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EAT THE RICH, PART XVLLVVIIIXX

I saw this on Greg Mankiw's blog, "From the desk-and-I-do-have-one of Jane Galt":

But America's widening income distribution cannot be blamed on bequests. According to Piketty and Saez, while in 1929 the wealthiest Americans derived more than 70% of their income from invested capital, and only 30% from wages or entrepreneurship, by 1998 the very rich got only 20% of their income from investments.

I thought this can't be true, and it isn't. Unfortunately the source is a 92 page paper. We're still in danger of some chop-down of the estate tax, so I guess I should do my bit on this.

THE DOCTOR DRIVES A LEXUS

by the Sandwichman

"The kind of challenges we face aren't the kind that can be ridden out. They're structural challenges and they require new and farsighted solutions." -- Ron Gettelfinger, president of the UAW, quoted in the NYT today.

A big item is health benefits and the cost thereof. Although it might not suggest any immediate solution, an understanding of the ecology of benefit bargaining might help in developing the required farsightedness. First, the blossoming of employer-paid benefits took place after World War II in the context of favorable tax treatment from the federal government. Presumably, ten dollars worth of tax-exempt benefits was worth more to members than ten dollars of taxable wages.

I READ IT SO YOU DON'T HAVE TO

Via Pajamas, Judith Klinghoffer and Atlas Shrugs claim to have evidence the recent report of Palestinians on a beach in Gaza being killed by Israeli artillery fire of some sort is a hoax. They've got zip. They claim the fact that they media were on the spot -- they weren't -- plus "bad acting" in the footage proves the thing was staged. To buttress this they have ambiguous statements by the alleged perpetrators -- the Israeli Defense Forces -- and contextual b.s.

What it really proves is that American Jews are the dumbest Jews in the universe.

THEY'RE COMING TO AMERICA

Kudos to Tyler Cowen for today's op-ed in the Post.

TECHNO-BOOB SUNDAY

For those who like puzzles, the solution to this problem had nothing to do with Windows or Linux. The warning I was getting when I tried to get sound was due to GiggleByte's "EasyTune" program, which has a warning message if the mainboard is overheating. The board thinks that the system fan isn't running. It is. I ignored this since my other PC had a similar problem and it's been running for years. Problem is, the program sends out the warning message, and that was screwing up the audio, which works fine once you turn off the warning. Gigabyte support should have known this immediately, but they were clueless.

BLACK IS BACK

It usually takes a lot to make me laugh. People tell me I have the most wooden expression and sour disposition. Usually when you're with a group, things seem funnier.

I never laughed harder than when I saw Lewis Black on HBO a few years ago, alone in my house. He's got a new one on tonight at 10 pm.

STANISLAWSKI METHOD

Rep. John Murtha has announced an interest in becoming Speaker of the House, leading some to portray competition from Rep. Steny Hoyer as some kind of progressive-conservative showdown. Not so.

WHO'S ON FIRST IN IRAQ NOW?

by Barkley Rosser

Max is right that we may now have conditions for a Senator Aiken "victory" with the death of Musab al-Zarqawi and the curiously additional fact that Prime Minister al-Maliki has finally managed to appoint permanent people to the three key posts of Defense, Interior, and National Security, thus arguably finally putting in place the goal of having a solid government, democratically elected under a democratically adopted constitution. This is what we supposedly set out to achieve (aside from getting rid of the nonexistent WMDs of course), so there is certainly solid grounds for leaving. Let us pause briefly to applaud.

However, it is curious that SecDef Rumsfeld is being awfully low key about all this, although perhaps partly to show how cool he is while strutting about at NATO HQ. Nevertheless, the level of violence may well not decrease all that much, even if we cease seeing some of the more horrific kinds of stuff that Zarqawi specialized in, such as beheadings. There is reason to believe that he has been on the fade within Iraq, and there is reason to believe that he was done in by his enemies among the insurgents, particularly more secularly oriented Baathists and Sunni Arabs of different theological persuasions. To achieve real peace, al-Maliki will have to pull these people in and end the civil war between the Sunnis and the Shi'a that has pretty much displaced the al Qaeda movement in Iraq as the main action.

HE SAID IT

Quoth my pro-defense spending libertarian (sic) friend Chris Edwards, of the Cato Institute:

"Much of the value in large estates consists of unrealized capital gain, which currently avoids capital gains taxes because asset basis (the cost of buying the assets, which is deductible -- mbs) is stepped up to market value at death."

