The Economist's Free Exchange writes that many higher-earning Danes are voting on its tax regime . . . with their feet:
None of this is to say that the strains of commitment in Denmark have imperiled its stability in the near term. But as the low-tax, high-growth EU entrants from the east close in on the west, competition for both human and financial capital will intensify, drawing away ever more well-educated, cosmopolitan Danes-- unless they are given sufficient incentive to stay put. In effect, free migration within Europe allows wealthier Danes to bargain to keep a greater portion of their earnings. The interesting question is how hard they will bargain.
The numbers don't seem that large, but they come out of Denmark's most valuable human capital; the immigrants flowing the other way tend to be much lower skilled.
It is hard for high levels of taxation to survive a right of exit; Europe has mostly been protected (so far) by its many languages, which make it harder to move. But as the EU increases labor mobility, expect to hear more about harmful tax competition. Or more American-style efforts to keep the citizenry from moving abroad to work1.
1 In case you didn't know, America, alone among developed countries, taxes the foriegn earnings of its expatriates. Also alone among developed countries, it holds you liable for taxes ten years after you renounce your citizenship, and confiscates your property if it determines that you have renounced your citizenship for the purposes of tax avoidance.
So Americans are, in part, the property of the Federal Government? That puts the Civil War into perspective.
Denmark already has some taxes on exit. For example capital gains taxes are levied as if all assets were sold on the day someone abandons Danish tax residence. It's hard to imagine US-style citizenship based taxation, but one possibility could be -"graduate tax" on people with (government funded) university degrees, which is how they collect tuition fees in England and Wales.
Just recently a commenter here was telling me that Washington should try hard to emulate Copenhagen. If a 63% marginal tax rate appeals to him, then I suppose Denmark offers an alluring model. My own tastes are rather different.
The flight of productive people from Denmark shows just one of the channels through which high tax rates distort incentives and damage the economy. A subtler, but more important channel, is reduced work effort and entreprenuership.
"People respond to incentives," as economists are fond of saying, and high tax rates reduce the incentive to work hard and take risks. That is one major reason that the standard of living (GDP per capita) is about 20% lower in Denmark than in the United States (and Denmark is not catching up).
Free exchange rightly notes that the failing European system is generally consistent with John Rawls's view. But Rawls's political and moral ideas were always dubious, premised as they were on a fictitious "veil of ignorance" and an impoverished view of human nature.
Patrick Henry cried:
Rawls's motto is somewhat less inspiring:
RWE, I read your comments occasionally and you keep referring to GDP as a measure of a country's standard of living. That is emphatically not what GDP measures. GDP simply measures the value of everything produced within a country. It is pretty much useless if you want to compare standards of living, at least across developed countries.
For instance, Luxembourg has an extraordinarily high level of GDP per capita, simply because lots of people work there and thus contribute to GDP but do not live there and are not counted as part of the population.
Moreover, GDP does not take into account things like income distribution, security, level of education, health etc. Saying that Denmark has a lower standard of living than the US (which may or may not be the case) based on GDP per capita is absurd.
With reference to the second sentence of Megan's footnote:
IIRC, at some point in the mid-1990s there was a minor league financial scandal in that a number of wealthy people, including some directors of Fortune 100 companies, had renounced their American citizenship in favor of citizenship in Caribbean island nations as a tax dodge. I'm not sure precisely what the objection was, although the notion that someone who was born an American and made a ton of money here would rather give up their American citizenship than pay their taxes is generally pretty disgusting.(*)
I suppose I wouldn't begrudge anyone the right to change their citizenship if they don't want to pay US taxes, but you shouldn't get to keep living and working perpetually in the US if you do.
(* Anyone who wants to argue that abandoning US citizenship was justified by the confiscatory levels of taxation applicable in the mid-1990s is invited to tour Arlington National Cemetery and get back to me.)
One more thing about Megan's footnote -- this time, the first sentence -- and then I'll shut up:
In case you didn't know, America, alone among developed countries, taxes the foreign earnings of its expatriates.
I believe that you can exclude the first $80K of your foreign income from taxation, or alternatively take a credit for foreign taxes up to the amount of your US tax liability. The details are (naturally) complicated, but the point is that the risk of double taxation is mitigated somewhat.
Yes, you can take a credit for double taxation, but this begs the question: why on earth do we have a right to income earned in another country?
The problem is that that original Times article (on which the Free Exchange post is based) offers next to no evidence that any such change in Denmark is actually happening: the best they can come up with is a couple guesstimates as to numbers. When your human-interest example is a guy married to a non-Dane who wasn't comfortable in Denmark, your "Danes are fleeing Denmark for tax reasons" argument looks pretty weak.
@RWE
If I said, "Are there no prisons? Are there no workhouses?" was a good précis of Hayek, that would be about as accurate as your treatment of Rawls.
It's fine to disagree with egalitarianism. But you're misrepresenting the argument out of ignorance or disingenuousness.
A Theory of Justice has as its first principle: "each person is to have an equal right to the most extensive scheme of equal basic liberties compatible with a similar scheme of liberties for others." These basic liberties (paging Patrick Henry) cannot, according to be Rawls, be compromised for the sake of the difference principle, which you caricature. Rawls thinks society should be arranged to benefit the least well-off, so long as this doesn't interfere with the preservation of basic liberties .
