Paying Higher Taxes Can be Very Profitable (rerun)

(Originally posted in January 2010now an April perennial)

Chevy Chase, MD, is an affluent suburb of Washington DC. Median household income is over $200K, and a significant percentage of households have incomes that are much, much higher. Stores located in Chevy Chase include Tiffany & Co, Ralph Lauren, Christian Dior, Versace, Jimmy Choo, Nieman Marcus, Saks Fifth Avenue, and Saks-Jandel.

PowerLine  observed that during the 2008 election season, yards in Chevy Chase were thick with Obama signsand wonders how these people are  now  feeling about the prospect of sharp tax increases for people in their income brackets.

The PowerLine guys are very astute, but I think they’re missing a key point on this one. There are substantial groups of people who stand to benefit financially from the policies of the Obama/Pelosi/Reid triumvirate, and these benefits can greatly  outweigh  the costs of any additional taxes that these policies require them to pay. Many of the residents of Chevy Chasea very high percentage of whom get their income directly or indirectly from government activitiesfall into this category.

Consider, for starters, direct employment by the government. Most Americans still probably think of government work as low-paid, but this is much less true than it used to be. According to  this, 19% of civil servants now make $100K or more. A significant number of federal employees are now making more than $170,000. And, of course, the more the role of government is expanded, the more such jobs will be created, and the better will be the prospects for further pay increases.

If one member of a couple is a federal employee making $100K and the other is making $150K, that would be sufficient to allow them to live in Chevy Chase and occasionally partake of the shopping and restaurants. But to make the serious money required to  really  enjoy the Chevy Chase lifestyle, it’s best to look beyond direct government employment and pursue careers which indirectly but closely benefit from government activity…which are part of the “extended government,” to coin a phrase.

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Attack of the Robot Bureaucrats

Via Bookworm, here is a truly appalling story from Minnesota. When the fire alarm went off at Como Park High School, a 14-year-old girl was rousted out of the swimming pool, and–dripping wet and wearing only a swimsuit–directed to go stand outside were the temperature was sub-zero and the wind chill made it much worse. Then, she was not allowed to take refuge in one of the many cars in the parking lot because of a school policy forbidding students from sitting in a faculty member’s car. As Bookworm notes:

Even the lowest intelligence can figure out that the rule’s purpose is to prevent  teachers  from engaging sexually with children.   The likelihood of a covert sexual contact happening between Kayona and a  teacherunder the actual circumstances is ludicrous.   The faculty cars were in full view of the entire school.   There was no chance of illicit sexual congress.

But the whole nature of bureaucratic rules, of course, is to forbid human judgment based on actual context.

Fortunately for Kayona, her fellow students hadn’t had human decency ground out of them by rules: “…fellow students, however, demonstrated a grasp of civilized behavior. Students huddled around her and some frigid classmates [sic], giving her a sweatshirt to put around her feet. A  teacher  coughed up a jacket.”  As the children were keeping Kayona alive, the  teachers  were  workingtheir way through the bureaucracy.   After a freezing ten minutes, an administrator finally gave permission for the soaking wet, freezing Kayla to set in a car in full view of everybody.

As Bookworm notes, this sort of thing is becoming increasingly common. In England in 2009, for example,  a man with a broken back lay in 6 inches of water, but paramedics refused to rescue him because they weren’t trained for water rescues. Dozens of similar examples could easily be dredged up.

The behavior of these bureaucrats is very similar to the behavior of a computer program confronted by a situation for which its designers did not explicitly provide. Sometimes the results will be useless, sometimes they will be humorous, often they will be harmful or outright disastrous.

Last year in Sweden, there was rampant rioting that included the torching of many cars.  The government of Sweden didn’t do a very good job of protecting its citizens and their property from this outbreak of barbarism.  Government agents did, however, fulfill their duty of issuing parking tickets…to burned-out cars.  Link with picture.  In my post The Reductio as Absurdum of Bureaucratic Liberalism, I said…

I’m reminded of an old SF story, “Dumb Waiter,” written by Walter Miller, who is best known for his novel  A Canticle for Leibowitz. This story, which dates from 1952, lacks the philosophical depth of  Canticle, but seems quite relevant to the events in Sweden. (update: and Minnesota, and …)

In the story, cities have become fully automated—municipal services are provided by robots linked to a central computer system.  But when war eruptedfeaturing radiological attackssome of the population was killed, and the others evacuated the cities. In the city that is the focus of the story, there are no people left, but “Central” and its subunits are working fine, doing what they were programmed to do many years earlier.

