Obamanomics: Number Of People Not In Labor Force Soars

[_EAllusion]

If the concept of "receiving government services" is clarified to imply "benefiting from government services" or slightly more broadly, "benefiting from the social and economic structure the government facilitates," then I'd suggest that yes, the assertion that the rich pay more in taxes than they receive in government benefits is slightly moronic.

It is true that a person with a large amount of assets benefits from being under the umbrella of the world's most powerful military than someone with no assets. It is true that a person who owns a grocery store benefits from the road leading to it to a much greater degree than any one of his or her customers. While this doesn't scale exactly exponentially in the way your posts have implied, it is true that level of benefit differs based on wealth. You seem to be arguing similar to Kevin that since no one rich person can pay for the benefit of a multi-billion dollar military or to build a road from Chicago to Duluth, their benefit exceeds what they pay into government service. But this is an odd comparison, because this is cost-shared. Their taxes do not pay entirely for this. It contributes a fraction. The same would be true in privatized systems. In a voluntary payer scheme, their would be far less equality of service and payers would have to contribute more to make up for the lost income from mandatory taxation, but our current system is just so progressive, the wealthy would still make out like bandits. No one gets a multi-billion dollar military for their taxes. What they get is access to it, or a piece of it if you will. A heavy tax-payer's "piece" is just much less than what they pay in.

[_EAllusion]

Having looked it up, fire service on a national scale is about $60 per year per capita. This includes owners of skyscrapers and homeless people alike. This does not include remote private insurance services, voluntary systems, tribal systems, and so on. $470 to protect a property in a more remote area seems about right in line with that.

[_subgenius]

I looked up per capital expenditures by the federal, state, and local governments for West Virginia. Numbers are going to vary based on methodology - this is a complicated subject - but the high side of estimates was around 20k per year. This includes everything from crop insurance, to entitlements, to schools, to fire service, to our massive military budget, to debt service. That's the whole shebang, including services individual actors might choose not to opt into.

This implies that since everybody gets $20k in services per year, the fair way is to charge everybody $20k.

Ignoring the fact that not everybody can afford $20k per year, there is a huge problem with this approach. Namely, the rich get much more out of the government than the poor. People who have property need a police force to defend them more than people who have nothing to steal from. People who own big houses need a fire department more than people who live in rented trailers. People with big stock portfolios need an SEC for protection more than people who are broke. People who vacation in Cancun need air traffic control, a state department, and a TSA more than people who can't afford to leave home. People who are succeeding in America need a military to defend their lifestyle more than people who couldn't get much poorer even after a China invasion (or whatever it is the military is supposed to be defending us from).

The rich get far more out of the government than the poor. That is why they should pay more in taxes.

aside from your erroneous comment implying that being poor is not a lifestyle - this seems to be a good argument against the philosophy and application of the ACA.

If we suddenly decided to let everyone who wanted to fly anywhere for any reason have a government subsidized ticket then there would be an increase in necessary TSA, ATC, etc....the volume increases to the "system" would be more expensive, burdensome, and likely more wasteful...
Yet, the cost increase would only be realized by those who effectively "needed" the system and had been paying already. The cost would increase, but still be spread over the original payers.
The idea that some things should be affordable just for the sake of affordability is dangerous...government subsidized slothfulness is degenerative.

[_Analytics]

this seems to be a good argument against the philosophy and application of the ACA.

If we suddenly decided to let everyone who wanted to fly anywhere for any reason have a government subsidized ticket then there would be an increase in necessary TSA, ATC, etc....the volume increases to the "system" would be more expensive, burdensome, and likely more wasteful...
Yet, the cost increase would only be realized by those who effectively "needed" the system and had been paying already. The cost would increase, but still be spread over the original payers.
The idea that some things should be affordable just for the sake of affordability is dangerous...government subsidized slothfulness is degenerative.

