Tuesday, July 7, 2009

Editorial: Money gets more and more scarce

Today the unnamed Courier editor illustrates a couple of very basic propaganda/marketing techniques: oversimplification to confuse, and recasting events to fit the desired narrative.

Never mind that there's a whole lot more to understand about the budget situation, both fiscally and politically. The editor wants to spoon-feed you a simple good-guy/bad-guy story. The bad guy is the governor who wants to tax you and spend the money on stuff you don't need. The good guys are the noble anti-tax legislators who won't "break faith with their constituents." I'm surprised he didn't throw in a scene from High Noon to add some thrilling drama.

Readers who understand basic logic will notice that his argument is founded on a cracked premise. He writes, "Many of Brewer's fellow Republican lawmakers won their legislative seats on promises of no tax increases," implying that those Grover Norquist-inspired anti-tax pledges so adored by the extreme right have a real vote-getting effect. Since blind anti-tax zealotry is only shared by a small minority of voters (generously, 12-15%), and they have no one else to vote for, it's obvious that they can't really affect a close race, even a Rep primary. They take credit for what they didn't do just to puff up their importance, and it often works in the public mind, giving them more influence on legislators than they truly warrant. I've seen the threatening stuff the Goldwater Institute and its attack dogs circulate to legislators, and folks, I gotta tell you it's definitely ugly and I'm sure scary to spine-challenged pols.

The truth is that the radicals who 'signed anti-tax pledges' did so not because a significant body of their constituents demanded it, but because they truly believe, like Norquist, that the best government is a dead one, and they don't give a rat's ass about the majority of constituents who would prefer that politicians engage their brains before making law. These are the same pols who have been holding up the budget process (in the train-robbery sense) for months. Contrary to the Courier editor's narrative, they are really the black hats in this movie.

The white hats are the sensible moderates, including the Governor, who are trying to get through the hail of black-hat bullets before the deficit train runs down Little Nell Arizona. Ack, enough!

So why does the editor want you to accept his Bizarro recasting of the story? Because he's in the gang with the bad guys. He would happily deprive you of needed government services like infrastructure, education and health care because he's got his and he truly believes that he shouldn't have to pay for any more. It's a short-sighted, adolescent worldview, not conservative at all, but radically anti-government. And he'll wrap himself in the flag to pitch it to you.

So if his narrative is so twisted, what about his supposed paradigm-shifting point, that "states are out of money?"

It's easier to see in California, where in '78 the anti-tax zealots won the day and instituted tax rules designed to bankrupt the government. It took a couple of decades, but it worked. Meanwhile those darksiders got to work on financial and corporate deregulation to maximize profits, and we found ourselves holding the bag on a hollow, deindustrialized economy and a financial system looted by gangsters. The issue is not that the states are out of money. It's that the bad guys stole it. And they've got the gall to feed us D-Day's line from Animal House: "You fucked up -- you trusted us!"

This particular paradigm hasn't shifted. Our system is basically sound, but it needs repair, particularly a big hole in the wall of the vault. If we can reindustrialize based on clean energy production, play hardball against the corporations who demand to use our infrastructure for free while draining us of money, and keep the professional gamblers from playing high-stakes roulette with our financial system, we'll be able to get back on track. But we weren't insured for it, so we'll have to pay to fix that wall, no question about it.


Chris Bergman said...

Steven, I don't necessarily agree with you take on the Courier's editors. I think they're more likely shallow than malicious. Or maybe they feel they need to over simplify in order to reach their audience. Be that as it may, I just posted the following on the Courier's editorial thread, I'd like you input:

I know this is going to sound strange, especially coming from someone like me, but the facts is what they are, so to speak. Currently the State's level of spending as a percentage of Gross State Product (GSP) is running at around 8 percent. That's actually pretty low and well below the state constitutionally mandated threshold. Now I understand that education gets about half the state budget but considering the state budget, that's still not much. What if (and this is just a what if) the state eliminated consumption taxes on necessities like food and residential utilities and increased consumption (i.e. sales) taxes on non-essentials. Yes, taxes on your new car, your box of donuts or whatever would go up, but taxes on the things we NEED to live, would go down. Sales on taxable activities might go down but since state spending is already low, a “slight” increase in will probably not greatly affect these sectors. Especially since people spending less on essentials will have more to spend on non-essentials. When you consider that the total of all taxes at all levels is approaching 58% on average, nationally; you realize our state government is getting short shrift. What do you all think?

About your last paragraph; who are these corporations demanding to use our infrastructure for free? The taxes on most of the infrastructure I know of go up the more you use them. Let me know specifically 'cause if they're out there I want to tag 'em, bag 'em and drag 'em back into line too. bergman_blogs@yahoo.com

Steven Ayres said...

