Thursday, April 25, 2013

Tax Rates and Growth: What the data actually says

Cartoon of Adam Smith and John Maynard Keynes confusing Bill O'Reilly
Cartoon of Adam Smith and John Maynard Keynes
confusing Bill O'Reilly. (By rrllmm392 via Flicker.com)

News flash: Washington is crazy. And very often, it seems like they reject our desires. 


But, quite often, the government does do good work. And one of those bits of "excellent work" was the Congressional Research Services (CRS) 2012 research paper: Taxes and the Economy.

This paper is amazing, and does perhaps the finest job I have ever seen in asking quite frankly the question that has most of us puzzled: "What impact does the cutting of top tax rates have on the economy?" And in a few quick pages, divulges the following facts.

Overview of the CRS's findings in Taxes and the Economy.


  1. Top-Tier Tax Rates & Their Effect on GDP Growth 
    • Higher tax rates for the top 1% are weakly associated with faster GDP growth.
    • Lowering those rates leads to a slight decrease in associated GDP growth
  2. Lower Top-Tier Rates Produced only 1 Verifiable Effect
    • Consolidating income towards the top..
    • This is accomplished by redistributing wealth from the lowest two quintiles, and moving that wealth to the wealthy.
Ironically, these findings directly contradict many neo-Con fiscal policies that have been popular since Reagan. However, this has not stopped the GOP to continue to insist that "Tax cuts create prosperity. Which they do not. And yet, like I pointed out in my earlier article on the Laffer Curve, the GOP and most neo-Cons seem willfully ignorant of the import of the studies that prove their economics "incorrect."  

I would run some figures, but know that numbers often causes people's eyes to gaze over. So I took the liberty to cop a few graphics from the CRS that illustrate the real impacts of these largely destructive policies are having on the nation.

First off, let's look at the history of both the top-tier Average Tax Rates, as well as the Capital Gains Tax Rates, since the wealthy garner the majority of capitol gains (See Fig. 1).  

Notice that those rates have fallen considerably over the years. Especially from 1980 onwards, and the new neo-Con orthodoxy -- called Reaganomics, began to hold sway.

Notice that During the Clinton years, the rates were much higher than they are today. The Bush Tax Cuts of 2001 and 2004 have lowered those rates considerably. There is a solid argument that this is the cause of the deficit. Since the government is still pretty much "about the same." But the Federal income stream has slowed.
Fig. 1: Historical Trend of Top Marginal And Capital Gains Tax Rates, 1945-2011 (CRS)
Fig. 1: Historical Trend of Top Marginal And Capital Gains Tax Rates, 1945-2011 (CRS)

Next, Let's Look at The Tax Rates' Impact on GDP Growth (See Fig. 2)

Brave New WorldBrave New World by Aldous Huxley
My rating: 5 of 5 stars

I first read Huxley's Brave New World years ago -- right after I read 1984 . Back then, I found Orwell's vision creepy and scary. But less likely than Huxley's. Since I saw evidence of the population "disengaging," and "not thinking" all over the place.

Drug use in silly night clubs. Wealthy college students pulling lines of cocaine off of the bar. All the while not paying attention to things like Grenada, El Salvador, Pinochet and the Mujaheddin. And instead of reading, which takes work, people would just be vegging in front of the tube. Watching Married With Children and Beavis and Butthead .

All in all, things have not changed much. I still see Huxley's dystopia everywhere I look. Though I have grown up, and see the elitist, sophomoric flaw in my initial reasoning -- family and struggles and bills and relationships and heart break will do that to you -- there are some aspects of Huxley's dystopic vision which still ring true as steel. Becasue, all too often, people are treated like income streams. And indoctrinated into their "places" in society from birth on.

Sure, we don't play Centrifugal Bumblepuppy yet. But is X-Box much different? How many hours and dollars have been spent on video games? All the while the world is choc full of solvable problems. That we choose not to see.

So I am going to confirm my long-ago judgement: Brave New World merits five-stars. But my reasons now are different. I now see that Huxley does such an excellent job of painting two major ways that societies can dissolve into static entities.

One is the falsely conceived "Romantic" way of the "Nobel Savage." Which Huxley paints not as a Rousseau-type great place to live. Instead, in his hands, it looks pretty static. Filled with misery, devoid of science and exploration. And, since it lacks these "perspective" building elements. The "Savage" society turns in on itself. And rejects everything that smacks of newness.

But Huxley is too keen an observer to think that the rational "Scientific/ Postivistic" state would be much better. Since it would legislate out those things that make life worth living. Like love and loss. And deep attachments. And the passionate striving after things like art and "Truth". Things that take an entire being to experience, but which science and commerce just cannot provide.

What I found most incredible throughout the book was how fine Huxley draws his characters. For instance, I love that Bernard is both aware of his weakness and it's impact on him, yet is still controlled by it. He is missing the "outsiders" view that Shakespeare granted John. And thus could not see into, vocalize and then act in ways beneficial to his true self-expression. I also felt how painful it was for him to be that isolated. And how that isolation manifested itself as a desire to leverage his relationship with the Savage into a new-found popularity. Which, for a time, assuaged that isolation.

