The Psychology of Being Wrong

Belief: If the Redskins lose their home game immediately prior to the Presidential election, the party in power loses the White House. Except in the case of President Obama last time, and in the case of Gore vs Bush. Despite the failure of the belief, some people still believe in the Redskin Rule.

Eduardo Porter writes in the New York Times an intriguing article about economists who have been shown by events and analysis to be wrong who cling to their wrong headed views and politicians who cleave to these same discredited views, despite all the evidence.

"That's my story and I'm sticking to it," is the Republican cry.

There are two Harvard economists (Reinhart and Rogoff) who  published a paper which said that economic growth stalls once government debt reaches 90% of GNP. When a graduate student took the time to comb through the numbers however, the professors were forced to recant and finally wound up saying, "Indebted nations grow more slowly." Not to admit wrong, just slide by the wrong as if we didn't really get anything wrong.

Beyond academia, the experiment in fiscal austerity playing out in Europe has convincingly demonstrated cutting back on government spending simply makes economies worse--as America surges ahead while Europe crashes and burns. 

Why do politicians stick with this intellectual garbage?  Why does David Cameron continue to say, "We will not be able to build a sustainable recovery with long term growth unless we fix this fundamental problem of excessive government spending and borrowing which undermines our whole economy"?

As Porter puts it:  "What explains the gap between theoretical victory and policy defeat?" The Keynesans demonstrate the correctness of their analysis time and again, but the politicians continue to ignore all that and press on with counter Keynesan claptrap about the dangers of government spending and debt.

One explanation, as Porter notes, goes back to the fabled grasshopper and the ants. We all learned it as kids. In the US, we all saw the Disney cartoon.  The ants work and save and do not spend without a thought about the future, and they are virtuous. The grasshopper is a wastrel, thinks not about tomorrow, only about today. "The world owes me a living," he sings in the Disney version, and he comes to grief for it, while the head down, don't live high ants are the virtuous ones who rescue everyone in the end. 
We think it morally repugnant to borrow and spend our way out of a recession.  

Another Harvard economist asks, "If the goal of government is to express the collective will of the citizenry, shouldn't it follow the lead of those it represents by tightening its own belt?"

The problem is the premise. The goal of even a representative republic is not primarily to express the will of its citizenry. The goal of a government is to provide for its people, to lead them to a better life and a more vigorous economy even if the citizenry is misinformed and wants to do the wrong things to get there.

Porter notes, "The other argument derives from a seemingly myopic conflation of the short and the long term: worried about the scary rise of Social Security and Medicare spending in future decades, voters demand budget cuts now."

The fact is our ability to predict economic future is demonstrably poor. If you are old enough, you remember all the talk about budget deficits in the past which evaporated with subsequent budget surpluses--especially during the Clinton years--and the cyclical nature of economics seems entirely forgotten whenever we find ourselves in a valley. The strange thing is even when we reach a peak, we seem incapable of looking back to all those valleys and remembering: Hey, next time we think we are stuck in the valley, just remember the view from up  here."

The fact is, the best solution to the long term viability of Social Security and Medicare is getting the economy rolling now, even if that means more government spending. 

The other fact is neither Social Security nor Medicare is really at risk. We have been borrowing from Social Security for years, it's been doing so well. These two programs are and have been strong for their entire history. The only time they are threatened is when Republicans start crying "The sky is falling" and causing financial panic.

Which in this country, does not take much.

Tim Cook Testifies: Apple Games the System, Or How The Rich Stay Rich

Let's talk about taxes.
No, not those taxes, not the taxes the Tea Party doesn't want to pay because it is an educational institution which spends only 49% of its time on politics.

Not the exemption to taxes.

Let's talk about the taxes Apple, Inc. did not pay.  
Apple did not pay taxes to either Ireland or the United States for its Irish subsidiary, a shell company it set up to evade taxes.  

Here's how the game is played: Ireland taxes corporations only if the the corporation is managed and controlled in Ireland. The USA taxes corporations based on where the company is incorporated.  So Apple incorporates (a subsidiary)  in Ireland (not taxed by the US) and controls that subsidiary by having board meetings in California (not taxed by Ireland) and thus avoids being taxed on earnings of billions (millions in taxes) in either country.