The radiation levels have died down now, and the city is now habitable, from a radiological standpointbut the behavior of the automated systems, although designed with benign intent, now makes entry to the city very dangerous.

Mitch, the protagonist, resolves to go into the city, somehow get control of Central, and reprogram it so that it will be an asset rather than a hazard for future human occupants of the city.  The first thing he sees is a robot cop, giving a ticket to a robot car with no human occupants. Shortly thereafter, he himself is stopped for jaywalking by another robot cop, and given a summons to appear in traffic court. He also observes a municipal robot mailing out batches of delinquent utility-bill notices to customers who no longer exist.

Eventually Mitch establishes contact with Central and warns it that a group of men are planning to blow it up in order to have unhindered access to the city for looting…that the war is over, and Central needs to revise its behavior to compensate for the changed situation. The response is that he himself is taken away for interrogation. He hears a woman crying in an adjacent cell—she has been arrested by a robot cop for some reason or other, and her baby was separated from her and is being held in the city nursery.

“They won’t take care of him! They’ll let him die!”

“Don’t scream like that. He’ll be all right.”

“Robots don’t give milk!”

“No, but there are such things as bottles, you know,” he chuckled.

“Are there? ” Her eyes were wide with horror. “And what will they put in the bottles?”

“Why-” He paused. Central certainly wasn’t running any dairy farms.

“Wait’ll they bring you a meal,” she said. “You’ll see.” “Meal?”

“Empty tray,” she hissed. “Empty tray, empty paper cup, paper fork, clean paper napkin. No
food.”

Mitch swallowed hard. Central’s logic was sometimes hard to see. The servo-attendant
probably went through the motions of ladling stew from an empty pot and drawing coffee from
empty urn. Of course, there weren’t any truck farmers to keep the city supplied with produce.

Mitch observes that inmates in the surrounding cells have all starved to death while Central and its subunits went through the motions of feeding them.

Mitch and Marta manage to escape, as Central calls in vain for human guardswho don’t exist anymoreto assist its unarmed robots. Eventually, Mitch is able to reach the house of the former mayor, assert (via code-cracking) the mayor’s authority over Central, and gain control of the system.

The behavior of Miller’s automated city-system…feeding people with trays that contain no food, arresting people for minor offenses and putting them into an environment in which a child could see that they would starve, sending out utility bills to nonexistent customers, calling for assistance from personnel who haven’t been around for years or decades…closely models the state to which bureaucraciesie, robots made of  human  componentstend naturally to evolve.

And, of course, the human components of those bureaucracies–the individual bureaucrats–can usually feel confident that as long as they follow the rules, they will be personally protected from adverse consequences–no matter how much harm is perpetrated by the bureaucracy’s operations. As the mother of the girl in the Como Park incident commented, if she as an individual parent had made her daughter stand outside in freezing weather, she almost certainly would have been in big legal trouble. But it is quite likely that any consequences for the school’s teachers and administrators, operating as cogs in a machine, will be much less serious than they would have been for an individual parent who did the same thing.

Many Germans in the Nazi era had learned the principal of bureaucratic invulnerability, indeed had learned it so well that they believed it was a postulate never to be challenged–and were no doubt quite surprised when their defense of “only following orders” did not work and they were given a date to meet the hangman.

I expect that most Americans at the time of the Nuremberg Trials would have found it difficult to believe that, in the America of 2014, the practice of following procedures at the expense of humanity and common sense would have become as common in this country as it indeed has.

Random Links

Will Israel Be the Next Energy Superpower? – A balanced, thoughtful look at recent developments from Arthur Herman. There is cause for optimism.

