Tuesday, January 22, 2019

Quote Of The Day: High Tax Rates And Growth Unique Only To The Post-War US?


Continuing on from my recent QOTD post from economist Paul Krugman on high marginal tax rates for the rich, another New York Times OpEd by Emmanuel Saez and Gabriel Zucman provides a counter argument to a popular critique proponents of higher tax rates often receive.

When one argues that higher marginal tax rates do not hinder growth and point to post-war United States as an example of that, a common rebuttal is that the US was in a unique circumstance at the time: it could afford higher tax rates because the rest of the world was effectively destroyed. Saez and Zucman use post-war Japan as a counter example of that. Post-war Japan was destroyed and poor by modern standards. It had the US and Europe as competition, and yet it grew rapidly from 1946 to the 1960s and 70s, while it had a top marginal tax rate as high as 85% during those years:

A common objection to elevated top marginal income tax rates is that they hurt economic growth. But let’s look at the empirical evidence. The United States grew more strongly — and much more equitably — from 1946 to 1980 than it has ever since. But maybe in those years the United States, as the hegemon of the post-World War II decades, could afford “bad” tax policy? Let’s look then at Japan in 1945, a poor and war-devastated country. The United States, which occupied Japan after the war, imposed democracy and a top marginal tax rate of 85 percent on it (almost the same rate as at home — 86 percent in 1947). The goal was obviously not to generate much revenue. It was to prevent, from that tabula rasa, the formation of a new oligarchy. This policy was applied for decades: In 1982, the top rate was still 75 percent. Yet between 1950 and 1982, Japan grew at one of the fastest rates ever recorded (5.1 percent a year per adult on average), one of the most striking economic success stories of all time.

Their source comes from a paper by Chiaki Moriguchi and Emmanuel Saez (same author as the OpEd), on the evolution of income concentration in Japan from 1886 to 2005. A graph from that paper shows Japan's marginal tax rate during those years. This provides an interesting counter argument to the popular rebuttal that only the US could afford higher marginal tax rates due to its unique circumstance as the only unscathed country after World War II, and I'd love to hear a rebuttal to Saez and Zucman's argument in the comments if anyone wishes.

Wednesday, January 16, 2019

Survey: Few Americans Find Meaning In Faith


An interesting survey from Pew came out recently that detailed where Americans find meaning in life and it showed a relatively small number mention spirituality or faith.

A hot topic in the debate between atheists and theists is where millions of people will find meaning, once they've left religion for atheism. It is argued, mostly by social conservatives, but even by some liberals, that religion is the largest provider of meaning in life and that in the absence of traditional religion the void left by that absence of meaning will be filled by anti-social elements, like drug addiction, and radical ideologies, be they far Right or far Left.

Well, Pew's survey seems to challenge that perspective, at least somewhat. Despite Americas being seen as a highly religious population among the Western nations, only 20% of the respondents in the survey even mentioned spirituality and faith as something that provides them with a sense of meaning. Family by far topped the list, with nearly 70% mentioning it, followed much lower by career and money, at 34% and 23% respectively.

Americans most likely to mention family when describing what provides them with a sense of meaning

Despite the fact that when the survey is measured by what is the most important source of meaning, faith comes in second, I am positive that these numbers will be decreasing in the next few decades due to the ongoing rapid secularization of the US.

Religion second to family as ‘most important’ source of meaning in lives of American adults

And not surprising, black Americans mention spirituality the highest of 3 racial groups, corresponding with the known high levels of religiosity among them.

Tuesday, January 15, 2019

An Argument Demonstrating Why Arcane Knowledge Is Wrong About Special Relativity And Eternalism


There's a website called Arcane Knowledge written by a Catholic named Daniel J. Castellano that includes several articles on Special Relativity that try to argue that the theory doesn't entail eternalism (the view that all moments of time have equal existence). Now if you've read my blog at any length, you know I'm a big proponent of the view that Special Relativity does necessitate eternalism. So naturally, I disagree with much of what is written on the site.

Many of the theists I've debating eternalism with have cited this website and its arguments against the reality of a 4 dimensional spacetime block universe. (Not surprisingly, they've all been Catholics subscribing to Aristotelian-Thomistic metaphysics).

Through a year long debate with a Catholic who frequently cited Arcane Knowledge in an attempt to deny Special Relativity entails eternalism, I've constructed an argument below showing how the arguments used on Arcane Knowledge to deny eternalism forces one into a dilemma: either (a) affirm you are the only thing that exists at any given present moment for you (literally deny the existence of everything else), or (b) be forced to agree events in the past and future exist (effectively affirming eternalism).