Oh, and it gets better: Apple sells it's subsidiary company in Ireland some products, like iTunes or whatever, and the Irish Apple sells that stuff abroad, so there is no profit in the USA to tax. Apple files to pay taxes in neither country. Apple is laundering money, legally. If a drug lord sends money abroad to a bank to spend it through that bank, that is a high crime. If Apple does it, it is a brilliant business strategy.

You've got a phantom company paying nobody taxes.

Now, it gets way better: Tim Cook, the CEO of Apple, goes before a Senate committee and holds up a scolding finger and proclaims Apple has paid every dollar it was legally required to pay (which is to say, none) and that it also complied with not just the letter of the law but with the spirit of the law.

Mad Dog particularly liked that spirit of the law bit. He is still trying to figure out what exactly that spirit is. The spirit of not paying taxes? The spirit of gratitude to the country that provided you with skilled, educated employees, infrastructure and sustenance? Mad Dog likes that spirit thing.

And, oh, yes, Apple informed the Senators you don't want to tax Apple anyway, because if Apple gets to keep all the money it makes, it will make better decisions about what to do with that money than the government ever could. 

To which, Rand Paul swoons. 

You got to give Cook credit. The man has chutzpah. He tells the United States Senate Apple is not above the law, but outside it, and having managed to evade the law, he makes a virtue of that tax evasion.  You wouldn't want that money anyway. You wouldn't really know what to do with it. You want us to keep the money and spend it on things which we know are good to spend money on. 
 And Rand Paul says, "Amen."

Is this an amazing country?  Or what? 

Here's what Mad Dog wishes the chairman of the Senate committee, Mr. Levin, had said:  "Mr. Cook, thank you for your comments today.  I understand you feel very virtuous. I, on the other hand, think you belong in jail.  I will go back to my office now and I will consult with my staff to see if we can think of a way to tax Apple in the future in a way to recoup some of the millions of dollars you have evaded paying.  Until now, you have slipped through one loop hole or another, but we ought to be able to construct a net with mesh fine enough to catch even as slippery a worm as you."
 

Tar and Feather The Tax Man

Don't we all hate the tax man?
But we want our exemptions from the tax man, because we hate the tax.
 And Congress, having wrought an exemption to taxation based on the simple premise that if an organization does "education" 51% of the time and politics only 49% of the time, oh, Congress bears no blame at all for the mess which ensues.

Remember those shrimp fishermen along the Gulf of Mexico who faced the loss of an entire season's income when BP fouled the Gulf waters?  So President Obama sends a man down from Washington to hand out money to compensate the fishermen for their losses.  And the man from Washington says, "Okay, it's this simple. We will give you the same number of dollars you made last year. Just bring in your income tax forms so we can get the number of dollars from that record and we can cut you a check tomorrow.

Problem was, lot of these fisherman never paid any friggin income tax. Never filed. No records of what these guys made because everything they made was under the table, off the books, untaxed, unseen, unrecorded.  

Since they never paid the government a thing, they were in a pickle when it came time for the government to help them. 

They didn't want anything to do with the government, until it came time for the government to send money their way.

Well, all those thousands of  Tea Party groups were all anti tax and antigovernment, until it came time for claiming their exemptions, so they could keep their donor lists secret, so they could get foundation money, so they could suck on the teats of all those organizations tax exempt status would confer.

And now Michele Bachmann is saying conservatives will be targeted for death by the IRS operating through Obamacare.

Can the black helicopters be far behind?

Ah, Gail Collins and Charles M. Blow

Here's what Gail Collins had to say about the Congressional hearings on the IRS: 
"They were working at the Determinations Unit of the Rulings and Agreements Office of the Exempt Organizations Division of the Internal Revenue Service. Spending their lives trying to clarify the 501 (C) (4) status. You try that for a while and see how you like it.
   If Congress wanted to help, the members could simplify the law so IRS minions aren't trying to figure out which groups spend only 49% of their resources on politics as opposed to 51 percent...
   The IRS employees were stuck with a pile of 70,000 applications for the tax-exempt status that's awarded to organizations engaged in social welfare issues. Recently, political groups have been gaming the system, announcing they're just do-gooders with a minor political sideline in order to qualify. When they succeed, the get to keep their donors secret."


