Feeds:
Posts
Comments

Archive for the ‘Politics’ Category

[Really? Another blog post about politics?]

I’ve written previously about how tax cuts don’t lead to economic prosperity the way that some politicians think they do. And yet here we are, the Republican-controlled House of Representatives has passed a tax “reform” package that has mostly tax cuts, and the Republican-controlled Senate is trying to do the same thing. Various analyses of these two tax packages mostly conclude the following:

  • The average person on the street will see little benefit, perhaps a couple of hundred dollars, up to maybe a couple of thousand dollars for people making ~$150,000/year
  • The people at the very top, in the top 0.1%, will see big savings in the many tens, or even hundreds, of thousands
  • Corporations will save lots and lots of money
  • In 10 years, most people will see their taxes go up
  • The federal deficit will increase as a result of these tax cuts

Given all these negatives, we have to ask the question: Why are Republicans trying so hard to pass these tax cuts?

Way back in 2015 when President Trump was campaigning, and then all throughout 2016 and the first part of 2017, one of his mantras was “Drain the swamp!” There are various interpretations of what this means, but basically it’s about preventing lobbyists and special interests from buying politicians’ votes, and instead acting in the interest of the average American citizen. During the debates, then-candidate Trump would say he would do this all the time. When he needed a favor, he’d call up a politician and promise a campaign donation. Some people (erroneously) thought that a President Trump would curtail this if he got elected.

And so to answer the question of why Republicans are trying so hard to pass these tax cuts, the answer is simple: it’s not because it benefits the average citizen, but because politicians are trying to please their donors. For you see, it’s wealthy donors that are pushing for tax reform (that is, tax cuts). They are wealthy, and want to see their taxes reduced even though they are doing just fine. They are pressuring lawmakers with the threat of withholding campaign contributions. Whether they truly believe that it would help economic growth (most economists don’t think so), or they are trying to starve the government of funding and thereby force cuts to services (resulting in average citizens paying more), it’s not in the interest of the average American citizen to get a tax cut. After all, they barely get anything.

Maybe if the 0.1% does indeed re-invest the money, there could be a trickle down effect. But for a tax cut to be stimulative, it has to expand the consumer class. A few hundred dollars for most consumers who will have to pay for services they didn’t normally pay for does not expand the consumer class, since it doesn’t expand domestic demand.

The swamp is doing just fine; they will be the ones to benefit most from these tax cuts. Like most of President Trump’s promises during the campaign, this one appears to be as fictitious as the rest of them.

Advertisements

Read Full Post »

Here we are, another day with another piece of evidence that President Trump is a… sub-par President.

I could point to any number of things, but today I’m going to pick on his response to the allegations of child molestation of Alabama Senate candidate Roy Moore. Or rather, his lack of response.

The background to the latest example

In case you’ve been living under a rock, or not following US politics, Roy Moore is the former judge in Alabama who had a monument of the Ten Commandments placed outside his courthouse. He was eventually told to take it down (you can’t put a symbol establishing preferences for one religion over another in the United States federal building, it is unconstitutional because the the US constitution prohibits favoritism on the basis of religion). He eventually lost his position as a judge and got kicked off the bench.

But that wasn’t the end of his career. For you see, after Alabama’s Senator Jeff Sessions left his seat to become the Attorney General of the United States under President Trump, the governor of Alabama appointed someone else (Luthor Strange) to fill the vacant Senate seat until the next election which would be held on Dec 12. Luthor Strange was the incumbent, but he had to win a Republican primary first, and then win in the general election to officially take the Senate Seat. And that’s where Roy Moore comes in. Moore ran against Strange in the primary and won. So, he’s now the Republican candidate to become the senator of Alabama in a special election on Dec 12, squaring off against a former prosecutor running for the Democrats, Doug Jones.

Roy Moore was all positioned to win the election because Alabama elects Republicans. However, a couple of weeks ago, numerous reports of Moore committing sexual assault 35-40 years ago against underage girls began to surface. This happened while he was in his 30’s and was the District Attorney. Allegedly, he was well-known for dating teenage girls, was banned from a shopping mall for hanging out around there (as well as high-schools), and allegedly groped not just one girl, but so far six (!) have come forward. One was as young as 14 years old when the incident occurred. Moore has tried hard to deny the allegations as fake news, except that one of the women has his signature in her high school yearbook.

My view of Roy Moore is that he is an extremist (his political views are to the far right) and he is endorsed by far right publications. I never wanted him to win anything. Yet now I am disgusted by the reports of child molestation. That should disqualify him from office; and while I understand that these allegations are unproven, there are six different women and this shows a consistent pattern of abuse. It’s not fake news, it’s sexual abuse.

The background to the background of the latest example

That’s what gives these allegations authenticity, these types of abuse are never just an isolated pattern, instead they come up over and over again. I can think of countless examples of this over the years:

What’s in common here is that this behavior (unsurprisingly) was going down for decades and was overlooked, but now that it’s come to light, the perpetrators are paying the price. Not necessarily with legal trouble, but at least with career trouble and massive hits to their reputation.