"RWE, I read your comments occasionally and you keep referring to GDP as a measure of a country's standard of living. That is emphatically not what GDP measures. GDP simply measures the value of everything produced within a country. It is pretty much useless if you want to compare standards of living, at least across developed countries."-caramba
Caramba,
Actually it's quite common for economists to use GDP per capita as a measure of the standard of living. See Mankiw's popular Principles of Economics text, for example (Principle #8 is: "A country's standard of living depends on its ability to produce goods and services").
What it really gives, of course, is the average income. You seem to be saying that it just doesn't interest you that we have a 20% higher average income. I think it matters to most Americans, since it means they are able to buy 20% more stuff--including books, college education, pharmaceuticals, etc..., than their Danish counterparts. And most economists consider consumption per capita a very good indicator of overall well-being.
Public policies generally entail trade-offs. Denmark has chosen high marginal tax rates to help fund an expansive welfare state, but that policy comes at a cost. Danes might well feel more secure, but they are also a good deal poorer.
alkali - You don't develop your argument as to why Arlington National Cemetery, is relevant to the question of Americans having tax liability in the US for income in other countries, whether or not they have renounced their citizenship.
Yes the people buried there gave their lives for our country. But that doesn't mean the people who didn't die in war are owned by our government.
why on earth do we have a right to income earned in another country?
Maybe it's just a kind of pre-payment for sending in the Marines to get you out when things go south...
Rwe,
It is certainly true that many use GDP per capita as a proxy for measuring the standard of living. It is, however, a very problematic proxy for a number of reasons. The most important factor it does not take into account is probably income distribution. Even if the average income is actually 20% lower than in the US, most Danes may be better off than most Americans, depending on the income distribution.
A better measure would be median personal income, but even that is problematic since countries with high taxes (and thus lower median household income) also tend to have higher levels of public services (which do not have to be paid for by individuals). Poverty rates would also be a good indicator, and in that respect the Scandinavian countries do better than the US. I couldn't find any data on personal income by country, but it would be very interesting to see.
What a great concept the Danes have come upon: drive away your smart people with superhigh tax rates, and draw in the poor, illterate immigrants with the welfare those taxes finance. I believe dozens of US cities beat them to it.
But what! I thought we libertarians were all for massive numbersof unskilled immigrants because the do jobs Danes won't do: like use welfare.
Yes, you can take a credit for double taxation, but this begs the question: why on earth do we have a right to income earned in another country?
For the same reason BMW can charge more for its cars: because people want them.
Maybe it's just a kind of pre-payment for sending in the Marines to get you out when things go south...
There's actually a lot of truth to that. When Lebanon erupted a few years back, the Canadian government evacuated thousands of non-taxpaying Canadian "citizens" at no cost to them. They were actually Lebanese who'd held onto their free Canadian citizenship for just such a crisis.
And re: seizing people's estates: I don't recall the government seizing the estate of John Dorrance, the Campbell's Soup heir, when he hightailed it to Ireland for the stated purpose of avoiding the inheritance tax. You're free to leave for whatever reason you want. The government doesn't have the ability to read your mind about why you chose to leave. And even if you publicly announced why you left, you would almost certainly be protected by the First Amendment.
I don't think people move primarily because of taxes, but because they don't feel appreciated.
There is the famous story of the MIT student who counted cards in Vegas and used the money to start a software company that he later sold for $100 million. Most Americans look at that kind of ingenuity with awe, many Europeans look at it with revulsion.
I have 3 friends, one from Canada, and two from Germany who moved to the US because we embrace hard work and success. In Germany especially, the goal was to either work for the state, or get a job with a big company. Thus insuring your 38.5 hours work week and your 6 weeks of vacation. Anyone who wanted to start their own business or excel at work was looked down upon.
Tim Fowler writes:
alkali - You don't develop your argument as to why Arlington National Cemetery, is relevant to the question of Americans having tax liability in the US for income in other countries, whether or not they have renounced their citizenship.
I didn't make any such argument. I think the comparison is relevant to judgments about the morality of renouncing one's citizenship for the purpose of avoiding taxes.
For what it's worth, I don't have a firm view on what US citizens ought to pay, if anything, as US income tax on monies earned abroad. I certainly don't think US citizens should be penalized in any way for living abroad (indeed, perhaps that should be mildly encouraged), provided that they aren't doing so simply to avoid paying US taxes. The answer may depend on what other countries do in this regard; there may be some regime of reciprocity that it's in the US's best interest to adhere to.
With respect to US citizens who renounce their citizenship to avoid paying taxes, I really couldn't care less whether they think the US imposes unfair taxes on them after they renounce their citizenship. Again, if there is some regime of reciprocity among nations on that issue, perhaps it is in our interest to adhere to it.
"Rawls thinks society should be arranged to benefit the least well-off, so long as this doesn't interfere with the preservation of basic liberties."-ixnaythemetier
And I think society should be arranged to "promote the general welfare" and "and secure the blessings of liberty to ourselves and our posterity." And respect for private property is fundamental to liberty, as the Founders of the country recognized, but Rawls never did.
Ixna and Caramba both seem to agree with Rawls that high taxes, big government and the redistribution of wealth offer the best hope for the poor. I much prefer economist (and Nobel Laureate) Robert Lucas's thoughts on how to raise people out of poverty:
The growth in output offered by a dynamic, competitive and free economy is the best hope for the poor over time, so, Rawlsian redistribution, insofar as it compromises long term growth, actually dims the prospects of the poor. It promises to rob us not only of our freedom but also of our prosperity. It is indeed "poisonous," then, as Lucas powerfully argues.
