Summary of the Recent Presidential Debates

Central Message of the Republican Debate: Realism.

Central Message of the Democratic Debate: Fantasy.

Realism versus fantasy. I'm tired of realism.

Give me pie in the sky. Give me free health care. I don't care who has to pay for it, so long as it's not me. Let's withdraw all the troops from Iraq so we can blame Bush for the resulting genocide & collapse in world oil markets. And please, please repeal the Bush tax cuts. My taxes are way too low.

Sarcasm, Mark? Really?

The only reality the Republicans seem to be offering is that 3,400 dead American soldiers and hundreds of billions (100% of that is YOUR taxes at work, my friend) isn't enough to fix a hugely botched (not to mention illegal) war against a fictional threat.

The war against terror ended in Afghanistan. The war in Iraq is a transgression against a sovereign nation that was not threatening the United States.

The Soviet Union has a better rationale for attempting to invade the US as a potential threat against it than the US had for invading Iraq, yet you would certainly be affronted at the thought of it doing so.

And you may feel your taxes are too high, but EVERY country with a better standard of living than ours has a significantly higher tax rate. So, if your taxes go down, so will your standard of living; maybe not immediately (after all, that extra two grand you save could buy you a nice plasma TV), but in the long run. But it's not surprising you and people like you don't realize that; we Americans aren't very smart when it comes to understanding the long-term implications of the decisions we make.

And this long list of countries with higher standards of living is... and you're measuring living standards how?

And high tax rates cause high standards of living...how?

I'm really surprised that you think that a tax cut - which allows you to keep more money that you earned through your own hard work - makes your standard of living goes down. If you really believe that sending more money to the government directly benefits your life, you would send over and above your tax obligation to the government. You'd stop taking the home interest deduction on your taxes.

You apparenly trust politicians and bureacrats to take your money from you and spend it how they see fit. Why would you chose to live as a child and let the mommy state take care of you? Don't you think you can make it on your own? Or do you think we all need to chip in and help you buy your health care and education and car and food and housing and... where does it end? Do you really see yourself as so incompetent you need to send in all your money to the government to have them spend it for you? Let's take republicans out of the picture for a moment. Let's say the federal government and your state goverment is 100% of your choosing. Would you really rather send in 50% or more of the money you have earned so that these people can decide how to spend it for you? Do you really believe that a centralized bureaucracy is smarter about allocating resources than millions upon millions of free, thinking people? Doesn't the failure of command economies all over the world (think of the old Soviet bloc) indicate that rigidly centralized, socialized bureaucratic countries are relics doomed to failure?

It's not *my* standard-of-living measurement, Mark; I'm just basing it on the multitude of studies done on comparing quality of life and other social well-being metrics. One example is the Human Development Index (read up on it at http://en.wikipedia.org/wiki/Human_Development_Index ).

I don't trust politicians and bureaucrats, but I do realize that _someone_ has to manage and run the social institutions we rely on for civilation (e.g., roads, sewers, police, fire, etc.). And yes, there are many examples of where centralized decision-making is _far_ superior than "millions upon millions of free, thinking people" making independent decisions. The latter situation often results in "local optima," and game theory tells us that when people make self-benefiting decisions, they often do it at the expense of the overall population. And basically, most people aren't very bright when it comes to making sound financial decisions. Just look at the savings rate in this country -- it's the worst in the civilized world! And you're suggesting that we should let Joe Six-Pack who currently has three credit cards maxed out and is living paycheck to paycheck while spending $100 a week on beer and cigarettes be the chief financial decision-making entity in the country? You're nuts...or maybe just blind to reality.

Could our government be more efficient with the tax revenue it uses? Absolutely. But that's not the issue on the table.

My taxes are an investment in the well-being of America and its citizens (that's the connection between tax rate and standard of living). If I didn't believe it was worth investing in, I wouldn't want to pay taxes. But then, if you don't believe this country is worth investing in, why do you live here? There are lots of places with no formal tax structure that you could easily move to, such as Sudan and Iraq. Why not give those a try and see how much you enjoy living in a tax-free society.

Interesting webpage with some interesting, if dated, statistics: http://www.huppi.com/kangaroo/8Comparison.htm

You've failed to supply any evidence that high taxes have caused the living standards in the countries in your neat little graph. You're making the old mistake of conflating correlation and causation.

