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One of the things contributing to our continued economic illiteracy is our insistence on stupid abstractions like this. When you distribute huge sums of money

One of the things contributing to our continued economic illiteracy is our insistence on stupid abstractions like this. When you distribute huge sums of money it doesn't actually wind up being all that much in individual terms. "hose the rich, they can afford it!" yeah, but after you hose the rich (and they start leaving/not investing) you only have like...a grand per person. A trillion dollars is less than 3 grand per person in the US. Say we hosed the rich to the tune of a trillion EVERY YEAR. We still wouldnt have enough for our socialist schemes. Meanwhile, investment plummets and the productive leave the country...

Rod 18y ago
I wholeheartedly agree with your point. But is it a matter of economic illiteracy? Isn't it a matter of plain innumeracy? $1 trillion = 1E12 dollars, 300 million Americans = 3E8 persons, and hence that is only approx. 3 grand per person, like you mentioned. This is basic arithmetic. It's not even a problem of economic illiteracy, though economic illiteracy is a serious problem which allows demagogues to manipulate the masses easily. Cheap sentimentalism is defeating rationality. Even if the rich were heavily taxed, there's simply not enough money to pay for the benefits this generation of Americans seems to feel entitled to.
- nazgulnarsil 18y ago
  right but people aren't encouraged to think critically about economics and so the idea of doing the math never occurs to them. I think there is a cognitive bias involved in not examining too closely the exact methods of a leader who tells you that he will get more resources for the tribe. We prefer to think of ourselves and project an image of empathy and community, but the most effective tribes were those that killed others and stole their resources. So we like to gloss over the details because it allows us to maintain our self image. In essence the best leaders are Machiavellian, so we look the other way and pretend our share of the plunder didn't come from initiating force.
- asmithmd1 18y ago
  I find it more helpful to divide these huge numbers by the number of US households (aprox. 100,000,000) Doing that we get $10,000/household instead of $3,000 for every man, woman, child, prisoner, etc. I think budget numbers ought to be reported this way. The recent $410 billion spending bill would be reported as $4100/household spending bill. Suddenly people start to think differently - Do I really want to borrow $4100 to spend on this?
  - Rod 18y ago
    You're quite right. My analysis was simplistic and naive.
- katz 18y ago
  This is a nice statistic - but you should rather use the number of economically active people rather than the whole population when you calculate the per person value. That is because only the economically active persons generate wealth (and they would have to eventually pay the stimulus).
skalpelis 18y ago
Also, three grand per person per year is what the so-called "socialist" countries spend on healthcare. In the US it's twice as much yet a sizable number of people have no access to healthcare at all.
- ams6110 18y ago
  Absolutely false. Nobody in the US has "no access to healthcare at all."
  - gnaritas 18y ago
    > Absolutely false. Nobody in the US has "no access to healthcare at all." Absolutely false, you're confusing health care with emergency care. Plenty of people go without health care.
    - ams6110 18y ago
      Go without != no access to
      - gnaritas 18y ago
        In reality, it's virtually the same thing. Those trips aren't free, you get hit with bills, you learn to avoid them. You're now arguing pointless semantics.
chime 18y ago
I'm sorry but I can't buy the "rich will take their capital elsewhere" mantra anymore because they already do that. From Cayman to Dubai, there are tax havens all over the world and the smart rich do use them as their headquarters and capital planning; they know how to manage their assets better than you and me. The only way for rich to get richer is to invest smartly. And if you make investing difficult, it doesn't mean they'll stop investing. It means they'll have to figure out how to make money despite the difficulty in investing. Yes, they can invest anywhere in the world but they are free to do that already and there are already many incentives for them to do so. The rich aren't suddenly going to take all their money out from US and put it into India or China. They know better than that. Additionally, so what if the top few % take their capital away elsewhere? There are millions of entrepreneurs who can fill their space. These "rich will leave and you will suffer" tactics make sense if they aren't already investing elsewhere heavily and if the rest of the world is a much better investment opportunity than the US. But that isn't so and hasn't been so in a long time. I'm not saying tax the rich unfairly. I'm just saying I don't buy the "if you tax the rich they will leave" line anymore because that line only works in an untapped free market for capital with perfect competition, which we do not have anywhere in the world.
- mhb 18y ago
  Your argument is one of extremes. The relevant consideration is what occurs on the margins. There are some rich people who have decided not to take their capital elsewhere, but will if they are taxed more. Your premise is that these people don't exist and that is not true.
- nazgulnarsil 18y ago
  it's not about large quantities of money just sitting in a bank account. it's about investment. high taxes discourage reinvestment of profits back into businesses.
  - deleted 18y ago
    [deleted]
  - forinti 18y ago