I would actually agree that economic growth is essential to alleviate poverty. The question is: Do high taxes necessarily endanger economic growth? You might look at France and say yes. But then the Nordic countries or, say, the Netherlands, seem to be doing fine, with solid economic growth, very healthy public finances and current account surpluses. They have both high taxes and a "dynamic, competitive and free economy." It also seems like social conditions for the poor are better there than in the US. So which model is the best hope for the poor, the Nordic one or the American one?
This sounds good, in theory. And I agree with it, in theory. But the reality is that in the U.S., for example, though the average worker is x percent more productive than they were thirty years ago, almost all of those productivity gains have flowed to the upper one or five percent. In point of fact, real wages have been stagnant for going on thirty years now, and that's a well-known fact.
And, as I am always fond of saying, facts trump theory . . . every time.
This sounds good, in theory. And I agree with it, in theory. But the reality is that in the U.S., for example, though the average worker is x percent more productive than they were thirty years ago, almost all of those productivity gains have flowed to the upper one or five percent. In point of fact, real wages have been stagnant for going on thirty years now, and that's a well-known fact.
And, as I am always fond of saying, facts trump theory . . . every time.
And, as I am always fond of saying, facts trump theory . . . every time.
So fond of it, in fact, that you said it twice!
@RWE
You're making "Respect for private property" do a lot of work here. I imagine that you think some level of taxation is appropriate and some governmental purposes are legitimate. So the right to own private property is not the same sort of right as the right to free speech, the press or to be free from cruel and unusual punishment. To say that any redistribution of wealth, like a progressive tax code, is an affront to liberty is a highly idiosyncratic view. Patrick Henry would rather die than be taxed by a alien government that gave him no say in his affairs (and tried his compatriots before military tribunals, quartered troops in their houses). I don't think he would rather die than support a pension scheme--however inefficient--enacted by the duly elected representatives of the country. Perhaps you think he proposed to die for the 18th century-style state? This is again, I think, a highly idiosyncratic view.
Futhermore, "promote the general welfare" does not to be obviously preclude redistribution. Neither does it require it. It seems to me a general, even pro forma, statement that government should serve the whole of the governed not narrow factions, regional interests or the personal emolument of its officials.
I still think you misunderstand Rawls. If one stipulates that the maximalist position that any redistribution at all will leave the poor worse off than they would be under laissez-faire, then one following Rawls 2nd principle of justice would endorse laissez-faire.
To speak again in extreme cases, a huge coercive program of redistribution with prevented the industrial revolution would be a poor choice in terms of Rawls view of justice because it would leave many of the poor still exposed to a Malthusian trap.
Rawls theory of justice is not about redistribution for the sake of redistribution or "leveling." But, as he explains using the veil of ignorance, it's interested in benefiting the least well off in the society. Thus Rawls would reject choices that leave the rich much better off and only slightly hurt the poor, which would be apt under certain versions of "promoting the general welfare."
Thus, I do not think this line of attack on Rawls (redistribution makes the poor worse off) is damaging because it mistakes Rawls' project as the advocacy of social democracy. I think the argument Nozick makes about "Justice in Transfer" in Anarchy, the State and Utopia is much more compelling.
rwe quotes Lucas:
There you go again, supply-siders. Ugh.
What happens when "apparently limitless" becomes "actually quite finite?" What then?
Caramba:
Obviously the American one, because everyone knows the Nordics are all Communists. Besides, the Nordic countries are all smaller than the U.S.; we simply don't have the ability to give that much support to so many people. Finally, there is the moral hazard that most Americans would just sit on their butts all day if we expanded the welfare state to that extent; Americans simply won't work hard without the spur of threatened poverty to drive them.
Nope, can't do that.
Moreover the military is a relatively small portion of all government spending, the majority of which is little more than income transfers. Saying that expatriates ought to have to pony up for their “fair share” of national defense is one thing but saying that they ought to consent to the government robbing them in order to redistribute their wealth is something entirely different.
There’s at least two problems with this supposed “well-known fact”:
1) Saying that the productivity of the “average worker” has increased by X percent isn’t the same as saying that the productivity of every worker has increased. Some workers have increased by a little, some by a lot, some not at all, and some have possibly even decreased. Unless you can show how much each worker (or sector of worker) has increased their productivity, complaints about the alleged unfairness of the “flow” of the gains from that increase in productivity is meaningless.
2) As our hostess has blogged about in great detail on her old site, the canard about “wage stagnation” is largely a function of the shift to non-cash benefits (e.g. health insurance) which has become a greater portion of employee compensation over the last 30 years and doesn’t get counted as wages.
What happens when "apparently limitless" becomes "actually quite finite?" What then?
I think you are confusing the issue. I hope you don't really think that progress is about to come to a screeching halt. Do you also advocate shutting down the patent office because everything has already been invented?
"What happens when "apparently limitless" becomes "actually quite finite?" What then?"
Are you predicting an end to increasing productivity? Looks like the Supply Siders are 1-0 vs the Luddites.
The quote spoke of "production," not "productivity." Though I daresay there is a limit to that, too.