Charles M. Blow amplified:

"The Congressional Tea Party Caucus founder, Michele Bachmann, who never misses a chance to say something asinine, suggested to the conservative web site wnd.com that it was 'reasonable' to worry that the IRS might use Obamacare to kill conservatives...
'Reasonable and 'Bachmann' don't even belong in the same conversation, let alone the same sentence, and yet she remains one of the most visible spokes-women for the movement."

Ah, finally, some actual pith from the un Republicans.

Ye, Gads. Why are all the Congressional Democrats running for cover?  Where is Barney Frank when you need him?

 

Susan Collins: Airhead Republican

Today's Portsmouth Herald has an op ed by Senator Susan Collins, R-Maine, about the IRS "scandal" over the IRS's Exempt Organizations Division, which "targeted" organizations with "Tea Party" or "Patriots" in their names for special examination to insure these organizations, which claimed their contributors should be able to claim their contributions as deductions to their own personal income taxes and which claimed their organizations should be exempt from paying taxes.

Ms. Collins is irate, irate, I tell you about the abuses of these patriotic citizens by "the most powerful and feared, federal agency in Washington." 

And she wants to tell you something else:  "The American people cannot, and will not, tolerate the abuse of power to erode their most fundamental rights."

And, she warns darkly, "Some believe that the abuses that are now making headlines appear to be part of a larger pattern of questionable activity by the administration that seems intended to hinder or chill the expression of views critical of the president's policies."

Oh, there it is, the paranoid style in American politics.
And all this from the prototypical "bipartisan" and "moderate" Republican.

Of course, this is not about the violation of free speech by organizations with "Tea Party" in their names. This is about money. 

These organizations came to government attention because they were, in essence, asking the government to subsidize their activities by tax write offs.

This same sort of argument comes up all the time with respect to churches which have a role as a religion but which also become involved in political speech and activity to influence elections, to advocate for candidates either by name or by clear implication, in the real world of policy and politics.

When it is a liberal church advocating for liberal causes the Republicans become irate, irate I tell you, about the government legitimizing their opinions by granting these churches tax exempt status.

In perhaps the most clear cut and egregious example of the trouncing of freedom of speech, Frederick v Morse, otherwise known as the  "Bong Hits for Jesus" case, Chief Justice Roberts dismissed arguments the case was about free speech because the plaintiff had asked for monetary compensation. "That means this case is not about freedom of speech. It is about money." 

But now that the right wing finds itself asked to pay for its own organizations, we have the bogey man, the IRS trampling on free speech.

Well, speech is anything but free in these 21st Century United States of America. It costs money. And what really appalls the Tea Party and its Republican mistresses and shills in Congress and the Senate is the idea any right winger should have to pay his fair share of taxes. 

It's not surprising a Republican like Senator Collins is in the pocket of the right wing party which paid for her election; but it is disappointing Democrats have allowed the Republicans to become the most outraged people in the room. Collins with her "cannot, and will not" blather and, of course, Michele Bachmann with her, "The power to tax is the power to destroy" quote. 

Yes, Chief Justice John Marshall did make that observation, Ms. Bachmann, in the 18th century when government did more taxing than spending and supporting.But it is also true, in the 21st century, exempting you from the burden of paying your fair share is a burden on every other taxpayer, and an exemption is a subsidy.

The IRS Got It Right: To Hell with The Tea Party

No analysis can be on safe ground until "the facts" of a controversy are known and Mad Dog does not pretend to have all the facts about the IRS investigations of organizations applying for tax exempt status as "educational" organizations which had "Tea Party" or "Constitution" in their names.

Was this shameful "profiling" of conservative organizations as the Republicans would have us believe or simple vigilance?

Mad Dog heard some of the Congressional hearing testimony today and an IRS man, already fired and humiliated explained there was suspicion that some groups which claimed to be "educational" were actually political.