I've been dealing with the Courier editors a lot longer than you have, Chris, but I'll agree that the problem is more incompetence than malice, and I've said so many times. Oversimplifying "to reach their audience" would be patronizing at best, but however you identify its motive, it serves every reader and the community poorly. That these oversimplifications tend to reinforce the corporatist anti-government agenda they usually espouse in their op-eds is sufficient confirmation for me that they try to control the message with some, perhaps foggy, purpose.

On your sales-tax point, I'd like to see what proportion of revenues come from street retail compared with housing and other construction. I expect retail is a minor component, which would afford your idea only minor real-world effect. I agree that taxes on essential spending for food, utilities and the like is anti-progressive. One big problem with our post-industrial economy is that we're overdependent on construction for public funding as well as jobs, so moving more toward sales taxes for revenue, it seems to me, would only make our finances more volatile, meaning the money's not there when we need it most. The elephant in the room is Arizona's relatively low residential property taxes, set to encourage population growth and feed a twisted and unsustainable system.

I don't know what you're looking at, but my sources show education at about 18% of the state budget, compared to almost 33% for health care. What you may be seeing is that education represents about half the budget that the Legislature controls in real terms, thanks to voter protection by initiative. That's a major component in making the budget process nightmarish.

Not sure what your 58% figure is meant to mean.

On corporations: Industry spends billions every year cajoling our government authorities for tax relief and handouts, and billions more on schemes to dodge taxes, legally and semi-legally. Their ideal figure on paying taxes is zero, and most large concerns indeed pay what amounts to nothing for public infrastructure and access to our markets. I'm sure you're aware of all that. AZ's corporate taxes are officially high, but few really pay them. How about this: lower the corporate tax rates, but plug the loopholes and make sure they pay for the privilege of access to this growth market. Take the flat-tax idea from the right, apply it to the corporations first, and see how well it flies.

Chris Bergman said...

Sorry Steven, I didn't mean to suggest that the message "should" be over simplified. It just seems to be the common perception in the news business generally. I've been working within and without the Courier for only about 14 years now. When I talk to the folks inside this is generally what they espouse.

The 58% figure represents the cost of all taxation at all levels vs. national GDP; latest figures from 2007. In my opinion that's too much. Even in the Dark Ages, Augustinian law (not always practiced, I know) limited taxation on surfs to 33%. I don't believe it's the Government's job to do everything for everyone. I don't believe you do either. We could debate forever where to draw the line, though.

As for the Corporations, I'm mostly in agreement with you with the following caveat. It is impossible to tax corporations. You can only tax the people who make up the corporations or the customers of the corporations because no matter what you do, the cost gets passed down, always. As for subsidies; absolutely... shut 'em down. It is absurd that I should pay higher taxes for the privilege of paying higher prices at market.

As for property taxes, I'm not really sure where I stand. The right to own property is fundamental and taxation fundamentally interferes with that right. Still, "land" is not created from one's labor but "usable" land is. Then there's the question of those on a fixed income, the retired who have worked all their lives to pay off their home, have retired and now can't afford the taxes and so are deprived of their "property" rights. How would you deal with that?

Steven Ayres said...

OK, I stand corrected, our Courier face time is about equal. Having never heard or seen your name before it began appearing in the comments recently, I made an unwarranted assumption. You've kept a low profile.

I'm familiar with the low opinion most journos hold of the average reader's intellect. My point is that this is a dumb way to run a business, especially given that with the masses turning away from newspapers, the average reader's appreciation for detail and nuance is rising fast.

I'm sorry, perhaps I'm dim, but "the cost of all taxation at all levels vs. national GDP" doesn't gell for me -- is it meant to be shorthand for something clearer?

If it were "impossible" to tax corporations, as you say, then I can't see why they spend so much effort to avoid paying them. That tells me they can't pass through tax costs as easily as you assert, and from my background working with economists both academic and practical, I know that to be generally true. What's missing from your theoretical point is the practical reality that costs pass through only to those who choose to trade with that specific corporation, making that taxation voluntary for all concerned. This makes the game much more complex, and requires us to think carefully about why we tax a given industry in a certain way at a certain rate. To the greatest practical extent it has to be about balancing real costs to the community, and where that's done well, everyone can see it as fair.

Similarly, subsidies or tax breaks should be applied where a community has a vested interest in cultivating that industry and simple market forces would tend to work against that interest. That way people can more clearly see the value they're getting for their money, a factor that's too often obscured and neglected.

I see property taxes as participating in the cost of local infrastructure and services associated with that property. If you think you can do without the community, you can argue that you have a "right" to sit on your land and pay nothing for the privilege. But in the real world, there are costs we must all share for the services we all receive, so we pay. That's just fair.