It’s a big problem in politics, too

Hollywood is not the only place where this has gone down. But at least in Hollywood, actors are paying for their sins.

When it comes to politics, many powerful men have almost managed to squelch allegations of sexual assault. Fortunately, they failed:

  • Just this past year, the popular mayor of Seattle Ed Murray, who is openly gay, was positioned to be easily re-elected. However, reports started surfacing this year that back in the 1980’s when he was a youth worker (also in his 30’s, the same as Roy Moore), he committed sexual assault against troubled youth. Murray denied the allegations and that they were politically motivated, but more and more reports kept coming forward. Eventually the political pressure was too heavy and Murray stepped down, and did he did not run for re-election.
    .
  • For me, the coup-de-grace is Dominique Strauss-Kahn. You won’t remember this, but I sure do. Strauss-Kahn is the former head of the International Monetary Fund (IMF), and he was based in New York City. A few years ago, the state of New York was trying to prosecute him for the rape of a maid (an immigrant) in a hotel. They were set to take him to court when a couple of days before the trial began, it fell apart and never proceeded. I never found out what happened, but my guess is that he did it and paid off the woman so she would drop her claims and refuse to testify.That wasn’t the end of his career, though. He started to move up in the circles but a year or two later, he was busted again for taking part in a prostitution ring, and was known for having wild sex parties. He never was convicted of anything (he admitted he had a strong sex drive) but that seems to be the end of his career. For now, I guess.
    .
  • Where this hits closer to home for me is that way back in 1993, while I was still living in Canada, my parents were involved in the Reform Party. The Reform Party was a right-wing party based in western Canada that was effectively a protest party. The local candidate was Terry Lewis, and he was a Christian. My parents supported him. He ran (and lost) in 1993, and ran again (and lost again) in 1997.Several years later, he was convicted of sexual assault which he committed against a teen boy in the 1970’s, again while he was a youth worker (in his 30’s, just like Roy Moore). He was convicted of a second case a few years ago.When my parents found out about this the first time, they were angry and disgusted that he did these acts. I give my parents credit, they never would have supported Lewis had they known that this was in his background.

So you see, sexual assault by men in positions of power, whether it is in Hollywood or in politics, is common. And it’s also serial, they rarely do it only one time. That’s what I think gives reports against Roy Moore credibility – that there’s so many.

The famous counter-example

But serially abusing men don’t always get their comeuppance, and the most obvious example is Donald Trump. In 2016, at least eight different women came forward and alleged that he sexually assaulted or groped them. At the time, candidate Trump said all eight of them were lying, a claim he still makes today. He was also caught on audiotape making “locker room talk” about women, but dismissed it as nothing more than men making off-the-cuff remarks about their sexual prowess (and that it was not at all a reflection of his character and his views towards women, relative to his own position of power).

President Trump got away with it; and unlike my parents who turned on Lewis even though they agreed with his politics, Trump’s supporters did not turn on him because they agreed with his politics, and they still haven’t. Likewise, Roy Moore’s supporters have not turned on him because they agree with his politics. Apparently, to Moore’s supporters, you can be a child molester so long as you espouse the right political and religious beliefs. If you do that, you get a free pass and anything wrong you do is dismissed as fake news.

When I was on a jury earlier this year, the case was about sexual assault. During the jury selection process, the lawyers are allowed to ask the potential jurors questions in order to kick them out of the jury pool in order for their client to get a fair trial (or the prosecutor get rid of any lunatics). I forget which lawyer asked it, but he asked the women in the audience how many of them had ever been a victim of sexual assault. Many raised their hands, and I tried to do a quick count. I estimated that somewhere between 20-25% of the women in the room had raised their hands. Some even spoke about their experiences.

So as you can see, this country has a problem with sexual assault committed by men, and many women don’t bring their stories forward out of fear, shame, and the feeling of powerlessness. Being accused of lying, and of participating in fake news, doesn’t help and makes the problem worse because it scares victims into staying silent. Furthermore, seeing the perpetrators (like then-candidate Trump) get away with it is even worse because it sends a social signal that it’s possible to get away with it under certain circumstances. People watch for these social signals, and if Roy Moore gets away with it, then others will figure out that you can get away with anything if you subscribe to extreme politics but indicate you’re on the side of a certain group.

Thought Bubble

Before, I continue, let me go to the thought bubble. I’ve listened to the radio about why Moore’s supporters haven’t abandoned him. Some think the accusations are fake news, others will vote for him even if the allegations are true because they won’t vote for a Democrat, but the one that makes me roll my eyes the most are because Christians have the concept of forgiveness. You may have committed some evil acts, but forgiveness is available to you. Redemption is a common biblical theme.

I get that, and it’s a great concept. However, it’s entirely dependent upon your coming clean, confessing, and repenting. In other words, you must admit your guilt and promise to turn around, and actually turn around.

