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11/27/2011

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Core Drills

Thanks for sharing this fantastic information with us..The unfortunate thing is that there were plenty of signs that called for a more adequate reaction way in advance..

Dr. V

Should germany then punish themselves since they are clearly over the 60% Maastrcht treaty limit? I mean, let he without sin cast the first Euro.

Jack

Tans? Could you provide data that connects "productive" and "non-productive" with....... anything? Perhaps voting patterns? Public policy? Haven't we discussed the "curious" 400% increase in CEO compensations while wages for those doing the work have stagnated and even fallen?

I used to live in CA and remember when Jarvis' pushed through the abominable Prop 13 that Buffet ridiculed during his VERY brief time as financial consultant to Arnold, by pointing out the taxes on his long held Malibu estate at $2,000/year were far lower than on the modest home he maintains in Omaha.

I am, BTW, well aware that having mercy on older folk being taxed out of their rapidly ascending beach front homes was the leverage for yet one more plank in the ALL FOR THE RICH agenda. (Here in Alaska we've simply allowed our seniors a $150,000 exemption that makes their family home affordable and would make a two bedroom condo tax free.)

Anyway, though of possibly? good intent 40 years ago, today one must understand that by locking folks into their family homes, you're pushing the young working folk further from their jobs. Likewise.... the older folk are having to drive to the beach, golf course, or even to visit younger family members "out there". It's a wretched policy if only for adding to the "freeway?" gridlock in both directions at most hours of the day. And DO you expect new CA's to be happy about paying three times the tax of their next door neighbor?

If you ARE trying to compete on Gov Perry's avenue of the wage race to the bottom....... HOW do you expect to house the $10 - $15 set? They couldn't pay the taxes if they got the house free. And say they put two kids in your schools at $10,000 each? How does that work?

IF this isn't getting too long, I'd like to ask about "Texas envy" Really? It is true that TX population grew twice as fast as that of the US, but then Nevada's grew at three times the national average.

I guess it's all in what you want, eh? In TX median income lagged that of the US by a couple thousand bucks and as you likely know for investing at 45th worst in the nation on education, they attain 46th worst on SAT's....... thought that is AFTER a 40% drop rate from 9th on and then only HALF of the rest sitting for the SAT.

Did you know that CA has one of the highest incomes in the nation and is only mid-pack on tax burden?? Also with 240 folks per sq mile (and HALF of So Cal's square miles being paved over and devoted to the car) to TX having only 100 per sq mile do you really WANT high population growth? Do you SEE your state as being an unsustainable Ponzi scheme dependent on attracting new rubes? Man! I thought So Cal pretty much hopelessly ruined back in 70's!

But to your final question: Obviously, with being true to my heritage of Dad and Grand Dad having left Ireland for Boston, and I going from MA and ME to CA and then AK, I'm a big fan of the right of labor to move freely. When we escaped from So Cal I looked over OR..... but sadly that beautiful state had a moribund economy at the time, and after a quick look at WA I concluded quite accurately "all divvied up" and continued on to the northern frontier.

In the case of CA, now be truthful, don't you appreciate the fact of some of your 5 million under or unemployed packing up even if it is only for a shtjob in TX? Doesn't their "vote" save you a bundle on unemployment? Medicaid? Subsidized housing? Medical? Public transportation? And! beneficially tend to bring housing prices down there back in line with reality? A chance to plow the worst of your pre-war bungalows and early post-war tract housing?

When my folks got to So Cal we, and most, could buy a new home, modest as they were, for less than 2.5 times ONE wage earner's salary. Not long ago we looked up that, now VERY old home and found its "value" as more than five times CA's median H-H income... which means most of the time that's with two wage earners.

Anyway, surely the lesson for the Euros and their "bonds" is that if you ARE going to be ONE team, you've really got to commit to being on one team. You know, like being a resident of a wealthy blue state like CA you don't really mind having some of your tax money pay for a least a modicum of education in MS or TX? or for that matted to prop up one of CA's own much poorer "red" counties?

Well, sorry this got so long, but as you see it's simply not bumper sticker or Limbaugh simple.

Jack

"back taxes" Thanks for responding! At least you're reading some of us and not like those spamming imported shoes sold by a company paying its sports heroes more to endorse the overpriced brand than it pays its Asian shoemakers. I feel sorry for 'em as just now it is any port in a storm, eh? As for yourself are you sticking with the original fantasy of there being a job out there for any who wants one?

