Laffer vs. Poisson

Laffer (on the left) versus Poisson (on the right)
 

I’m still thinking about the current controversy on where the “hump” in the Laffer curve should be placed.

Maybe it’s time to do a little “thinking outside the box.”  What if the Laffer curve is not the proper representation for the economic situation we wish to model?

If you check out Wikipedia, you see that the Laffer curve is presented as a parabola, typically skewed to the right so that the peak in the curve is after the midpoint. Why is that? Why should the Laffer curve be based on a geometric shape?

Maybe it’s because a parabola implies a scientific basis.  We use a parabola to approximate the path of a fly ball in baseball.  It is based on scientific phenomena (drag and gravity) and allows us to predict where the ball will be at any given time if we know the velocity of the ball when it leaves the bat.

Does that sound like something that should be applied to economics?  Wouldn’t a statistical tool be better?

The Poisson distribution (see image above on the right) deserves a closer look.  It is meant to model the probability of actions, not to predict a specific action.  Furthermore, in contrast to the Laffer curve, it provides a better model of behavior near the 100% tax rate.  The Laffer parabola shows the tax collected will be zero, whereas the Poisson distribution has it tapering down toward zero.  It indicates that even though nobody should want to pay all their income in taxes, some idiot will do it.  That is a better model of reality.

And that’s important!  We should be using tools that represent actual data.  The model should reflect our reality, not a vision of what we want our reality to be.

The acceptance of the Laffer curve in our culture is based on the idea that the hump in the curve is skewed toward the right.  That implies higher tax rates will generate increasing tax revenue, even at tax rates over 50%.  The Poisson distribution skews the curve the other way.  It implies that if you set tax rates too high, you will see diminishing returns.

Do you see why the Poisson distribution is not being applied in our current political environment?

If our cultural narrative is to promote more federal government activity in our lives, then we need to be shown how greater government is good for us and makes us feel better.  One way to do that is to emphasize that increased taxes don’t hurt.

If the Poisson distribution shows the opposite, our culture will make sure it never sees the light of day.

Return to Top

Return to Bottom

Trouble with The Curve

 

Tim Groseclose has a video posted at Prager University postulating a relationship between tax rates and revenue.  It’s relevant to Hauser’s Law, which shows the relationship between tax revenue and income.

What’s an economic discussion doing on the Anti-Republican Culture site?  It’s all about testing our beliefs.

Mitt Romney makes a pledge to keep government spending constrained at 20% of GDP.  That’s in line with what is shown by Mr. Hauser.  If government can’t extract more than 20% in tax revenue, don’t spend more than 20%.

That’s the spending side.  On the income side, Mr. Romney wants to make permanent 20% cuts in marginal tax rates.  That assumes tax revenue increases with lower tax rates.  Mr. Romney believes America is to the right of the hump in the Laffer curve.

And that’s where there is controversy.  Where is that Laffer curve “hump?”  If it’s in the 33% area, Mr. Romney is right.  If it’s in the 50% area, the Democratic Party is correct.

How do we find out?  I guess we try to “tax the rich” and watch human nature come into play.

Can “the rich” avail themselves of more tax-avoidance schemes than the rest of us?  I imagine so, and this makes them more sensitive to the Laffer curve.  When increases in tax rates cause their net income to decline, they adopt the necessary tax-avoidance strategies.  Regular working people might not be able to stop working, but “the rich” will move their wealth into tax-free securities.

What’s the effect?  The Laffer curve will exhibit “dynamism.”  The hump moves left or right depending on tax policy, and – this is immutable – increasing overall tax rates moves the relative position of the hump to the left.

That may take an understanding of the mathematics of derivatives, but just realize that the slope of the curve begins at a peak value of one, and decreases from there.  Where the curve peaks with a slope of zero – the “hump” – is a function of our response to overall tax policy.

The Laffer curve is simply modeling human behavior.  It shows that if we get to keep more of what we earn, we keep doing what we’re doing.  If we get to keep less of what we earn, our sense of fairness causes us to look for alternative behaviors.

Tim Groseclose has a way of making the argument in a non-threatening way, but it is devastating.