Roy Moore has not gotten past that first step – he hasn’t admitted what he has done, so I can’t see how forgiveness should be extended to him. Indeed, by refusing to admit what he has done (allegedly), he is making the situation even worse by indicating to future victims that their stories will not be believed.

Thanks Thought Bubble.

Finally getting back to the hypocrisy

With all that in mind, let’s turn our attention back to President Trump. When the news broke about Moore’s allegations, President Trump was silent. He didn’t say anything. No urges about showing caution, no threats that these better not be true, just a simple “I haven’t studied it, we’ll have to see what happens.” He was exercising caution, a character trait President Trump doesn’t actually have.

Yet in the past week, Senator Al Franken, a Democrat out of Minnesota (the same Al Franken known for playing Stuart Smalley on Saturday Night Live) had his own sexual assault allegations makes the news. During a USO comedy tour back in 2006 before he was a Senator, he took a picture with his hands on the boobs of a female colleague while she was asleep (she was wearing body armor underneath military fatigue). Franken apologized for an unfunny joke and called for an Ethics Panel investigation into his own behavior.

While Franken is not the biggest thorn in Trump’s side, he’s been very vocal about sexual assault. And now this image has been circulating on social media. Like clockwork, President Trump rage-tweeted about Franken, calling his behavior inappropriate. “And what about the (non-existent) even worse images in photos 2, 3, 4, 5, 6, and 7!?!?”

Seriously?

The sheer size and scope of the hypocrisy of this tweet floors me. This is a man who committed sexual assault against numerous women, calls them all liars, and propagates the problem forward by sending signals to others they will not be believed even if they do come forward. He said nothing to the allegations of sexual assault allegations against Roy Moore, even though other Republican leaders have condemned the behavior (for their own political reasons, of course) [2].

But the reason that President Trump condemns Franken is not because he is actually disgusted by Franken. Instead, it’s because he knows where his bread is buttered. Donald Trump always courts the extreme right-wing base of the Republican party. He eggs them on all the time, and exploits their support. That’s why he wouldn’t condemn David Duke (the alleged leader of the KKK), why he wouldn’t condemn neo-Nazis, and why he wouldn’t say anything about gun control even after the Las Vegas, Texas, and California mass shootings which have occurred in the past few weeks. It’s because there are too many far-right extremists that are part of that voting bloc, and he needs to shore them up regardless of whether or not they are harming the country.

I know that not everyone who supports Trump is far-right, or an extremist. But many, many do and President Trump is pandering to them.

So, the President condemns Franken because Franken is a Democrat; he doesn’t condemn Moore because Moore’s politics are extreme but align with Trump’s base.

That is the reason why President Trump does what he does.

He is not showing any type of moral leadership, but instead is exploiting divisions in the country to firm up his support [2].

And I predict he’ll do this over and over. When a white male commits a mass shooting, President Trump will be silent because gun control is a pet issue for many in his base and he won’t risk alienating them. But if a Muslim rents a truck and drives over people in New York, he’ll be tweeting about it within minutes, about how we need extreme vetting, because many in his base don’t like or trust Muslims anyhow [3].

And on and on it goes. And will continue to go until he either loses the next election, or is impeached (probably because of his dealings with Russia, although I think that is a long shot, perhaps 20% chance of success). The hypocrisy of calling out one set of behaviors when it is politically advantageous, and not calling out another – even when the other he is not calling out causes more harm – is not going to stop.

And I think that is damaging the country.


 

Update three days after I wrote this post

And just like that, we’re seeing the behavior of how politics overrides personal ethic.

1. The most disappointing example is Franklin Graham, the son of American evangelist Billy Graham and the person in charge of Samaritan’s Purse, a Christian charitable organization that runs Operation Christmas child. My wife and I have donated to this organization in the past, so it’s such a depressing example of how leaders in the church should know better, but don’t.

Franklin Graham posted this on Twitter in response to the coverage of Roy Moore:

Did you notice the “What about-ism?” This happens when you say “This guy is bad, but what about this other person who is bad?” This is a diversion tactic that you engage in when you can’t defend something or someone, so you try to shift the discussion over to something else which you can personally attack. It is a tacit admission that you lost that battle, so you try to engage in something you can win.

What-about-ism is used by the Trump administration all the time, and the media falls for it. They get into a discussion about other things, chasing the rabbit trail. But it’s a ruse, a canard. Regardless of whether or not that other thing is bad, we are discussing this thing right now.

Franklin Graham ought to know better. Yes, other politicians in Washington are bad, but right now we’re discussing Roy Moore and his sexual assaulting of underage girls. Don’t try to change the discussion just because you’re a conservative Republican and you think Roy Moore will support the policies you want him to support. I thought Franklin Graham ought to show some leadership by showing he has some skin in the game, and would denounce someone who has shown immoral behavior. I guess I was wrong about that.

2. Unsurprisingly, President Trump has endorsed Roy Moore. From The Hill:

President Trump on Tuesday appeared to throw his support behind Roy Moore (R) despite the allegations of sexual misconduct against the Alabama Senate candidate.