Luddites, indeed. You know, Ludd did have a point: every increase in productivity as a result of automation is a reduction in productivity of the person who used to do that job. Overall the business becomes more productive- more widgets go out the door- but less people are employed and the "downsized" workers have to go do something else.
The fantasy of "apparently limitless potential of increasing production" is that there will always be something else for those workers to do, that they will be able to do it, and as a result they will be better off than before. That ain't necessarily so, I don't care who won a Nobel Prize for declaring it.
No, I advocate shutting down the patent office because it now stifles creativity instead of incentivizing it, which was its original function before corporations (and corporate lawyers) got involved.
In case you didn't know, America, alone among developed countries, taxes the foriegn earnings of its expatriates.
Not really. You can get rid of your citizenship and expatriate. If you retain your citizenship, then yes, you will pay taxes.
Also alone among developed countries, it holds you liable for taxes ten years after you renounce your citizenship,
What does "holds you liable" mean? Every nonresident who derives income from the U.S. is held liable for U.S. taxes, including expatriates and never-patriates. If you really expatriate, you will not pay taxes in the U.S. during 10 years or after. The "expatriation" overlay of Section 877 does 2 things: (1) forces you to report income & assets to the U.S. for 10 years and (2) requires you to be taxed like a U.S. resident if you spend more then 30 days in the U.S. (60 days under a narrow exception). Leave, relinquish your citizenship and don't come back and you won't be taxed.
and confiscates your property if it determines that you have renounced your citizenship for the purposes of tax avoidance.
Totally, 100%, wrong.
Sorry about that. I really must use the Preview button more. Note to self.
It also doesn't put gas in your tank or food on your table.
Wage stagnation is very real to me.
It also doesn't put gas in your tank or food on your table
Oh for heaven's sake. Don't offer health insurance, and the left calls you evil (Wal-mart). Offer it, and the left complains it isn't cash (see above).
Maybe a company should offer health insurance, but share employees the full price of the premium. Happy now?
Oh, and can you offer an argument or evidence that the patent office stifles creativity now more than in the past?
OK, bad editing. That should be "make employees pay the full price of the premium."
Nothing like starting one sentence and finishing another.
Yep. Sure would be nice if we looked at health care as a right instead of a privilege, a luxury to be paid for.
I seem to recall seeing just that proposal being floated out there (I think this is what Hillary's "mandatory insurance" plan turns into). Nope, not happy with that at all, unless you also increase my salary by the cost of the health insurance, or at least guarantee me some level of care regardless of my ability to pay. Some level higher than "none at all," which is what we have now. And in any case, you haven't increased my real wages; my ability to buy things other than health care has not increased, therefore my wages can be considered "stagnant." At least by any reasonable definition I can think of.
Innovation or Patent Colonialism
Rambus' patent warfare
Patently Inferior
357,000 matches for "patent warfare" search on Google...as far there being "more than in the past," that seems only common-sense since there are now far more patents extant (and for far more basic or obvious things previously ruled un-patentworthy) than in the past.
We're getting off-topic, aren't we?
I don't want to skip Thorley's other point:
How much proof do you need? Every report I've seen in the past few years shows this flow of wealth to the richest Americans. You're denying the forest because we can't tell you the taxonomic designation of every tree in it?
liberalrob: "Americans simply won't work hard without the spur of threatened poverty to drive them."
I'm sure you're aware that Sweden had to reform it's famouously generous unemployment benifits when it became obvious that, for the vast majority of people, without "the spur of threatened povert" the vast majority of people will not work.
I."They have both high taxes and a 'dynamic, competitive and free economy.' It also seems like social conditions for the poor are better there than in the US. So which model is the best hope for the poor, the Nordic one or the American one?"-Caramba
You are coming perilously close to espousing an economics without trade-offs. I suggest looking at Robert Barro's growth regressions, which showed that an increase in government spending (as a share of GDP) is associated with a significant reduction in growth. That's perfectly consistent with economic theory. Large welfare programs and the taxes required to finance them distort incentives and cause heavy deadweight losses. Among the distortions is a reduced incentive to save, which stifles capital formation and brings lower output over time.
II. "Thus, I do not think this line of attack on Rawls (redistribution makes the poor worse off) is damaging because it mistakes Rawls' project as the advocacy of social democracy. I think the argument Nozick makes about 'Justice in Transfer' in Anarchy, the State and Utopia is much more compelling."-ixnaythemetier
Nozick himself later called that book "seriously inadequate." Regardless, my main objection to Rawls' theory is the artificiality of the "original position." It seems to me a very shaky foundation on which to build a political theory. But without that, the whole edifice crumbles.
For an amusing and devastating critique of Rawls, I recommend the address at Harvard in "Giants and Dwarves" by Allan Bloom.
III. "rwe quotes Lucas... There you go again, supply-siders. Ugh."-liberalrob
Robert Lucas has never been a supply-sider, and I'm sure he rejects some of their more extreme claims. He was one of the founders of the "New Classical" economics. He is also one of the best growth theorists around.
Regardless, his basic contention would get wide agreement among economists. The best hope for the poor is growth, not redistribution.
Liberalrob - you mentioned the top 5%. That's 15 million people. Why do you think they've been able to capture all of those gains.
