After being directly asked by a poster coupled with having absolutely no interest in working this friday afternoon, I've dug up the email chain and edited it to change the names to protect the innocent...
(i might be offered a job by a republican one day and i need to beable to lie to him/her)
This is my PHD (in economics) uncle's response to my response to that stupid email chain. So you really need to read my last post for any of this to make sense.Barstool Economics
Wow---when did Che Guevarra get Patrick's email address access???!!!!!!
Unfortunately, the original beer story is right on, and describes human behavior with respect to both beer AND society....simple, but true.
I guess they don’t teach the Principle of Occam’s Razor anymore in college---pity, because it would reduce the waste of resources (increase sustainability)!!!
But—since I know Andrew was just joking, I thought that story was pretty funny!
SPM (one of the #10 guys, but not yet a member of the LERB!!)
So you're sayin the moral of the story IS that 10th guy just quit drinking?..
PB
Nope---it’s if the 10th guys decides to drink only 5 nights a week, the others are in troubled (and would actually have to pay for some of their own beers or quit drinking)!
This isn’t an all-or nothing game---it’s called marginal analysis and behavioral incentives (works for humans and other animals, not plants—at least no evidence of that yet!)
---and you DID learn that in Chapter 6 of your intro economics textbook!
SPM
the 10th guy is only going to live in the US for 5 days a week?... i thought this was an analogy for government policy?... and where is he going for those other two days?... wait didn't i cover this already?
Now if you want to start discussing Marginal Ananlysis with the paragraph of beer analogy, i guess we could?.... but why?
if you want to start throwing up a few hundred assumptions go right ahead, but i doubt we have sufficient information to make a truly informed decision on behavior at this point.
instead of going thru the next few emails:
You'll throw up a few assumptions to tailored to your goal to lower Guy 10s taxes. Then i'll come back and explain how about have of those assumptions are not POSSIBLE in the real world. (economics is fun. to all those Non dorks reading - i swear to god that is what econ is. ) but you'll still believe that cutting taxes will always raise government revenue as if jesus christ himself told you so. (i mean, i only assume that because with absolutely NO information in this little ridiculously inadequate analogy, you automatically assumed lowering taxes was the best policy)
And the last time i saw Arthur Laffer, he wasn't exactly giving Bush the thumbs up for his tax policy.
oh, and i really didnt learn much in my INTRO classes... early morning classes, filled with Poli sci freaks... didnt really pay much attention. (when i went)
PB
First thing you have to learn is to understand analogies, and not take things too literally.
Try this: the beers are a stand in for consumption and production, and the impact of net pay on work and productivity! Govt can influence that. Very FEW assumptions are necessary here---toms of empirical evidence shows the true light, for those who care to see!
And to answer your first question--- the point is if he decides to WORK only 5/7 as much then everyone will be less well off, because they are depending on that productivity and output for their consumption.
And Arthur Laffer might get a chuckle out of this analysis, too!
SPM
Well you might take the beers to be interpreted as work/consumption, but sense you don't pay taxes on consumption you just pay on "work", i don't really see how that holds water. You do not pay taxes to join the economy (I.E. when i inherit 5 billion bucks in a Reganonics paradise, i would end up spending money on shit and never once pay taxes). Supposedly you pay taxes for the services of the government... (but the kids of rich people should get a free ride cuz they contribute so much) hence the buying the beers in a tax rate scheme.
As described in the first paragraph the beers are a "good" being bought, and how you pay for that "good" is being analyzed. (the "good" being the services of the government)
But ok, you wanna completely re interpret what this analogy is stating?...
now in this analogy, your taking the beer to represent all economic activity. So in your model there is a progressive payment scheme (which i'll admit i've never really studied). so all economic activity not JUST government (taxes) you pay on a progressive scale. So in your world Guy 10 has to go into McDonnals and pay 10 times more then guy 5, and guys 1 thru 4 get it for free?...
I'm sorry i really tryed to bend my mind in such a way that "the beers are a stand in for consumption and production, "
you cant just say " dont take it too literally"...I think analogies need to be interpreted just literally enough so they might actually make sense and help illustrate the original point?.... (but thats just what i think. I wasn't exactly a lit major, as ya'll can tell from my jumbled half hazard writing style)
but i'm pretty sure the proper "understanding" of analogies isnt to "interpret them any way that fits ones agenda."
But anyways, in your model the 10th guy pulling in $10,000,000 a year over at Goldman Sachs who seriously sees a difference between pulling in 10 mil VS 9.5 Mil, (Why do i feel like this Jackass is behind these wonderful credit "swaps".)
(This was written in the fall of 2008 ... and that JACKASS WAS!!!!! like directly responsible for the CDSs)
yea, it would just be horrible if this guy thru a temper tantrum went home to his yacht and just played the market. Because the guys left behind don't want to just pull in that extra .5 million and go home. They don't have an incentive to start a fire and loot all they can before the place blows up. (taking guys 7 thu 9 401Ks with them)
its the difference between Lex Luther and the Joker, (here we go with the analogies again)
The joker cares about the short term. he'd blow up Gotham city to steal a few million dollars (and a few laughs).
Luther wants to rule the world, so the world needs to be there when he's done. thats why he spends billions of dollars (good for the economy) researching ways to get superman out of his way. But his goal isnt to get taxes a bit lower, so he'll make a few more million and then retire.
Lex has a vision and goals, being rich is the means to that end, not the ends itself. Those are the people who need to be running companies. you cant have people who go "oh i've hit my rich mark (whatever that amount is) peace i'm out, and ya'll can go to hell (leaving scorched debri, and Robin's Corpse behind him)" but hey, any way we can get these jackasses out of the way, i'm open to suggestions.
I mean, i'd like to say im the only one who sees flaws in the basic economic models used to run the entire world. But, many people have thought this for a while, and others are starting to come around now.
"Those of us who have looked to the self-interest of lending institutions to protect shareholder's equity -- myself especially -- are in a state of shocked disbelief." (come on... take a guess who this is)
(yea, cuz managers self interest isn't the same as stock holders... SHOCKING.... what's the board going to do fire me after i pull in 30,000,000 last year?... oh im so sad)
“I have found a flaw. I don’t know how significant or permanent it is. But I have been very distressed by that fact.” Rep. Henry Waxman (D-CA) then pressed him to clarify his words. “In other words, you found that your view of the world, your ideology, was not right, it was not working,” Waxman said. “Absolutely, precisely,” Greenspan replied. “You know, that’s precisely the reason I was shocked, because I have been going for 40 years or more with very considerable evidence that it was working exceptionally well."
i mean, at least some people are admitting they were wrong. ( but just for the record i knew that before Greenspan did... )
Oh, im sorry i strayed away from tax policy... but you did kind of start it.
PB
and he never responded to that....PHD well worth it...