I don't think the standard system of property taxation based on floating market-based valuations and obscure formulae set ad hoc by the Supes makes any sense, though. I pay taxes on a supposed property value that I will never pay or be able to pay, my income hasn't changed substantially as the taxes rose and the public services available to me haven't changed at all, so how's that fair? There are many other possible formulations, involving factors from actual purchase price through number of inhabitants to real income and all combinations. Whatever we use should be apprehensible as reflecting the practical value we get from the community as well as our actual ability to pay, a fair trade.

Chris Bergman said...

Okay, I think we're pretty much on the same page. I think your assessment of "journos" vs. their audience is dead on.

I admit, the pass through of costs by corps isn't straight, easy or fast; however, when a tax is levied someBODY has to pay it. It is necessarily a reduction in available gross capital. That means it affects dividends, wages, benefits, price or all of the above, to some extent. Hence the attempt at tax avoidance. I never said these costs could be passed on pleasantly. No matter where you stick the cost of taxation, somebody squeals. The idea of balancing tax costs with tax benefits is ideal; I'm just not convinced the people making those decisions are up to the task or, for that matter, that they care.

About total tax rate; I did a little research awhile back. If you take all tax receipts from all levels of government (gas tax, income tax, vehicle taxes, etc.) and compare to GDP, you get the percentage of how much ALL government costs compared to how much "wealth" is produced in a given year. The stats are out there and available, it just takes some digging. You could argue that not all receipts are spent in the year they're collected but since these receipts represent capital removed from the market they still count as a "cost" to the market, which is the source of the GDP.

On property taxes, yeah, it's complicated. We simply can't continue with the old "We (the government) want more money so we're going to raise your taxes" mentality. I think that (or the perception that that's what's happening) is the source of must of the modern tax resistance. I know for certain (from contacts in Calif.) that that's where much of the attitude in Calif. is coming from.

Steven Ayres said...

If you're passing through costs, why stop at one level? My taxes are paid by my customers, indirectly, and their cost for my production is paid by their customers, ad infinitum. You're in chicken/egg land. The point is that benefits fairly received from society should be fairly compensated to society. Corporations -- immortal, amoral money-seeking systems -- went to the trouble of having their kind declared legal persons in most of the world. They should carry a fair share of the load. And if you're immortal, that's a big share in my book.

You say you're "not convinced the people making those decisions are up to the task or, for that matter, that they care." I dunno about you, but I'm a voter, and in this system that makes me one of those people involved in making those decisions. If you insist on taking yourself out of the loop and seeing government as the tool and expression of some nameless other, you've given away all power to affect the outcome and fulfilled your own prophecy without troubling the bad guys to lift a finger. If you can't trust the ones you have, find people you can trust and get busy. But don't waste my time with effete cynicism, it just stinks, like rotten cabbage.

Steven Ayres said...

You're saying that "government" amounts to 58% of GDP? I'm sorry, that's nuts. You've found figures and tricks to artificially support an idea, nothing real. C'mon, Chris, you seem smarter than that, to be taken in by such simple-minded agitprop.

Chris Bergman said...

Steven, don't just "believe" I'm wrong, prove it. I told you, I did the research, now you do it. Or not, either way is okay by me. I'm confident in my own research.

Steven Ayres said...

I'll tell you what, Chris, why don't you write up your argument, with checkable citations, as a column? You're making a rather startling claim, and it will be newsworthy if you can back it up. But so far it's just a bald assertion.

Chris Bergman said...

Hey, you're right, I could go back through, recheck my sources, look for newly released data, do all the math and correlation work and just give it to you. But then, I'm not a commun... oh, I meant socia... oops, that's progres... um, liber... Any way, I don't give my work away just because someone who doesn't want to do it themselves thinks I should. I'm happy to share my conclusions. Beyond that, you're free to do your own research and give it all away if that's what you want.

You and Parker seem to play the same game. Those who have it, should give it, simply because you want it. And if we don't then there must be something wrong with us; we're "darksiders."

Funny thing is, having done the research for my own benefit, I now have it and I'm quite comfortable with keeping it. If you want it, as the great tag-line of the "darksiders" says... get your own. bergman_blogs@yahoo.com

Steven Ayres said...

Let's see whether I have this straight, Chris. You come on my blog, make an unsubstantiated assertion that is preposterous on its face, challenge me to prove it's untrue when I call you on it, then, when invited to use your own column to make your case, claim that it's just too valuable to tell anyone. Do you really think that does anything for your credibility or that of your paper? Go on, pull the other one.

Chris Bergman said...

Sorry Steven, not quite straight. We had some great discussion. I told you what I thought and why. You said you don't believe my "why." I told you that was fine by me; especially since the reason you don't believe me is simply because you don't. You've chosen to not believe without doing any research yourself. Maybe I'm right, maybe I'm wrong but the only reason you don't believe me is purely because you don't want to. Why would I interfere with that? I'm quite happy to let you believe whatever you want. I would hate to be accused of "forcing my beliefs on you." It doesn't bother me one way or the other.