It's a well-known fact that evolution is a very, very good fit to the real world, and that Creationists/IDers don't have a leg to stand on. Do the latter dispute this? Yes. Since this has been remarked upon at length, guess which category you default to? In fact, this really is 'common knowledge', cf
http://www.epi.org/content.cfm/bp195
I would put in more links, but I am told that the odds are excellent that this comment would not be posted.
So you can 'dispute' the figures all you like, here on the oh-so-authoritative Megan's blog. I'll take the Cenus bureau, thank you very much.
Or, you could do the sensible thing: you could index health care bennies to health care inflation instead of general inflation to get - surprise! - that the median workers total remuneration package is stagnating.
Is any reason to index these benefits with general inflation rather than health care inflation, other than to massage the numbers? I can't think of any.
you haven't increased my real wages; my ability to buy things other than health care has not increased, therefore my wages can be considered "stagnant."
But you ability to buy health care has increased, right? And your need to spend your cash income on health care has decreased. So you're better off overall.
But beyond that, I view health care like any other good, such as food or clothing. You plainly do not. This is an unbridgeable divide.
Re: patents, we're off topic, but you've blundered into an area where I have something of a comparative advantage, being an IP attorney. I read your articles, and they're thin on evidence; basically the authors are complaining that a patent system exists--it's so unfair that the first inventor gets to exclude me! Waaahh!
Is there abuse? Certainly. Are the wealthy better off than the penniless in the patent system? Of course--show me a system where that isn't true. But hey, if you need someone to break a bad patent for you, call me.
for far more basic or obvious things previously ruled un-patentworthy
Examples? I doubt this very much. But if so, such patents would be easy to break.
rwe:
And that's different from a supply-side argument because...?
In the event, I was being more critical of Lucas (or more accurately Lucas' statement) than of you. If you can assume that growth will occur in the manner described, then yes growth is obviously the way to go. My problem with that is the basic assumption, that growth will occur. To me that's like betting on black at roulette and, having won ten times by "letting it ride," advocating letting it ride some more. Even if you take half the red numbers and replace them with black, the consequence of being wrong is unacceptable, and not insignificantly likely.
If you cannot assume growth will occur, but redistribution is 100% likely to improve the lot of the poor (even if to a lesser degree than growth), surely it is a better bet. I think it is, anyway.
redistribution is 100% likely to improve the lot of the poor
Of course, there are those of us who dispute this, too.
No, it hasn't; in fact, it's decreased. As everyone knows, health care inlfation has far outpaced general inflation, and you can't spend your health bennies on anything but health. Care to modify your position? Or are you going to say you're still right anyway?
This statement is of course nonsensical, since 'different' is not defined. I would guess it's really only an emotive cheap shot, trying to imply that the poster is more knowledgeable about economic issues (In fact, the first statement in his post demonstrates precisely the opposite.)
ScentofViolets - "Is any reason to index these benefits with general inflation rather than health care inflation, other than to massage the numbers? I can't think of any."
Inflation means that the same things costs more in dollar terms. Much of the growth in health care costs is driven by all the new test, drugs and procedures that can be performed.
It would be like saying there has been a huge amount of computer inflation beacuase the % the average family spends on computers has gone up dramatically over the past 30 years. In reality, people didn't spend a lot on computers 30 years ago because there weren't any computers to buy.
No, I'm having to pay for what was previously provided as part of my compensation (since I don't work for Wal-Mart), and my wages have not been correspondingly increased. Your hypothetical was that my company provide a health plan but I would pay the full premium. That's not helpful.
A growth industry if there ever was one.
No, they're complaining that deep-pockets big corps with armies of IP lawyers on retainer are patenting everything under the sun and assembling "patent portfolios" to stifle competition, and correspondingly shut out all innovation that doesn't come from their shop.
The Amazon "one-click" patent is one of my favorites. Yeah, I'm patenting clicking a button on a web page. That one took 8 years to kill (the USPTO just invalidated it last October). Amazon also patented "Method and system for conducting a discussion relating to an item on Internet discussion boards." I.e., they patented the product-specific blog. I'm not aware of the status of that patent; but the idea of patenting any kind of blogging or review service is ridiculous on its face. Those are just two examples.
I'm sorry, but even if true (I don't think it is[1]), that is no reason to index the benefits to general inflation. Am I missing some obvious implication?
[1] In fact, the cost for very straightforward standard procedures that haven't changed over the years have gone up tremendously, as most people can attest to. It may be true that this is happening to say, subsidize the new MRI machine the hospital just bought. But that doesn't change the fact that the costs for procedures that have remained the same over a number of years have increased dramatically. Your argument would only make sense, if, like computers, it was the cost of the new technology and new treatments alone. Somehow being billed $26.50 for a paper hospital gown doesn't strike me as being part of the new medicine.
SoV,
Does it cost more, in real dollars, to get an ordinary chest X-ray in 2007 than in 1977? Maybe it does, but if not, then what we see isn't inflation, but an increase in costs resulting from an increase in quality.
I'll confess I do not understand your second criticism. liberalrob and I have a fundamental philosophical disagreement. I highlighted it to avoid wasting both of our time. Why that offends you, I have no idea.
jmo:
The system has been rigged in their favor. I suspect very few would have realized those gains on their own ability, and fewer still would have objectively deserved it based on the value added to society. But those are personal feelings. The objective fact is, they did benefit, inordinately and disproportionately so, and that is an injustice that should be remedied.
