Taxes are the Thunder of World History

Taxes, according to Joseph Schumpeter, are “the thunder of world history.”

“The spirit of a people, its social structure, the deeds its policy may prepare, all this and more is written in its fiscal history, stripped of all phrases. He who knows how to listen to its message here discerns the thunder of world history” 

(Schumpeter, J. 1918. “Crisis of the Tax State,” p. 101, quoted in Corey Robin’s blog. Robin is writing a book on two foundational modern conservative schools: the Austrian white emigres and Nietzsche. I think. We’ll see).

Michael O’Hare’s "Letter to my students"

Here is the link to Michael O’Hare’s “Letter to my Students.” Berkeley Blog 8/24/10.

An excerpt:

“Swindle – what happened? Well, before you were born, Californians now dead or in nursing homes made a remarkable deal with the future. (Not from California? Keep reading, lots of this applies to you, with variations.) They agreed to invest money they could have spent on bigger houses, vacations, clothes, and cars into the world’s greatest educational system, and into building and operating water systems, roads, parks, and other public facilities, an infrastructure that was the envy of the world. They didn’t get everything right: too much highway and not enough public transportation. But they did a pretty good job.

Young people who enjoyed these ‘loans’ grew up smarter, healthier, and richer than they otherwise would have, and understood that they were supposed to “pay it forward” to future generations, for example by keeping the educational system staffed with lots of dedicated, well-trained teachers, in good buildings and in small classes, with college counselors and up-to-date books. California schools had physical education, art for everyone, music and theater, buildings that looked as though people cared about them, modern languages and ancient languages, advanced science courses with labs where the equipment worked, and more. They were the envy of the world, and they paid off better than Microsoft stock. Same with our parks, coastal zone protection, and social services.

This deal held until about thirty years ago, when for a variety of reasons, California voters realized that while they had done very well from the existing contract, they could do even better by walking away from their obligations and spending what they had inherited on themselves.”

Todd Henderson’s Argument Against Taxing the Rich

A response to economist J. Bradford DeLong’s commentary on Chicago law professor Todd Henderson’s argument against taxing the rich. Henderson argued that even though he and his wife make between $250,000 and $450,000 per year (depending on how you count it), they have such high expenses that they cannot afford some further luxuries or to pay more taxes. The conservative Chicago law prof’s argument was not well received in the blogosphere, but it was very revealing.

To DeLong & JayC (who complained about low economic literacy and class anger in the blogosphere responses to Todd Henderson): I find these comments on DeLong’s blog, however, fairly interesting. Elsewhere, there’s a lot of unpolished working class anger (unpolished because there are insufficient labor institutions to cultivate them), because most people endure excessive top-down class warfare. As the social epidemiologists observe, we are not a species that can well tolerate (psychologically or physically) high inequality.

Many commentators here, who have fairly good grasps of economics, insightfully point out that society should not be expected to fail to pay for scheduled, needed collective goods and services just to accommodate Henderson’s impecunious choices to incur large debts, forego collective services, and accrue huge assets and savings, as befits a man who is setting his standards only upon those of super-wealthy administrators and capital managers. DeLong’s point that Henderson’s is the psychology of entitlement that accompanies increasing inequality is very germane. It is why increasing inequality begets demands for further increasing inequality, and it is part of why increasing inequality leads to declining happiness. It is why capitalist societies, dedicated as they are to concentrated accumulation, need countervailing forces, such as progressive taxation at the very minimum.

One thing that most (but not all) economically-savvy commentators are overlooking, or unfamiliar with, is that in the context of rapidly increasing inequality, we have had rapidly increasing asset prices in the Anglo-speaking countries. Commentator Maynard Handley’s point about positional goods is spot-on and deserves emphasis: If the rich are not adequately taxed, they will use their excessive discretionary income to push up the price of positional goods. Consider further that under the inequality-fueled rapid expansion of positional goods prices, multiple market goods and services that once worked passably as socially-desirable investments transform rapidly into multiple horrible albatrosses (eg. very expensive educations and houses). A rational economic action turns into an irrational decision as inequality soars around you. Most people cannot respond by changing course fast enough because they don’t have access to a framework to explain what’s happening.

It’s not only the fact that he only looks “up” in his lifestyle aspirations and in his sense of entitlement, but also that Henderson’s conservative economic paradigm could not prepare him for this problem (he was expecting instead to twirl, twirl, twirl toward freedom) that is why he is such a terrible money manager–that is why he doesn’t see that his freedom is constrained by the free market, so that he needs to be making a harder set of either-or choices with how he spends his money. His money management problems are real and are characteristic at some level or another of those of many Americans. In the midst of the heady market triumphalism, and the ideology that each American generation would by the hand of Almighty Capitalism see material progress, there was no way that most people could step into a quiet corner and rationally calculate how impossible paying multiple, de-socialized, inflated asset costs would become, for example (Though cheers to those outliers who did! It must feel good to have been an iconoclast). For the most part, though, we’re only human. Social, social humans.

Our problem right now is that it is far, far too facile for conservatives who are trapped in the inequality cost-spiral treadmill to press for policy that simply greases the treadmill they’re already slipping on–to demand low taxes and the evisceration of non-military public, collective goods and services that support and limit the costs of non-elites’ biological and cultural reproduction within capitalism (as for example public health care does in other affluent countries). For all but the top .01%, low taxation exacerbates and does not solve money management problems.

American Exceptionalism: CRAZY in a bad way

The Problem with American Exceptionalism:

19% of Americans in 2000 believed themselves to be in the top richest 1%. Another 21% believed they would be in the top 1% in the next 10 years.

Harmless optimism?

No, it has disastrous decision-making consequences. Gore pointed out that Bush’s tax cuts would only go to the top 1%. Because they were so fantastically clueless, nearly 40% of Americans thought that 1% meant themselves. It certainly did not. Americans have supported tax cuts on the basis of their incapacity to reason realistically, thereby enabling the richest 1% to grab the tax cuts, further inflate the economic, political, and power distance between themselves and all the dumb suckers, and fuck everyone else with their self-interested policies.

But not everybody is frittering away democracy on Powerball fantasies of arriving. Some are choking democracy in actually hoarding all the social wealth. The really rich want to ensure that they individually have control over at least 7.5 million in personal wealth each.

Awesome. This has to be the dumbest country ever. Will somebody teach these people about class? Because their bosses fucking know all about it. Christ almighty.

Data from Zweig, Michael. 2007. More Unequal.

mind-blowing hypocrisy & corruption: Bush’s IRS

From Democracy Now! (
Tuesday, November 8, 2005

IRS Warns Church About Anti-War Sermon
The Internal Revenue Service has warned one of Southern California’s largest churches it could lose its tax-exempt status because a priest gave a sermon criticizing the Iraq war two days before last year’s presidential election. The IRS has sent the All Saints Episcopal Church in Pasadena a warning that the federal tax code prohibits tax-exempt organizations, including churches, from intervening in political campaigns and elections. The IRS has issued warnings to other non-profits, including the NAACP, for issuing statements deemed critical of the president.

Um, has Bush’s IRS subsidiary heard of this holy rolling snake oil salesman/political consultant named Pat Robertson? What about these religions called Baptism and Mormonism? They’re pretty fucking political. What the hell is their tax-exempt status about?

WHY is this whole fucking country the feudal property of the fucking Bush family?