“I’m so bored. I hate my life.” - Britney Spears

Das Langweilige ist interessant geworden, weil das Interessante angefangen hat langweilig zu werden. – Thomas Mann

"Never for money/always for love" - The Talking Heads

Wednesday, April 05, 2006

what the coup was for

From David Kay Johnston’s excellent article in today’s NYT, an analysis of the last round of Bush tax cuts found:

Among taxpayers with incomes greater than $10 million, the amount by which their investment tax bill was reduced averaged about $500,000 in 2003, and total tax savings, which included the two Bush tax cuts on compensation, nearly doubled, to slightly more than $1 million.

These taxpayers, whose average income was $26 million, paid about the same share of their income in income taxes as those making $200,000 to $500,000 because of the lowered rates on investment income.

Americans with annual incomes of $1 million or more, about one-tenth of 1 percent all taxpayers, reaped 43 percent of all the savings on investment taxes in 2003. The savings for these taxpayers averaged about $41,400 each. By comparison, these same Americans received less than 10 percent of the savings from the other Bush tax cuts, which applied primarily to wages, though that share is expected to grow in coming years. “

The conservative reaction to this is hilarious:

“The Times showed the new numbers to people on various sides of the debate over tax cuts. Stephen J. Entin, president of the Institute for Research on the Economics of Taxation, a Washington organization, and other supporters of the cuts said they did not go far enough because the more money the wealthiest had to invest, the more would go to investments that produce jobs. For investment income, Mr. Entin said, "the proper tax rate would be zero."

As the beast slouches towards Bethlehem, it is nice to know that it has handlers like Mr. Entin, who claim that the beast is hungry, and needs more of the planet to process through its delicate bowels. Or, in Maria Antoinette speak: let them eat shit.

Of course, the proper response is not just to close down the Bush giveaway, but to take that money back – raising tax rates on the wealthy by twenty to thirty percent to start with. Tax rates aren’t only about revenue, but they counter the Matthew effect - that is, the mechanism of cumulative advantage, defined by Robert K. Merton in a famous paper like this:

“…cumulative advantage, applied to the domain of science, refers to the social processes through which various kinds of opportunities for scientific inquiry as well as the subsequent symbolic and material rewards for the results of that inquiry tend to accumulate for individual practitioners of science, as they do also for organizations engaged in scientific work. The concept of cumulative advantage directs our attention to the ways in which initial comparative advantages of trained capacity, structural location, and available resources make for successive increments of advantage such that the gaps between the haves and the have-nots in science (as in other domains of social life) widen until dampened by countervailing processes.” Merton named this the Matthew effect after the passage in the Gospel in which our Lord said: “For unto everyone that hath shall be given, and he shall have abundance; but from him that hath not shall be taken away even that which he hath.”

In a footnote, Merton quotes a Bible scholar who says that Jesus was showing his usual Tolstoy peasant shrewdness here:

“Most recently, I am indebted to M. de Jonge, professor of theology at the University of Leyden, … He notes further that “it is highly likely that [Jesus] took over a general saying, current in Jewish (and/or Hellenistic) Wisdom circles - see, e.g., Proverbs 9:9, Daniel 2:21, or Martialis, Epigr. V 81: ‘Semper pauper ens, si pauper es, Aemiliane. Dantur opes nullis [nunc] nisi divitibus.’ “And de Jonge concludes: “The use made of this sentence [in Matthew] by modern authors neglects the eschatological thrust inherent in the saying in all versions, and (in all probability) in Jesus’s own version of it. It links up, however, with the Wisdom-saying taken over by Jesus: ‘Look around you and see what happens: If you have something, you get more; if you have not a penny, they will take from you the little you have.’” M. de Jonge, summary of lecture, “The Matthew Effect,” 24 July 1987.”

As the rich get richer, opportunities to get rich, or to advance socially in general, get filled in; in a democracy, countervailing processes must be cyclically reactivated in order to break up entrenched momentary structures of advantage, lest these structures harden into chronic anti-democratic tendencies. In the U.S., the countervailing process has generally been growth – yet we have seen years, now, of productivity gains that have gone almost wholly to the top income level. This is definitely a flashing red light. And as we have seen with Katerina, the bankruptcy bill, the looting of Iraq, and the string of criminal capers for which the Bush gang will live in infamy, if you have not a penny, they will indeed take from you what little you have. Greed, in the Bush system, is not a vice but a systematic necessity – for the concentration of wealth in a period in which the Matthew effect is fed by a corrupt and compliant government means that you have to pick the pockets of the very poorest to keep up. The government is the best instrument to do that. Thus, the alliance of big business and big government produces round after round of oppressive, expropriative laws aimed at the working class.

ps Also see David Leonhart on the end of “fordism” – the NYT Biz section today is kicking. Here are the nut grafs.

"One's own employees ought to be one's own best customers," Mr. Ford said years later. "Paying high wages," he concluded, "is behind the prosperity of this country."
This turned into a pillar of 20th-century economic wisdom. It's time to ask, though, whether Mr. Ford's big idea is as ill suited to this century as his car company seems to be.

By any reasonable standard, the last few years have been bad ones for most people's paychecks. The average hourly wage of rank-and-file workers — a group that makes up 80 percent of the work force — is slightly lower than it was four years ago, once inflation is taken into account. That's right: Most Americans have taken a pay cut since 2002.

But you would never know it by looking at the headline numbers on economic growth. From the standpoint of the broad national economy — the value of the goods and services the country produces — the last few years have been stellar. Despite two wars, soaring oil prices and business scandals, the economy has been growing more than 3 percent a year.

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