We don’t need a liberal person in there, a Democrat,” Trump told reporters on the South Lawn of the White House.

The president slammed the record of Moore’s Democratic opponent, Doug Jones, saying “it’s terrible on crime, it’s terrible on the border, it’s terrible on the military.”

Trump declined to say whether he believes the accusations against Moore, but stressed that the former judge has denied them. “He denies it. He totally denies it,” Trump said, noting the alleged incidents took place about 40 years ago. “Roy Moore denies it — that’s all I can say.”

As I explained above, it’s not surprising that President Trump would employ this tactic, he only speaks to his base and pushes policies for his extreme base. Roy Moore is part of it, and there’s no way Trump will abandon him no matter how bad Moore is, because…

3. The Hill also reports that Moore and his Democratic opponent are in a statistical dead heat, with Moore still slight ahead:

According to the Raycom News Network poll, 45 percent of respondents believe some or all of the allegations against Moore, while 34 percent said they don’t believe any of the accusations.

Twenty-one percent said they believe some or all of the allegations, but that it won’t change their vote.

Did you see that? 1 out of 5 voters believe the allegations of sexual assault are true, but still will vote for Moore anyway (I haven’t checked to see if those are all Moore voters, or split, or all Jones voters). This underscores my disgust that all you have to do is subscribe to extreme beliefs and signal to your extreme base that you’re on their side, and they’ll give you carte blanche to do anything you want so long as you vote their way when in power. Your moral character means nothing (and that’s what irks me about Franklin Graham, he should know better).

This sends a bad signal to everyone else who might be so inclined to abandon politicians who do grossly immoral things. If Side A (Republicans) won’t do it, or won’t do it in enough numbers to matter, than what motivation do Democrats have to abandon, say, Al Franken? It amounts to a unilateral disarmament. Votes can do the game theory, and abandoning their guy but knowing the other side won’t abandon theirs means that you either accept the other guy, or you stick by your own no matter how bad he is.

I know national politics is a blood sport, but this is starting to feel really slimy.


Addendum

[1] Some leaders in the Republican party have said they believe the women, and that Moore should drop out. I think they are saying this because it’s politically expedient. The Republicans are establishment Republicans, and Moore is an extremist outside that. They want Moore to drop out because they don’t want the problem that Moore would have brought to the party in power, even outside of these allegations.

Yet, because of my disgust of Moore, I have to align myself with Republican Congressional leadership, even if I understand that they’re only doing it because it aligns with their own best interests, and not because they are showing any moral leadership.

[2] This goes to what Nassim Taleb describes as having skin-in-the-game. If you don’t have skin-in-the-game, your opinion shouldn’t be taken seriously. For example, during the financial crisis, maybe Wall Street managers were criticized for taking on excessive risk and destabilizing the system, yet still profiting handsomely. They had no downside, only upside. They had no skin-in-the-game.

When President Trump refuses to criticize Ray Moore, it’s because he knows he might alienate his base if he does, even though charges of child molestation are serious. When he does criticize Al Franken (even though he himself has done far worse things), it’s because his base is fully on-board with him criticizing Democrats and there’s no downside for him. Democrats won’t vote for him, and he can shore up support within his base.

Thus, President Trump has demonstrated he has no skin-in-the-game when it comes to showing moral leadership, he only panders to his base.

It’s when you do things for which you might suffer adverse consequences that you should be taken seriously.

[3] The message coming out of the White House is that the reason the President has criticized Franken is because he admitted it, whereas neither President Trump nor Roy Moore admitted to these allegations.

Moore hasn’t admitted it because it would probably be political suicide. President Trump… probably can’t remember that he did it, or does remember but has convinced himself that it was perfectly okay.

But in either case, it sends a bad signal: rather than admitting when you’ve done wrong, deny it forever. Even if it results in long-term damage to real victims of sexual assault.

Read Full Post »

Tax cuts, growth, and wealth

The allure of economic growth

I was listening to NPR on the way home from work, and they were talking about tax reform. Now that Trump and the Democrats have cut a deal on protecting DACA people (those people who were illegally brought to the United States by their parents), the president is moving on to tax reform.

Oh, boy, here we go again.

President Trump is trying to drop the corporate tax rate from 35% to 15%. The idea is that because big corporations are holding so much overseas because of the high tax rate, they’ll be incentivized to bring it back if they only lose 15% instead of 35%. And when they bring all that money back, they’ll invest it into the economy and create more jobs, or at least increase the wages of their workers.

Tax cuts for corporations aren’t that popular among Democrats, but I guess the idea is that since Trump gave the Democrats protection for DACA recipients (including no building or funding of a giant [idiotic] wall on the border), they’ll reciprocate and give him some tax cuts which are always popular with Democrats.


But will it even work?

I wrote about how tax cuts don’t deliver the intended returns people think they do compared to a tax cut. TL;DR: they don’t expand the consumer class. Yet in the interviews with various officials in government leadership, people have asked how a drop in revenue in taxes from corporations and also people (you don’t get tax cuts from Republicans unless they go to wealthy people) will not increase the federal budget deficit.