Another thing: you yourself say that you "don't trust politicians and bureaucrats", but those are the people to whom you want to send your money. Think about it: you don't trust them... but you're willing to work four or more months out of the year to send them money. You don't trust them, but you're willing to give them increasing amounts of power and money so they can decide how to make America better for us all. What do you make of those contradictory notions?

No, Mark, I didn't conflate correlation with causation. If you read what I wrote carefully, I pointed out that the best possible relationship in my data are the possibility of taxes being a leading indicator (not cause) of standard of living. But causation really isn't the issue. If the correlation between tax rate and standard of living were 100%, would any sane person still argue for lower taxes? No.

As I said in my previous comment, our government isn't perfect, but it's the only one we have here in the US, so it's not like we have a choice of how to invest in roads, military, etc. There's only ONE way to have those things and that's through taxation. Unless you're proposing that we scrap all forms of public infrastructure and let private entities take on those roles (a ridiculous notion), then there's no merit to the argument that federal taxation is bad.

Do I want 100% federal tax? No, of course not. But nor do I want a much lower federal tax if that means significantly less infrastructural development and support for necessary social institutions.

Beyond that, what exactly would you do with the extra money you'd save by not being taxed? Spend it on better home security systems because of the reduced police force in your neighborhood? Spend it on a home sprinkler system because the nearest fire station was closed due to budget cuts? Spend it on new tires for your car because the growing potholes in the streets tear them up faster? Taxes aren't money that evaporates into thin air; you do actually receive significant benefit from the "expense."

You wrote earlier: "if your taxes go down, so will your standard of living" and "My taxes are an investment in the well-being of America and its citizens (that's the connection between tax rate and standard of living)." Those statements, particularly the first one, suggest a causal relationship.

Fine, Mark, prove me wrong. Show me some evidence that a significantly lower tax rate results in a higher standard of living. And I don't mean just for the wealthiest 10% in the nation.

"Prove me wrong?" So do you still hold to the idea that tax rates cause standard living or not? I'm not the one who was trying to establish causality. Again, look at the title of your chart. It says "Tax Rate Effects on Standard of Living". From the beginning you asserted that there is some cause - effect relationship between taxes and standard of living. Are you backing away from that?

Also, do you realize that your chart, which covers the 10 *best* nations, has no value in uncovering a relationship between taxes and living standards *in general*? What you did was pick the 10 best countries and generalize about other countries. You can't generalize about countries *in general* when you're only analyzing data from the *best* ones. For example, you said categorically that "if your taxes go down, so will your standard of living." You then produced a chart comprised of the 10 best countries as support for your argument. So, I don't see anything to disprove here. Your arguments haven't made sense from the get-go.

What I said originally (above) was this: "...EVERY country with a better standard of living than ours has a significantly higher tax rate. So, if your taxes go down, so will your standard of living; maybe not immediately (after all, that extra two grand you save could buy you a nice plasma TV), but in the long run."

I made a mistake, as Japan has a slightly (1/2% or so) lower tax rate and a slightly (.001) better HDI score. But the other countries with a better HDI all do have markedly higher tax rates (Ireland's is the lowest at 30% compared to ours at ~25%). So that statement is well-supported.

The second statement is based on that empirical evidence. If you want to lower our taxes, based on the tax-HDI correlation, it is likely that our standard of living will go down as well. Causality isn't the issue -- directionality doesn't matter if the end effect is the same (i.e., lowering taxes corresponds to a reduced standard of living). If you want to lower our taxes, I wouldn't object to that as long as our standard of living remains where it is or improves. If you can demonstrate that our taxes are too high for our given standard of living, then I'll accept your position. Until you offer some evidence to support that, then you'll have to go on believing you can get something for nothing (which is the antithesis of the "realism" that you claim the Republicans are offering).

From the beginning you've been asserting generalized causality by looking at a skewed sample.

