Beyond the Cusp

January 23, 2014

Politics Teaches All About Language and Statistics

Many commentators decry the state of political debate complaining about the polarization and the ever increasing gap between the right and the left. They tend to see nothing to be gained as gridlock and harsh discourse is all they are able to see but there are lessons if not in the actual debates, then in the way the arguments and validations are fashioned. Language is probably most defined by the position of the user’s politics more than any dictionary could ever intimate. There are key words whose meaning is in doubt until one realizes whether the user is arguing from the right or the left of the political spectrum. One such word which is brutalized by both sides is equality, especially when applied to the economy and the consequences of the different degrees of wealth as well as opportunity. Where one side using equality it means that the result after everything has been said and done and the government has acted will result in near equality in levels of wealth while the other side defines equality as everybody working in the same system under the same rules on a level playing field thus having the same opportunity and any difference is determined by many factors of which they will stress the extent of effort and natural abilities. One side believes that equality means leveling out the inequities resultant from the disparate outcomes while the other believes that at birth we all start with the same potentials for the most part and any differences result mostly from efforts and being able to grasp opportunities and that government should not be there to take from the successful to give to the less successful.

 

Another word which has unique definitions is charity. One position is that charity should be left to the individuals or to religious and private organizations and should never be a consideration of government as government enforcing charitable giving through taxes and redistribution is simply a form of theft. The other definition claims that the inequities are too great and that many are too greedy and selfish resulting in the necessity for government to enforce some degree of charity otherwise the needy would end up neglected. The definition of a fair tax is another area of disagreement where one side would claim that a fair tax would levy the same percentage in taxation on every citizen while the other side holds that a fair tax would levy the percentage in such a way that those with more wealth and income would pay at a higher rate while those below a predetermined level of income would be left untaxed. Experiencing the uses of words in the political domain constantly provides examples of how varied and opposing words can be used in supporting opposing ideas and ideals. Probably the most mangled words are those used as the names of the sides in the political arguments. Somebody who is called a liberal no longer means that they are a libertine who believes in individual independence with minimal interference by the governing bodies. A conservative does not necessarily hold views which demand that things remain exactly as they are or desires a return to how they were in the recent past. Those claiming to be independent voters often have a voting record which would rival the most ardent party member of any of the parties and simply claim to be independent in order to avoid having to explain or defend the party which they actually support almost without exception. Another term which has been completely coopted to mean, in many cases, whatever position you desire to support is choice. Those who support the Second Amendment adamantly claim that people should be free to have the choice of whether or not they wish to own a firearm and that as long as the individual accepts all the responsibilities and consequences of carrying a concealed weapon, they should be free to exercise that choice. There is the pro-choice position which most are familiar with where it allows for women to have the option available to terminate a pregnancy. Many libertarians claim that people should be allowed to have the choice to use drugs and claim that the War on Drugs interferes with personal choice and freedoms. Libertarians actually are very liberal when it comes to choice as they support personal independence almost to a fault. The one place where choice is often restricted to the point of absurdity is within the walls of government where they seem determined to pass laws which restrict people’s lives to the point where there will be no opportunity for choice as they will all have been legislated out of existence.

 

The one place where words are most often twisted and manipulated in order to produce a predetermined and defined desired result is in polls. Many polls which are commissioned by PACs, organizations, political parties and virtually any other source one can determine what the end expected result is simply by inspecting the phrasing of the questions. Politics is a place where words are tortured and polls are where they are executed. Even the time of day chosen to take the samples or the location where the polling is taken also will determine the results. Often polls will use emotional phrases which engender a certain reaction early in the poll in order to skew the rest of the answers to the poll questions. This is not to say that there are no polls which are crafted fairly with great attention paid to using unbiased wording and phrasing and avoiding hot topic words which might skew results, but these types are usually commissioned by businesses and not political entities. Polls can be slanted by having qualifying questions which limit those who are questioned and included in the tabulations, often this is done by age though whether one is employed or regularly votes are other qualifiers often implemented.

 

The other thing which is often related to polling that is mutilated and twisted in order to portray a particular political position is statistics. As the old saying goes, “There are lies, damn lies and statistics.” Statistics when utilized in politics is the precise science of massaging numbers to produce a predetermined result. One easy to understand example is the wealth gap. If one takes the statistics of those who are in the top ten percent of income earners and those in the bottom ten percent of income earners over a period of years the result will currently show that the income gap is growing significantly. But if instead one takes the people in the initial year who were in the top ten percent and those in the bottom ten percent and followed these individuals over the same time period the income gap will be shown to have shrunk. The reason for the disparity is simple, the people in the top and bottom ten percent change from year to year and those initially in either extreme will both slide towards the median income over time while other people take their place at the extremes. Thus, if one wished to exaggerate the income inequality they would use the first set of statistics while if instead one desires an accurate description of the fluctuations in income and the constant flux with people changing their income potentials as they move through life and their opportunities and conditions change, then the second set of statistics will serve you better. Another way of misrepresenting numbers but not necessarily statistics is by comparing apples to oranges, as the adage states. An example was the claim that Warren Buffet’s secretary paid greater amount in taxes than her boss. There is a very logical reason but the emotional response to this truth is being played for all it is worth when this unequal and unfair comparison was used. The taxes they were referring to were payroll taxes which are levied on one’s salary, not one’s wealth. Where Warren Buffet has great wealth and most of his wealth comes from investments, he thus has little salary per se but has wealth which would be taxed under capital gains while the secretary does have a salary and pays income based taxes but she likely pays negligible if any capital gains taxes compared to her boss. Language, statistics, numbers, emotions and truth all take a back seat in the political arena if not a total vacation. The real lesson is we need to take care and carefully inspect anything we are presented with which has political implications as when politics is in play the truth takes a well-deserved holiday.