And once again, the myth of economic growth comes into play. “We can afford tax cuts because it’ll grow the economy, from 2% to 3%. The tax cuts will pay for themselves; growth covers a multitude of sins. And if we can grow from 2% to 4%, wow! It’ll cover every sin!”

The problem, of course, is tax cuts don’t deliver the economic growth promised. To get that kind of growth, productivity would have to increase by 50%. Furthermore, in the past, when the corporate tax rate was temporarily lowered, companies didn’t bring back the money and use it to expand their businesses (thereby boosting productivity), they use it to pay dividends to their investors, or buy back stock (which decreases supply of the stock in the market, thereby boosting demand and increasing its price). In neither case are they increasing production, but instead giving money back to the shareholders.

 
How it affects me, and how it can affect others

As someone who has a good chunk of money in stocks and receives money in dividends, this is good for me. But I am under no illusion that this will increase the economy. Instead, it will increase the deficit and in order to maintain services, the government will have to borrow more money, which will cause the Federal Reserve to print more money, which will lead to inflation. Inflation helps the wealthy, particularly those owning real estate, but it degrades the buying power of the working and middle class if wages don’t keep pace with inflation.

The counter-argument is “Lots of Americans own homes! Inflation will help drive up their personal wealth!”

To which I say “Poppycock!”

Your home going up in value only helps you if want to sell it, otherwise it just increases your property taxes. And if you sell, it only helps you if you move to someplace cheaper and pocket the money. Most adults have to move into bigger places as their family expands, and it just costs more to maintain a bigger place. It only helps you if you want to downsize, and most people only downsize as they get older and their family moves out. But by that time they are spending more on healthcare costs.

Furthermore, growth in real estate isn’t that big a deal for most people. Unless you live in a city that has high rates of property appreciation like Seattle, Los Angeles, San Francisco, New York, Boston, and a handful of other urban areas, real estate as an investment is a pretty lousy one. It returns perhaps 0.2% per year after inflation. But inflation does erode your buying power if wages aren’t keeping up.

But wait! Wages will go up thanks to inflation!

This is also incorrect. Wages go up when there is a shortage of workers. And where is there a shortage of workers? In places where companies need them, and that’s in cities. And it’s mostly in cities that have high real estate costs like Seattle, Los Angeles, San Francisco, New York, Boston, and a handful of other urban areas. These are the places where wages are keeping place with inflation, or even exceeding them. But it’s also what’s driving up the price of real estate.

What compounds this problem is that the working and lower middle classes cannot afford the price of real estate so they have to move out from the cities – the ones where all the growth is taking place – to more rural or smaller urban areas. They then start overwhelming those markets with additional labor. Yet there isn’t enough demand for these additional workers. The result of more supply (labor) than demand (open job vacancies) is downward pressure on wages. That is, people leaving the high-cost cities can’t make as much in lower cost areas either, because there’s not enough demand for their skills and employers don’t need to pay as much because there’s so much to choose from.

So, growth doesn’t cover a multitude of sins. It goes towards those who are already doing pretty well, and leaves out the ones who weren’t. And the ones that weren’t are the very ones that voted for Trump, and his tax cut policy will hurt them more than it will help them. The whole point behind tax cuts is that it motivates wealthy people to save and invest more, but they’re already saving a large chunk of their income – around 30%. If they aren’t investing now, a few more percentage points won’t increase that. And if companies simply return their overseas money back to investors in the way of dividends and stock buybacks, this doesn’t increase productivity either. While companies can certainly choose to do this, as an economic policy it doesn’t make sense.


Now what?

Growth covers a multitude of sins if it is spread out evenly throughout the economy and expands the consumer class. Tax cuts don’t do this. Instead, it makes far more sense for the government to invest in education and job training for workers to boost their productivity in order to do more with less.

This is doubly impacted by the United States’s current administration is on the warpath to reduce immigration. The US’s population growth rate isn’t enough to sustain constant economic expansion. Even if you did boost productivity, you need someone to buy the products you produce. Without enough domestic consumption, you need to export to the rest of the world with economies where the consumer base is expanding. This is primarily China and other emerging economies.

I’m going to cut this blog post short because it gets more complicated from here. The pursuing of growth is a noble goal, but it’s inefficient and won’t deliver the results that the Trump administration and the rest of the Republican leadership is hoping for.

Read Full Post »

The wife and I the other day went down to Mt. St Helen’s. This is about a 3-hour drive from where we live.

The city of Seattle is heavily Democratic (capital D). Yet once you get out of the city and drive in any direction for an hour, the political orientation changes. There are lots of Trump supporters.

Along the way down, we saw a big billboard (privately owned, I think) that said “Higher taxes create jobs how?” The unstated argument is that raising taxes is bad for the economy and doesn’t create jobs, and lower taxes is a good idea and creates prosperity.

So I thought I’d take a stab at answering this question.