No, Rob, there is such a thing as health care inflation, and it is routinely reported as such. And it is, as well known, rising faster than general inflation. Oh, and yes, there are things, such as the hospital gown I mentioned, which are just ridiculous. The only explanation I've heard that makes sense is that it subsidizes the new technologies.
Here's something from that liberal rag, Forbes:
http://www.forbes.com/2005/06/21/healthcare-insurance-medicine-cx_da_0621topnews.html
The money-quote:
So it's not that people spending more money on new procedures that's causing inflation (though as the article notes that's surely true), it's the prices that are rising as well.
As to your second criticism, I thought it quite clear: you haven't specified what the 'difference' is. What do you think he thinks the difference is?
Patents are clearly a mess, but I don't know how we can make them better, without dramatically increasing the cost and slowing down the issuance process.
Obviously there is a lack of knowledge among the people granting the patents that is being taken advantage of by companies with the ability to do so.
But still, how do you make it better without increase the cost and time involved for everyone?
Really it all goes back to the people in our society should be virtuous, honorable people bound by personal limitations. Just because it is legal and you can get away with it or exploit an advantage doesn't mean you should.
"It's just good business" should not be a reason.
Unfortunately the moral relativists (on the left and right) that let anything go under the sun so long as it's not "hurting" someone (define hurt and the scope thereof) have given us this problem.
Now that they've opened pandoras box they are attempting to make everything right again with a complex series of laws and rules which will reach into everyone's life.
This story is older than the law of moses...
No, they're complaining that deep-pockets big corps with armies of IP lawyers on retainer are patenting everything under the sun and assembling "patent portfolios" to stifle competition, and correspondingly shut out all innovation that doesn't come from their shop.
If you're not happy with big companies taking out lots of patents, I suggest you 1) invent things before they do, and then 2) describe your invention in a publication promptly after inventing. These two steps will preclude patenting. If, on the other hand, Microsoft really did invent something first, then you have little cause for complaint if they get the patent. They invented it; you didn't. Boo-hoo.
That said, there are a lot of dumb software patents out there, no denying it. And the entire practice of patenting software is much more dubious than the traditional "better mousetrap" patent, given the ability to claim results with questionable enablement in the disclosure. But you should keep in mind that the mere existence of a patent doesn't mean you own the field; it may be invalid, or it may be that a simply design-around will avoid it. So, go with 2-click ordering.
But I don't think you've identified something "previously ruled unpatentable," you identified something you think ought to be unpatentable. Totally different animal.
OK, allow me to revise my statement more precisely:
"...there are now far more patents extant (and for far more basic or obvious things which previously would have been ruled un-patentworthy) than in the past."
And of course, thought it should go without saying, that's just my opinion of how things would have been ruled on in the past.
SoV,
I didn't use the word "difference" or "different," so why it's in quotes, I don't know.
liberalrob said clearly that he views health care as a "right," i.e., you should get it regardless of ability to pay. I view it as a good: buy what you can, and pay for it yourself (perhaps with some welfare-style adjustments for the poorest, as with food). I fail to see how highlighting this disagreement constitutes an an "emotive cheap shot" or displays an assumed attitude of superiority, which you attribute to me.
On inflation, it appears that you're right.
Rob,
But, the question I have is, what about those who have been able to use technology to increase their producitivity by a large amount?
Should those gains be taxed away? I worry that since increasing productivity is the only way we can boost the standard of living, taxing those incentive gains will hurt productivity growth rates.
The other point. I think the rise in equality is driven, in large par,t by the rise in the education premium. In the 50's a college education would only get you a 30% more than a high school education. Today that has lept to 100%. My fear is, the only way to reduce inequality is to decrease the education premium. And, if we decrease the premium more people will decide to pursue their higher education and we will all suffer long term.
sorry that should read: more people will decide NOT to pursue their higher education and we will all suffer long term.
jmo:
that depends. Again, the Scandinavian countries have the lowest education premiums on the planet and high levels of education. Of course, they also offer free education and stipend/loan packages to cover living costs. If education premiums go down, higher education needs to be subsidized more.
So going back to the original point, yes, wages have stagnated. Despite productivity gains. So however nice the theory is, in the real world some sort of redistributive mechanism must be allowed for.
As to your other point, here is what liberalbob actually said:
Strain as I might, I can't see how you get from "it sure would be nice" to "that's the way I see it".
Rwe:
Regarding trade-offs, I am aware that there will always be trade-offs. But I don't think the trade-off is a choice between growth and a welfare state. I think the choice is largely between the welfare state and the private consumption of the upper middle class and the rich. The wealthy, the upper middle class and many professionals are clearly better off in the US than in Scandinavia, at least as measured by private consumption. That is a real trade-off, albeit not one I'm particularly concerned about.
Rwe, to address your other concerns. The US, which by far the most liberal economy in the developed world, is not exactly known for its high savings rate, is it?
It is clear that a large government and high taxes can stifle a government, I think France is a great example of that. But I don't think high taxes have to necessarily ruin the economy and I think the Nordic countries and the Netherlands are good examples of that.
Strain as I might, I can't see how you get from "it sure would be nice" to "that's the way I see it".
For my part, that seems like the ordinary inference to be drawn based on the common usage of the English language. "It sure would be nice to have a beer" usually means "I'd like a beer." But if I'm wrong, then liberalrob has had ample opportunity to correct me.
that's just my opinion of how things would have been ruled on in the past.
