Alternet is an Idiot.

Ok... Well... "Alternet" itself can't be an idiot, lacking an autonomous nervous system and all. But its main economic blogger, Joshua Holland can be... and is.

For all those other idiots out there incapable of distinguishing my assertion just there from an ad hominem fallacy (which is something I find is increasingly common), I'm not saying "Joshua Holland is an idiot, therefore his points are all wrong", I am saying "Joshua Holland is an idiot, now let me devote a blog post on explaining the supporting evidence for this thesis".

I'm not sure why I feel compelled to make that disclaimer, but I really am getting tired of explaining the difference between ad hominem fallacies and merely saying something that some people would define as "insulting".

Anyway... Enough of that. On to the point!

Mr. Holland has provided a fantastic example of his idiocy and made it available for anyone with a brain to read. The Alternet article is titled: "Thanks to Decades of Conservative Spin, Americans Are Hopelessly Confused About Taxes, Spending and the Deficit"

Off to a wonderfully unbiased start, you only have to wait until the subtitle to start understanding where he's going to go horribly awry:

"Conservatives have spent 30 years divorcing the taxes we pay from the services they finance -- no wonder the public doesn't know where their tax dollars go."

This is already basically a strawman and most certainly becomes a red herring. I'd love it if Holland produced a single shred of evidence that supported his claim that conservatives have "divorced the taxes we pay from the services they finance", but he doesn't, and it's a nonsensical point anyway.

But I haven't even gotten into the text of the article. Holland begins his case with a pitiful argument from authority from the weakest authority on economics writing today... You know who I mean.

"A few weeks back, Paul Krugman, a Nobel Prize-winning economist, felt compelled to take time out of what is presumably a busy schedule to explain that “taxes are, first and foremost, about paying for what the government buys.” That he felt compelled to do so is a sad reflection of the state of our economic discourse."

Yep. It's Krugman.

He's right that it demonstrates a sad state of economics discourse in America, but not at all for the reasons he thinks... The fact that either Dr. Krugman or Joshua Holland believe that explaining to people that taxes "pay for what government guys" is a remotely compelling point is what's sad. Sad, and embarrassing for both of them.

OF COURSE TAXES PAY FOR GOVERNMENT "SERVICES"!


Taxes, as I'm sure everybody who is over the age of 12 knows, exist for the purpose of funding government. Thanks for the lesson, Krugman. No one I have ever met is remotely confused on that point. No conservative I have met has deliberately obfuscated that point, or would even be capable of it if they wanted to be. It's so ridiculously obvious, that it makes almost no sense to even bring it up.

Krugman (and Holland) engages in misdirection, arguing that people don't understand that taxes are paying for "government services" in order to distract people from the fact that taxes are involuntary, and that the involuntary nature of government funding has certain incredibly important economic implications.

Holland goes back to blaming "conservatives", which I'm sure in this case would include me since it's basically anyone who isn't Paul Krugman:

"They've bent themselves into intellectual pretzels arguing that cutting taxes – on the wealthy – leads to more revenues in the coffers. They've invented narratives about taxes driving “producers” to sunnier climes, killing jobs by the bushel, and relentlessly spun the wholly false notion that we're facing “runaway spending” and are “taxed to death.”"

What evidence does he use to back up the implication that in fact high taxes don't push producers to flee to "sunnier climes"? Why... His own previous op-eds of course!

His first link borders on being a non sequitur. It takes you to an article written by Holland on how a study finds that Walmart raising wages would not have a significant impact on their productivity or require much in the way of price-increases to their consumers.

Now... Walmart, like all businesses, pays a rate for labor that affords them the greatest value for the money. This means... yes... they pay as low a wage as they can (and are allowed) and still get employees that meet their standards.

Holland goes on to regurgitate the idiotic (sensing a theme?) and completely false claim that raising the minimum wage has no effect on employment. It so happens that I have previously blogged about 50 years worth of compiled data on that topic in the past (as opposed to the single study Holland mentions produced by the blatantly "liberal" Economic Policy Institute) and guess what... There's an effect. It's also incredibly well known throughout the economics community.

The pretzel-twisted logic here is Holland's. His is a world of magical thinking where there's no negative side-effect to employment or incentive for business owners to modify their behavior from artificially raising labor costs.

It might be worth pointing out here that with the most recent minimum wage, we also now have the highest teenage unemployment rate in the history of the United States. Good economists understand the link. Economists who exist to support political interventions into the economy generally don't. Shocker.

Speaking of pretzel-logic, look how far off topic we are already!

An article that begins with a headline and a few statements about conservatives confusing people about taxes has already gotten us into a discussion of minimum wage and Walmart, and the magical thinking of people who believe that increased costs imposed on businesses have no effect on employment.

As for high tax rates driving producers to "sunnier climes", well... How about Holland asks California where its jobs are going, cause I'm pretty sure they're mostly going to Texas.

Ok, that's not quite accurate, jobs aren't necessarily all flocking out of California and going to Texas (although quite a few are). Really, what's happening is that Texas is ranked in the top 5 for "good business climate" by basically every organization out there ranking these kinds of things, and California is near the bottom of the list (often within the bottom 10 states). So what happens is that California just doesn't have the economic growth or growth in jobs that other places have and jobs grow in Texas, new businesses start in Texas at rates that should make California rather envious.

