Monday, April 27, 2009

Non-Surprises from Pakistan

The Taliban is declaring the truce over. After violating it by attacking Buner, and creating chaos in Dir. In other non-surprises:
President Asif Ali Zardari called for more foreign support for cash-strapped Pakistan to prevent any danger of its nuclear arsenal falling into the hands of al-Qaida and its allies.
and finally, more non-surprising information from Zardari on Osama Bin Laden
"He may be dead. But that's been said before"

The good news is that the Pakistani army seems to be making progress in Dir. Time will tell. I imagine my friend Ray will be posting in much more detail on this on his blog.

Sunday, April 26, 2009

Don't believe what they say about you

cause they are probably wrong. Here's an article revealing that major league baseball scouts never thought much of pitcher Randy Johnson in high school and college. One even wrote "NO PROSPECT".

It took time, but Johnson developed into one of the dominant southpaws of the past couple of decades, if not of all time. He's a 10 time All Star, 5 time Cy Young Award winner, has pitched a no-hitter and a perfect game, and is second in history in strikeouts. Not bad for somebody with limited control and NO PROSPECT.

Monday, April 20, 2009

Somewhat Silly Symbolism

As Greg Mankiw points out, Obama looking to cut 100 million dollars from the budget is, well, pretty pointless. It's like a family making $100,000 a year digging deep to cut their spending by, da dum ... $3.

In order to feel like a significant cut (say, $1000 from that family budget, and even that is fairly small) we'd have to cut 30 billion dollars. Which is 300 times as much cutting.

Wednesday, April 15, 2009

More Tax Data

From the CBO. This data includes Social Security taxes and more.

CBO's most recent estimates of federal effective tax rates (taxes as a percentage of income) across household income groups for the four largest sources of federal revenues--individual income taxes, social insurance (payroll) taxes, corporate income taxes, and excise taxes--as well as the total effective rate for the four taxes combined.
One of their tables is fairly damning on income inequality, showing that the top 10% have gained 10.5% of after tax income shares ("the pie"), but 8.8% of that pie increase has gone to the top 1%. So the "semi-wealthy" haven't really gained much of the pie, only the super-wealthy.

More interesting (to me) than share of the pie is actual income. Lets see what has happened between 1979 and 2006. This data has been adjusted for inflation, which was roughly 2X in that period. Note: they adjust for household size in a way I don't really understand.

For pretax income, all quintiles are positive. The income increases are 6%, 12%, 15%, 26%, and 82%. The rich have clearly done much better, but at least everybody is positive. The top 5% has seen an increase of 133%. The disparity in the increase between the top quintile and the bottom is 82/6. which is 13.7. The disparity between the top 5% (the "rich") and the bottom quintile (the "poor") is 133/6, or 22. In other words, the rich have seen their pre-tax income increase 22 times as much as the poor.

For after tax income, the increases are all positive and more even, 11%, 18%, 21%, 32%, and 86%, with the top 5% at 142%. The two disparities are far smaller, 7.8 and 12.9. The rich have seen after-tax incomes increase less, "only" about 13 times as much as the poor.

Conclusions:

  1. There has been a large increase in income disparity in the past 25 years. IMO, this is a bad thing. However, I think this has happenned worldwide, not just in the USA.
  2. Tax policy (the infamous Reagan / Bush "tax breaks for the rich") have not added to this disparity. Current tax policies decrease the disparity numbers from 13.7 to 7.8, and from 22 to 12.9. In other words, the current tax policies reduce the disparity by about half.
  3. We should, IMO, do something about income disparity. But we cannot blame the disparity on tax policy. It is pre-tax income that seems to be the problem.

Followup on relative Tax Rates

I wanted to followup yesterday's post and give some examples to clarify the tax rates people actually pay. Because the talking heads just don't give real data. Conservatives generally ignore social security taxes, and liberals rebut with "but you forget social security taxes" yet don't followup with the simple math to get the true total percentages. Also, I wanted to add that I do not necessarily consider Ari Fleischer agreeing with me to be a good thing.

Here is one example of three people and their (admittedly approximate) tax rates.

A poor person ("Oliver", named after Oliver Twist) earning $20,000 a year, pays 7.65% in social security and medicare taxes, which is $1530. I'll assume no federal income tax. Since it varies so much state to state, I must ignore state income and property taxes (which would likely be very low for Oliver) and sales tax (which, being regressive, would adversely affect Oliver). I'm also ignoring all tax credits.

A moderately rich person ("Professor Higgins"), earning $200,000 a year, pays roughly 2.5 times as much in federal taxes per dollar earned, 19%, which is $38,000 . In addition, Higgins would pay the maximum $6621 in Social Security Tax, and a full 1.45% medicare tax, $2900. Total taxes of $47,521, which is an effective rate of 23.8%. This ignore state taxes (Higgins may well be paying state property or income taxes) and all tax credits.