TANSTAAFL

Well, Jack, I'd just about concluded you'll never be cut out for Twitter, but your reply to "back taxes" gives me pause . . . .

Back Taxes

There are plenty of jobs jack, but people have to lower there expectations and quit believing there going to be "rich" with some fantasy dream job. If you want to work, there is work to be done.

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Hey, baby! I agree with the idea, perhaps our peers, this is a consensus! I want to use this article, believe that you will agree to me!

TANSTAAFL

Well stated, Back Taxes. Life guarantees no one a fantasy dream job. And anyone who really wants to work hard, as opposed to f_rting away their days playing with an IPhone, can find work to be done and get paid for doing it.

As a thought exercise for students of history, consider the life span the Occupy Wall Street crowd and their apologists would enjoy if they were transported back to the Great Plains circa 1870, or, for that matter anywhere during the vast majority of the millenia of human history preceding the last 50-100 years. Very short life expectancy. No IPhones. Ears and other anatomy severed and dangling from the saddle of some aboriginal horseman. As his guts were unwound and strapped around a tree by a Comanche warrior, would Jack cry: "Medicaid? Subsidized housing? Medical? Public transportation?"

By and large, people who complain all the time about the unfairness of life have too much time on their hands because complaining is easier (in their minds) than working hard. These people are destined for a self-imposed gulag, real or figurative, and would squabble among themselves to decide who is among the many that get to dig the latrines, versus the few who get to man the watchtowers and point the guns. That is, in the utopian State they imagine and so dearly prize, the leftists all like to believe they could be Big Brother, when in fact most of them would wind up like Winston Smith, and quite deservedly so.

Jack

""backtaxes??"" How low? And keep in mind that in the moderate-cost state of OK that a study determined the most basic, independent living std required and income of $18/hour. To be sure there are a LOT of lesser incomes down there in call centers, the super-wealthy Walmart outfit and of course most in "service jobs". Thnx!

Jack

Tans Good "stuff" and what do you suppose happened during the Bushy affair to so dampen the entrepreneurial and hard working ethics of the Clinton era boom?

Cheers! and did my "too long" post help to cure you of Texas envy? Also, it LOOKS as though MOST CA's are still hoodwinked by seemingly low property taxes on their long held bungalows that they are unlikely to EVER figure out that they more than make up for it in exorbitant sales taxes and state income taxes that further burden the hollowed out middle class. Do you see any way to educate enough of them about the preferential rates, roll them back and ALLOW homeowners to trade their existing homes for more appropriate housing close to their grazing grounds?

You know all those "freeways" really are not "free" and any attempt, now, to reduce the gridlock by building MORE! is going to be extremely costly.

Here's quite a nice google-map depicting average commute/gridlock times:

http://zipatlas.com/us/ca/san-diego/zip-code-comparison/average-commute-time.htm

Man! just think of the costly IMPORTED oil you guys waste down there! Whew! How much would you guess is directly attributable to being locked in by the silly Jarvis' Prop 13 mess?

Observer

Becker says, "I opposed the formation of a common European currency because it did not allow weaker members enough levers to adjust to various idiosyncratic shocks they would inevitably face."

It is more than fascinating that Becker doesn't attempt to quantify this madness before he says that The 17 should stick with the Euro.

Others have, Martin Jacomb has several pieces in the FT, and the outcome is always the same. Unless the Euro is broken up, this is just going to be a repeating cycle. The laws on location theory and are far more powerful than Becker will ever understand. They drive economic activity from the South to North and will continue to do so. The magnetism is inevitable. The only hope for the South are separate currencies, for German tax payers will never export enough money to the south to compensate for economic activity that will continue to move to Germany

Observer

TANSTAAFL, displaying a classic case of being uninformed, writes, "Note the parallel between the structural flaw in the common European currency and the U.S. dollar, the common currency of 50 states, some of which are fiscally irresponsible and effectively free-ride on their responsible brethren (with lubrication by the Federal Reserve and Congress)."

What stupidity.

The states that free ride in the US the way Greece has free ridden in Europe are the unproductive ones, like KY, SC, etc. Low productivity low income states. States like NY, CA, and IL may have state level shortfalls in taxes, but they more than make up by paying substantially higher federal taxes. This subsidy flows to KY,SC, etc. in the form of federal transfer payments, such as above average federal employee salaries, payments for health care, etc.

