making sense out of nonsense

[kate e parker]

An economics professor at a local college made a statement that he had never failed a single student before, but had recently failed an entire class. That class had insisted that Obama's socialism worked and that no one would be poor and no one would be rich, a great equalizer.

The professor then said, "OK, we will have an experiment in this class on Obama's plan". All grades will be averaged and everyone will receive the same grade so no one will fail and no one will receive an A.... (substituting grades for dollars - something closer to home and more readily understood by all).

After the first test, the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy. As the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too so they studied little..

The second test average was a D! No one was happy. When the 3rd test rolled around, the average was an F. As the tests proceeded, the scores never increased as bickering, blame and name-calling all resulted in hard feelings and no one would study for the benefit of anyone else. To their great surprise, ALL FAILED and the professor told them that socialism would also ultimately fail because when the reward is great, the effort to succeed is great, but when government takes all the reward away, no one will try or want to succeed. It could not be any simpler than that.

Remember, there IS a test coming up. The 2012 elections.

These are possibly the 5 best sentences you'll ever read and all applicable to this experiment:
1. You cannot legislate the poor into prosperity by legislating the wealthy out of prosperity.
2. What one person receives without working for, another person must work for without receiving.
3. The government cannot give to anybody anything that the government does not first take from somebody else.
4. You cannot multiply wealth by dividing it!
5. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that is the beginning of the end of any nation.

[ryan costa]

what is wealth? what is prosperity?

it might be more complicated than 5 letters in a small class of students studying a very hypothetical subject matter.

progressive tax rates were much higher in the 30s, 40s, 50s, 60s, and seventies.
employment figures, household savings rates, and even weird things like GDP and GNP were at better numbers.

On the very day Congress decided to invade Iraq, they should have raised taxes on all income above the 65th percentile to 50 percent. this Congress wasn't serious. They should try to be more serious. I try to be serious....almost every day!

So, now its time to raise taxes cuz the previous bunch put it off so long. it is time to go back to traditional progressive income taxes. Good luck, A$$holes!

[Thealexa Becker]

A few comments.

First of all, I have heard this little "parable" at my own institution, told as a joke. I wonder what institution this originated at?

Secondly, I would note that failing is actually around the mathematical mean of 50%, so technically, that is EXACTLY where the grades would end up if everything were divided equally, but it just sounds very bad when applied on an artificial academic scale, where the average of 0-100 (50%) is an F.

Third, those "students" are very very bad at math if they EVER agreed to that deal. How could you not do a few simple calculations and not realize you would end up at 50%? Hasn't any of them ever heard of the Normal Distribution aka the Bell Curve? They should have failed the class just because none of them was smart enough to pull out a calculator.

Could you maybe elaborate more on why this is an appropriate comparison for this election? What specifically do you find socialist on the President's agenda and why?

If you look up socialism (like market socialism, which is real), you will find many varieties, one of them, "the great equalizer", is just communism. Socialist nations still have rich people. Hmm...maybe that is why the professor failed the class, for not being able to look up definitions...

[Sean Wheeler]

Even better still, how does the concept of incentives as explained by Dan Pink and experienced by wikipedia, creative commons, and the open-source movement fit into your concepts of socialism?

The university story is bogus, or apocryphal at best. I don't care one way or the other about socialism, but as someone deeply interested in motivation and incentives, I really do wonder if the idea that people will only work for monetary rewards and that they don't want to share freely is a myth of the past. I'm not advocating that we take away monetary rewards, or force people to share, but the bogey-man idea that people won't innovate unless the get to reap financial rewards is clearly in flux right now.


Does any of the talk below sound socialist? It involves free sharing, dividing while multiplying, and proposes that monetary rewards may cloud progress towards tackling challenging problems.

http://www.youtube.com/watch?v=u6XAPnuFjJc

[Brian Pedaci]

Nice little fiction, but if we were really to imagine a class based on "Obama's socialism", it might look like this:

Out of a class of 12 students, 2 were earning an F, 3 earning a D, 3 a C, 2 had a B, one had an A, and one had an A+++++++++++, mostly because her grandparents had been good students and gave her the answers to all the tests. The teacher decided to take a few plusses off that one top student and allow the F and D students to pass the course, with the understanding that they'd have to work harder in the future if they were going to ever do better than that. The C students got the chance to earn extra credit, and the B and A students were left alone because they had been doing their work and been reasonably successful. When the parents of the A+++++++++++ complained because their precious child was now only receiving an A+++++, the teacher relented and docked the grades of the B and A students one level, giving those points back to the one student at the very top of the class.