A very rich person making 2 million a year ("Warren") pays roughly 3.1 times per dollar earned, or 23.7%, which is $474,000, plus $6621 in SS and $29000 in medicare. Probably less in medicare cause some of this income is likely dividends, so I'll halve that to $15000. Total taxes of $495,621, for an effective tax rate of 24.5%. Again, ignoring state taxes etc...

When put this way, the system doesn't seem all that "progressive" in the top range. Warren pays basically the same rate (roughly 24%) as Higgins. I say raise the taxes on that Warren guy! (Fairness alert: in a very good year, I'm in that Henry Higgins range...) But seriously, it does feel that the top 1% could survive a modest tax increase. I am concerned that once the feds bump the top rates, states will follow up - Oregon is already considering an Obama-like "tax you more over $250,000" hike.

How about Higgins vs. Oliver? On the federal level, it seems fairly reasonable. If you factor in that the payouts for Social Security are progressive, my personal gut feeling is that Oliver is doing o.k. But, to test that, here is the same example, phrased two additional ways, since the exact phrasing has a psychological effect, especially where money is involved. I'm interested in how people think this affects the "fairness" aspect.

A) In a poor section of town are ten apartments, each with an Oliver. Combined, they earn $200,000, the same as Higgins. But they would pay total taxes of $15,300, roughly a third what Higgins pays.

B) In a poor section of town are thirty apartments, each with an Oliver. Combined, they earn three times what Higgins does. Yet they pay, in total, about the same taxes as Higgins.

To my mind, A still seems fair, but, for some strange reason (since it is really the exact same information), B makes me think that Higgins is getting a bit of a raw deal. How do others react?

Tuesday, April 14, 2009

Ari Fleischer agrees with me

In yesterday's Wall Street Journal, Ari Fleischer, former press secretary for G. W. Bush, agrees with me that Obama is proposing too much wealth redistribution. In my earlier post, I am accepting of the rich paying higher taxes, and accepting of social programs that generally benefit the poor, but I am against giving most of this money back as tax breaks to the bottom 95%. Especially in times of deficit.

Fleischer also has some updated facts on how Bush's tax cuts affected government revenues. Paraphrasing his article:
by 2005 the bottom 60% of Americans made 25.8% of the income, yet paid only 0.6% of the income taxes and only 14.3% of all payroll taxes.
If you divide the total taxes paid, 14.9%, by income, 25.8%, you get some sort of relative tax burden of 0.58. I'm going to call this figure Morgan's Relative Tax Burden, MRTB. Just to be clear, these taxes include the regressive Social Security tax.

For the "rich", the relevant numbers are that the top 10% pay 72.8% of all income taxes (I'll ignore payroll taxes for them, it would slightly increase their tax burden). What do they earn? The Tax Foundation provides this useful table, showing that the top 10% earn 47.3% of all the reported AGI. So their MRTB is 72.8%/47.3% = 1.54, slightly higher after payroll taxes. So the MRTB for the upper 10% of wage earners is nearly three times higher than that for the bottom 60%. Note that these table's figures are from 2006 and differ slightly from Ari Fleischer's figures, but the trend is very similar. Here is the MRTB for more of the upper classes of wage earners. This ignores payroll taxes, so the MRTB's are not exact, but it clearly shows that taxes in the USA are progressive. (Remember that the bottom 60% have a MRTB of 0.58, and sorry of there are extra big spaces in the table...)

Income

Income Taxes

MRTB

Top 1%

22.06%

39.89%

1.8

Top 5%

36.66%

60.14%

1.64

Top 10%

47.43%

70.79%

1.49

Top 25%

68.16%

86.27%

1.27


I don't claim that these MRTBs are socially correct, subjectively fair, or best for the US economy. That is certainly open to debate. But it does show that the rich are objectively paying a fair share, with the top 1% paying over three times as much in MRTB as the bottom 60%, even including regressive payroll taxes.

In times of deficit, giving long term tax breaks to a majority of Americans is probably not wise fiscal policy. It is political pandering. To be fair to President Obama, G. W. Bush made the same mistake. I hope Obama is wiser.

Sunday, April 12, 2009

Why many of us like the Designated Hitter

From the April 12 SF Giants at San Diego Padre's game. SF ace Tim Lincecum struggles again, throwing 46% balls, walking 3 and giving up 10 hits and 4 runs in 5 1/3 innings. It could have been worse. In the second inning, with 2 outs, SD's #6 and #7 hitters both single. Their number 8 hitter, Luis Rodriquez, walks "non-intentionally" on four pitches, bringing up the SD pitcher, Chris Young, who strikes out on three pitches.

In the third inning, the Padres score three runs and have runners on 2nd and 3rd base with two outs. Rodriquez is intentionally walked again. SD pitcher Chris Young manages a weak grounder this time, inning over.