Over on the site, Daniel argues that from any event considered present, no events in the absolute future or past will have any objective ontological status, but any events in "elsewhere" could physically exist. In Special Relativity, "elsewhere" is a term given to all the places not in an event's absolute future or past (which are its future and past light cones, respectively). In other words, elsewhere is the totality of spacelike separated events. According to Daniel, one cannot say whether any events in elsewhere exist when one is at the present moment, seen below in the spacetime diagram as a green dot (the coordinates of this dot at (0,0) on the X and Y axis). It is physically possible, according to this view, that any set of events can possibly exist in elsewhere.


This interpretation of Special Relativity is problematic in several ways, and I will show how. If an event's absolute future and past objectively doesn't exist, this would have to apply to all other events that exist, since there's nothing special about any given event we make the center of a spacetime diagram. Given this rule, no other events can exist in elsewhere that are in the absolute futures or pasts of any other events in elsewhere. For example, in the diagram below, it is possible events A and B can exist, since they're not in each other's absolute future or past.

But in this diagram below, it cannot be the case that both events A and B exist, since event A is in the absolute past of event B, and event B is in the absolute future of event A.
A quick side note of what is meant by the absolute future and past: The absolute future and past of an event are all the areas relative to that event's location where all inertial frames would agree are objectively in the future or in the past if they were all in that event's location, even if they're moving relative to each other. They are the future and past light cones.

Tuesday, January 8, 2019

Quote Of The Day: Paul Krugman On High Tax Rates For The Rich


Happy New Year! As we embrace a new year amidst the ongoing government shutdown (which isn't affecting me at all), newly sworn in congresswoman Alexandria Ocasio-Cortez said in an interview with 60 minutes that top tax rates on the super rich for income above $10 million should be 70%! The conservative blogosphere predicatbly blew up.

This all got me thinking about tax rates again. Back in May of 2017 I proposed a tax plan with a rate of 45% for income above $10 million, far lower than Cortez's 70%. Many have claimed that her rate is far too high. Too "radical" as Anderson Cooper described it. It definitely seems radical, even when you consider that the highest marginal tax rates in the 1940s and 50s were as high as 94%.

Enter Nobel prize winning economist Paul Krugman. In a recent New York Times OpEd, he writes on how many other economists (even some Nobel prize winning ones) calculate the optimal top tax rate to be over 70%:

Peter Diamond, Nobel laureate in economics and arguably the world’s leading expert on public finance. (Although Republicans blocked him from an appointment to the Federal Reserve Board with claims that he was unqualified. Really.) And it’s a policy nobody has ever implemented, aside from … the United States, for 35 years after World War II — including the most successful period of economic growth in our history.
To be more specific, Diamond, in work with Emmanuel Saez — one of our leading experts on inequality — estimated the optimal top tax rate to be 73 percent. Some put it higher: Christina Romer, top macroeconomist and former head of President Obama’s Council of Economic Advisers, estimates it at more than 80 percent.

Krugman continues on how the top tax rates is based on two primary factors: Diminishing marginal utility and competitive markets, [emphasis mine]

Diminishing marginal utility is the common-sense notion that an extra dollar is worth a lot less in satisfaction to people with very high incomes than to those with low incomes. Give a family with an annual income of $20,000 an extra $1,000 and it will make a big difference to their lives. Give a guy who makes $1 million an extra thousand and he’ll barely notice it. 
What this implies for economic policy is that we shouldn’t care what a policy does to the incomes of the very rich. A policy that makes the rich a bit poorer will affect only a handful of people, and will barely affect their life satisfaction, since they will still be able to buy whatever they want. 
So why not tax them at 100 percent? The answer is that this would eliminate any incentive to do whatever it is they do to earn that much money, which would hurt the economy. In other words, tax policy toward the rich should have nothing to do with the interests of the rich, per se, but should only be concerned with how incentive effects change the behavior of the rich, and how this affects the rest of the population. 

Seems reasonable. Tax the rich too high, Krugman argues, like at 100%, and you'll stifle all incentive to work any harder resulting in diminishing returns. But what's "too high" is a threshold beyond an optimal top tax rate that would drive the largest tax revenue, that experts argue is much higher than the top tax rates that currently exist. He continues, [emphasis mine]

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