the wealth? Sure, this is a militantly capitalist country that is supposed to bow at the altar of unfettered markets. But we still need some government, do we not? Some services are provided for the public good, to the benefit of civilization. Roads, for example. Public safety, for another. Most would agree that public education is a good thing, and some would argue for expanded publicly-funded healthcare beyond Medicare and Medicaid.

OK then, why should the wealthy pay a higher percentage of their income in taxes than do the poor?

The most compelling case, in my opinion, is that unfettered capitalism has created a schism between the rich and the poor, and that it is the oppression of the poor by the wealthy that has driven the poor to need more governmental services.

Business owners move jobs overseas to take advantage of cheaper labor. Employees are put out of work, and put in greater need of assistance, in hopes of boosting corporate profits. If the government is taking on more responsibility while corporations and their executives are getting richer, should the rich not assume a greater portion of the tax burden?

Likewise, many corporations, among them "big box" retailers, keep a part-time work force in order to avoid providing health benefits to their employees. These employees are forced to postpone health care services, which invariably increases the cost, and rely on medicaid or charity care when they do seek services. Shouldn't those who send employees into the arms of the government in order to increase their own profits ultimately be held to pay for the increased cost of providing those services?

The basic tenet of Republican economic policy is that allowing the wealthy to keep their earnings will spur investment in the economy. This will result in job creation and a "trickle down" of wealth to the poor and middle class. The problem? It doesn't work that way. The wealthy keep their money to themselves. Today we see the widest earnings gap that we've seen in 100 years - since before any sort of labor protections were put in place. Today, after 8 years of the Bush Administration, the economy is in the worst shape that it's been in since 1992. Coincidentally, 1992 was the end of 12 years of the Reagan/Bush policy of promoting "trickle down" economics.

Wealth does not trickle down. Providing tax breaks to the wealthy is nothing short of class warfare.

So yes, we must redistribute the wealth. If business owners are rewarded for cutting jobs and wages, that is exactly what they will do in a market-based economy. If jobs and wages are cut, the economy will stall and more people will be looking for government assistance. Therefore tax policy must penalize those who would unfairly benefit.

But perhaps it's more simple than that. On The Daily Show, John Stewart was much more concise. He pointed out that the Bush administration tax policy were effective in "redistributing wealth" from the poor to the very rich. Obama's policy would simply start to bring things back to where they were under the Clinton administration.

By all means, lets have the rich pay a greater share of the tax burden.

Oh, and by the way

Of course we're in a recession.

A recession, by definition, occurs when the economy slows down. In other words, less money is being spent today than was spent yesterday.

So look at the facts:

1) Recent economic growth was spurred by ballooning consumer debt. In other words, we were buying things with money that we don't have.

2) Lending money to people who don't have any money and expecting it to be repaid with interest, carries a fair amount of risk.

3) Banks need to grow revenues in order to appease shareholders, meaning they needed to find more consumers to whom they could extend credit. Since they'd already lent to the strong customers, now they needed to lend to those with less financial security. This adds risk.

4) Eventually all that risk came back to bite the banks in the ass, and the loans stop being repaid, creating losses.

5) Shareholders don't like losses, therefore the banks needed to stop the losses. This was done by no longer extending risky credit.

6) Consumers now have less access to money that they don't have, (and besides, with rising unemployment and falling 401(k)'s, now seems like a good time to hang on to cash), therefore they are buying less things.

7) Ergo, we're in a recession.

But don't worry. Soon enough people will have contracted their household spending to more manageable levels, then they will start spending more. Spending doesn't have to grow by a lot to get out of a recession, it just has to grow. That's why these things usually only last a few months.

For a somewhat less rosy outlook on the future of the US economy, check out this article in the fall issue of the secessionist rag, the Vermont Commons.

Hey, this is the second post of the evening. (Better than watching the Sox right now. EDIT - Spoke too soon!) Keep reading!

FiveThirtyEight.com

I have another blog, where I (used to?) write about baseball. Anybody who has read the SeaBlog realizes that I really love statistics. One of the baseball analysis sites that I really like is BaseballProspectus.com, with its best-in-the-business player performance projection system, named PECOTA.

Well, PECOTA creator Nate Silver has turned his projecting genius to politics. The results of his labors can be found at the delicious FiveThirtyEight.com. 538 (representing the total electoral votes available in the presidential election) arrives rife with colorful maps, charts and graphs. But data on it's own is dry and can be overwhelming and inaccessible. Luckily, Nate and crew accompany the data with well-written insight and analysis. The 538 formula proved to be Best In Show for the primary season, and it looks real strong for the Presidential race. Barack Obama is currently installed as a 19:1 favorite to take the White House in a couple of weeks.

Reading 538, I was directed to the Tax Cut Calculator at AlchemyToday.com. The methodology is very transparent, and it shows that, despite the McCain rhetoric, most of us will be better off under Obama's proposed tax plan. So we can all breathe easier. Even Joe the Plumber, who it might be added is in no danger of making $250,000 annually at the moment.

Tell Me They're Joking, Part II

Wha...whaaaaaaattt?

They're effing kidding, right?

The great State of Alaska (aka The Russian Front) launched an investigation into whether or not Governor Sarah Palin abused her power in having her ex-brother-in-law fired from his State Trooper position. The report issued today concludes that she did just that.

However, to nip that little problem in the bud, the McCain campaign issued its own report that proved, without a shadow of a doubt, that Palin acted ethically throughout.

Trying to head off a potentially embarrassing state ethics report on GOP vice presidential nominee Sarah Palin, campaign officials released their own report Thursday that clears her of any wrongdoing.

Excuse me? Can you really do that? Can you really just issue your own report clearing yourself of wrongdoing on a controversial issue? I suppose if you can show that the report was prepared by a truly impartial party.

McCain spokesman Taylor Griffin, who distributed the campaign's report, said it was written by the McCain-Palin campaign staff and based on public filings and Todd Palin's affidavit.

OK, so much for that. No conflicts of interest there!

Just how stupid do they think we are?