 

Beyond the Cusp

 

November 3, 2011

Fallacies of the Rich / Poor Divide

With the onset of the Cost of Living tent protests in Israel, the Occupy Wall Street ongoing demonstrations around the United States and the World, and the riots against austerity measures being applied to European countries’ budgets to avoid defaulting on their loan payments, we are witnessing what appears to be a massive movement against the rich and calling for wealth redistribution in order to end all poverty. This begs a number of questions about who is actually rich, who are the poor, whether poverty can actually be eradicated, who are the one percent, who are the ninety-nine percent, who are the fifty-three and forty-seven percent, and much much more. Maybe defining some of these terms and category definitions might shed some light on what things are actually obtainable and what things are simply feel-good terminology and the calls meant solely to excite people to rise up against authorities.

The first things we need to understand is exactly who the rich are and who the poor are and who are considered middle class. Generally speaking, in economics the wealthy are usually defined as those whose wealth places them in the top twenty percent among the population, the needy are defined as those whose worth places them in the lower twenty percent, and obviously the middle class consists of the remaining sixty percent who do not fit the definitions for wealthy and needy. What makes this so interesting is a simple irritating fact, there will always be a top twenty percent and a bottom twenty percent and that will always leave a central group of the remaining sixty percent. Should, for the sake of economic equality, we take half of the wealth held by the top twenty percent, the rich, and divide it among the bottom twenty percent, the poor, both of these groups would probably be moved towards the center of the wealth chart and become part of the middle sixty percent. All this accomplished is to make a new top twenty percent and a new bottom twenty percent. The society still has the same number of rich and poor people because of the definitions for these classes in economics. Making a completely classless society would require that all wealth be controlled by the government and divided up evenly between every person. The government would have to control everybody’s spending in order to assure nobody hoards any of their portion of the economic pie as that would make their wealth fall outside the permitted norm. To maintain this equality, either nobody would get a new flat-screen television unless arrangements are made such that everybody gets a flat-screen television. Everybody would be issued exactly the same items of clothing, vehicles, living quarters, food, and any item that can be considered to be a measure for wealth which includes just about everything. Such equality of wealth, as you probably can see, is an absolutely absurdity which would be impossible to maintain and would result is a population of disgruntled individuals who would not be allowed to complain as such a society would necessarily be based on a collectivist mindset and individuality would be paramount to criminal.

Another problem is exactly who are the protesters actually demanding be punished, the rich or the wealthy? We often confuse these two separate groups. The wealthy are the ones who are really favored by the tax system. Taxes are figured on income but not wealth. Imagine a person who is worth say a couple of billion dollars but is not employed. Their only income would be interest on your money unless they placed their investments in tax free funds making their taxable income near zero dollars and thus would pay no income taxes, think Mr. Buffet. Such a wealthy person would necessarily pay less in income tax than not only their secretary, but also their gardener, chauffeur and the kid they ordered their lunch salad from yesterday. Before flying off the handle and parking yourself downtown as part of the rabble protesting, you need to understand who it is you are upset with. If you are mad because the rich are not paying their fair share in taxes, you are dead wrong as those earning the most money do indeed pay the most income taxes. If your aim is people of money that get around paying income tax you are not against the rich but are against the wealthy. The wealthy are the ones who own vast amounts of the money, expensive cars, large homes, and other items that signal those in the top percentages of affluence. If the people who fuel your anger are those holding great amounts of wealth, you are not against the rich; your argument is with the wealthy. This is where your protests go off the rails; you are complaining about and demanding higher taxes on those making higher incomes but in order to achieve wealth redistribution, you need to call for a wealth tax, not an income tax. By the way, it is the wealthy that have the great and unequal amount of influence which is why all taxation is based on income and virtually no tax is raised against wealth. Think about that for a while and decide if you are barking in the right direction, and if you are not, then change your tune and correct those around you.
There is a quote of unknown origin that states, “There is not sufficient wealth to eradicate poverty but there is more than enough poverty to eradicate wealth.” This little statement is valid and has been proven in every instance where socialism became the driving influence of the governance such that the energies of the government were set at equalizing the distribution of wealth in an effort to raise the poor at the expense of the wealthy. What needs to be considered when deciding on which economic strategies to employ in your society is that the society constitutes of people and people have certain known peculiarities. Some of these little quirks are based deeply in some manner of greed. The vast majority of people will choose shelter over living outside at the mercies of nature, food over going hungry, heat when the weather is cold, cool when the weather is blisteringly hot, security over uncertainty, safety over overt risk, and possession over want. This makes any social contract and system that exploits greed to drive production of goods and wealth will prove more sustainable than any social contract and system which grants goods and treasure regardless of effort and contribution to production. Socialism was defined in stark simplicity by Karl Marx with the phrase, “From each according to his ability, to each according to his needs.” Capitalism would more likely be represented by a different phrase, “From each according to his needs, to each according to his abilities,” by giving people rewards for production which in turn allows them to toil in order to satisfy their desires. Each person will find a balance in which they will tailor their desires and needs to fit within their ability to produce thus receiving the means to cover those desires and needs. Each individual may choose whatever level they desire and then work towards attaining such level. On the other hand, in a socialist state the person submits their list of demands which the state then proceeds to attempt to satisfy while completely independent of your stated needs; the state will require you to produce to your ability. In such a system most will have extensive needs while offering minimal ability to produce. This eventually reduces production making satisfying peoples’ needs more difficult and such simply gets worse over time. The sole instance socialism can work is in an exclusively small societal unit where peer pressure can be brought to stimulate each individual to carry their own weight. With a system based on Capitalism you have a built in driver that uses greed as a motivational factor which will drive higher output from each individual as the rewards are dependent on your personal drive and production.

