My Gedanken ExperimentsSinister Writings (from the left)
She did not have time to think about the network, nor had the insurance company provide her a list of network providers. The hospital accepted her insurance, which she believed meant they were ok. It wasn’t as if she had a choice. She did not have the option of getting it approved by her insurance in advance. She needed surgery now. Within a few hours, she was home, missing a gall bladder. She did not even spend the night at the hospital.
Days and weeks went by. She got the urgent care bills, that were paid for by the insurance, so she owed nothing. Emergency care covered. Certain other bills, covered. Then, a full month after her surgery, she got a bill from the hospital. The insurance company, Anthem, denied her claim. The person who denied her claim is not a doctor, does not realize that diabetics do not take surgery of any kind lightly. Amount due – $21,000. Payable immediately.
She doesn’t make that much money in a year. She is in school. She has monthly insulin costs. She has to take other medications to make her body accept the insulin. She has costs associated with making her pump work. She has to have regular doctor visits to check her numbers, to check her body, to check her pump. There are visits to her GP, to her diabetes doctor, to her eye doctor, and so on and so on. To cover all these costs, she would have to make $4,000 a month after taxes before buying a mouthful of food or paying a nickel for a place to live.
Anthem claimed the surgery was elective. As if she woke up two days before Christmas on a Sunday and decided, hey, I think I’ll get my gall bladder removed today. Except that serious diabetics don’t do elective surgery on a whim. They have to spend days ensuring their numbers are stable enough to have the kind of jolt to the system that surgery causes. And then, after the surgery is scheduled, they check again. If the numbers are off, the surgery is postponed until the numbers are acceptable.
She will have to appeal the denial. This will require more time and expense, and may even require a lawyer. She is working with the patient advocate at the hospital, but there are no guarantees. The last thing she needs is to be fighting this claim while she is going to school.
They say that diabetes is a manageable disease, and that is true. But that doesn’t mean management is easy or inexpensive. Diabetes doesn’t just mean you take a couple shots a day, management is expensive, in terms of both time and money. Time is expended to make regular trips to the doctor to get the body checked, to recalibrate pumps, to recalculate the right doses of insulin to keep the body under control. Money is expended in ways I never imagined before I had a diabetic in my home. The pump costs money (thankfully, because of ACA, it was paid for) to the tune of $44,000. Then there is the insulin. There are drugs needed to help the insulin. The pump requires new sensors every few months. There are copays to the doctor every visit (without ACA, those copays are really high). And the diabetic still has to carry insurance (without ACA, that insurance is really expensive).
The management of the disease does not mean that it is not taking a toll on the body. She needs to check on that body a few times a year. Currently she is taking shots in her eyes to keep diabetes from stealing her sight. Diabetes is also causing neuropathy in her feet. The constant ups and downs in her sugar levels has cost her her gall bladder and her pancreas. It impacts the functioning of the kidneys, to the point where it can shut down the kidneys and put the diabetic on dialysis(thus another expensive drug and a machine to keep the kidneys working). It also causes fits with her teeth, which then get infected and cause problems with her sugars, and becomes a vicious cycle. Yes, the disease is manageable, but it is a full time job that requires hours and dollars.
Here is the thing: she is a smart woman with a lot to offer our society. Keeping her healthy is difficult and expensive, but her contribution will be worth every penny. She is a prime example of why we need regular, complete medical care for every citizen – because the only untapped resource left in this world is the human potential. I talk about diabetes because that is what I know, but there are many diseases that are “manageable,” but require access to health care. And we can’t allow a lack of medical care to prevent us from tapping the human potential.
I haven’t written anything here for over a year. I was campaigning for state senate. I hadn’t planned to do this. I hoped some young, dynamic person would step up and run, and would become part of a new bench for our county. You can’t build a bench on people of certain age. State Senate is a bench-building position, and our county is in dire need of a strong bench. But nobody else stepped up, so there I was. I knew our county party really didn’t have an infrastructure, and I figured that at least I could use my race to help build one.