The Obama Campaign preaches that it can get us free stuff and all we have to do is “tax the rich.”

At the risk of being less sensitive than Mr. Groseclose, let me pose this question:

What kind of masochist wants to re-elect president Obama just to see him proved wrong?
 

UPDATE 9/24/2012:
My wife and I went to see the Clint Eastwood film that is the title of this post.  It's a sweet movie, in the tradition of Gran Torino (with less bloodshed).  And who doesn't like baseball?

I don't mean to give economics a bad name, but when you've got the National Bureau of Economic Research showing the hump in the Laffer curve always at a tax rate of 60% or greater, and Mr. Groseclose saying it is closer to 33%, shouldn't someone in academia be interested in resolving that discrepancy?

What about Mr. Hauser?  If Americans historically balk at giving up more than 20% of GDP in federal taxes, shouldn't that appear as a discontinuity or inflection point on the Laffer curve?

Remember, "The Curve" is meant to model economic behavior, not to be an ironclad law.  Have we gotten things turned around?

Return to Top

Return to Bottom

The Mask Slips

Thanks to Allen J. Schaben of the Los Angeles Times for this photo and to Zombie for the context.

Pat Caddell, a prominent Democratic Party pollster, showcases America’s current national security policy in an interesting way.  He notes the disparate treatment between the protections afforded Chris Stevens in Libya and Valerie Jarrett in Martha’s Vineyard.

According to Ben Shapiro at Breitbart.com, Libyan Ambassador Stevens did not have a Marine detail in Benghazi, Libya, but White House Senior Advisor Valerie Jarrett received a full Secret Service detail while on vacation at Martha’s Vineyard.  Foreign Service officers function without the armed protection of our government, while Democratic Party senior operatives receive the elite protection of our Secret Service.

What’s wrong with this picture?  Not a thing, if you understand the power and authority of the Democratic Party.  Americans are pawns, and our culture is engaged in splitting us into “good guys” and “bad guys.”  A few examples:

--The “Freedom of Expression” Grouping

Andres Serrano’s Immersion (Piss Christ) is celebrated in our culture.  So is The Holy Virgin Mary by Chris Ofili.  In contrast, the work of the gentleman shown above in the midnight “perp walk” is not being celebrated.  Our culture lets us know that art denigrating “The Religious Right” is good; works that embarrass the Democratic Party are bad.

--The “Equal Protection under the Law” Categorization

Members of the New Black Panther Party are granted exemption from our laws along with major Democratic Party contributors.  Unfortunately, Sheldon Adelson (a contributor to Republican political candidates) is now subject to IRS and NLRB investigations, and the Koch brothers, (supporters of Republican causes) suffer incessant verbal abuse.  Our federal agencies are  being used to reward allegiance to the Democratic Party and to punish Republicans.

--The “Promote the General Welfare” Classification

The contrast between the security detail for Valerie Jarrett and the safety of those who serve in the Foreign Service is a case of political emphasis.  A similar situation occurred at the Democratic National Convention earlier this month when the American military was honored. The backdrop for the presentation was a graphic of Russian warships and Turkish jet fighters.

The DNC ended up giving our military a token observation of service to country with an emphasis on the generic nature of their work.  If the United States Military were a Democratic Party identity group (e.g. young single women, people with dark skin tone, people with Hispanic ethnicity), proper recognition might have been afforded.  It is disappointing that our military is a DNC afterthought.

The three Constitutional ideals listed above are an abstraction to many people.  They are protections that we expect in America, but we don’t feel the need to “man the barricades” just because the Rule of Law is under assault or our First Amendment rights are losing protection.  Instead, we hear a single direct message delivered to us day in and day out:

Americans have a choice.  We can get free stuff – free healthcare, free education, and free birth control – or we can have bad people (Republicans) put in charge.

That is what our culture puts forward as the choice for Americans.  It is a coordinated election message, and its simplicity gives it power.

But if you look carefully, the mask is slipping.

UPDATE 9/27/2012:
Courtesy of Matt Drudge, we have evidence that the "free stuff" message is working.