This mechanism doesn't happen in Europe. High productivity in Germany is not resulting in high transfer payments to Greece. Greece is in trouble because it has very low productivity, fewer than 5 million people working and almost $500 billions in debt.

For example, if the US worked like Europe, doctors in KY would be making 1/2 of what they now earn because KY is so much less productive than CA, especially Silicon Valley, and no federal dollars would be flowing to KY.

here is a link to the charts

http://www.taxfoundation.org/files/ftsbs-timeseries-20071016.swf

you will see that CA, NY, ILL, get back less than .75 cents of each federal tax dollar but that AL, KY, SC, get huge federal tax subsidies

jim

"This view has turned out to be correct, but a return to separate currencies in the middle of the crisis is likely to be highly disruptive."

Not so fast. Yes, a change in currencies will be disruptive but it is far from clear that it will be more disruptive than the path the EU has presently taken. For one thing, a currency change would allow the focus to shift from bailing out whole countries to directing resources toward preventing failure of the larger European banks. My expectation is that the latter is less costly in the short run and more effective in the long run.

TANSTAAFL

Jack, I bet you enjoy short commuting times in Alaska. Is that what allows you to write all those "too long" (your words, not mine) posts for readers of this blog to savor? :-)

TANSTAAFL

Observer -- please see http://www.amazon.com/Economics-Dummies-Sean-Masaki-Flynn/dp/0764557262, and check back when you're done.

Frank in midtown

"we in America (who somehow serendipitously became the most prosperous nation in the world through the world despised cowboy mentality of selfishness"

If you can't figure out how we got here why should I think that you know the way forward? I suggest you read "Eat the Rich". We got here because we have the best blend of freedom and fairness.

Tax Relief

Your damn right TANSTAAF, I dont care what Jack has to say about 18 dollars an hour. There are plenty of housing opportunities and jobs to support someone in this world. Just because your jealous you cannot afford an Iphone like all the other debtors, doesn't mean your going to die. I worked my ass off in construction for a year and made good money while enjoying the work... imagine that.

Jack

Tans --- Thanks for asking about AK commute times. While I live in Anch where I can access about anything in 15 minutes, truth is it varies. Like many other cities we have the suburban "Valley" of Palin fame that's about a 35 mile commute which some folks find "worth it" for cheaper housing on larger lots etc.

But Ha! as you might imagine in a state 2.5 times the size of TX many of us do spend time on various kinds of transportation.

And thanks for savoring my, often, "too long" missives. I do so wish I could squeeze them down to poetic stanzas or even the bumper sticker slogans that seem so popular today and often pass for real thought.

Jack

BackTaxes? Is this more fantasy? Say along the lines of folks being able to LIVE on the emaciated min wage of $7 that has lost much of its purchasing power during the last three decades as per capita productivity doubled?

BTW when discussing things with R-wingers I often wonder if they know that increased productivity is about the only path to greater per capita wealth and income. Do you have a grasp on the concept? I find a lot of wingers don't and instead tend to parrot stuff ladled out for them on Clear Channel radio's 1000 plus propaganda stations.

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NEH

affl (another freakin free luncher), Checked your link. Where's the analysis? It's just any empty page with an "Amazon.com" logo. Is this what passes for analysis and problem/solution work among the "New Ridiculous Right" and "Classical Libertarian Anarcho-Capitalist Economists"?

No wonder we've got problems. Not just here at Home, but overseas as well...

TANSTAAFL

Neh -- my apologies. It was intended to be a link to the Amazon page selling "Economics for Dummies," which seemed fitting in light of Observer's outcry of "stupidity" and his/her/its apparent inability to recognize that monetary policy and tax policy are not the same thing. And, assuming it works, the link below may help your obsession with urban legends like the "New Ridiculous Right" and "Classical Libertarian Anarcho-Capitalist Economists."

http://en.wikipedia.org/wiki/Sedative

NEH

affl, My obsession with "Urban Legends"? I'm not the one advocating "Economics for Dummies" as the end all Economic text. This is something I'd expect to find in a Junior High or High School Economics Class. That is, if it's still taught...

As for Observer's "inability" to recognize that monetary policy and tax policy are NOT the same thing - "Really"? I certainly didn't read that into his comments. Putting ideas and words into peoples heads and mouths (that were never said or intended) and lashing out at them as "Strawmen"? And you wonder why the Right is viewed as Ridiculous...

TANSTAAFL

Sigh. One might wish that Becker and Posner would post ideas about why leftists seem unable to engage in civil discourse.

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