Saturday, April 9, 2011

Rep. Ryan's Magic Beanstalk

Posted by Mark A. Sadowski, economist & fable narrator, as a comment to the Econobrowser blog's analysis of the Heritage Foundation's model for Rep. Ryan's plan ("Implied Supply Side Elasticities from the Heritage CDA Simulations"):

Once upon a time a national government who had an only congressman named Rep. Ryan and a source of tax revenue named the US economy. And all they had to live on was the tax revenue the economy gave every year. But one year the US economy gave very little tax revenue and they didn’t know what to do.
"What shall we do, what shall we do?" said the government, wringing her hands.
"Cheer up, US government, I’ll go and get work somewhere," said Rep. Ryan.
"We’ve tried that before, and nobody would take you," said his government; "we must sell the US economy and with the money, start a international lobbying group, or something."
"All right, US government," says Rep. Ryan; "it’s market-day today, and I’ll soon sell the US economy, and then we’ll see what we can do."
So he took the US economy's halter in his hand, and off he started.
He hadn’t gone far when he met a funny-looking old right wing think tank, who said to him: "Good morning, Rep. Ryan."
"Good morning to you," said Rep. Ryan, and wondered how he knew his name.
"Well, Rep. Ryan, and where are you off to?" said the right wing think tank.
"I’m going to market to sell our economy here."
"Oh, you look the proper sort of chap to sell national economies," said the right wing think tank; "I wonder if you know how many supply elasticities make five."
[I have to insert a dramatic pause here in Sadowski's narrative, as what follows is the funniest thing I've read in years. Get ready...]
"Two in each hand and one in your mouth," says Rep. Ryan, as sharp as a needle.
[Think about it. Think congressman-as-cheapo-hooker offering a group rate for services. LOL & ROTFL]
"Right you are," said the right wing think tank, "and here they are, the very supply elasticities themselves," he went on, pulling out of his pocket a number of strange-looking supply elasticities. "As you are so sharp," says he, "I don’t mind doing a swap with you — your US economy for these supply elasticities."
"Jeepers!" says Rep. Ryan; "wouldn’t you like it?"
"Ah! you don’t know what these supply elasticities are," said the right wing think tank; "if you plant them overnight, by morning they grow right up to the sky."
"Really?" says Rep. Ryan; "you don’t say so."
"Yes, that is so, and if it doesn’t turn out to be true you can have your economy back."
"Right," says Rep. Ryan, and hands him over the US economy's halter and pockets the supply elasticities.
Back goes Rep. Ryan to congress, and as he hadn’t gone very far it wasn’t dusk by the time he got to his congressional desk.
"Back already, Paul?" said his government; "I see you haven’t got the US economy, so you’ve sold her. How much did you get for her?"
"You’ll never guess, US government," says Rep. Ryan.
"No, you don’t say so. Good boy! Five trillion dollars, ten, fifteen, no, it can’t be twenty."
"I told you you couldn’t guess. What do you say to these supply elasticities; they’re magical, plant them overnight and —"

Well to make a long story short the moral of the story is... What moral?
After all, how can a story about a congressman who is fooled into taking magic supply elasticities, trespasses on someone else's property, commits burglary, and then kills him, offer a "moral lesson"?
Posted by: Mark A. Sadowski at April 8, 2011 02:56 PM

Almost made me snort my morning coffee out my nose!

I stopped short at the mental image of Rep. Ryan strapping on an oversized dildo-belt that he intends to thrust into the gaping orifices of the American public.

Thursday, April 7, 2011

Everything You Need To Know About What's Wrong With American Capitalism

Ratio of CEO Pay to Average Wages

Guess who is getting all the growth in the size of the economic pie?

Proof Positive: A Rising Tide Does NOT Lift ALL Boats

It appears, in fact, to only lift the yachts.

And you just KNOW it's only gotten worse since 2001, right?