Well, I imagine that a patent examiner in 1935 would have found clicking on a web page rather novel. And indeed, the filing date for the "one click" patent is 1997, when internet marketing was still quite young. It's not always easy to remember that only 10 years ago, the web world looked very different than today.
I think what you're getting at is not that things in the world of the law have changed, but that technology has opened up new forms of subject matter, which you think unworthy of patent protection. There's nothing wrong with thinking that (hell, I'd probably agree with most of your criticisms), but I think your nostalgia for the golden age of the PTO is misplaced. They're just struggling to stuff new pegs into old holes, and it isn't working out terribly well. Congress can change the law if it wants, but they're such screw-ups, they'd probably make it worse.
Look at who is truly benefitting from those productivity gains. Is it me, with my stagnant wages and increasing cost of living despite my increased productivity? Or is it the majority stockholders, quite likely executives and board members, who benefit due to my ability to spew out more widgets per day? In the cases where there is some sort of profit-sharing, and my increased productivity does also benefit me to some degree, is that increased benefit proportionate to the increased benefit of those at the top who are not themselves more productive?
What about the worker whose job assembling circuit boards was replaced by a robot which can do the same job in less time? What about the web developer who was replaced by an outsourcing company? The company is more productive, has lower labor costs, ships more widgets more cheaply, and returns higher profits- but those workers have not benefitted.
There comes a point, and my worry is that we are approaching it (or are at or past it), where the ability of the labor market to provide displaced workers with equivalent or superior jobs to what they had before erodes away. At that point, the labor force starts moving backward, and productivity gains actually drive DOWN the average standard of living. There is no economic incentive for those at the top to concern themselves with the plight of the displaced workers; and as has been said, social safety nets are expensive. If you cannot rely on continuous growth to absorb the displaced workers and maintain their standard of living (a magical notion I previously rejected in this thread), what is left except redistributory tax policies to provide a safety net for the displaced?
Unless your goal is a Social Darwinist society where the strongest survive and thrive and the weak are systematically exploited, I don't see how you can avoid turning to taxation to balance out the inequalities engendered by the capitalist system. You don't have to pick winners, but you do need to do what is required to care for the losers; and the winners should be asked to take up that burden, not absolved of it.
That's very true, but it's also a non sequitur. Moving on:
This to me has always seemed to be the nub of the matter. Suppose you have two countries, A and B with an equal amount of resources, population, technical expertise, GDP, etc. However: The median wage in country A is twice as high as in country B; otoh, the richest one tenth of one percent in country B are 50 times wealthier than their counterparts in country A. The question is, which country would you rather live in?
One can make various caveats about long-term stability, crime rates, the state of the arts and sciences, etc, but let's consider one question at a time. I'll start by being quite up front about preferring to live in Country A. I can't imagine why anyone would rationally want to live in country B, but I'm willing to entertain explanations.
Rob Lyman is correct, I think health care should be viewed as a right. I have consistently said as much in countless other threads. Well, several anyway.
The point of my statement was to remind Rob that if we had a single-payer system, we wouldn't be haggling over whether companies or individuals should bear the cost of health insurance.
Well, I tried this earlier, but McArdle's annoying filters kept interfering. Anyway, those here who are arguing that "the poor are getting poorer" and that incomes are "stagnating" ought to look at the following facts:
"People in the bottom fifth of income-tax filers in 1996 saw their incomes rise 91 percent by 2005. The top 1 percent — “the rich,” who are supposed to monopolize the money, according to the left — saw their incomes decline a whopping 26 percent."-Tom Sowell, using IRS data
Then I apologize to Rob. Btw, I definitely don't view health care as a basic right on a par with free speech. It's good from a societal view to provide a safety net, a system which, moreover tilts heavily towards the prophylactic and preventative rather than drastic intervention at the eleventh hour. But there should not be a constitutional 'right' to, say, lung transplants for smokers, for example.
ScentOfViolets and Rob,
I had a long talk with a very dear friend about this very issue tonight. My friend is very successful but comes from what can only be described as a "white trash" family. We talked about why she was so successful and her family was so poor. She admitted that it had to do with how they were raised. She was raised to believe that education was a waste of time. To her parents to be a jock was great, to be popular was great, but to get good grades was suspect. ScentofViolets and Rob, I'm sure you must know people like this. The question I guess is, what do we do with those who are being held back by their own belife system?
I sincerely think that some people have a belief system that leads them to success, and other have a belief system that leads them to failure. I worry deeply about any system that says no matter what you believe we won't let you fail.
I most emphatically agree with you - I'm from one of those white trash families myself, in fact, was kicked out on my 17th birthday with no notice because, according to my father, I "thought I was better than he was" on the strength of the fact that I wanted to go to college. I didn't get any student loans either, because you have to have a parent or guardian cosign for them, nor would he sign an affidavit stating that I would not be claimed as a dependent.
What I got, I got with no help from the family. Yet, 30-odd years later, I am far and away the most successful of the bunch. The rest are trapped in dsyfunctional family dynamics, much like what they grew up in, or have alcohol/drug/psychiatric problems, or both. And btw, I'm still considered not a real workin' man, I'm derided at family gatherings for not drinkin' with the rest, or prayin' to Jeezus . . . and I'm still the one they call when 'problems' arise (like jail), the one they touch for money, etc. Don't get me started about their notions of 'personal responsibility'.