In other words, this income is the bulk of large estates and but for the estate tax, it would never be taxed.

CONGRATULATIONS, MR. PRESIDENT

You got Zarqawi and beheaded Al Queda in Iraq. Your mission has been accomplished. You can now declare victory, withdraw our troops, and leave the Iraqis to run their own country. Thank you.

Somewhat related, I respond to Peter Beinart's response to me.

CHUMPA LUMPA

by the Sandwichman

Yawn. Time to recylce some anti-boilerplate boilerplate:

Over at the Milken Institute Review Yahoo! Finance there's [yet another] piece on the lump-of-labor fallacy, [this time] by Timothy Taylor, managing editor of the Journal of Economic Perspectives Charles Wheelan, the "Naked Economist", who writes:

"There’s an arcade game called Whack-a-Mole in which a plastic mole pops up and you pound its head with a mallet. The lump-of-labor fallacy is the Whack-a-Mole of arguments about jobs. As often as you slam it, it reappears somewhere else."

[I promised that in this column, I would debunk one of the most pernicious economic ideas of the left. I've chosen the "lump of labor" fallacy, which is the mistaken notion that the world has a fixed number of jobs and that therefore the best way to make workers better off is by protecting those jobs. The French are not the only people who subscribe to this erroneous view of a modern economy, but they seem to cling to it more tenaciously than most.]

UPDATE: Sandwichman has uploaded an artist's rendition of Wheelan as a Chumpa Lumpa:

DOING THE MATH

by the Sandwichman

1. Should Johnny, who works full-time at a wage of $22.50 an hour plus benefits, accept his employer's offers of 3 hours of overtime work each week at a flat $10.00 an hour? Well, this is not really a math question, it's an aesthetic one. So I will give arguments for and against.

For: If Johnny doesn't accept the offer he will spend an extra three hours a week sitting on the sofa, drinking beer. Assuming one beer an hour, that's a six-pack every two weeks or 156 bottles a year. Assuming 150 calories per bottle, Johnny will gain about 6.5 pounds a year and he won't be able to afford to buy a house in Fort Lauderdale. To make that $10 an hour look more attractive, Johnny can have his employer reduce his regular wage to $21 an hour and apply that $60 a week to his 3 overtime hours making them nominally worth "time and a half".

UPDATE: Here is a demonstration Java contract costing spreadsheet to play around with.

FIGHT CLUB

I join the fray at Talking Points Café discussing the Peter Beinart book, The Good Fight.

And my second verse, different from the first, is now up. (Same link.)

UPDATE: In what is supposed to be a dialog, for his second post Beinart uploaded an excerpt from his book. Not a particularly compelling one either.

THE SIMPLE TAX-FREE LIFE

Why write anything new? We have the same b.s. debates over and over again. This week it's the Estate and Gift Tax. Some MaxSpeak golden oldies:

One Two Online debate with Tyler Cowen.
My Mercatus Center debate with Steve Moore.

CONDI, DICK, MAHMOUD, AND VLADIMIR: WHO'S ON FIRSTY ANYWAY?

Yesterday's Washington Post had disagreements between a news story by Glenn Kessler about Washington decisionmaking on the recent change in approach to Iran and an op-ed piece by the generally pretty well informed Jim Hoagland. Hoagland says that the decision to offer direct talks with Iran, which has brought about this six-party offer, shows Condi is On First and that Dick Cheney is in the policy doghouse, presumably because of a combo of Scooter, Iraq still a mess, and just plain lousy low polls. Kessler has Cheney still in the loop, with "all policymakers on board" with the new approach, although Cheney is identified as worrying that it could lead to an acceptance of enrichment and reprocessing by Iran, so sort of a semi-holdout.

Meanwhile in Tehran, Mahmoud Ahmadi-nejad seems to be laying low on this new offer and reading the details, while Vilayat-al-faqih (Supreme Jurist and Commander in Chief) Ali Khamene'i was denouncing the US and implicitly the Big Six offer on the 17th anniversary of his predecessor's (Khomeini) death. He reitereated that although they want nuclear power and nobody is going to push them around, that they do not wish to obtain nuclear weapons and that the use of nuclear weapons is against Islam. Of course, he also claimed that they do not violate human rights. He also threatened to block "the flow of energy" is Iran is attacked.