Our book for today is Taxes, Death, and Trouble: How Starve the Beast Tax Cuts Created the Black Lives Matter Movement, by Andre L. Smith. For example, he cites Starving the Beast: Using Tax Policy and Governmental Budgeting to Drive Social Policy, going back to Leo Strauss's version of Plato's oligarchic tyranny, and to Irving Kristol, the founder of Neoconservatism.
Starving the Beast by relentlessly cutting taxes for the benefit of the wealthy deprives government of the money it needs to fund social services like well-functioning schools and hospitals, and the financial gap is filled by levying sales and sin taxes the poor cannot avoid, as well as commercial and criminal fines and fees and forfeitures and surcharges and interest to squeeze every last drop of wealth out of poor black and brown folks. So they must accept whatever job is available regardless the wages or conditions.
Mike Browns and Joyce Curnells and countless others are being taxed to death because, perfectly contrary to Adam Smith's description of a meritocratic market, those with means refuse to pay for the government that serves them only. Better exploiting the US Tax Code is part of the solution.
And totally contrary to the Walras picture of real competition, where nobody has special privileges, and nobody can be excluded. We know what we need to do, but there is a lot of work ahead of us before we can get down to it properly—in 2025, according to the plan.
I started writing about these ideas here on Daily Kos years ago, and I am going to repeat a lot of what I wrote back then, because Voodoo Reaganomics and “Supply-Side” Economics and Starving the Beast are all still 100% weapons-grade bolonium. (🎩 Cubert Farnsworth, the Professor from the alternate reality, on Futurama)
Good News Fifth Thursday: Starving the Beast is Still the Loudest Dog Whistle
The rich have a corrupt bargain with all of the Republican factions. Cut taxes for us, and we will use those tax cuts to blow out the budget and force Democrats to agree to cut social programs under the Dog Whistle Starve the Beast. But no more.
Grokking Trumpists: Starving the Beast
Jan 3, 2021 — The original Starve the Beast policy is widely known: tax cuts for the rich to bust the Federal budget and force cuts to social programs for Blacks. But tax cuts have been taken much further, and have resulted in Policing for Profit and other vast abuses meant to make Blacks and others of the oppressed pay for government services for Whites, as in Ferguson MO. Further, few understand the dark origins of this policy, its vast extensions, and how its purposes have been hidden for so long.
Translating Code: Starve the Beast
We start off with Grover Norquist's favorite phrase, "Starve the Beast", because self-proclaimed deficit-hawk Republicans are still claiming that tax cuts don't matter, and that this issue will help them win in November.
and his other favorite phrase,
drowning government in the bathtub
Starve the Beast→BLM
This study explores the roots of STB beginning with the political philosophy of Leo Strauss, followed by the adaptation of Strauss's philosophy by Irving Kristol (the godfather of neoconservatism) in establishing the basic tenets of neoconservative political theory, and the marriage of neo-conservatism with supply-side economics to increase popular support. Through this anthropological study, 11 propositions evolve during the development of a comprehensive view of a complex social policy underlying STB strategies designed to promote wealth retention, less progressive tax rate structures, less spending on social programs, and greater national focus on defense, security, and patriotism.
Economist Paul Krugman wrote in 2009
September 11, 2009, 4:48 am
Mathematics and economics
I’ve been getting some comments from people who think my magazine piece was an attack on the use of mathematics in economics. It wasn’t.
In short, mathematics is not magic, having its intended effect merely because you recite the correct equations. You have to meet the necessary preconditions. You have to satisfy the axioms.
Contrary to the common assumption, mathematics does not tell you that 2 + 2 is always 4. That is true only under specific circumstances. Mathematicians are quite happy to consider entirely different circumstances, such as an arithmetic that goes in a circle with no 4 in it, where you count 0 1 2 0 1 2 0...so that 2 + 2 is 1. Or military time, which also goes around in a circle. For soldiers, 18:00 + 6 is 0-dark-hundred. Similarly in economics, we cannot prove Eternal Verities. We can prove that things will happen under certain circumstances, and woe betide any who forget (or worse, refuse) to verify and abide by the circumstances. That's how you blow up Space Shuttles and nuclear reactors, and melt down economies.
This is what happened to Nobel Prize-winning economists Black and Scholes, who created an excellent mathematical model for pricing market future options. Their company was raking in huge profits until it was wiped out by a simple change in interest rates that they had not modeled. The investors lost billions of dollars.
Krugman continued (and I added links)
Math in economics can be extremely useful. I should know! Most of my own work over the years has relied on sometimes finicky math — I spent quite a few years of my life doing tricks with constant-elasticity-of-substitution utility functions. And the mathematical grinding served an essential function — that of clarifying thought. In the economic geography stuff, for example, I started with some vague ideas; it wasn’t until I’d managed to write down full models that the ideas came clear. After the math I was able to express most of those ideas in plain English, but it really took the math to get there, and you still can’t quite get it all without the equations.
What I objected to in the mag article was the tendency to identify good math with good work. CAPM [Capital Asset Pricing Model] is a beautiful model; that doesn’t mean it’s right. The math of real business cycle models is much more elegant than that of New Keynesian models, let alone the kind of models that make room for crises like the one we’re in; that makes RBC models seductive, but it doesn’t make them any less silly.
And conversely, you can have great work in economics with little or no math. I can’t pull up papers now, but as I recall, Akerlof’s market for lemons [The Market for Lemons: Quality Uncertainty and the Market Mechanism] had virtually no explicit math in its main exposition; yet it was transformative in its insight.