Now, how do you draw the line?  Do Tea Party people and Republicans and Democrats not routinely say they need to "educate" the public to "understand" the issues, when what they really are up to is persuasion and, when possible, indoctrination?

If you advocate for the election of leaders who will fight for "limited government"  and "cutting taxes" and shrinking the government to a size where you can drown it in the bathtub, are you not advocating against President Obama and the Democrats?

When does "education" become political speech?

Mad Dog is only sorry President Obama did not react thusly: These Tea Party thugs routinely tried to use the laws intended to protect universities and non political advocacy groups to funnel money and contributions into their phony "educational organizations." Well, the IRS was doubtful, as they well should have been.  This was not some Nixonian "enemies list." This was simply healthy skepticism: IRS agents were saying--show us what makes you an educational group rather than a political group.  For all the IRS knew, these groups were no more apolitical educational groups than the Westboro Baptist church is an apolitical local church. Whenever an educational group or, for that matter a religious group attempts to influence public policy it becomes an interest group, a lobby if you please and it loses its immunity to scrutiny and should lose its immunity to exemption from taxation."

That's what Mad Dog wishes the President had said.

But the President instincts are audi alteram partum--there are two sides to every argument. Hear the other side.

And, of course, there is an other side here: The IRS demanded all sorts of lists of members, minutes of meetings and all those aggravating, irrelevant, intimidating records few people keep. They wanted a summary of books read in book club groups. The head of book club sent in the book and said, "Read it yourself." As well she should.

So, it's hard to love the IRS. They are not always very bright. But, if you are President Obama, use this flap to your own advantage. Attack. Attack. Attack.

 

In this case, he ought to have presented his side, the government's side with more vigor and backed down those howling hyenas of the Republican right.

Republicans: Feeding at the Trough

Republicans are defined by many things:  Bible Thumping, opposition to  abortion, endorsement of gun rights, sanctimony, a tendency to demonize and vilify their opponents, resentment of people who sport brand name educational institutions in their resumes, resentment toward government in general, but not, in specific.

Republicans love government when it comes to bringing government power to bear on people who speak in opposition to prevailing dogma (see Bong Hits for Jesus) or when it comes to supporting police intimidation, as in strip searching persons arrested for rolling through stop signs or for walking down the street while Black, or when it comes to defense contracts,  or when it comes to preventing local governments from passing strict gun ordinances or when it comes to preventing a fourteen year old girl who has just had unprotected sex from buying and using Plan B, so she does not get pregnant.

Republicans hate government, until the point they want government to do something for them or to other people.

In that, they are not all that different from John Q. Citizen.

When you look at the pie graph of government spending, it strikes Mad Dog, there are surprises, pleasant surprises, in the way our federal government chooses to spend dollars.  Republicans, of course, think we spend too much money on everything, except for the things they want to spend money on--like weapons. 

But look at that pie: We spend only about 14% on Defense, roughly what we spend on "welfare.'  Of course, how you define "Defense" is crucial. If spending on the Veterans Administration, with all those prosthesis for soldiers returning from Iraq and Afghanistan comes under "Health Care" then the small slice of the pie for Defense is misleading.

If we spend roughly 20% on healthcare Mad Dog would say that's money well spent, although it should be noted, Europeans, who in general have better health care than Americans spend only about 10% of their budgets on healthcare.

Roughly 20% on "pensions" which likely includes both federal government pensions and social security is money well spent because it keeps senior citizens out of poverty, off the bread lines and out of the emergency rooms. It probably saves money in the long run, and it certainly prevents much misery.

But look at that "interest" slice: If that 6% is all we spend on servicing our debt, I'd say we're doing pretty well. Republicans will tell you our deficits are killing us. Paul Krugman says they are paranoid schizophrenics on this score. Mad Dog tends to believe Professor Krugman on this one.  They are paranoid because the threat they perceive is non existent. and they are schizophrenic because they are split personalities, of two minds. Spending 6% on debt is intolerable but spending 14% on defense, including spending on weapons systems and ships and airplanes which make us no safer, make corporations richer as a form of corporate welfare, that is just fine with our Republican friends.

With friends like these, as the saying goes, we don't need enemies.