Rod 18y ago

I wholeheartedly agree with your point. But is it a matter of economic illiteracy? Isn't it a matter of plain innumeracy? $1 trillion = 1E12 dollars, 300 million Americans = 3E8 persons, and hence that is only approx. 3 grand per person, like you mentioned. This is basic arithmetic. It's not even a problem of economic illiteracy, though economic illiteracy is a serious problem which allows demagogues to manipulate the masses easily. Cheap sentimentalism is defeating rationality. Even if the rich were heavily taxed, there's simply not enough money to pay for the benefits this generation of Americans seems to feel entitled to.

nazgulnarsil 18y ago
right but people aren't encouraged to think critically about economics and so the idea of doing the math never occurs to them. I think there is a cognitive bias involved in not examining too closely the exact methods of a leader who tells you that he will get more resources for the tribe. We prefer to think of ourselves and project an image of empathy and community, but the most effective tribes were those that killed others and stole their resources. So we like to gloss over the details because it allows us to maintain our self image. In essence the best leaders are Machiavellian, so we look the other way and pretend our share of the plunder didn't come from initiating force.
asmithmd1 18y ago
I find it more helpful to divide these huge numbers by the number of US households (aprox. 100,000,000) Doing that we get $10,000/household instead of $3,000 for every man, woman, child, prisoner, etc. I think budget numbers ought to be reported this way. The recent $410 billion spending bill would be reported as $4100/household spending bill. Suddenly people start to think differently - Do I really want to borrow $4100 to spend on this?
- Rod 18y ago
  You're quite right. My analysis was simplistic and naive.
katz 18y ago
This is a nice statistic - but you should rather use the number of economically active people rather than the whole population when you calculate the per person value. That is because only the economically active persons generate wealth (and they would have to eventually pay the stimulus).

skalpelis 18y ago

Also, three grand per person per year is what the so-called "socialist" countries spend on healthcare. In the US it's twice as much yet a sizable number of people have no access to healthcare at all.

ams6110 18y ago
Absolutely false. Nobody in the US has "no access to healthcare at all."
- gnaritas 18y ago
  > Absolutely false. Nobody in the US has "no access to healthcare at all." Absolutely false, you're confusing health care with emergency care. Plenty of people go without health care.
  - ams6110 18y ago
    Go without != no access to
    - gnaritas 18y ago
      In reality, it's virtually the same thing. Those trips aren't free, you get hit with bills, you learn to avoid them. You're now arguing pointless semantics.

chime 18y ago

I'm sorry but I can't buy the "rich will take their capital elsewhere" mantra anymore because they already do that. From Cayman to Dubai, there are tax havens all over the world and the smart rich do use them as their headquarters and capital planning; they know how to manage their assets better than you and me. The only way for rich to get richer is to invest smartly. And if you make investing difficult, it doesn't mean they'll stop investing. It means they'll have to figure out how to make money despite the difficulty in investing. Yes, they can invest anywhere in the world but they are free to do that already and there are already many incentives for them to do so. The rich aren't suddenly going to take all their money out from US and put it into India or China. They know better than that. Additionally, so what if the top few % take their capital away elsewhere? There are millions of entrepreneurs who can fill their space. These "rich will leave and you will suffer" tactics make sense if they aren't already investing elsewhere heavily and if the rest of the world is a much better investment opportunity than the US. But that isn't so and hasn't been so in a long time. I'm not saying tax the rich unfairly. I'm just saying I don't buy the "if you tax the rich they will leave" line anymore because that line only works in an untapped free market for capital with perfect competition, which we do not have anywhere in the world.

mhb 18y ago
Your argument is one of extremes. The relevant consideration is what occurs on the margins. There are some rich people who have decided not to take their capital elsewhere, but will if they are taxed more. Your premise is that these people don't exist and that is not true.
nazgulnarsil 18y ago
it's not about large quantities of money just sitting in a bank account. it's about investment. high taxes discourage reinvestment of profits back into businesses.
- deleted 18y ago
  [deleted]
- forinti 18y ago