Running for office is a strange experience. People you think will be excited about your run and totally behind you aren’t, and people you never heard of are totally there and working on your behalf. I met the most amazing people who are doing incredible work for their communities. I learned about struggles of families in our supposedly comfortable community, I learned about the needs of education, I heard stories about the difficulties of young people getting started in life. But, funny thing, I never met my opponent. Every time I expected to meet him face to face he bugged out.
I was running against an incumbent. In his last run, four years earlier, he had won by 30 points. We only lost by 11 points, running against an incumbent. I think this seat can be flipped next time, maybe by a comfortable margin. Winning requires getting started. I hope next time, a dynamic younger person will step up and take this seat.
I learned about how hard it is to get your name out there, especially when the local media are friends of the incumbent. I learned that fundraising is really hard and needs to be done a whole lot earlier than people expect. Lots of funds come in too late to be used if you aren’t doing quick media buys, and the groundwork to do those media buys is nearly impossible if you can’t predict the funds.
I knew I was entering the race a bit late, but I delayed while trying to work through the protocol. I also knew that I had a huge mountain to climb, and the chances of scaling it were slim. But I knew that if I could use my candidacy to build an infrastructure, future candidates would have a better chance of winning.
The biggest thing I learned is that labeling is what is dividing this country. Time and time again, I was asked, Are you a moderate? A liberal? A progressive? And I learned that that is one question a candidate should never answer directly. So I began to instead ask the questioner about issues. I said, “I am not sure how to label me. I believe that our children should be able to get a great education, and begin their careers without facing a pile of debt. Is that liberal, progressive or conservative?” And usually, they said it was not any of those things, but a practical concern. I said, “I have a future daughter in law who is a brittle type 1 diabetic. Without ACA, her insulin and uptake medications cost $2000 a month, plus another $2000 a month for insurance. That means that she has to earn $4000 after taxes just to take care of her diabetes. That means a salary of $60.000 a year just for her diabetes, before she even buys a mouthful of food, to say nothing of lodging, clothing and transportation. I think we need to fix that. Is that conservative, liberal, or progressive?” And I got the same answer. In addition, I got to engage in some fascinating conversations. The same with the light rail we have been paying for for 10 years and still don’t have. I asked, “Is it liberal, progressive or conservative to want to have what I have been paying for?” Same thing. We have to get beneath the labels to discuss the real issues.
I will have more to say about the campaign in the days ahead. But for now, just know that I am back.
My husband and I arrived about 2 hours before the march was to begin. We did this to ensure that we could find parking at the light rail stop. As it turns out, this was a really good idea, because when we got back from the march, the parking lot was full, even on the unpaved part, unusual for a Saturday. Another reason we there early was so we could walk through the crowds, taking pictures of signs we found interesting. There is no way we could take pictures of all the unique and expressive signs, and there were many we did not photograph, as they were not totally family friendly. Below are a few of our favorites (I should note that we asked all people in the photos for permission both to take their pictures and to publish them on line and all agreed).
When we first got to the civic center, it wasn’t very crowded, and we were afraid the newscasts were correct. I was worried, because that would mean that the energy of the resistance had waned considerably, and that we were beginning to accept the outrage that is happening to our country. But as the first hour passed, more and more people started coming in. At one point, my husband got to a high point to try to take a photo, and he saw waves of people coming from all directions. We both laughed out loud in joy. They were coming in, all around. It reminded me of the Ents on the way to Isengard. Too bad our Saruman was hiding away in his castle in DC. It would have been so satisfying to see him peering out the window cowering in fear.There were signs for almost every issue you can imagine, from environment to DACA to war. There were lots and lots of signs demanding equal rights for women, for immigrants, for minorities, for the disabled. There were signs about outrage. Participants ranged in age from infants to elderly, of all ethnic backgrounds, men and women. (It was surprising how few, however, we saw from the Generation X age group, especially men.) There were pink hats everywhere, some knitted, some crocheted, some fleece, some regular hats died pink. There were also rainbow hats. There were vendors who had pink hats of all varieties who were doing brisk business. And it wasn’t all signs. There were opinions expressed on people’s clothing as well. The march began with a Navaho blessing, and Navaho drums led the procession. It seems only fitting to me that a march against this administration should be led by those who were here first, whose land we confiscated and whose lifestyle we destroyed. I can only hope that the message got through. Now for some pictures of people with signs: Some signs were just funny: Some were about our children: Many were about issues: Many were about voting: Some were about our situation: My Outrage Won’t Fit On This Sign Many were about our “President It was a wonderful, exciting, uplifting day. We spoke to many people even from our very red district where I am running. It almost gives me hope that a miracle can happen. If you would like to help my campaign, please go to my act blue account or see my website at https://juliaforcostatesenate30.com
So I’ve gone and done it. I have filed to run for office. Specifically, I am running for Colorado State Senate in District 30. District 30 includes Highlands Ranch, Parker and Roxborough. While it may not be the reddest district in the country, or perhaps even in the state, it is really red. This district hasn’t been represented by a Democrat in the 29 years I have lived here, and I seem to remember it always being Republican all the years I was growing up.