Return to Top

Return to Bottom

Self-Doubt

Clint Eastwood at the 2012 Republican National Convention - Stan Honda, AFP/Getty Images
 

Is “self-doubt” good for you?

Use the Internet to search for the term and you are directed to sites that give advice on how to conquer, break, or cure self-doubt.  Evidently it is bad if you have too much of it.

But is the absence of self-doubt a good thing?  It is an attribute of authoritarianism, and can lead to problems.  A few examples from our current politics:

--The United States Senate has not passed a budget in three years.  The feeling is, “You people don’t need no stinkin’ budget!  We’ll spend your money any way we like.”

--Public Schools don’t like being adjudicated.  “We don’t need no standardized testing!  We will teach students any way we like.”

The righteous absence of self-doubt is a power trip, but it’s also destructive.

DWI automobile accidents are a case in point.  A person who has no concern for his or her driving ability while inebriated is exhibiting the absence of self-doubt.  Senator Ted Kennedy’s experience at Chappaquiddick is emblematic.

A person who is texting while driving is also displaying the absence of self-doubt.  But must we criminalize the behavior?  Do you catch the irony in lawmakers who have no self-doubt in passing anti-texting legislation?  Their lack of self-doubt enables them to criminalize the behavior of citizens who exhibit the absence of self-doubt!

The “60 Minutes” coverage of last year’s mission to kill or capture Osama bin Laden provides another look at self-doubt.  The author of “No Easy Day” noted how the women on site at the bin Laden compound were unusually combative, aggressive and hostile.

He didn’t relate this behavior to the absence of self-doubt, but it was a factor.  The people at the compound had absolute confidence in their ideology.  They lacked self-doubt - and it worked to their detriment.

So, if too much self-doubt is bad, and too little is no better, what are we to do?

A line from the Clint Eastwood movie “Magnum Force” comes to mind:

“A man’s got to know his limitations.”

That advice helps us understand the proper amount of self-doubt.

Return to Top

Return to Bottom

A Cultural Green Light

Maria Ciano (on the right) at a Broncos game.

The rain-delayed Republican National Convention gets underway today, and it puts Mitt Romney in the political spotlight.  He’s got a major task in front of him: to change the perspective of the American people.

Right now, as Mark Steyn has indicated, “He's still Mitt Romney, and he'll put your dog on the roof, your wife in the ground and your Negro houseboy in the cotton field out back.”  (If you don’t understand the brilliant humor within that quote, please see my previous post.)

Mr. Romney has to change that perception over the next three days, and it will be fun to see how he does.  It will be a political battle.

Actually, it might be more of a political war.  While Republicans are fighting the battle with their votes, our opponents are engaged in a more personal battle.

What are their weapons?

MariaCiano employs lying - about her core beliefs.

Alexis Fecteau vandalizes property.

Brett Kimberlin and Neal Rauhauser see SWATting as a useful tool.

Jason Thomas Wilson carries a machete.

Floyd Lee Corkins II prefers a semiautomatic handgun.

Adam Smith is simply a bully.

These people all choose to show their anti-Republican sentiment in ways that are destructive, not only to Republicans, but destructive to themselves as well.

What gives them a “green light” to behave in this fashion?

Do they believe they won’t get caught?  Is there a financial incentive?  Is it a quest for glory?

What could be their motivation?

These are not societal misfits.  One is (was) an Air Force officer.  Another was a CFO.  They are educated and they are successful.

It doesn’t make any sense.

When something is going on within our society that needs to be better understood, an investigator typically investigates.  Unfortunately, here in Denver, 9News doesn’t want to know and The Denver Post believes things are hunky-dory.

Perhaps a social scientist at one of our leading universities sees something worth investigating?

Maybe Ferris Bueller sees it!

Bueller…Bueller…

UPDATE 8/29/2012:
David Chalian of Yahoo! News finds raaaaacism to be the weapon of choice.

UPDATE 9/5/2012:
Bonnie Pollak just throws your ballot away.

UPDATE 9/26/2012:
Michelle Neumann will personally threaten you.

UPDATE 9/28/2012:
Mona Eltahawy uses her moral authority - plus a can of spray paint.