I, too, really felt for John. Who seemed dedicated to seeing people from a holistic perspective, not bound by conditioning, but inhabiting rich, complex interior worlds. Instead of being allowed to accompany Bernard to the island where other misfits were "ostracized to," he is sentenced to live life among people dominated by their conditioning. And the results -- truly tragic.

All in all, an excellent book that stands the test of time. Often funny in its satire. But ultimately a tragic look at the limits of rationality. And the inadequate responses to the dehumanization of man that both Positivism and Romanticism entail.

View all my reviews

Tuesday, April 16, 2013

Review: The Crying of Lot 49

The Crying of Lot 49The Crying of Lot 49 by Thomas Pynchon
My rating: 5 of 5 stars

Thomas Pynchon manages to squeeze more meaning into 150 pages in The Crying of Lot 49 than most writers can pull off in twice that time. As always, Pynchon is a riot. His names are odd to say the least. Some examples include Oedipa and Much Maas;  Mike Fallopian; and Dr. Hllarius And his counter-cultural brain exuberantly draws up conspiracies that make Glenn Beck look sane.

Pynchon also draws a late 60's America that I know only through the movies. Cheech and Chong. "Gimme Shelter." "Easy Rider" -- which I hated. "Woodstock." "Harold and Maude" -- one of my favorite movies of all time. "Eraserhead" -- which still has me scratching my head. And "The Graduate." Etc. He paints the era with a satirical eye. A radio station with the call letters KCUF (a joke that every 13-year-old would find a gas). A half-crazed German shrink who wants to give women LSD as an experimental treatment. And the open highways and urban sprawl that the Interstate 101 (and it's elder sister, the slower 2-lane US 1, the Pacific Coast Highway) defined as it grew into present day California. Electronic music. Pimply-faced teens forming rock bands, called The Paranoids, trying to be the next "new thing." And child-actors, who starred in cheesy 1940's era action films hanging on in LA, but becoming lawyers.

Everything American. But told slant.

Thankfully, Pynchon manages to hide a lot behind the hair-brained trickery of his crazy facade. He does this more effectively than any other writer I can think of save James Joyce. And. like Joyce, Pynchon reveals, mocks, and then covers his tracks every step of the way. And thus, he forces us to be Maxwell's Demon. Separating wheat from chaffe.

And there is wheat here. A lot for such a short and, for Pynchon, approachable book.

The question central to Crying is "What it the nature of  reality?" And it's correlary "Is, indeed, reality real? Or is it just information that disintegrates into entropy between our ears?"

Pynchon never answers this head on. But he does so indirectly. Which is why he has his protagonist Oedipa Maas learn about a potentially fictitious underground postal system named W.A.S.T.E., and scrambling around California to find out what she can about it. And connecting W.A.S.T.E. to a similar delivery service burning the European Renaissance called "Trystero." Finding a strange symbol associated with both groups. And then finding that her ex, for whom she is acting as the executor for his will, has a lot of forged postal stamps. That all appear that they may, possibly be linked to W.A.S.T.E.. But, then again, may not...

Thursday, April 11, 2013

We by Yevgeny Zamyatin

We We by Yevgeny Zamyatin
My rating: 2 of 5 stars

I am not quite sure why, but I found Zamyatin's We , considered by many to be a classic of dytopian literature, profoundly disappointing. The narrative is poorly structured, and it traces the protagonist's - the mathematician D-503 - descent into madness.

This sort of descent usually appeals to me. But here, Zamyatin leaves me cold. I never quite felt that the catalyst for D-503's madness, his love for I-330, was anything but staged. There was, it seemed, little there. And yet, this affection was supposed to instigate a "madness," which we know is love, that caused D-503's world to implode, making him unfit to exist in the perfect society, One State.

Not only is the book psychologically awkward to me, the world Zamyatin builds is filled with contradictions that, frankly, seem implausible. For instance, all citizens of One State live and work in transparent buildings, making it easier for authorities to spy on them. And yet, this state, obsessed by control, leaves the Ancient House, the sole opaque house on One State, untouched. And them allows their citizens to enter and exit said house at will. To further complicate things, Ancient House has assorted passages that, somehow, the authorities have never discovered.

Talk about your implausibilities.

And Zamyatin's style also leaves a lot to be desired. His interweaving fact and fantasy in D-503's mind seems clumsy. As does his contact with a group of free people living close to nature existing right outside the walls of One State - yet another implausibility.

There also seem to be a Romantic hint of Rousseau's "Nobel Savage" at work here. And the 19th Century's belief that rationality is flawed. And the only freedom a human can gain is by destroying rationality (One State). And replacing it with a naturalistic Utopia, where people live close to the land. Without realizing that One State is not a rational state, but a regressive state that nears theocracy in it's commitment to emotionless perfection.

So, sad to say, I cannot recommend this book. Which sucks, because I was really looking forward to reading it.