My final comments regard the fifty-three percent against the forty-seven percent. This is the presumed split of population divided between those who pay federal income taxes, the fifty-three percent, who are pitted against the people who pay no federal income taxes, the forty-seven percent. This is a very troubling division as once those who do not pay any income taxes becomes sufficiently larger than those who do pay income taxes, then there will be no end to how high taxes will need to be raised as those who are not affected will vote for more giveaways and those who pay the taxes will be powerless to prevent sky high taxes. A recent New York Times/CBS poll reported that 66% of Americans polled claimed that wealth was not equally distributed and more equality of wealth was a desirable goal. That alone might be the sign that we have broken through the tipping-point and there will be no going back. Combining the results of this poll with the Occupy Protests and the fact that on all levels almost half of Americans depend on the government for their income either through unemployment, Social Security, disability, or are government employees and you have the formula for completely out of control runaway government with the resulting higher and higher spiraling taxation which will only end poorly. For a good example of where such out of control government leads, one needs look no further than the Soviet Union which collapsed under the weight of government, or Greece for a more contemporary example. Even looking at Mainland China one can see they have pretty much given up on pure socialism and have introduced a weird mix of Capitalist Communism. Talk about an oxymoron; Capitalist Communism, go figure.

Beyond the Cusp

August 26, 2011

A Late Response to Warren Buffet on Taxing the Wealthy

Warren Buffett, billionaire CEO of Berkshire Hathaway, is a close friend and rabid supporter of everything President Obama including increasing taxes on the presumed wealthy who are not paying their fair share. Well, in some ways I can agree with Mr. Buffet except he is not calling for more taxes on the wealthy, he is calling for more taxes on the hard working and the smart investors. What he, most people, and every politician I have heard seem to not know the differences between the wealthy, the rich, and the well compensated for their efforts. Politicians call for taxing the rich and the wealthy then propose raising taxes on those who are well compensated for their efforts.

So, in this very short article I am going to make two simple suggestions to remedy the lack of taxing the wealthy and the idle rich. First, for all who believe that they are not paying sufficient taxes let me point out that there is a line on every tax return that allows for you to mitigate your guilt of paying too little to the government. This line allows you to make an additional and completely voluntary contribution in addition to your required tax fees. This is a readily available means for you to pay exactly as much as you feel you really ought to pay without forcing those who feel they have paid sufficient amounts of their hard earned money just because you have guilt feelings. It really is that simple Mr. Buffet.

Now, let us address that the wealthy and rich do not pay sufficient taxes considering their immense wealth. Taxing people who make over a quarter of a million dollars a year is not taxing the wealthy, it is taxing the hard workers who are getting a very nice return on their efforts but through higher taxes being prevented from becoming part of the wealthy. So, let’s not tax effort and tax the “idle rich” funds. It is a very simple idea that I doubt even Mr. Buffet will find fault with as it will not make his taxes measurably higher, something he claims to desire but takes actions to avoid whenever legally possible. Mr. Buffet invests in such a manner to protect his wealth and keep it from being overtly taxed; otherwise he would indeed pay a higher amount of taxes. What I would propose is that a tax of one percent be placed on any monies held over five million dollars that is not invested in stocks, bonds, treasuries, CDs, or any other interest or risk investment with the one provision that it be in an American bank, industry, company or investment group. This would assure that the wealthy not become the idle rich who, like Thurston Howell III, sit on some island with Gilligan counting his money. This tax would encourage investment and keep the monies invested domestically if properly fashioned and would be a true tax that only affected the wealthy while not preventing the hard working from becoming wealthy.

Beyond the Cusp

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