I totally agree. If we don't allow sick people access to health insurance, premiums will go down. If we make sure that people who can't afford healthcare don't get it (e.g. require ERs to turn away people without insurance cards or cash), insurance premiums will go down even further.

Not only will this course of action lower the cost of the healthcare system, it will help decrease the surplus population, so everybody wins.

[_Res Ipsa]

If the concept of "receiving government services" is clarified to imply "benefiting from government services" or slightly more broadly, "benefiting from the social and economic structure the government facilitates," then I'd suggest that yes, the assertion that the rich pay more in taxes than they receive in government benefits is slightly moronic.

It is true that a person with a large amount of assets benefits from being under the umbrella of the world's most powerful military than someone with no assets. It is true that a person who owns a grocery store benefits from the road leading to it to a much greater degree than any one of his or her customers. While this doesn't scale exactly exponentially in the way your posts have implied, it is true that level of benefit differs based on wealth. You seem to be arguing similar to Kevin that since no one rich person can pay for the benefit of a multi-billion dollar military or to build a road from Chicago to Duluth, their benefit exceeds what they pay into government service. But this is an odd comparison, because this is cost-shared. Their taxes do not pay entirely for this. It contributes a fraction. The same would be true in privatized systems. In a voluntary payer scheme, their would be far less equality of service and payers would have to contribute more to make up for the lost income from mandatory taxation, but our current system is just so progressive, the wealthy would still make out like bandits. No one gets a multi-billion dollar military for their taxes. What they get is access to it, or a piece of it if you will. A heavy tax-payer's "piece" is just much less than what they pay in.

I don't think Kevin's comparison is that odd. You're comparing costs with costs, while he is trying to compare cost with value. Let's use the military as an example. In theory, the benefits I receive from the U.S. military have some value to me -- call it X. It doesn't matter how many people I can split the cost with, it doesn't change the value to me. I think Kevin's point is that the cost of the benefits that government produces are split so many ways that what each person has to pay is far less than the value of the services they are getting. That doesn't seem to be an odd comparison to me. For the share of my tax dollars that goes to the military, I don't just get a "piece" of military protection -- I get the whole shebang.

I think the key point to what Kevin is arguing is that I don't get a fractional piece of these services -- I get the entire benefit of the services while paying only a fraction of the cost. The key problem is is setting the value. It strikes me that, for a fire department, one could set the value as the difference in the cost of fire insurance for two identical dwellings, one with fire protection service and one without. (This of course ignores the sentimental value of possessions, risk of loss of life, etc.). That would give us a "value" for fire protection that wouldn't change with the number of ways the cost could be split. Do you think the value would exceed some of the cost figures you've found?

[_ajax18]

If we suddenly decided to let everyone who wanted to fly anywhere for any reason have a government subsidized ticket then there would be an increase in necessary TSA, ATC, etc....the volume increases to the "system" would be more expensive, burdensome, and likely more wasteful...
Yet, the cost increase would only be realized by those who effectively "needed" the system and had been paying already. The cost would increase, but still be spread over the original payers.
The idea that some things should be affordable just for the sake of affordability is dangerous...government subsidized slothfulness is degenerative.

This is an excellent example.

[_Analytics]

If the concept of "receiving government services" is clarified to imply "benefiting from government services" or slightly more broadly, "benefiting from the social and economic structure the government facilitates," then I'd suggest that yes, the assertion that the rich pay more in taxes than they receive in government benefits is slightly moronic.

It is true that a person with a large amount of assets benefits from being under the umbrella of the world's most powerful military than someone with no assets. It is true that a person who owns a grocery store benefits from the road leading to it to a much greater degree than any one of his or her customers. While this doesn't scale exactly exponentially in the way your posts have implied, it is true that level of benefit differs based on wealth.

To quibble, I've implied that the benefits of the government increase somewhat progressively with wealth. Not exponentially.