Oh, and to make the metaphor even more realistic, when the teacher averages the grades, he must factor in the absent football player, who everyone else in the class must pitch in to support because he hasn't been able to do his homework since the team's been playing away games every night for the past 10 years.

[Ryan Salo]

Secondly, I would note that failing is actually around the mathematical mean of 50%, so technically, that is EXACTLY where the grades would end up if everything were divided equally, but it just sounds very bad when applied on an artificial academic scale, where the average of 0-100 (50%) is an F.

Please correct me if I am wrong but if you average the student grades you will not always come up with 50%. You need people to score high to bring up the lower grades. If all 20 students score 25% on a test then the average would be 25%. If there are not kids that try hard the entire class suffers. That is very similar to our economy, until recently when we just started printing more money to hand out...

It is funny watching the unemployed being ticked at the rich when they really want them to just hire them... or give up more money to pay for their entitlements...

If you look at the population that is succeeding the most it is the immigrants, they still see America as the land of opportunity and are not afraid to work hard for it. Too many grown adults have forgotten how to work hard and be productive.

[Thealexa Becker]

Secondly, I would note that failing is actually around the mathematical mean of 50%, so technically, that is EXACTLY where the grades would end up if everything were divided equally, but it just sounds very bad when applied on an artificial academic scale, where the average of 0-100 (50%) is an F.

Please correct me if I am wrong but if you average the student grades you will not always come up with 50%. You need people to score high to bring up the lower grades. If all 20 students score 25% on a test then the average would be 25%. If there are not kids that try hard the entire class suffers. That is very similar to our economy, until recently when we just started printing more money to hand out...

It is funny watching the unemployed being ticked at the rich when they really want them to just hire them... or give up more money to pay for their entitlements...

If you look at the population that is succeeding the most it is the immigrants, they still see America as the land of opportunity and are not afraid to work hard for it. Too many grown adults have forgotten how to work hard and be productive.

I didn't say that all the grades would be Fs, but that if you averaged from 0-100 you get 50%. That is the normal distribution or the bell curve that everyone is so fond of.

[kate e parker]

http://blog.turbotax.intuit.com/2010/03 ... -weighted/

“A look at the data on tax distribution in the United States, for instance, reveals that high income individuals pay an enormously disproportionate amount of total income taxes in the country. The Tax Foundation’s Fiscal Facts report shows that the top 1% of income earners (1,410,710 people) pay 40.42% of all income taxes in the United States. The top 2.5% (5,642,839 people) pay 20.20% of total income taxes, while the top 5% (a combined 7,053,549 people) pay 60%. The top 10% as a whole pays 71.22%, while the bottom 50% of taxpayers account for only 2.89% of all income taxes.”

can i get a "whooohoooo" for fairness?

prolly not.

[Thealexa Becker]

Fairness can be debated but that is NOT socialism.

No one is arguing that the tax code right now is great. How you want to fix it is a matter of policy preference. Still not socialism though.

[Brian Pedaci]

America's had a progressive income tax for as long as we've had an income tax, and the effective rate on the super-rich is nearly the lowest it's ever been. The upper percentiles of income earners pay what seems like a disproportionate percentage because they hold a disproportionate percentage of income and total wealth.

In other words, the top 1% of wage earners pull in about a fifth of all income in the US. Woo. Hoo.

[kate e parker]

No one is arguing that the tax code right now is great. How you want to fix it is a matter of policy preference. Still not socialism though.

redistribution of wealth via progressive taxation most certainly is a tenet of socialism. sources of this fact are too numerous to list.

