Category Archives: Econ & Money

Tax Day

“Taxes are what we pay for civilized society,” wrote Justice Oliver Wendel Holmes (in dissent); it seems I’ve been misquoting it for decades as “taxes are the price of civilization.”

They’ve even got the Holmes version on the front of the IRS building in Washington:

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Just for fun, here’s another good tax quote, from the IRS:

People who complain about taxes can be divided into two classes: men and women.”
— Unknown

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Class Warfare at the Coffee Shop

Inside The Barista Class. It’s about power,

After a while, the process of dealing with the clientele itself can conform to a similar—albeit slightly more nuanced—math. Somewhere around the hundredth order, the expectations underneath each inflection become easier to decode, like you’ve developed a sixth sense. Often it was simply detecting how much overt power a customer wished to exercise. By far the simplest to please are, unfortunately, the most cliche: the older, better-dressed, and very likely monied ones. They want substitutions and customized drinks, and from their servers, only hyper-polite deference. For a woman, men over a certain age are easy, most of the time—there is but only one marginally flirtatious smile, and all it requires is a twist of the mouth.

And don’t forget the alienation:

I once had a friend who quit his job as a bike messenger because, as he told it, people on the street started to resemble nothing more than obstacles in the way of his next commission. If delivery work makes all humans into roadblocks, front-of-the-house service professions render them as a collection of preferences and tastes and, as both Pierre Bourdieu and latte orders have taught me, taste is almost never singular. Luckily there really aren’t that many kinds of people buying $5 coffees in Brooklyn, and thus there are a limited number of ways in which it becomes necessary to communicate, particularly once you figure out which parts of yourself are most in demand.

…and….

My kind of service work is not the kind of service work that puts you in the back room washing dishes for 12-hour shifts for dollars because you are considered completely expendable. But my kind of service work is part of the same logic that indiscriminately razes neighborhoods. It outsources the emotional and practical needs of the oft-fetishized, urban-renewing “creative” workforce to a downwardly mobile middle class, reducing workers’ personality traits and educations to a series of plot points intended to telegraph a zombified bohemianism for the benefit of the rich.

Always lurking is the reserve army of the un- and under-employed,

The national unemployment rate was hovering close to ten percent while I was in school, and if I ever doubted how lucky I was, I had only to look around my own place of employment. The shop was perpetually full of people glaring at their laptops. Some endlessly scrolled through the universal yet private hell of Craigslist job postings. Others hammered away manically, picking away at their corner of the gig economy, that handily shortened name for what had once been termed the Industrial Revolution of our time. It had been estimated, around 2010, that there were a million freelancers in New York. I only knew one or two who were making it work—for everyone else, working for yourself just meant begging for projects while you looked for a job. I was lucky.

As of 2012, one in ten employed Americans worked in food service. Two-thirds of them are under 35. The average hourly wage for a food service worker, according to the Department of Labor, is around $12, with a work week less than 25 hours long. It comes out to a little more than $14,000 a year. These are jobs without benefits or much potential for upward mobility, jobs where the idea of a sick day is laughable. Almost 60% of new jobs are of the low-wage, high-turnover variety; food service ranks in the top five of industries with job growth; the others are mostly in healthcare.

There is a small amount of class solidarity,

For all of North Brooklyn’s book groups and websites and meet-ups dedicated to alternative monetary systems, the solidarity economy is, for the time being, at its best in the service sector. I can barely remember paying full price for anything. Checks for Negronis, artisanal spicy pickles, hand-roasted coffee beans, and sometimes entire locally sourced meals disappeared with a wink and a nudge reminiscent of Fight Club’s ominous waiter scene. At the very least, it allowed us to participate in a culture we couldn’t really afford. At its vilest it felt like a neighborhood of people working for slightly more than minimum wage in exchange for a chance to play-act at brunching in a nice neighborhood.

Rarely spoken aloud, the tendency of Greenpoint’s service class to take care of its own was one of the only outright gestures of solidarity I witnessed, the only place where a distinction was made between the server and the served. I suspect the rarity of that admission has something to do with the fact that, for most intents and purposes, our jobs relied on completely erasing that distinction from public view.

But if you’re not one of them, you better be a good customer, or you will get it:

If a customer was particularly bad we exercised one of the only powers we possessed and “decafed” them. To covertly rob a caffeine-addicted asshole of their morning jolt was truly one of the sweetest pleasures of baristahood, and one that my subsequent professions haven’t come close to replicating.

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We Are Getting Owned

According to Oxfam’s Working for the Few: Political capture and economic inequality, 85 of the world’s richest people own the same amount of wealth as the bottom half of the world’s population.