You seem to be arguing similar to Kevin that since no one rich person can pay for the benefit of a multi-billion dollar military or to build a road from Chicago to Duluth, their benefit exceeds what they pay into government service. But this is an odd comparison, because this is cost-shared. Their taxes do not pay entirely for this. It contributes a fraction. The same would be true in privatized systems…..

You misunderstand me. As an example, my town doesn’t collect the trash. Each HOA is responsible to privately contract trash service for the homes in the neighborhood, which is then funded through HOA dues. I like this system, and have no illusions that the service would be better or cheaper if we replaced our private trash removal with service provided by the government. I certainly wouldn’t argue that if a particular government service wasn’t available, that there would be no cost sharing.

In a voluntary payer scheme, their would be far less equality of service and payers would have to contribute more to make up for the lost income from mandatory taxation, but our current system is just so progressive, the wealthy would still make out like bandits. No one gets a multi-billion dollar military for their taxes. What they get is access to it, or a piece of it if you will. A heavy tax-payer's "piece" is just much less than what they pay in.

Sure, everybody gets a piece of it, but what is each piece worth to the individual?

For the sake of discussion, here is a more concrete example. Compare these two homes in Dallas:

http://www.zillow.com/homes/dallas_rb/# ... 2490_zpid/

http://www.zillow.com/homedetails/4939- ... 7254_zpid/

The owner of one is assessed $2,154 a year in property tax, and the owner of the other is assessed $180,029 in property tax—roughly 100 times as much.

We agree that for some services, the billionaire is getting 100 times the benefit as the average guy. He’s getting 100 times the fire and police protection, for example. I think you get my point that for some things (national defense, FAA, SEC, TAS), the billionaire gets a ton of value while the poor person gets essentially none. An investment banker who pulls seven figures might complain about the SEC, but his ability to pull seven figures wouldn’t exist without it.

On the other hand, your focus is that the rich guy isn’t getting 100 times the garbage pickup service, or 100 times the public education service for his kids, or 100 times the service for a well-developed highway system. This type of thing is the basis of your argument that the rich would “make out like bandits” if they privately contracted for what they actually use, right?

But the road example raises the question: How much would a billionaire who drives a Lamborghini be willing to pay for uncongested roads without potholes? Somebody who rides the bus might pay $100 a year for good roads. In contrast, the billionaire might pay $1,000,000 for the joy of having a road on which to drive his car.

For poor people, the marginal value of a dollar is very high—it’s the difference between eating and not eating. For the billionaire who is saturated by luxury, the marginal utility of a dollar is essentially zero. Thus, while somebody who is poor might say it isn’t worth it to him to pay $200 a year to get his trash picked up, the billionaire might very well think it’s worth $100,000 a year to pick up his neighbor’s trash just so that he doesn’t risk being exposed to it blowing by.

The original question is how much value do people with different levels get from the government? How does the value they receive compare to their respective tax burdens?

My assertion is that the rich get much, much more benefit from the government than many admit—sure, the government could be more efficient, but without the government (or other mechanisms of providing security, order, and risk pooling), almost all of the rich would lose the ability to be rich. Furthermore, money has a decreasing marginal utility. These two facts support Warren Buffet’s observation that the rich are in fact winning the class war.

[_EAllusion]

To quibble, I've implied that the benefits of the government increase somewhat progressively with wealth. Not exponentially.

I took the implication from what you said as necessary given that there is an exponential scale of wealth distribution. Value would have to track with it in order for your argument to work - at least in defense of the comment I'm responding to.

It would be spectacularly coincidental if the share of value all people received from government services scaled perfectly with their tax burden given that there is no coherent pricing mechanism for taxing authorities to make those two match. The idea that no one, anywhere, is paying more out than is coming in in relative value is absurd.

The ultra-wealthy, as a general rule, do well for themselves as do the lower classes. This has mostly to do with how our tax system is structured and the activities of the government it funds. It's the upper-middle/lower-upper range that are getting hit with much larger bills in comparison to what they are receiving.