First of all, nobody who wants higher taxes wants them at 100%

So let’s throw that away. Everyone knows that if the tax rate is too high, the economy stops because no one will work.

Second, it’s a matter of who is being targeted with the higher taxes

In any economy, there is the poor, the working class, the professional class, and the rich. We’re not just talking about the 1% who have incomes starting over $450,000, but the highest sliver of that whose incomes are over $5 million per year. That’s usually who is being targeted for higher taxes although typically it applies to earners over $450,000.

Third, it has to do with increasing consumer spending

The United States’ economy, and most western economies, is built upon consumer spending. Someone has to sell stuff, and someone has to buy the stuff that’s being made. If I build 10,000 widgets, but nobody buys them, that’s bad. It puts no more money in my pocket, and if nobody can afford my widgets, then they can’t take advantage of my widgets’ awesomeness.

The theory behind tax increases

The idea being tax increases is that you take some money from the wealthy and give it to the poor, working class, and professional class. This could be in the form of a direct transfer payment, but usually it’s in the form of services. So, a government might take the additional revenue from taxes and spend it on improving public transit, or on roads, or on daycare, or on health care.

The result is that a poor, working class, or professional class person that normally would have spent an extra $5 on a subway ride, or $1000/month on day care, has extra money in their pocket. They decide to spend it on something else, be it goods that are necessary (household items) or luxury goods (mid-to-upper end vehicles).

The net result is that because people are spending less on one area because the government is subsidizing it, they get to spend more on another area. That means the people that sell stuff have more customers to buy their stuff.

The theory behind tax cuts

Tax cuts have to go to the wealthiest people. The belief is that a wealthy person will take the money they receive in tax cuts and invest it to start new business and generate more wealth for everyone – new jobs, new innovation, new spending on business.

A poor, working class, or professional person doesn’t get enough back in taxes to be able to invest it. For the poor and working class, any new additional income is likely to be spent on consumer goods and services. For a professional person, the money will either be spent, saved, or invested in the markets depending their financial situation. This is similar to a tax increase on the rich in that both are intended to be stimulative. But in these cases, the tax cut money has not gone to creating more wealth in the economy by starting a new business.

No, only a wealthy person who gets a big tax cut can take it and invest directly in the economy. For you see, a wealthy person already has all (or nearly all) of their needs and luxury items. This is because of the decreasing utility of money. All of us need a certain amount of money to buy food, shelter, transportation, cat food, and other requirements. Then we all buy some luxury items. But eventually that tapers off and additional money doesn’t make us happier, that is, we don’t spend it. But given enough additional money, and then maybe a wealthy person decides to take a risk and start a business to grow the economy. It takes a certain amount of money to get started, running a business isn’t cheap. It’s difficult and requires a cushion.

That’s why you have to give tax cuts to the rich if you want them to grow the economy.

Which one is better?

Economists have measured both of these. Both are intended to stimulate the economy. A tax cut does put additional money into everyone’s pocket, and they spend it – but not equally.

The poor and working class spend their extra money. The professional class frequently does, and the wealthy sometimes do, but sometimes they save it. If someone wants to save their extra money, that’s fine. It’s a smart thing to do, Americans don’t save enough. But from macro-economic perspective, it’s bad. Our economy is built on consumer spending, not consumer saving.

If the government now suffers a reduction in revenue, it either has to cut services or run deficits. If it cuts services, then the poor and working class who were using them now have to use the small bit of money from tax cuts to spend on those cut services whose fees have increased. They have no additional money. So the government has to run a deficit and sells bonds in order to finance itself, but as the deficit grows, it can increase inflation. That, too, can erode the buying power of consumers whose incomes have to grow fast enough to keep up with inflation. In 2017, that’s happening for the professional class, but not the poor and working class.

So, if you compare the two:

  • A tax increase on the wealthy that results in the government providing more services for the middle class gives us more consumers who can spend money. Because of the marginal utility of money, the wealthy don’t experience a noticeable degradation of their lifestyle
  • A tax cut on the wealthy does not necessarily result in the wealthy creating more jobs. Much of the time, they save it which is good for them but not for the economy as a whole. The middle class does notice a degradation of their lifestyle as they now have to spend more money on services that they previously didn’t have to spend on

Therefore, as long as it is done right and the rates are not too high, a tax increase on the wealthy does more to stimulate the economy than a tax cut for the wealthy.

And that’s how I would answer the billboard’s question.

 

Read Full Post »

I had a surprising experience the other day.

Recently, I’ve been thinking a lot about politics, no doubt due to my alarm about the current US administration. But I also want to be non-partisan, as I’ve written on numerous blog posts.

I’d heard that a lot of US political appointee positions had not been filled, so on a whim I decided to see if the US ambassadorship to France is currently open. It is.

I joke to people that my goal is to become the US ambassador to France (it could be any country, but I picked France). Even though I’m not qualified for this, let’s just assume that somehow I get the job. I then plan to serve out my term, and then since I hold dual citizenship, apply to become the Canadian ambassador to France. When they ask me for my relevant job experience, I can answer “Was previously the ambassador for France.”