Cynics, specifically American Exceptionalist, free market fundamentalist conservatives, might argue that the foregoing graph doesn't prove anything. They might argue something along the following lines:

  • If the "pie" - i.e., [real] total wealth - grew fast enough over the period, 
  • the bottom 60% might still be better off than they were 20 ~ 30 years ago...
    • ... notwithstanding their shrinking share.
And they might have even have a bit of a point.

But how then do they explain this?

Relative Poverty Rates in Twenty-One Rich Nations at the Turn of the Century (2000) for Children
Source: Timothy M. Smeeding, 2008. “Poorer by Comparison.” Pathways 3-5.

American Exceptionalism, indeed!  If American-style capitalism is so self-evidently superior to any other economic system, why do we have more poor people, per capita, than almost all of the rest of the industrialized world? And by such a large gap?

I haven't even gotten to the cross-country education comparisons...

Only willful ignorance seems to explain the fervent belief in American Exceptionalism. Free market fundamentalism is clearly an act of faith, because empirically the facts don't seem to agree.

Have They No Shame?

Mark Thoma remarking on Jeff Frankel's Harvard weblog post regarding the Republican Party's latest economic policy malfeasance - to wit, Rep. Paul Ryan's supposedly 'serious' latest budget plan:

When all of the savings from cutting spending are given back as tax cuts, it's not about the deficit (see here for who the tax cuts got to under the Ryan plan -- it shouldn't be a surprise).

 The radical right - forgive me if that's redundant - has been boo hooing about how the liberal left is supposedly raising the spectre of class warfare as some sort of red herring to confuse and/or threaten the great unwashed masses. They cry that the left is unfairly distorting the Republicon message, and engaging in underhanded, un-American internecine strife. [Ignore the Koch brother behind the curtain.]

What, pray tell, is Ryan's plan if not bald-faced class warfare? I am hard-pressed to interpret this graph in any other way:

So, the Top 1% in this country reap virtually & literally ALL of the national economic benefits of the last 30 years. Their success in capturing such an unbalanced share of the national prosperity was supported & accelerated by purportedly 'conservative' tax & regulatory policies based on a free market fundamentalist ideology & flawed economic theory that nearly brought on a second Great Depression, has tossed nearly 15 million Americans out of work, and contributed to an unsustainable ballooning of the national deficit and debt.

And now that the bill has come due on these ideological policies Rep.Ryan wants the middle class (and below) to pay it?

Worse, he wants us to pay that tab AND pay for another massive tax cut for the rich!
I'm not making this stuff up, folks!

On the tax side, the Ryan plan would make permanent all of the Bush tax cuts for high-income Americans, as well as the striking estate-tax giveaway included in the December 2010 tax package that benefits the estates of only the wealthiest one-quarter of 1 percent of Americans who die, at a cost of tens of billions of dollars. The Ryan plan loses $700 billion over ten years from making the high-end tax cuts permanent. People with incomes over $1 million would receive average tax cuts of $125,000 a year — or more than $1 million over the coming decade — if these tax cuts are made permanent, according to the Urban-Brookings Tax Policy Center. The $125,000 figure does not include the additional tax cuts that high-income households would receive from the evisceration of the estate tax (or from additional cuts that people earning at least $1million a year would receive from Ryan’s call to cut the top tax rate to 25 percent as part of revenue neutral tax reform).

             CBPP Statement: Updated April 6, 2011Statement of Robert Greenstein, President, on Chairman Ryan’s Budget Plan

Anybody who says Rep. Ryan is reasonable - or even a fiscal conservative - is an idiot.
Or a liar.
Or both.
Most likely both.


Adding credibility - NOT!- to Rep. Ryan's plan is the Heritage Foundation's economic analysis.

Our favorite Koch Bros. enrichment-enhancement machine claims that some magic wand-waving of tax cuts [mostly for the rich], supply-side hypotheses & free market fundamentalism will drive the long-term unemployment number down to 2.8% within 10 years.

 That hasn't happened in my lifetime (I'm 51).
Won't happen now.
I'm amazed Ryan can pass the straight face test on this one.