Wildlife photographer pleads guilty to violating Endangered Species Act – The gist of the story is that some guy was photographing “endangered” birds from less than 500 feet away, which apparently is a violation of the Endangered Species Act, and was turned in to the feds by zealous environmentalists who saw him do this. Of course he copped a plea. If he had taken his chances in court he could have ended up in jail for years. As it is he may still do time and will end up with a felony conviction and probably a big fine to make an example of him. The birds he supposedly harassed aren’t even rare, merely locally rare in Florida, and he didn’t harm any of them. At most he should have been fined a few hundred bucks and warned to stay farther away from the wildlife. But nowadays everything is a federal crime with draconian penalties, and you can’t fart in a wetland without violating some rule. And the enforcement agencies have to justify their budgets. He should have left the birds alone, but his punishment is cruelly excessive. Some of the comments in response to the article are remarkably heartless. Not just the EPA but also the Fish and Wildlife Service and the Park Service deserve substantial defunding.

Possibly my best blog post ever.

The “Deep State.”

UPDATED to correct the author of the essay.

This essay by Mike Lofgren on Bill Moyers’ web site, is interesting. It has the usual leftist slant of Moyers on the topic but also includes many good observations. Lofgren is also a very interesting guy. He spent 28 years as a Republican staffer. From 1995 to 2004, he was budget analyst for national security on the majority staff of the House Budget Committee. From 2005 until his retirement in 2011, Lofgren was the chief analyst for military spending on the Senate Budget Committee. The Democrats took The House in 2006 and the Senate Majority from 2001 to 2003 and then since 2007. If he was on the Budget Committee of the Senate, he must have been a staffer for the Democrat majority, as well.

he was “appalled at the headlong rush of Republicans to embrace policies that are deeply damaging to this country’s future; and contemptuous of the feckless, craven incompetence of Democrats in their half-hearted attempts to stop them.” He charged that both major American political parties are “rotten captives to corporate loot”, but that while Democrats are merely weak and out of touch, the Republican Party is “becoming more like an apocalyptic cult”. Lofgren and Moyers are both leftists but Lofgren has had an interesting odyssey.

There is the visible government situated around the Mall in Washington, and then there is another, more shadowy, more indefinable government that is not explained in Civics 101 or observable to tourists at the White House or the Capitol. The former is traditional Washington partisan politics: the tip of the iceberg that a public watching C-SPAN sees daily and which is theoretically controllable via elections. The subsurface part of the iceberg I shall call the Deep State, which operates according to its own compass heading regardless of who is formally in power. [1]

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America 2.0 Looks To Be Worth Around Twenty Five Cents on the Dollar

A while back I dissected the debt of Detroit, the classic America 2.0 case. By this, I mean a gigantic government presence, working with manufacturing and unions to push off obligations into the future with no clear plan of really what to do. In the end, of course, it all came crumbling down and yesterday we got a slight glimpse into just how bad it can get.

To review, here is the diagram I had to make after reading several sources on the subject, to help wrap my head around the calamity that was the city of Detroit’s books:

This looks crude, and it is, but it really helped me get my brain around the nightmare.

From everything I have been reading, Kevyn Orr is getting ready to propose that the general obligation and pensions get settled out at .25 on the dollar. That sounds a bit expensive to me, and as Lex Green said to me in an email certainly isn’t “fire sale” prices yet, but that is what the consensus seems to be saying.

In an odd bit of news, many private foundations have been trying to gather enough money to offset an auction of Detroit’s art collection, estimated by some to be worth up to a billion dollars. If I were Orr, that would have been the first thing I would have done is liquidate that stuff, but I am quite a bit less sensitive than I would need to be to ever consider a career being a politician.

All of this is subject to the whims of the BK judge, but if I were a retired Detroit fireman, I would certainly begin tightening the belt stat, if that wasn’t done already.

This may affect municipal investments, but honestly I imagine any fallout from it is already baked into the pie.

Is Chicago next? We shall soon see.

From a political standpoint, the Republilcans should make the Democrats own this just like they should own Zerocare ™ and the nightmare in Illinois/Chicago that is coming down the tracks. How easy can it get for a Republican? All they have to say is “look at that” and they should get easily elected in any of a number of districts in 2014.

(Disclosure – I have many different municipal investment vehicles in my portfolio).

Cross posted at LITGM.