No, you are quite correct that some people have, shall we say, nonoptimal belief systems, and yes, we should do everything in our power to discourage the perpetuation of such belief systems.
Otoh, I don't believe that some sort of safety net is equivalent to preventing people from 'failing'. It just minimizes the sound of breaking glass and overall expenditures that my taxes pay for.
I say this as a former junkie. Those with self-destructive behavior patterns and belief systems will only change when the choice is between change and death.
"some sort of safety net" is going to allow a great many people to perpetuate their self destructive behavious. I firmly belive that the more we do now, to force those with self-destructive belife systems to suffer, the better off we leave this world to future generations.
SOV,
The median wage in country A is twice as high as in country B; otoh, the richest one tenth of one percent in country B are 50 times wealthier than their counterparts in country A. The question is, which country would you rather live in?
If you're pessimistic, lazy, or risk-averse, then A. If you're optimistic, productive, or driven, then B.
I'm mostly serious.
Country A sounds like a municipal bond, country B sounds more like a growth stock. Both are appropriate choices for different investment goals or risk styles.
But isn't America supposed to be the land of opportunity, with limitless possibility?
Not yet posted to "Free Exchange:"
When Rawls' "A Theory of Justice" is invoked, it is worth referring back to Nozick's "Anarchy, State and Utopia" (1974)[since reprinted], especially Chapter 7, which thoroughly gutted Rawls' propositions.
Further, Nozick's observations are closer to what occurs in social orders.
"some sort of safety net" is going to allow a great many people to perpetuate their self destructive behavious
My belief is that the very altruistic (though usually with someone else's money) attitudes held by leftists exist because these are people who - for whatever reason - do not fully appreciate this fact.
Some people do NOT want to change.
Some people WANT to be poor.
Okay, that last one deserves clarification: If you ask them, they will tell you they don't want (or deserve, or whatever) to be poor. But the truth is that some people prefer being poor to doing whatever is necessary to improve their life, just like I prefer my present modest life to doing whatever is necessary to become a multimillionaire. There are costs to improvement. And why shouldn't they be free to be poor? It's their choice.
The problem is that WE want to change them, and afterall WE don't want to be poor so THEY must not want to be poor so if they are poor then it must be due to some other cause than their own decisions.
I realize there are people for whom this doesn't apply. I'm for a safety net that is able to make this distinction, and does not just allow people to self-destruct at my expense.
Upon reflection, liberalrob, I find myself increasingly in agreement with your suggestion that software patents would not have been ruled patentable in the past, although perhaps for different reasons. My big problem, though, is the lack of enablement in the average software patent. "I claim a black box that gives result X" would probably not work for non-software.
If you care enough to want me to elaborate, let me know.
Is it true that "America, alone among developed countries, taxes the foriegn earnings of its expatriates." Several years ago South Korea also used to tax foreign earnings of expatriates. Have they stopped now? However, at that time these were the only two countries doing so.
Here's a very good article on the relationship between exit costs and liberty:
http://unenumerated.blogspot.com/2007/08/exit-and-freedom.html
"The objective fact is, they did benefit, inordinately and disproportionately so, and that is an injustice that should be remedied."
To call this objective is bizarre. It may be defensible as an opinion (although I don't think so), but it's clearly not 'objective'.
But getting back to the original post (which I just had time to read, long after everyone else has probably given up on this thread), I lived in Hong Kong for several years and had to file US taxes. After the (at the time) US$70,000 exemption and then the standard deductions, credit for foreign taxes paid on the excess income, etc., the tax wasn't bad, and I felt that I ought to pay it because I'd have called the US Consulate if there'd been trouble.
BUT, I really hated the huge dead-weight cost of calculating the taxes. My Hong Kong tax form was little longer than a post-card, but then the US tax calculation was a long, drawn-out nightmare. The long painful hours filling out the complicated form cost me a lot without helping my country at all - it was pure waste.
"Those with self-destructive behavior patterns and belief systems will only change when the choice is between change and death. "some sort of safety net" is going to allow a great many people to perpetuate their self destructive behavious. I firmly belive that the more we do now, to force those with self-destructive belife systems to suffer, the better off we leave this world to future generations."
Jmo:
The above statement makes an implicit assumption that the "safety net" will only benefit or apply to those who are otherwise self-destructive. By this type of thinking one quickly arrives at the conclusion that the poor, the indigent, the sick are all in that condition by virtue of their faults, not by circumstances beyond their control.
In this way, the government can ignore the homeless in New Orleans because they "chose" to live ten feet under sea level next to a crumbling levee.
I prefer, on the other hand, to look upon Social Security and Medicare as forms of National Defense. One does not (or should not) defend only the healthy or wealthy in times of war, thus one should not only provide health care or income redistribution to those that don't need it.
Altruistic behavior is common among the "lower" life forms, which evolution explains as a survival mechanism that necessarily benefits the whole community, the strong as well as the weak.
Something to think about.
Speaking from personal experience, expatriates get to exempt their first $80,000 or so of earnings from income taxes. As a self-employed sucker, I still have to pay the self-employment tax, i.e. my own Social Security contributions, but since that's a contribution to the national pension plan it seems pretty fair to be taxed wherever I am. Somehow, I do not weep for those US expats who must pay taxes on income earned above $80,000.