Return to Top

Return to Bottom

Objectification

Halle Berry at the 2002 Academy Awards - Photo by Steve Granitz / WireImage

Occasionally you might hear a woman complain that she is simply “an object of sexual desire.”  She feels stripped of her humanity and made nothing more than an abstraction.

That’s objectification.

Our culture is well-versed in the concept.  Feminist theory plays up the idea as a demonstration of men exerting power over women.

Most people find objectification to be, well, objectionable.  We like to think of ourselves as complex beings, with free will, moral and ethical constructs, and ideological passions.  Being reduced to a simple object is demeaning.

While objectification is a part of our human nature, there is one particular type of objectification that often goes unrecognized.  It is political objectification.

It showed itself recently at the Summer Olympics in London.  Gabrielle Douglas was celebrated as “the first black woman to win gold in the gymnastics individual all-around.”

Was this really necessary?  Must there be a racial context to every American accomplishment?

The racial context is actually a political context.  Our culture elevates the accomplishments of non-Republicans, and Gabby is a Possible Lifelong Democrat (PLD).

(I know, I can hear you saying, “What’s the matter with this guy?  Does he see politics in everything?”)

Well, maybe.  Our culture has a political agenda, and we need to be aware of it.

In the case of Gabby, she is being classified into an identity group.  She has dark skin tone, and our culture knows this feature is closely associated with people who support the Democratic Party.

Gabby ends up being objectified.  She is singled out.  She is a PLD and she must be exploited.

It would be fun if she fought back against the objectification.  What if an exchange with a reporter went something like this:

Reporter: Gabby, what’s it like being the first African-American gymnastic all-around champion?

Gabby: First, I’m an American, not a hyphenated-American, and I’m part of a team with four other accomplished women.

Reporter: Well, you must be pleased that you’ve come this far in the struggle for equality in our country.

Gabby: I don’t feel any connection to the issue of slavery or to the segregationist policies of the Democratic South.

Reporter: But certainly you have made your people proud.  What do you want to tell other blacks?

Gabby: People are able to compete and get ahead in America because this is the best nation on earth.  Thanks for your time.

That conversation didn’t happen.  Instead, Bob Costas noted the “historic nature” of Gabby’s accomplishments and celebrated her as a PLD.

Yes, in America, we are conditioned to believe we have an obsession with ethnicity and race.  It is our American shame!

But if that were true, what about the treatment of leadership figures like Clarence Thomas, Herman Cain, and Allen West?  And who can forget Condoleezza Rice before the Senate Armed Services Committee?

The abuse of these people may not be particularly uplifting or fair, but this is America in the 21^st century.  Political objectification is a fact of life, and people like Gabby Douglas endure it.

So what is to be done?  Can our culture be changed?

I think we are taking “baby steps” in that direction, and awareness is a good first step.  When Barack Obama was elected President of the United States, his accomplishment was considered “historic.”

That’s fine, but where does it end?  When an American becomes the first black dogcatcher, is that historic?

Awarding people recognition in a given field because of their physical appearance is patently strange.  Yet when our culture does it, it is seen as “right and natural.”   The news is delivered in a serious and reverent tone.  Attention must be paid!

However, from the perspective of the individual, it frequently seems inappropriate.  Gabby is a person with a family and all of the accompanying baggage.  She comes from a broken home and was raised by her mother.  Her journey has not been easy.  To complete her quest and find all that matters in our culture is the color of her skin, has to be an immense letdown.

But, at least she is being celebrated.  A similar story could have been told about Olympian Lolo Jones.  Instead, Lolo found herself the subject of a New York Times story that was less than complementary.

Why the difference in treatment between Gabby and Lolo?  Lolo is a young woman who, to put it gently, is not pro-choice.  (Yes, political objectification is alive and well at the New York Times.)

Again, what can be done?

In the case of the treatment of Lolo, she is perceived as a fundamentalist Christian.  She, like Tim Tebow, is abstaining from sex before marriage.  Clearly, that is a hallmark of the Religious Right!

And so we have two groups of Americans, one identified by physical appearance and the other identified by religious beliefs.  One is celebrated by our culture; the other is subject to demagoguery.  Both are instances of objectification.