Expand the focus to the richest 1%, and Oxfam reports they have about $110 trillion in wealth (46% of the total) which is 65 times the $1.7 trillion (about 0.7% of the total) held by the bottom half of the population.

Makes you feel that “The Owner” is not just a Neal Asher dystopian fantasy.

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Pricing Public Colleges

Brad had a gloomy moment:

The old social democratic belief that America should have the best universal free public education system in the world was a principal source of America’s relative prosperity and economic leadership for a century. Now that the political coalition that supported that belief is gone, America will be a much less exceptional place.

I am quite frequently a pessimist, but this is one area where I don’t think we should give in so easily. The US had a strong comparative advantage for post-secondary education due to several factors:

  1. the First Amendment, critical to the atmosphere of free inquiry in which scholarship and studying thrive;
  2. liberal immigration laws that brought the world’s talent to teach and learn;
  3. decentralized control of education, which created intellectual and prestige-oriented competition between campuses and states;
  4. a public-private mix, which further contributed to variety — and provided an outlet for religious-themed education while reducing attempts to impose religious orthodoxy on the majority of campuses;
  5. a national consensus that higher education matters,
    • as a matter of national security (post-Sputnik)
    • as part of the social contract with veterans (the GI Bill)
    • as one of the primary means of personal advancement in the post-Horatio Alger world

    and that higher education was thus worth paying for as a public good rather than billing for it as a private good.

None of these factors other than the last part of the last one were in any way ‘social democratic’. And most are still in place. The two that are hurting are fixable.

An easy fix would be the immigration prong. Post-9/11 we’ve tightened the rules for academics and even more for students in ways that not only do damage to recruiting but make the experience of coming the US unpleasant. This in turn has greatly straightened strengthened foreign academic competitors — it’s only a small exaggeration to say that our mistreatment of foreign students is the core of the UK’s academic financing strategy.

As for the US financing, it seems to me that the national security arguments are as strong as they ever were even without the Cold War — stronger if one considers the economic consequences of education for the workforce and for national wealth. Similarly, education remains a key aspect of income outcomes. If we are pricing poor people out of college, or saddling them with huge debt, we’re locking in inequality across generations. I think there are signs that the social consensus is moving ponderously towards confronting inequality. Raising the minimum wage will be round one; education expenses could be round two.

Because he chooses to cast the issue as ‘social democratic’ (bad framing?) Brad sees an equality problem with lowering tuition in the public post-secondary sector:

Given that the average taxpayer of California is considerably poorer than the average Berkeley graduate, that upward transfer to the relatively rich leaves a bad taste in the mouth.

The second argument is that for every student who would go to current Berkeley, the taxpayers of California would have to pony up $48,000 that they would not be able to spend on what they want.

Given that the average taxpayer of California is considerably poorer than the average Berkeley graduate, that upward transfer to the relatively rich leaves a really really bad taste in the mouth.

In my view, these arguments against are overwhelming: there is no valid argument for transforming UC Berkeley as it currently exists into Free Berkeley.

Even on this field, I am not persuaded that these are overwhelming arguments. Part of what the taxpayers of California want is to live in an opportunity society, not one with fixed (and perhaps angry) social classes. Another part of what the taxpayers of California want, or at least ought to want, is to live in a society that benefits from the public good of having educated voters making decisions. A third part of what the taxpayers of California want is to live in a country that is economically competitive on the world stage — which in our case increasingly means services and knowledge workers. Plus, although this more Brad’s department than mine, there is surely a multiplier from education that increases everyone’s wealth; my instinct is that this compares well to the opportunity cost of the sort of job available to a high school graduate.

This is a brew of self-interest from which a turn against expensive public education back towards free or low-priced public colleges ought to be possible. Another part of the story will undoubtedly be cost control, with fewer fancy food courts and trophy gyms. But if we can bend the cost curve on health care, we can do it on education.

(Note that the argument above is, if anything, against interest – I work in a private institution that can only be hurt if the price of public education goes down. On the other hand, I think the arguments above apply primarily to undergraduate education, and least well to professional schools; then again, in a university everyone to some extent shares the same pot.)

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Why the Budget Deal is Awful, in One Chart

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(from DownWithTyranny!)

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Hoovernomics Explains the Economy

This one chart tells you much of what you need to know about the fiscal side of the US economy: we’re dealing with a recession/depression Herbert Hoover style — by cutting government spending just when we would have needed a strong counter-cyclical push from government.

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What’s good about this chart, lifted from Krugman, is that it aggregates federal, state, and local spending; everyone’s cutting.

Something to consider as you look at the ugly budget deal coming out of Congress — the one that doesn’t extend unemployment benefits and, as far as I can tell, doesn’t fix the recent vicious cuts to food stamps either. (Please correct me if I’m wrong about that.)

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