View all my reviews

Wednesday, April 10, 2013

Guns, Culture and the Southern Impact: A more in depth look at the numbers

Gun Show in Houston, TX
Gun Show in Houston, TX
(Wikimedia Commons)  
Earlier, I posted an article that proposed a simple hypothesis: The gun culture is more pervasive in the southern states. And found a strong correlation between violent crime and how far south a state was. I also found that that correlation was more significant than the impact race had on violent crime.

The basic observation came from Steven Pinker's remarkable The Better Angels of Our Nature: Why Violence Has Declined. But many people on political sites still questioned my results. So I dug back into the data.

Turns out that my initial findings were confirmed. Instead of all violent crime, I used murder rates in 2006 -- the only data that I could find that sperated out black from white murder rates cleanly. So, let's look at that dataset...

[It should be noted that the posted data did not include FL. And the author removed both HI and AK, and focused on the continental US.] 

Impact of Latitude Overall Murder Rate

Why We Conform: What the Asch Conformity Experiments tell us

Lemmings: "If everyone was jumping off a cliff..."
"If everyone was jumping off a cliff..."
by S1501 (Source http://s1501.deviantart.com/)

# 1 in the Series "Applied Social Psychology"

Knowledge is power, as the saying goes.

One of the greatest gifts that late 20th and early 21st centuries have given us is an appreciation of how we humans actually behave in groups. And our predictable biases that can be manipulated by dishonest marketers and hucksters to act in ways that run contrary to our best interest.

Even economics, whose classical theory includes the tenet that people in economics transactions make a rational decision to optimize their payoffs, turns out to be wrong. And people will make the same incorrect move at a relatively predictable rate. Which leads to Dan Ariely's seemingly nonsense title Predictably Irrational.

So knowledge is power. If you know that you have "defects" which kludge up you're thinking, you can defend against them.

Which leads us to today's topic: Conformity. And why do we tend to mimic others?

Saturday, April 6, 2013

Impacts of Culture on Violent Crime: "Cultures of Honor" versus "Cultures of Law"

Fig. 1: Burr-Hamilton Duel
Fig. 1: Burr-Hamilton Duel (Wikipedia)
While reading Steven Pinker's The Better Angels of Our Nature: Why Violence Has Declined, I was struck by something that he mentioned about "Cultures of Honor" (more info on Wikipedia) as a driving force in violence. In these Honor Cultures,  personal honor is defended directly and, when necessary, violently. These are compared to Cultures of Law, where the citizens put greater trust in the state to mediate disputes.

Historically, this manifested itself in "saving face." And dueling for perceived slights. In Western Europe, it was common to challenge a person who slights you to a duel. And it was very common in the US. In fact, even two of the most important figures in US history -- sitting Treasury Secretary Alexander Hamilton and current Vice President Aaron Burr -- engaged in a famous duel in 1804 which left Hamilton dead.

Imagine: a Vice President shooting a cabinet member in a duel? Sounds incredible. But that is because, by and large, the United States have become, by and large, a Culture of Law in the 210 + years since then.

But, according to Pinker, there are still portions of America that that have Cultures of honor.

He brings this up to explain higher violence rates in African American communities. Since, historically, the police have been at best negligent to violence against African Americans - witness the history of lynchings in the South to Rodney King - leads to a sort of frontier justice mentality. Marginalized cultures have historically had to take justice into their own hands. Think about how the early Italian-American immigrants turned to the Mafia and the Irish to the Moll McGuire for protection since the police either ignored or were actively hostile to those communities.

Same song. Just a different group being recorded in a different year.

He also mentions that southern cultures maintain a greater need to "save face" than northern cultures. Which sounded reasonable, since southerners in my experience tend to be more hawkish. And the gun culture, as exemplified by the NRA, does seem centered around people in the southern states. So I was curious. And wanted to do a quick look at the data for myself.

Tuesday, April 2, 2013

You Mean Humans Have Grown Less Violent? Steven Pinker on our better angels...

fig. 1: Steven Pinker
Steven Pinker  (wikipedia.org) 
I am currently reading The Better Angels of Our Nature: Why Violence Has Declined. Great book. But I kept on saying "this sounds familiar." When it dawned on me why. I've seen the basic outline for the material. I caught the basic argument in a Ted talk that Pinker gave in 2007. Which is shown below.

Often a summary is all a book needs. Indeed, when I discovered that I've already heard the material, I was almost tempted to return the book  And I'm glad I didn't.

Because  The Better Angels of Our Nature supports the hypothesis with a depth and breadth of  material that make his conjecture crystal clear. In fact, right now, I've graduated from healthy skeptic to reasonably certain that he is correct -- though I currently am only about a quarter of the way through the book. But my turning point was -- as always with nerdy me -- the data he uses. Because without data, you only have opinion. And everyone has an opinion... But with a good dataset, you have fact. And few people are armed with the truth. But to those that are, usually, goes the spoils.

He traces the decline in violence by tracing several well-documented phenomena.

  1. Plummeting murder rates in Europe after the Middle Ages. 
  2. The correlation between homicide and other violent crimes -- rape, assault, etc. 
  3. The declining percentage of the population that actually dies in war. (to See More, click below......)