Who is this feared #8 hitter, Luis Rodriquez? A career backup / utility man, good glove, with an OPS of .664 that may not even rate as "replacement level". Before today, he had one intentional walk in his career. The only reason he gets walked is that the next batter, pitcher Chris Young, has an even more pathetic .360 OPS.

Some may claim that this is "strategy" and good for the game. Bah humbug. If having a pitcher bat is so "strategic" and requires deep thought, how come pitchers always (except for Tony LaRussa) bat 9th? Pitchers almost always bunt when they should bunt, and #8 batters almost always get intentionally walked when they should get walked. It's not strategy or thinking, it has become routine practice.

Thursday, April 9, 2009

Nick Adenhart killed

Wow. A young man pitches six innings of shutout baseball in his major league season debut. Then is taken from us by a hit and run driver. Even though times are tough for many, this should make everybody else appreciate what they still do have.

In ancient Rome, after a glorious victory, a Roman general was paraded on a chariot through the streets of Rome in a celebration known as a triumph. Standing behind the general was a slave, whose job was to remind the general that glory and life are fleeting. In legends, the slave whispered to the general to remember that he was mortal: "Memento mori."

Remember that you are mortal. I found a hymn by Sanford Bennett (that I've never heard of before) but I like the words:

Life is fleeting, life is fleeting!
Let us do what good we can,
Have for all a kindly greeting,
In love's army lead the van,
Hoping ev'ry seed that falleth
May grow up in flowers of love,
Till the gracious master calleth
All his children home above.

Wednesday, April 8, 2009

SF Giants Opening Day

I was lucky enough to attend the San Francisco Giants Opening Day versus the Milwaukee Brewers yesterday (April 7). The weather was dicey, delaying the start of the game by about half an hour, and canceling the exciting "flyover", but it cleared up nicely for the game, with even a little sun peeking out and a beautiful rainbow after the game.

The game itself was very sloppy, perhaps reflecting the field. Pitching sucked: mixed in with twenty-two hits were 13 walks and four hit batsmen. The Giants won 10-6 thanks to three home runs and because their pitchers fared better in wriggling out of jams (three double plays, plus the Brewers team left 11 men on base, more than one per inning).

Some concrete observations:

Tim Lincecum has no control over his fastball. It was consistently high in the strike zone. The good news is that the Brewers hitters couldn't dig in, and he rung up 5 Ks, the bad news is that he pitched only three innings, walking three and throwing over 70 pitches. Hopefully he's not hurt, nor is he turning into a nibbling Barry Zito.

Jeff Suppan is not a #1 pitcher. His ERA has been in steep decline for three years, ending last year at nearly 5. If the Brewer's highly touted youngsters, Yovani Gallardo and Manny Parra, struggle this year, it could be a long season for them.

Pablo Sandoval can hit, but is no Brooks Robinson or Eric Chavez. He has several chances to make admittedly tricky plays, and succeeded at none. Either he grows into the position, or he will grow into Miguel Cabrera and be relegated to first base or traded to the AL as a DH.

In general, the Giant's defense looked shaky. Edgar Renteria looks a step slow, Fred Lewis made a terrible throw home, and the Brewers stole four bases. Maybe it was the wet field and first game jitters, but if they don't tighten up behind their good pitching they could set a record for yielding unearned runs.

Travis Ishikawa looks good. Fielded fine and had some key hits with power. And I just like his name - very melting pot American.

Congratulations to Joe Martinez on the win in his major league debut. It wasn't pretty (2 runs in two innings) but many wins aren't pretty and I'm sure he will savor it for the rest of his life.

Money Changes Everything (in Cricket)

Thanks to Cyndi Lauper for the title, and thanks to A Vinu, one of my followers, for some interesting links. I really don't know a whole lot about Cricket myself, but it's seeing some of the economic issues that affect baseball. Which is probably good - if there were zero money in cricket there's be a lot less of it.

The lucrative Twenty20 Cricket is sucking top players away from traditional test matches. (For those slightly more ignorant than me, Twenty20 is a shorter form of cricket, finishing in a couple of hours rather than days). This sounds much like the the World Baseball Classic, which many top players (e.g. Ryan Howard, Adrien Beltre) skip, or are forced to skip by their clubs, since it is a sidelight from their highly paid jobs in Major League Baseball. Some of the WBC issue is the timing, since it occurs during MLB's Spring Training. But the ened effect is to cast some doubt on the "validity" of the results, since teams with "apparently" less talent, like South Korea, have dominated because they can field their full team. It's clear that Korea really does have a ton of baseball talent, plus a ton of pride in their play, and great fans!, but until the WBC has the financial wherewithal to really attract all the top talent from all teams, it will be a stepchild to MLB.

