Tax the rich? Economics explained in beer

[ObserverNY]

Originally Posted by ovcatto

I know how you folks are tied to analogies, but let's try for a change an analogy that actually is reflective of how a society works.

We have a tribe of hunter gathers numbering 30 individuals.

There are 15 males and 15 females.

5 of the males are in their prime, 5 are old or infirmed, 5 are children. The females have they same distribution.

Of the 5 males in their prime, 3 are great hunters and warriors, 1 is a lousy hunter and 1 isn't good for much good for anything other than other than making babies. The 5 women do all of the gathering for the tribe.

Due to a drought the women have nothing to gather and the tribe is totally dependent upon the 3 hunters to gather obtain food for the tribe.

On a hunting trip, i hunter kills 10 animals, a second kills 3 and another kills 2 enough to feed the tribe for a week.

Is it your argument that it is unfair for the most successful hunter to contribute more to the tribe than the others?

Should the 5 old and infirmed not be cared for?

The women and children should go without?

And keep on thing in mind, even as great as the greatest hunter is he is defenseless against large predators without the others in the tribe contributing to the mutual defense when necessary?

I do like analogies, but I hope you didn't work too long on that one because the REALITY of the U.S.A. 2012 is far different from communal hunter/gatherer TRIBES of 3,000 BC. Now if you want to try and come up with a serious economic analogy based on modern day life and our current tax system, I'll be happy to discuss. Last time I checked, the Woolly Mammoth isn't on the endangered species list - it's extinct.

[Finn_Jarber]

I think the first time I heard this was in high school. David R. Kamerschen denies writing it (not that it matters who really wrote it).

How Taxes Really Work

To start with . . . .

In the US and throughout most of the rest of the world, the tenth man would have paid off a politician for $10 to get a beer subsidy of $30 per night(to create jobs for the bartender). Of this $30, $10 of course would have covered the lobbying expense, $10 would go in his own pocket, $1 would go to the bartender to keep his mouth shut, and $9 would go to the bar.
The Bar would give him a kickback of $10 each night for bringing in his 9 buddies to make them into alcoholics, repeat customers for life.
The Bar would then raise their prices to $130 citing inflation and higher taxes.
The tenth richest man would then secure his finances in a Dutch Holding Company managed by a trust in Ireland which invests in Chase and Bank of America. He would then explain to his buddies that he is as poor as the rest of them and can’t afford to pay himself as he cries into his beer that night citing his latest financial report which shows him to be broke on paper so that he doesn’t have to pay taxes in the United States ever again.
Citing his former generosity, the other nine men would agree that the tenth man can now pay nothing like the 4 poorest.
The others would then be faced with an adjusted amount of

• The fifth would pay $3.
• The sixth would pay $10.
• The seventh would pay $22.
• The eighth would pay $38.
• The ninth would pay $57.

Now the group would recognize that this is not fair and so would lobby the Government for an Earned Drinking Credit for the Poorest men. The government would oblige and give the four poorest men $2 each, but they would tax the 5th – 9th men $2 each as well.

• 4 men receive a total of $8 and 5 men pay $10.

The adjusted amounts would then look like this for all 10

• First Receives $2 pays $2 | Net 0
• Second Receives $2 pays $2 | Net 0
• Third Receives $2 pays $2 | Net 0
• Fourth Receives $2 pays $2 | Net 0
• Fifth Pay $1 to bar pays $2 to tax | net paid $3
• Sixth Pay $8 to bar; pays $2 to tax | net paid $10
• Seventh Pay $20 to bar; pays $2 to tax | net paid $22
• Eighth Pay $36 to bar pays $2 to tax | net paid $38
• Ninth Pay $55 to bar; pays $2 to tax | net paid $57
• Tenth Man: Tax Credit Received: $30 ;
  Pays $10 to politician;
  $1 to bartender;
  Receives $10 from Bar
  Net RECEIVED $29 per night and free beer

[gwynedd1]

When a slave owner buys the swill for all his slaves:

slaves pay : 0%
owner pays : 100%

This is an injustice, according to the model, to the slaver.

Perhaps the problem here is that one cannot explain a complex society with simple mental exercises?

Under other simplistic economic models being mugged would be defined as a service.

Unless you are dealing with physical properties, math is usually involved to promote some sort of social lie.

[gwynedd1]

Originally Posted by ObserverNY

I do like analogies, but I hope you didn't work too long on that one because the REALITY of the U.S.A. 2012 is far different from communal hunter/gatherer TRIBES of 3,000 BC. Now if you want to try and come up with a serious economic analogy based on modern day life and our current tax system, I'll be happy to discuss. Last time I checked, the Woolly Mammoth isn't on the endangered species list - it's extinct.

Having studied economics for some odd 20 years, I can only come to the conclusion that the problem in this example is that you believe it no longer applies. It takes awhile to appreciate that most economic thought, which now generally tries to fit overly complex interaction into simple mathematical models, has idiotic results. Take his example. Would you apply economic formulas to interactions between 15 people and account for his generational cycles. Or sure they do look at demographic trends, but then in the next WSJ article they look at baby boomer assets.

Lets look at that last one a bit more closely shall we?

If I am a boomer at 60, and I have a 100k asset what does that mean? That asset generally has more demand from the same exact demographic, especially a consumer good like an exurbia barn. .Its the same reason the demand for Micky Mouse depends on the number of 5 year olds. So what happens to the marginal utility of that boomer asset they thought they could use to retire in 20 years? Well, what happens when a perpetually infantile teen tries to sell his toys to his now much older friends who no longer would give anything for that red rider? He will have to sell it to the next generation of 5 year olds.


Hmm...

Looks like someone is going to be selling into a glut of their own creation.




Several things are near extinction. Human tribalism is not one of them.