So, I guess what I'm saying is that so far, Holland has produced utter crap in support of his points.

By the way, speaking as a business owner, and knowing dozens of fellow entrepreneurs, I can speak first hand on the fact that incentives completely matter to me. I don't want to be punished for owning a business, and in California and in Connecticut, I most certainly felt that I was. If my business had been larger and grown, it would have only gotten worse.

Now... Holland proceeds from this point to talk about that ridiculously right-wing organization, Gallup. They released a poll a while back that unsurprisingly showed that people think government spends too much, but that they like everything government spends money on.

This, Holland asserts with no evidence at all, is because the "conservative message machine" has effectively mislead everyone. The assumption here is that what people really want is to have all the government services they like - although a lot of that simply has to do with poorly worded poll questions. For example, when on Penn & Teller: Bullshit!, Frank Luntz asked people on the street a series of questions that resulted in contradictory responses.

"Do we spend too much on aid to illegal immigrants?" Of course, people said yes.
"Would you deny the children of illegal immigrants health care?" People naturally like children and don't like the idea of sick kids, no matter who their parents are, so they said... No.

This shouldn't surprise anyone. The problem here is that there's no way to weight which programs people want to prioritize and which they would favor cutting, and by the way, generations of idiots like Holland have pushed a false dichotomy where if government isn't providing a service, then it won't be provided at all.

People think we spend too much, but have been convinced that without welfare spending, spending on health care, or on education, etc., people won't actually have access to health care or they'll be homeless. This isn't true, but it's really the "big lie" in Holland's (and especially in Krugman's) writing.

Another key point being ignored here is that a lot of people simply believe that the big problem is "waste", and that if we could only make government expenditures more efficient and less pork-filled, we would balance the budget. This is fundamentally a problem with people's understanding of economics and incentives. Of course, that's something Holland is not even remotely qualified to opine on, given his current track-record.

Holland concludes:

"Taken together, this shows how difficult it is for law-makers to arrive at good public policies. Their constituents wants their cake, they want to eat it, but they don't think they need to pay the tab for it. Politicos offer tax cuts to get themselves elected, but then face outraged constituents when they try to cut services. Small wonder that we've only managed to balance the budget in one brief period during the boom years of the 1990s.

We do face serious issues in this country. We need a serious debate about how best to solve them. But we're having that debate in a democracy populated by citizens who have little or no clue where their tax dollars go. And you can credit the anti-tax crusaders and their habitual mendacity for that sorry state of affairs."

Yep, blame anti-tax crusaders.

Let's go ahead and ignore the obvious here... We're broke! Holland starts with the bizarre presumption that just because people want "free" stuff, that America can simply provide it to them via taxation. Nobody likes to pay taxes, and yet everybody also wants free stuff. These are contradictory issues, and they are made so much worse by the fact that we're now at a point where virtually 50% of the country pay no taxes and the other 50% pays for their services, but yet everyone gets an equal vote.

The incentive for most people is to demand more and more government services and to not worry for a second about that evil "rich" guy who's on the hook for paying it. And guess what, that results in a situation where the Federal government spends at a rate of about 25% of GDP and only take in 19% of GDP.

It behooves people like Krugman and Holland to ignore that in the last 60 years, regardless of tax rates, we've averaged only about 18-19% of GDP in revenue - and that the reason for this is because tax rates do, in fact, change people's behavior.  It behooves people like Krugman and Holland to ignore that we've increased annual Federal spending by close to $2 Trillion in the past decade, while only increasing revenues by a fraction of that.

So... No Josh.

No one is "confused" that taxes pay for government services... In fact, more and more people actually understand that not only are taxes not even close to enough to covering the cost of government spending, they also are starting to recognize that government pays for a huge percentage of its activities through debt and uses inflation to pay for that debt.

What a misleading pile of crap you've written, Mr. Holland.

You've started with a thoroughly useless, rudimentary point that no one is confused about, and then made a series of idiotic assertions that you backed up with more of your own writings. You've ignored how incentives play a role in people's economic activities, including job creation & destruction. You've ignored that the Federal government spends far more than it ever has in the history of the United States and that the overall tax-burden actually including Federal, State, & local income taxes as well as the burden imposed by tariffs and consumption taxes of various kinds (like the roughly $0.50 per gallon average on gasoline) is among the highest seen in the US. It's no surprise that people always forget to include the other taxes and pretend that just because Federal income tax rates have gone down since the 50s, that all taxes combined are down.

You've also ignored the complexity and the waste in the tax-code, and the myriad and ever-expanding regulatory costs imposed on businesses, particularly in places like California, which make those places less and less attractive to job producers. You didn't even touch on the cost of the debt and the cost of wars.

You've blamed conservatives - by which, in this case, you're including basically anyone who thinks high taxes are a bad thing - but you've provided no real evidence for that assertion, and you've so clearly demonstrated that you don't have a clue what you're talking about that it's driven me to simply call you an idiot.

I could probably go on about this twisted mess all night, but I think we're good here.

Rant. Over.