So by all means let’s have math in economics — but as our servant, not our master.
Contrary to what is commonly taught in schools, math is not calculation of Right Answers or proofs of eternal verities. It is the derivation of consequences from premises (axioms and postulates). Anybody who forgets the premises, the preconditions for whatever success we might derive, is a fool or a charlatan. I will not speculate here on which of the possibilities is correct for Milton Friedman, Supply-Sider Arthur Laffer, or Ronald Reagan, except to note that George H. W. Bush was correct in characterizing their work as Voodoo Economics (until Reagan bought him off with the invitation to be his running mate, and Bush shut up permanently.) We humans are far too good at becoming both fools and charlatans, and at believing them.
I read Gerard Debreu's completely mathematical Theory of Value in 2008 in pursuit of a moral and political principle which I had found earlier in Leon Walras and others in the General Equilibrium tradition that we looked at last week. General Equilibrium Theory posits certain conditions, given the conventional name Perfect Competition, and from them deduces the existence of a market equilibrium with certain optimal properties.
In particular, every product and service in the market clears. The market finds the price at which the amount offered for sale and the amount sought for purchase (supply and demand) are equal. In particular, in Perfect Competition there can be no unwanted unemployment. Furthermore, at the equilibrium, nobody can make excess profits on any available trade, so that nobody can be made better off without making someone else worse off (Pareto Optimum). In other words, we can reduce Adam Smith's Invisible Hand and Milton Friedman's Magic of Markets to a specific set of requirements. From this we can draw two conclusions.
- If we want to make any of our models work at all well, we have to provide better approximations to Perfect Competition. For example, the Internet gives us unparalleled access to economic and financial information, a requirement of the theory. So we must make the Internet available to everybody on Earth, on the principle that it isn't a Free Market for you if you aren't in it. Contrary to Market Fundamentalism, the conditions for the proper functioning of a market cannot themselves be provided by the market. We must consider how they can be provided, given that governments are quite bad at doing that when corporate money dominates the political process.
- Although a market equilibrium is a Pareto optimum, which has some nice properties, the theory makes no choice among all possible Pareto optima. Any distribution of assets and income is possible, from equality to feudal aristocracy + serfdom. Any such outcome can be the result of some possible starting state of ownership of factors of production, including land, buildings, equipment, raw materials, and skills. If we have any reasonable preferences about the outcomes, such as preventing the formation of monopolies and the breaking down of the market, we have to think about how to restrict the possible states of the market. Governments have rarely been very good at antitrust, but anything is possible after the 2024 elections.
At this point, we can put the math aside and have a discussion about Political Economy, which is where we began before the pretense of making Economics into as pure a science as physics—What do we want, and how can we get it? Or if we can't get what we want most, then what else do we want instead? If that works out, we will be able to go back and forth between the math and the human elements, gaining greater insight at each step and coming closer to solutions desired by most of the population. Instead of the current process of generating more heat than light, of seeking to obfuscate, delay, and defeat rather than to inform and seek solutions, or of outright lying, of selling the souls of economists to Mammon at a bulk discount.
The Laugher Fallacy
Arthur Laffer began his hypothesis of Supply-Side Economics with a clear mathematical truth. A continuous function that has the value 0 at two points, and is strictly positive between them, must have a maximum between those two points. Then he posits that this applies to tax rates, where a 100% tax would destroy an economy, yielding 0 revenue, and a 0% tax would also yield 0 revenue. OK.
Then he pretends that the curve always has a simple shape, thus.
Then he takes a flying leap into the world of science fiction, or I should say fantasy, asserting that by the magic of the markets and such we can always approach that maximum by cutting taxes. This will, he says without evidence, free up capital to seek profits that can be taxed next year, resulting in greater revenue, at which point we can cut the tax rate again. Therefore the only legitimate tax rate on capital is 0.
The notion that one can consider supply without demand is contradicted by all legitimate economics since Adam Smith.
Laffer has taught at Liberty University, a radical Evangelical propaganda mill, and now teaches Supply-Side Economics at the Christian Nationalist school Hillsdale College.
On April 15, 2019, Laffer blamed the Great Recession on Barack Obama, "who I believe was the reason why we had the Great Recession. As he got closer and closer to winning the markets collapsed."[25]
Because HE’S BLACK, you know. So of course the markets freaked.
That’s the one that was caused by the collapse of the real estate bubble of the Bush years, well-described in The Big Short: Inside the Doomsday Machine, by Michael Lewis, and the movie made from it.
In 2020, Laffer advised the Trump administration on how to re-open the economy during the COVID-19 pandemic.[26][27][28] Laffer argued for halting stimulus, calling instead for payroll tax cuts.[29][30] He advocated for taxes on non-profit organizations in education and the arts, as well as for salary reductions for professors and government officials.[30] He argued against expansion of unemployment aid, arguing it discouraged people from working.[30]
Further Reading
Leon Walras, The Pure Theory of Economics
Milton Friedman, Capitalism and Freedom
Arthur Laffer
The Economics of the Tax Revolt: A Reader, co-authored with Jan P. Seymour
With Victor A. Canto, Douglas H. Joines, Foundations of Supply-Side Economics – Theory and Evidence
Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index, co-authored with Stephen Moore and Jonathan Williams, American Legislative Exchange Council
(with Stephen Moore and Peter Tanous) (September 8, 2009). The End of Prosperity: How Higher Taxes Will Doom the Economy--If We Let It Happen
An Inquiry into the Nature and Causes of the Wealth of States, co-authored with Stephen Moore, Rex A. Sinquefield, and Travis Brown
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