Skewed Sample: "...EVERY country with a better standard of living than ours..."
Empirical observation: " has a significantly higher tax rate."
Faulty, generalized non sequitur asserting causation: "So, if your taxes go down, so will your standard of living"

Before I forget, I wanted to recommend that you check out a podcast called econtalk with a professor named russ roberts. You obviously think deeply about this stuff, and even though we disagree I think you'd enjoy the podcast. It does come from a right-ish perspective, but there's little to no left-bashing and it's not an apologetic for any given political party. I sincerely think you'd find it interesting. It's about an hour long and Roberts treats subjects in a thorough fashion in an NPR style setting. Actually, I think Roberts is on NPR from time to time. I'd love for you to listen to an episode or two and maybe put a blurb on your blog. If you're a baseball fan, you might enjoy a couple programs he did on economics and baseball.

Mark, first, the data I show above are not a "sample," but are the entire population of countries with better standards of living than the US (at least using the HDI criterion). So, there's "generalization" to be done -- we're dealing with the entirety of the population. I'm stating a fact: with the exception of Japan (which one could argue has essentially equivalent standard-of-living and tax rate as the US does), EVERY nation with a better standard-of-living has a markedly higher tax rate. That is a fact.

If you want me to cede the pure causation argument, fine. Let's say there's no causality. But, knowing that countries with lower tax rates than the US' all have lower standards of living, do you want to risk moving our quality of life in that direction by instituting widespread tax cuts?

Here's a simple analogy: If you hated rainy weather and you found out that every place that was HOTTER than where you lived was also DRIER, would you instead seek out a COLDER place to live? You would do so only if you hated heat more than rain, since the heat/dryness correlation suggests that you can't have both cool and dry. If you know that all the places with lower tax rates also have worse standards-of-living, why are you so eager to reduce the US's tax rate?

Is it just to force the government to be more efficient? I'm sure your employer would prefer to pay you less. What if he came to you and said "Mark, I'm gonna cut your salary by a third...you're just going to have to use the remaining two-thirds more efficiently." Does that work, or would you find another job? Well, our government CAN'T find another job; we're the only employer it has.

Can we expect more for our dollar? You bet...and I do...which is why I vote the way I do. Have I voted against tax raises? Yep, when I think they'll be used for the wrong reason. But do I think we should be spending more as a country on things like education and healthcare? Yep, and the #1 way that money is raised is through taxation. Do I also give through charitable contributions? Yes, but I can't realistically support every social initiative worth funding even if I only gave a penny apiece. That's where the government comes in; it's like a mutual fund for social benefit investments. Granted, it's one of the highest-load funds you'll see, but there aren't too many investment vehicles with the complexity and scope of the federal government, either. I'd love to see the bureaucracy evaporate and the government work more like a business. And I've chosen to support it while it improves rather than wait until it improves; perhaps that's the difference between us.

Thanks for the link to the podcast...I'll check it out when I get some time.

You wrote: "...all the places with lower tax rates also have worse standards-of-living..." There is no data about such countries in your table. That is why I suggested you need to run a regression against a random sample of countries. I'm sure we'd see that there are many many more countries with higher tax rates than the US with markedly lower standards of living than ours. To use the lesson of your analogy, if I would like raise my standard of living by moving to another country, I should pick one with higher taxes. Well, I might pick Norway but I might also pick France or Germany. All three have higher taxes, but only one of those countries has a higher standard of living than that of the US.

I think you're starting to catch on, Mark. If you pay higher taxes, there's no guarantee that you'll raise your standard of living (the return on that investment depends on the efficiency of the government to convert revenue into well-being). But neither of us are advocating HIGHER taxes than what we pay in the US currently.

In contrast, you are advocating LOWER taxes. All countries with LOWER taxes than ours have LOWER standards of living (but the vice versa is not true).

You're right in that's not what I am portraying in the graph above, because that graph was produced to demonstrate that all countries with higher standards of living also have higher taxes (not the other way around). Since you're unconvinced about causality, that should be completely acceptable to you.

Since you are advocating lower taxes, you need to compare the US to places with lower taxes. All those places have lower standards of living.

If, in contrast, you were advocating raising our taxes, I would have to question why because there are many exceptions where higher taxes don't come with higher standards of living.

So, it depends on which way you want to move. If your objective is to lower our taxes, as it seems to be, then you need to compare us with countries with lower taxes. It so happens that EVERY SINGLE ONE of those countries have worse-off populations. That is the troubling implication I see in these data.