House of Eratosthenes

Once again, I’m venturing into a college town, a stranger in a strange land. This is where you can finally find one or two Biden/Harris signs. Which isn’t so bad, but there’s a prevailing sentiment that Bernie Sanders is an okay guy and might still have the right idea. Months after he took the money & ran. People can’t figure out what smells.

Resentment appeals to people, especially to people who pay attention to politics only occasionally. I suppose it’s like a smoothie, that first sip is enticing and delicious. Nobody wants to suck away at it all day, but that’s okay because with politics people only pay attention long enough to form an opinion. They can’t see what their resentments are doing to them, and to the rest of us.

Alright, I’ll explain here we can’t afford to have resentment in our tax policies. Let’s inspect the intersection between economics and politics by making it simple: I’m a collectivist-type politician, running on a platform of absolute collectivism. If I win, everybody’s money goes into a big pile, and then everybody gets back the total amount of money divided by the population count so everyone ends up with an equal amount.

To keep things simple, everyone votes their own interests. If you know my scheme will extract more money from you than it will give back to you, you’ll vote no, and if you know it will give back to you more than it will take, you vote yes. If you line everybody up according to how much they have, and take the property value of the guy standing at the halfway point, that’s the median. If you put everybody’s property in that big pile and divide by the number of people, that’s the average, or mean. So I lose if the median is greater than the mean. I win if the median is less than the mean. It all has to do with whether there’s a slope, and which way it goes.

The way economics works, this will always win. There’s always a slope and the slope always goes one way. The wealthiest guy has a whole lot more than the second-wealthiest guy. The poorest people have roughly the same amount as each other. An “Us Against Them” mentality emerges. But I don’t need to rely on the us-against-them mentality, the numbers are on my side. I can take to the airwaves and truthfully say “If you have less than X, you will benefit under my plan” and if people vote purely selfishly, like rats on a sinking ship, I will win.

Here’s where it gets interesting.

Suppose a blue fairy godmother emerges from on high and says “I will straighten your curve.” She would wave her magic wand and do merely the first step of what I’m promising to do — curing inequality. Note, though, she’s offering merely to straighten the curve, not to go so far as I’m going to ensure everyone has the same amount of stuff. No curve means the median and the mean are the same. Poorest guy has 1, wealthiest guy has 100, so the guy in the middle has 50 or 51.

Well! If you ask me, I’m going to say not only no, but Hell No. I can’t win that way. Or — I could win, but I would only squeak through with barely 50% of the vote, best case scenario.

I, the collectivist-minded politician, M-U-S-T have the inequality and the inequality must have the curve to it. My whole political career depends on it. I have got to have those 70%, 80%, 90% continually shafted, continually possessing less than the mean, so they have an incentive to support me. I can’t have: Poorest guy has 1, richest guy has 100, with linearly spaced gradients in between. If it’s like that, my goose is cooked. Note that my plan is supposed to go leaps and bounds beyond that, ensuring that the wealthiest guy and the poorest guy have the same amount. The point is that to achieve merely the first step of that, would already be unworkable because it would be contrary to my interests.

Progressive taxation is supposed to do exactly what it has in fact done, which is to take this glorious fantasized instant of Bastille-raiding and stretch it out endlessly. It’s supposed to promise the whole cookie while offering only crumbs…across decades and generations. It is the ultimate in the counterproductive bureaucracy, which is incentivized to preserve the problem it was formulated to solve. The median has to be less than the mean, in order for it to work politically. Its proponents are not on the side of the rich people, and they’re not representing the interests of the poor people either.

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Progressive TaxationSunday, October 11th, 2020

Progressive Taxation
Sunday, October 11th, 2020