I checked out the current ambassador to France’s resume as of course they would have relevant experience, and she does. I also saw that she’s on the Council of Foreign Relations. I hadn’t heard of this before but it did sort of ring a bell. It turns out to be a non-partisan group of fairly famous people who are a think-tank based in Washington, D.C. whose focus is US foreign affairs. I went through the site, browsed its contents, subscribed to the daily newsletter, and subscribed to the podcast. I also started looking through the membership, as for some reason I have this idea in my head that I want to join the US Council of Foreign Relations. After all, I’ve always had an interest in geopolitics.

I started going through the membership list of the CFR, and it’s big. I recognize a large chunk of the names, but none of them are people who I know personally (e.g., Debbie Wasserman Schultz, the former head of the Democratic National Convention; Colin Powell, former US Secretary of State). But then I recognized one name on the list for whom I did have a quasi-relationship – my member of Congress.

My congressman has a common name and I wondered if it was him. I went to his webpage and browsed his bio but I didn’t see his membership on the CFR. So, I filled out the “Contact Me” page (it has a lot of screening on it, they make sure you’re in his district before he’ll respond) and I asked him “Are you the same guy that’s on the membership of the CFR?” I left my contact information and basically forgot about it, not really expecting a response.

A few days later, I got a phone call from an unknown number. I let it go to voice mail because I get so much unsolicited spam on my cell phone now (some idiot organization or two clearly leaked my phone number). I was surprised to see they left a message (so few spammers do), and I was even more surprised to hear it was a staff member of my congressman!

He did, indeed, confirm that my congressman was the same person listed on the CFR! So I was right, I kind of figured he was. But I was suitably impressed that he took the time to get back to me on this rather obscure question.

I wonder if anyone’s every asked him that before?

Read Full Post »

I’ve loosely been tracking the trial of Bill Cosby – the TV star from the 1980’s and 1990’s. He’s had a whole stack of sexual harassment allegations spanning multiple decades, and his accusers have accused him of giving them drugs and engaging in unwanted sexual acts with them. There’s not just one or two women accusing him of this, but dozens.

Cosby’s on trial, but because so many of the cases are so old, he can’t be prosecuted for them due to the statute of limitations (or so I’ve heard). Instead, he’s being tried for one incident that occurred in 2004.

The prosecution brought multiple witnesses, whereas the defense wrapped up their case in a few minutes, only bringing in one witness (a police detective). They went to closing arguments, and the jury went into deliberations. That was last Monday or Tuesday (it’s the following Sunday as I write this).

There’s still no verdict, and the jury has asked to review lots of the evidence presented at trial.

I’ve read some commentary by so-called jury experts who say that it’s not indicative of it being either good or bad (for Cosby). But in my view, I think it’s bad news for the prosecution and good news for Cosby.

Now, personally, I think Bill Cosby is guilty. I know he has a wholesome image, but he’s had dozens of accusers come forward and say more or less the same thing. Why he would ever feel the need to give these women drugs – relaxants – to get them to agree to have sex with him is beyond me. He’s a rich and famous celebrity, I would think he wouldn’t have had that much difficulty in finding willing participants. And the circumstances of the story being told is suspicious.

I think he did it.

But I don’t think he’ll be convicted.

For you see, a couple of months ago I was on a jury, and it was a sexual assault case. In the case, it resulted in a guilty verdict. But I feel like the case was really obvious that the guy did it. There was evidence that was too strong to ignore.

In this case, there are a bunch of complicating factors:

First, it comes down to he said, she said

This is unfair, but this ultimately comes down to a he said, she said debate, and which one has more credibility. There isn’t any physical evidence, so the jury has to decide which one they want to believe. Both agree that there was a sexual encounter, and both agree that there was relaxant drugs involved. But one says it was consensual while the other says it wasn’t.

Secondthe prosecution has to prove that Cosby is guilty; the defense doesn’t have to prove he is innocent

This is a high bar to clear in a case like this where there is no physical evidence. As a jury, you can’t just say “Well, she said it so it must be true.” The jury has to find that Cosby is guilty beyond a reasonable doubt. This doesn’t mean that there can be zero doubt, but rather that a reasonable person would find the defendant guilty given the evidence and that alternative explanations are simply implausible.

Third, I suspect that the jury does not know that much about Cosby or the other allegations against him

When I was on the jury, there is a pre-trial process where the lawyers will weed out any juror who they think should not be on the jury. This includes people who have heard about the case on the news, and you are given strict instructions to not read about the case in any way, shape, or form; or to discuss it with anyone in any detail. When you go home for the evening, you can’t discuss what case it is or even what it’s about.

During the trial I was on, we were only given the facts of the case in isolation. I had heard that Cosby had numerous sexual complaints against him, but this probably didn’t come into the trial because it’s not part of this particular case. I say that because the defendant in the case I was on had a long criminal history. That didn’t come up during the trial since it was outside of the context of the case, and I’m sure the defense lawyer argued that it shouldn’t be part of the evidence the prosecution could bring up (and he succeeded).