We can’t do much about the hatred that is shown toward the Religious Right.  That is promoted by our culture and is largely outside the control of those Christians who are under attack.

However, the objectification of Americans with dark skin tone is wholly reversible.  All that has to be done is to relinquish the proxy association of the Democratic Party.

How to do that?  Simply change voting patterns.

Currently, the Democratic Party assumes that more than 90% of voters with dark skin tone will vote for Democratic Party candidates.  What if that changes to less than 70%?

That would be a shattering wake-up call to the Democratic Party, and a chance for a large group of people who are objectified because of their physical appearance to say, “We’re not going to take it anymore!”

While being taken for granted is not a positive feeling, sending a strong message to those who objectify you is.

I also think it would be pretty darn good for America.

UPDATE 10/3/2012:
All your lady parts are belong to us!  The Democratic Party shows that it "owns" American women.

UPDATE 10/31/2012
 Emily Esfahani Smith has some comments on the Lena Dunham ad for Barack Obama. She accurately refers to it as "re-objectification."

UPDATE 12/18/2012:
Amos Brown, host of an AM radio program in Indianapolis, demonstrates the downside of objectification.  His Twitter comment on the appointment of Tim Scott by Nikki Haley:

"Gee, courtesy of S Carolina GOP, the nation gets Tim Scott an ultra-rightwing, Tea Party devotee US Senator who's Black only in skin color."

Mr. Brown sees allegiance to the Democratic Party a requirement for people with dark skin tone.

UPDATE 1/10/2013:
Melissa Harris Perry makes the point in a backhanded way, saying that even though Justice Clarence Thomas has dark skin tone, he is not "representing necessarily the positions, the issues, even the Constitutional interpretation that is shared by the vast majority of civil rights organizations, by the vast majority of African-Americans."  She warns us not to "assume that any given physical body carries with it a set of political ideas."

Huh? In the United States, 90% of people with dark skin tone are aligned with the Democratic Party, and because Clarence Thomas is conservative, he is deemed un-representative.  Clarence Thomas is not "black enough" because he is not a Democrat.

That's objectification.

UPDATE 10/2/2014:
Elbert Guillory in Louisiana is a profile in courage.  Watch this video:

 

Return to Top

Return to Bottom

Life Imitates The Onion

James Taranto, in his Best of the Web Today series, often has a segment titled, “Life Imitates The Onion.”  It is meant to poke fun at news stories that have a spooky resemblance to parodies published in The Onion.

One that came up recently is our government’s desire to evaluate school discipline in the context of skin tone.  President Obama issued an Executive Order on July 26, 2012 to create a special panel within the federal government.

The title of the order is “White House Initiative on Educational Excellence for African Americans.”  It creates a commission of up to 25 presidential appointees to improve educational outcomes for students with dark skin tone.  One of the functions of the commission is to promote “a positive school climate that does not rely on methods that result in disparate use of disciplinary tools.”

In 2009, I wrote “The Cat in the Bag” (available for $0.99 on Kindle).  It looks at how the Democratic Party has become a political movement, and includes a couple of chapters as a spoof.

One of those chapters is titled, “Human Rights Come to America” and suggests that our criminal justice system could be improved if we tied punishment to skin tone.  The idea is that the darker your skin, the more lenient would be the extent of any punishment.  If people of pallor end up staying in prison much longer than people with dark skin tone, our justice system would appear to be more “just.”

My hope in advancing such a concept was that people would appreciate the genius of our “equal protection under the law” constitutional framework.  I also wanted to poke fun at the Democratic Party for wanting to grant special treatment to an identity group that tends to always vote with it.

Self-promotion in the name of “equality” needs to be spoofed.

Now comes our President’s executive order, with its provision to monitor school discipline based on skin tone.  Why not take it one step further, as was done in “The Cat in the Bag?”

At some point, people begin to recognize the absurdity and appreciate the elegance of Chief Justice Roberts’ point: “The way to stop discrimination on the basis of race is to stop discriminating on the basis of race.”

UPDATE 10/15/2012:
Things are not getting better.

Return to Top

Return to Bottom