[Thealexa Becker]

No one is arguing that the tax code right now is great. How you want to fix it is a matter of policy preference. Still not socialism though.

redistribution of wealth via progressive taxation most certainly is a tenet of socialism. sources of this fact are too numerous to list.

What are these numerous sources?. What are the tenets of socialism? And which kind of socialism since there are at least 3.

A progressive tax does not necessarily redistributed wealth in the manner you suggest. We have a progressive tax code now. And have had it in the past. In fact, if you were to look up the data, you would find that we actually had MUCH higher rates of taxation historically. They are at record lows now, for good or bad, that is an opinion question.

Go on wikipedia and type in progressive tax. Under the "history of the intellectual debate" section you might find some interesting facts. Including that Adam Smith even believed in progressive taxes. And the French written Declaration of the Rights of Man also advocated for equally distributed taxation. Don't think they were socialists.

In my Intro Microeconomics class, we learned that our overall tax system is progressive, but really only for those who make over 100k. But our tax system DOES NOT redistribute income. The simple math just does not work out to redistribute. That doesn't indicate socialism, which is just the collective ownership of the means of production, not collective ownership of personal property or income. So, it would be collective ownership of say, a utility, but not of your bank account.

Our tax code is not socialist.

[Sean Wheeler]

I'll try again, as this topic is pretty compelling. Kate, I'd like you to give this some consideration...

1. You cannot legislate the poor into prosperity by legislating the wealthy out of prosperity.

This one is a bit too political for me, but I might point out that returning to Reagan era tax policies doesn't feel very socialist, unless Reagan was a socialist.

2. What one person receives without working for, another person must work for without receiving.

Kate, I'd like a response from you on this point. Is this a bad thing? I'd like you to consider Linux, Wikipedia, Flickr, Creative Commmons, YouTube, Flickr, and any other open-source model that you can think of.

3. The government cannot give to anybody anything that the government does not first take from somebody else.

Again, is this bad? How else would you have a government operate? Can you think of any government in the world that doesn't collect taxes? It seems to me that these "truisms" have an implied negative connotation, but I can't figure how any government could operate without taking and giving. Ex. Taxes for the military.

4. You cannot multiply wealth by dividing it!

Aside from the pithy use of math terms, what does this one mean? The division of wealth is as essential as the division of labor. If all of the wealth was consolidated, we'd be back to lords and serfs. Even Reagan's "trickle down economics" involved division of wealth via the "trickle".

5. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that is the beginning of the end of any nation.

I'll go back to how much this applies to all of the examples I provided under #2. This statement is an outdated fallacy, at least in regards to what we now know about the economics of "the long tail". Check into it.

Again, I'm mainly interested in the way that the argument fails to recognize what we know now, as opposed to what we used to think we knew about economics.

How much have you payed to use Google?
What's the cost of Facebook, and why do so many people contribute to it for free?
Why does Amazon use Linux servers?

And these are questions about the three most innovative American corporations to pop up in the last ten years, so be careful before discounting their models, as we wouldn't want to think you were anti-business.

[Ryan Salo]

How much have you payed to use Google?
What's the cost of Facebook, and why do so many people contribute to it for free?

The reason companies like Facebook and Google can success is that other, more traditional businesses pay them for access to their subscribers. They are the new TV. The "commercials" are viewed by people who are enjoying the "free" services.

This is just like all the "free" apps people can download on their smart phones.

Nothing in life is truly free.

[Jim O'Bryan]

How much have you payed to use Google?
What's the cost of Facebook, and why do so many people contribute to it for free?

The reason companies like Facebook and Google can success is that other, more traditional businesses pay them for access to their subscribers. They are the new TV. The "commercials" are viewed by people who are enjoying the "free" services.

This is just like all the "free" apps people can download on their smart phones.

Nothing in life is truly free.

Ryan

I would agree. However I know a totally FREE website, that does not mass mail and or intrude.
NEVER allows anyone to access their email lists. Has NEVER tried to package or
sell personal information. Does not track or keep track of where you go and what you
do, and makes sure, everyone you deal with does the same on the site.

I like to call it the Lakewood Observer, we care more about your privacy than you do.

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