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Yesterday, Congressional Democrats got back in touch with their animal spirits. They were in highest dudgeon over the fact that AIG had fulfilled a contractual obligation to employees by giving them the bonuses allowed by law.
Since Democrats had crafted and passed this law, you can see that a visceral fear of accepting responsibility does much to revive flagging animal spirits.
But feigned outrage is often as effective as the real thing. The government is going to get its money back. And yet, as AIG CEO Edward Liddy put it: "My fear is, the damage is done.... We will get the bulk of that money back. They will return it with their resignations."
Blogger Dr. Helen Smith has dubbed this: "Going John Galt." Link to some of her posts here.
Borrowed from Ayn Rand's "Atlas Shrugged" the concept means that when taxes become confiscatory, they will become a powerful disincentive and people will choose not to work. If that is the only way they can exercise their freedom, then that is what they will do.
There are other ways to disincentivize work. This morning Caroline Baum picked up the argument in her Bloomberg column. She asks why, if bankers have been made into the designated scapegoats for the financial crisis, why would any of them want to continue working to fix the banks. Link here.
But now a new disincentive has given banking executives another reason to Go John Galt: death threats.
Yesterday, Rep. Barney Frank insisted that CEO Liddy turn over the names of the executives who had received bonuses.
Liddy responded that his company had been receiving death threats directed against these people, and that they now feared for their lives. Thus, rather than release something that could turn into a hit list, Liddy asked for assurances that the names not be published.
Barney Frank refused.
Most Congresspeople, however, do not believe that the death penalty is a fitting punishment for the newly-invented crime of receiving mandated retention bonuses. Instead, they prefer confiscatory taxes.
OK, they are saying, you can have your bonuses; we respect the rule of contract law. But, by the way, we are going to tax them at 100%, or 90%, or 70%.
Once you start down that road, why stop at this year's bonuses. Why not declare that last year's bonuses were ill-gotten gains, and thus, deserve to be taxed at 100%. Wasn't Wall Street just another Ponzi scheme?
This is not only about today's John Galts. Given the current climate of demagogic posturing and violent scapegoating, would you want your child to grow up and become a banker?
Thursday, March 19, 2009
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16 comments:
check the vote! how many in the GOP voted as did the Dems to get the money back? If there are a few crazies out there, does that mean congress ought not pass any legislation? honest bankers have no fear...this legislation is not designed to spread a huge net but rather to unskim the skimmers who are taking MY tax money for personal gain. You have nothing to fear but...well, you figure that out.
this post a tempest and not even a teapot around
First they came for the AIG bonuses...
Anonymous at 5:04 AM:
If you want to "unskim the skimmers," I suggest you look at Congress first. It is they who are taking the tax money and giving it to entities like AIG. They gave themselves a raise, including $92,000 per year for expenses. They are letting semi-government entities Fannie Mae and Freddie Mac give bonuses to their executives despite their failures. Do we have to go through all the tax money sinkholes in the stimulus bill and recently-passed spending bill?
Worried about your tax money? You are training your guns at the wrong people here. The bankers are not the culprits.
If anyone is responsible for any skimming, Pelosi, Reid and former-Senator-now-President Obama are it.
Are these executives the heroes of Atlas Shrugged, the adventurous, productive scientific inventors and men who owned steel mills and copper mines? Or are they the parasitic financiers in the vein of James Taggart. The whole "Going Galt" fiasco seems terribly confused about basic Randian themes. Shrugged is a bad sci-fi novel with a perpetual motion machine as its engine of libertarian vengeance -- you can't apply it to the real world.
They're not industrialists. They're bankers tasked by the new owners of AIG ("taxpayers", which in practice means Congress) to clean up the mess left by the Taggarts of various kinds who'd gotten them into this mess.
Atlas Shrugged is an outstanding, compelling novel with many dramatic, real-world themes. It has sci-fi, but nothing of the perpetual-motion variety.
This bill constitutes a bill of attainder, an ex post facto law, and it "impairs the Obligation of Contracts." Thus, it's unConstitutional three separate ways.
And it's wildly popular and will undoubtedly be passed in the Senate and signed by Barack Obama, no doubt during a special ceremony in the Rose Garden.
Is anyone out there not yet convinced that we're under attack by our own government?
You're a relationship coach?
That's almost as nutty as letting "Doctor" Helen Smith near your kids!
It seems that the democraps screw the pooch in every single thing they do. It would be absolutely comical if it didn't mean so many going broke through democrap stupidity and ineptitude.
You can add this latest effort to incentivise (Through threats) the workers to other recent efforts to turn around the economy:
The villification of firms who go offsite and use business jets -
200,000 jobs lost in the hospitality industry in January;
and,
The impending loss of 1,000,000 jobs involved in supporting the business jet infrastucture in the USA.
Anonymous said: "Atlas Shrugged is an outstanding, compelling novel with many dramatic, real-world themes. It has sci-fi, but nothing of the perpetual-motion variety."
Perhaps you haven't read the book then. What is "Galt's motor" which runs of atmoshperic "static electricity"?
Come now Atlas Shrugged is a poorly written, grossly dogmatic work of pulp written by an amphetamine addict. Just google the Youtube video of Mike Wallace's interview of Ayn Rand. Forward the video to 2:00 and watch her drug addled eyes spin around her poor head.
Rand was an unhappy, sterile woman, a control freak who made spouse-swapping the center of her quasi-Nietzchean cult. Her profoundly unrealistic and selfish message resonates with the developmentally stunted -- encouraging dreams of adolescent autonomy in an advanced globalizing society in which we are ever more connected and reliant on others.