On the other hand, your focus is that the rich guy isn’t getting 100 times the garbage pickup service, or 100 times the public education service for his kids, or 100 times the service for a well-developed highway system. This type of thing is the basis of your argument that the rich would “make out like bandits” if they privately contracted for what they actually use, right?

Yes and no. I am asserting that at least one person is paying out more in taxes than they receive in benefit. More specifically, someone like ajax is right in the income sweet-spot of where you find those people. To understand the benefit in a comparable private system for things like military, police, fire, etc. we'd have to look at how risk/cost-sharing systems would price out their needs. Fire protection would be more expensive for a large office than a trailer home in approximately the same way building insurance in general is. Ditto for other comparable services. It's not at all a given that this would scale more in a private system than a public system's tax policy, though. And meanwhile, other kinds of services, such as those you mention, would not scale as drastically. Our taxation system is so progressive - it's actually a relatively small portion of the population funding the bulk of all government activity - that it's inevitable that people will be getting less than what they pay for. It's tempting to argue in response to this point that progressive taxation is good for other reasons, but remember this dialogue is about Kevin's "epic moron" comment.

Reading this post, I think your line of reasoning is quite distinct from Kevin's. He's been stuck on not understanding how public goods on a mass scale can exist without a taxing authority. He's incredulous over the very idea.

[_EAllusion]

I don't think Kevin's comparison is that odd. You're comparing costs with costs, while he is trying to compare cost with value. Let's use the military as an example. In theory, the benefits I receive from the U.S. military have some value to me -- call it X. It doesn't matter how many people I can split the cost with, it doesn't change the value to me. I think Kevin's point is that the cost of the benefits that government produces are split so many ways that what each person has to pay is far less than the value of the services they are getting. That doesn't seem to be an odd comparison to me. For the share of my tax dollars that goes to the military, I don't just get a "piece" of military protection -- I get the whole shebang.

I put "piece" in quotes, because it's simply a way of conceptualizing it. Hospitals are comparable to the military. My health insurance does not come close to footing the cost of a hospital. Yet my insurance payment gives me access to it. In a sense, you can say my insurance buys me a "piece" of the hospital. It doesn't literally give me a piece of the hospital. I do not own one section of drywall. My relatively small contribution gives me theoretical access to the entire thing. What makes the hospital's existence possible is that my interest in health care is fundamentally aligned with many other people's. This allows me to pay a fee that many other people will pay that collectively will add up to the existence of a hospital. The economic mechanisms that capture our desires and allow our resources to be pooled into something as sophisticated as a modern hospital are complex and the byproduct of centuries of social evolution, but are nonetheless real. Getting military, police, or fire is no different. The evolution of the state itself comes from the accretion of private force.

It's actually not hard to imagine Kevin in a universe where all hospitals exist as a state-run legal monopoly having a hard time grasping how such a thing could be without the state. We live in a universe where such things exist, so it is easy to point to, but the incredulity he expresses towards the police is of the same type. It's easy to see how command economies pool resources because the process is comparatively simple when contrasted with private development in a market. That's why I made the evolution analogy. We can compare the value of military access, police access, hospital access, etc. against what is paid out in taxes. It's too inexact to give specific numbers, but there are broad enough price ranges to give us a sense if some kinds of tax burdens exceed them.

[_Res Ipsa]

EAllusion,

I absolutely agree that the services being discussed (police, fire department, military) could be contracted for in the private market. But I'm missing how that is responsive to Kevin's point on value. Stripping the argument to its bare bones, here's what I"ve got.

Ajax: I pay more to the government than I get out of it.

Kevin: No, you pay lots less because you get very valuable benefits (like full military protection) but get to spread the cost among many people.

EAllusion: The private market can do the same thing, but cheaper.

Brad: ???

Having read lots of your posts, I know you're not trolling and that you a smart and thoughtful person. So I'm thinking I'm missing something. What is it?