Cosby’s lawyer would have argued the same thing (if he didn’t, he’s a bad lawyer and there’s no way Cosby would have gotten a bad one). That means that the trial jury would most likely be made up of people who weren’t that familiar with Bill Cosby (celebrities are not universally known) and were unfamiliar with all the other complaints against him. Or, if they did know about Cosby, would have been instructed to put all of their biases aside. But anyone familiar with Cosby’s other sexual misconduct allegations would probably have been excluded from the trial jury.


So with that out of the way, why do I think Cosby will not get convicted?

Guilt beyond a reasonable doubt is hard to define, but it can be attained with the word of a credible witness. That’s the one thing this entire case likely rests on. Is Cosby’s accuser credible?

There will be some on the jury who think she is, but some who don’t. The reason the jury is asking to review her testimony is because they are trying to see if there were any inconsistencies in it. Did all the facts line up? Do they contradict at any point? Because if they do, that will undermine her credibility. There are going to be some on the jury that don’t think her testimony is credible enough to secure guilt beyond a reasonable doubt.

I say that because it’s what happened in my jury room. I’d say between 1/2 to 2/3 of us believe the defendant was guilty, even though the accuser had some minor gaps in the testimony. But the jurors who were unsure were not that willing to find a guilty verdict because they knew the implications, and believed that there was room for reasonable doubt. Reasonable doubt differs from person to person.

In the trial I was on, there was physical evidence on the victim, and there was security footage that caught the two on camera about a half hour after the incident took place. And, there was testimony from friends of the victim. But, the friends’ testimony was not enough to convince the jury, only the physical evidence on the victim and the video camera footage. Had it not been for that, I don’t think we could have gotten a unanimous verdict.

And that’s what I think is happening here. I think that 1/2 to 2/3 of the jurors think Cosby is guilty, and the rest do not – at least not beyond a reasonable doubt. Those jurors will want more than he said it was consensual, she says it was not, in order to say guilty unless they find the accuser credible.

There will be an internal debate going – why would she make it up? The defense argued that it is grandstanding, or trying to get revenge after a consensual sexual encounter, or something like that. And some jurors will hold out that possibility even though it’s not that plausible. It’s true that some men will be falsely accused of sexual assault, but it happens far less than they actually commit sexual assault, and far less than they are accused of it but are acquitted.

So I think that the jury will probably come back as a hung jury, or return a verdict of not guilty, and that’s why it has taken so long. The jury I was on took about 5 hours, and this one is now at least four days (maybe three). They will review the testimony, but you can take notes during the trial and everyone can discuss it. You can bring your own personal experience into the trial, too.

But I think Cosby is, unfortunately, going to get away with it.

Update – June 20, 2017: I found out on CNN today that the result was a mistrial, just like I predicted.

 

Read Full Post »

Last month, I wrote that for the first time ever, I was angry at the US government for their restrictive travel ban. The ban was overturned by various federal courts in the days following, so that crisis has been averted.

But in the weeks since then, I have been amused at the number of leaks coming out the White House. These are not related to national security, but rather, about the personalities in the White House and how things are in disarray.

One of my favorites is the Twitter account RoguePOTUSstaff. This is a Twitter account run by a handful of low-to-mid-level employees in the White House that are unhappy with the administration’s incompetence. In it, they talk about the inner workings of the Oval Office, and how personality clashes and chaos is reigning over there. We get to hear about how Trump and Bannon are raging egomaniacs who have their own view on things that are out of touch with reality.

RoguePOTUSstaff is populated mostly by Republicans unhappy with the state of things. They are passive-aggressive and their intent is to #resist the current administration by leaking how incompetent they are.

Another source of leaks is the intelligence community. When Trump’s NSA advisor Michael Flynn was forced to resign, the White House tried to deflect the issue by saying the real outrage is that the phone calls by Flynn were leaked. Indeed, we’ve been seeing leak after leak by the intelligence community and it is distracting the Trump administration. That’s what happens when you go to war with your nation’s spies; they get back at you in all sorts of ways. It’s surprising to me that Trump couldn’t predict this when he took Russia’s word for it that they didn’t hack the election over the word of 17 different intelligence agencies.

However, the big reason I am enjoying this schadenfreude is because during the election campaign, President Trump reveled in the difficulties his opponent had with her political opponents (Russia) leaking her own team’s sensitive emails. Trump couldn’t say enough good words about Wikileaks. My criticism back then was that we had to take the foreign interference seriously because while Trump was benefitting from it at the time, eventually the shoe would be on the other foot and he would be negatively impacted when the leakers turned on him. He ignored this sage advice at his own peril. It never occurred to him (or his supporters) that he, too, could suffer the wrath of the leakers.

And now they have turned on him. That was fast.

So, to see a little bit of poetic justice being done fills me with warm fuzzies.

I know that’s not being mature.

But I am enjoying it nonetheless.

Read Full Post »

Older Posts »