While such perversity will win over the more gullible and sociapathic, it is too anti-Christian to ever get too far in a profoundly Judeo-Christian nation.
While I've never read any of Ayn Rand's writing, I've heard from many people (including many who like her ideas) that she's a poor writer at best. So the anonymous commenter above me may well be accurate, as far as Atlas Shrugged's writing quality and dogmatism.
However, the popularity of the "John Galt" meme has nothing to do with whether Rand was a good writer, and as such, has ad hominem attacks on Rand are beside the point. And he's also right that the total withdrawal portrayed in Rand's novel is unrealistic today, but that's also beside the point.
What most people mean when they talk about "going John Galt" is not a total withdrawal from society, but simply doing less. Putting in fewer hours at work, seeing fewer clients, spending more time with the family instead of earning money. The salary goes down, the taxes go down, the number of hours spent on non-work activities goes up. And that idea resonates with a lot of people -- some because they're angry about taxes, some simply because they've always wanted an excuse do spend more time having fun.
The net result of all this, though, is lower total salaries, and thus a lower tax base. If you raise taxes from 30% to 35%, but the economy as a whole drops 5% because people are averaging 2 hours a week less at work, you've achieved no net gain in tax revenue, and you've got a net loss in the economy because of fewer jobs, less productivity, and so on. (98.6% of all statistics are made up on the spot, including the numbers in this example).
Basically, what you're seeing is working people saying "You know what? We've gotten along just fine so far without government handouts. We don't have to work 60+ hours per week to survive; we can cut back some. So if working those 60+ hours means we pay that much more in taxes, *shrug* oh well, guess it's time to work 40 hours then. Hoorah for having free weekends again!"
It's not the total disengagement of Rand's novel, just a 5% cut here, a 10% cut there... but spread among LOTS of people. And pretty soon, that adds up to a LOT less tax revenue, even with higher tax brackets.
Now, if you want to lash out at those who cut back on their work hours to have more time for other things, go ahead, feel free. Call them all the names you want -- "gullible", "sociapathic [sic]", whatever. You're doing a really great job of persuading people to your line of thought! Keep it up, buddy, there's nothing like insulting people to make them want to listen to you!
Just, one little question for those who think it's so heinous to cut back on your work hours. Have you ever subscribed to or read Simple Living magazine? Do you think their "simple living" philosophy is a good one? And can you kindly explain the difference to me between "simple living" and "going John Galt"? Besides the totally obvious fact that the latter is a libertarian idea and therefore must be evil per se, I understand that much. But what's the really practical difference?
I mean, I'd rather pay $0.99 for a bar of soap than $12.99 for a 8.5 oz bottle of Cucumber & Watercress Face Wash. And I'd rather pay $1.99 for a pound of honey and buy a few candles for ten cents each, rather than drop $32.99 on a Savannah Bee Gift Set made of 20 oz. of honey, two candles, and a few tins of lip balm. (Buy now and get 40% off the regular list price of $54.99!!!) But both of those are offered for sale at the Simple Living Magazine website, so clearly buying those products is in some way superior to buying the equivalent at (gasp, shudder) Wal*Mart. I just with someone vastly more intelligent than me could explain to me why those are better. I must be really, really dumb, because I just don't get it...
There is a scene in the old TV show MASH where Colonel Flagg - the paranoid, vindictive CIA operative tells another character, "I'm here to make sure you stay loyal to the country that is going to hound your every step."
The line was written for laughs - what incentive does anyone have to stay loyal to a country that is going to treat you like a criminal regardless?
What was written for comedic effect in a seventies television series seems to be the actual attitude of many of the angrier "anti Galt" commenters, and I think I understand why.
The government has decided to purchase the support of the non-productive segments of society using wealth taken from the productive without their consent. The productive people, having no desire to see increasing amounts of their livelihood taken, are simply cutting back in ways which are legal, unstoppable, and untraceable. This is the essence of going John Galt and it must really anger the envious to discover the targets of their wrath have the means to avoid being hounded.
People seem to forget that Obama is simply returning the tax rates to the boom years under Clinton. My God, stop the hysteria! Marginal tax rates under most of the Reagan years were a whopping 50%! Was that socialism? Please. And the top marginal tax rates under Eisenhower were 91%! Hard right reactionaries are so divorced from the basic facts of 20th century political economy that you don't know if its idiocy of amnesia.
Everyone calm down and consult the following chart:
http://www.washingtonmonthly.com/archives/individual/2009_03/017201.php
Galt's motor is sci-fi. Calling it "perpetual motion" is untrue and derogatory - adjectives that apply to many, many criticisms of Rand's writing and of her personally.
The kind of venom expressed in the comments above is only going to get more unhinged as Rand's cultural influence increases.
Anonymous said...
People seem to forget that Obama is simply returning the tax rates to the boom years under Clinton. My God, stop the hysteria!
How about if we also return to the life expectancies of the 1700s? That was normal at that time too. Things have since gotten a lot better. Just because things were worse in the past does not mean that it was OK. I like having more of my money with which to spend or save as I see fit. I do not approve of a government taking my money and redistributing it to others as it sees fit in efforts that are far beyond what the government was intended to do.
The main difference between a conservative and a liberal is; a conservative believes in doing good works with his time and effort whereas a liberal believes in doing good works with other people's time and effort.
Goodness, there is a lot of useful data here!
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