The same may be true in cricket. If the national teams want all their their stars in the test matches, they will either have to pay better, drum up nationalistic pride and pressure for them to play, or adjust the schedule to avoid conflicts with Twenty20. Cricket has an advantage over baseball, since test matches are traditional and Twenty20 is new, whereas in baseball the WBC is "new" and has to overcome both tradition and money.

TV coverage of cricket is also an issue, especially for young people:

Berry again voices concern about the lack of free-to-air TV coverage in the UK. While he acknowledges that the ECB attracted top dollar for the sale of international TV rights to BSkyB, he draws attention to chilling research carried out among more than 26,000 schoolchildren in South London. ... Cricket was ranked 21st
This is much like MLB playoff baseball. TV sets the times for the big games, often in prime time in the evening (for big ad revenues) which is too late for younger children, especially a few time zones away. Many games are on pay channels. The end result is that fewer kids can watch the games and baseball loses future fans and players. Years ago these playoff and World Series games were often on during the daytime and we'd sneak radios into school to listen to our heroes. If the teacher was a fan, no sneaking was required! I guess today kids can follow the games on their cell phones. (I follow some games on the internet) Not sure what the solution is for cricket. An internet feed should be decent for following the game. But there are a lot of places in the sub-continent where this is not an option.


On the bright side for cricket, major manufacturers are sponsoring teams, providing high tech clothing, and sending hot babes. And Bollywood is there.

Monday, April 6, 2009

Six months has greatly changed the G20

Kevin Hennessey (caveat, a former Bushie) compares the language of the G20 resolution from November 2008 and April 2009. Wow, how times (and presidents) change.

A quick summary of some minor things missing from the new, April document:
Note that the word “free” is nowhere in the document.
"… rule of law …” is nowhere in the document
"… private property …” is nowhere in the document
"… competitive markets …” and the word “competitive” are nowhere in the document

Since Hennessey correctly predicted that "free" would be dropped, give him a little credit. He's better at prognosticating than most of the other economist. :-)

IMO, dropping one or two of these clauses is no big deal. But dropping four clauses, all having to do with traditional American principles, concerns me. Yes, some free market execs really screwed up, but let's not throw the baby out with the abthwater.

Friday, April 3, 2009

Where do they play the Indian Premier League?

Sounds like a modern take on the old "who's buried in Grant's tomb" question. Where do they play the Indian Premier League? Not in India. The 59 match, 5 week tournament has been moved to South Africa due to security concerns in India. South Africa was chosen over England cause it's closer to India in time zones and distance, and the weather in April will be more reliable. Maybe they have some empty hotel rooms. It's probably a good sign that some Indians think the elections are more important, though I know that I would go to a baseball World Series in preference to a US election. (There was some danger that a good Oakland Athletics run in 2005 would interfere with my wedding).

Anyway, it's a little sad, but a serious onlooker can't really disagree with the decision when lives could be at stake. Let's hope it runs smoothly and safely. But Groucho Marx is having a little laugh today.

Wherein I agree with the Huffington Post

Somewhat to my surprise. Not much to add. Maybe to point out that

"But it seems to me that this cycle of doubt itself, rather than fundamentals of
the economy, is partly to blame for the dizzying decline in the market averages
and the associated fallout"


sounds like a John McCain quote that the Democrats blasted as "out of touch".


The economic badmouthing has been going on for years. (Checkout most Paul Krugman editorials for the last 8 years) My wife and I can hardly watch the TV news anymore - it's all bad, or spun to be bad. For example, after dire warnings of doom, the California snowpack was just measured at 81% - 85% of normal, which I'm sure is well within a normal range. Yet the article highlights water official's worries. They are paid to worry about water, and it fits the paper's need to create doom and gloom.

Wednesday, April 1, 2009

Charges Dropped against ex Senator Ted Stevens

First, congrats to new Attorney General Eric Holder for following the law and dropping the charges. Of course, the fact that Stevens had already lost the election made it easier, but, still a good move. Here's another article.

One thing I've noticed is that neither Daily Kos nor NPR mentions any details (like names, who appointed them) about the prosecutors who committed the gross misconduct that almost surely lead to one more Democratic seat in the Senate. A little digging found their names here.

"The team is headed by William Welch, chief of that office, and his main deputy, Brenda Morris, who was the lead attorney in the Stevens trial. Also affected are two other lawyers in that office, Nicholas Marsh and Edward Sullivan, and two on special assignment from the U.S. attorney's office in Anchorage, Joe Bottini and James Goeke."
More details of the prosecutors and their misconduct can be found here. Welch was appointed by Roberto Gonzales, but this article says he is a registered Democrat. And Brenda Morris has served in several administractions since 1991. So sorry, looks like no devious conspiracy going on, just prosecutors forgetting their place is to enforce the law legally.