The Koch Brothers started exerting their influence in this area in the late 1980’s and early 1990’s. I was a Republican then (old style, a la Rockefeller, pro choice et al.). I remember hearing them spoken of in awe by the party honchos back then. And I watched the Koch minions select, interview, train and fund those who would adopt the Koch agenda fully. I watched them push aside anybody who disagreed with any of the Koch talking points. Soon it became clear that anybody with a moral compass was not welcome. I was told more than once that I probably should change parties, and eventually I did. Once I did, and opened myself up to what the Democrats were talking about, I discovered that I had probably always been a Democrat.
The person I am running against is a Koch favorite, and I have heard that he is being groomed for higher office, like governor or US Congress. He has $20K left over from his last campaign. He won in 2014 by nearly a 2-1 margin. I am starting from $0, and I don’t have a lot of name recognition. I feel like Don Quixote tilting at Koch machines. But there was nobody else who stepped up, and I refuse to give the Koch brothers a free seat. And I have other reasons to fight this battle.
The first reason I am ready is because of issues. I have issues with the Koch agenda. For example:
- I am a firm believer in public education, and I believe tax dollars should not go to religious entities. I not only believe in public education, but I believe in the teacher’s union. There is also something insidious about the voucher-to-private-or-religious-school thing that bothers me. Back when I was young, people were proud of neighborhood schools. Yes, people sent their kids to parochial school, but they had no problem with the idea of paying for it. You never heard anybody disparaging our public schools and asking for vouchers until Brown vs Board of Education. I recall that schools like the one that was being set up in the 60s by Jerry Falwell stated in their charters that they were for white students only. I honestly believe the voucher movement gained traction because there were a lot of parents who didn’t want their lily white darlings to have to sit next to brown and black students. I think that is shameful.
- I am a firm believer in science, and thus, in climate change. Our family has done all we can to minimize our carbon footprint. We have excellent insulation, high efficiency appliances, top of the line windows and solar. Our experience with solar has made me an advocate. The Koch brothers and others are fighting renewable energy. They have a reason to do that, because when the country turns to renewable energy, the Koch fortune is threatened. They have pushed through laws in several states, and have tried to do so in Colorado, that curtail renewables or make the cost prohibitive. I want to stop them from passing those laws here. I also support the EPA and public transportation.
- I support DACA. I do not understand why that is not universal. Republicans keep saying they want to deport lawbreakers, but most dreamers have not broken any laws. There is NO LAW against children staying with their parents. Dreamers were not of age when their parents came over. They do not know any other home. They have to be allowed to stay. Same for TPS and refugees. They need our support.
- I support gun safety. I see no use for any person to own a bump stock. If they like the feeling of shooting a whole lot of bullets at a range, they can rent a bump stock from the range. There is no use for large magazines, automatic or semiautomatic rifles or bump stocks outside of a range except for killing people. It is time for the killing to stop.
- I support health care for all. I don’t are if we get there through ACA or medicare expansion to all citizens. I have a future daughter in law who is a type 1 brittle diabetic. I worry about what the Republican agenda will do to her ability to live and to thrive. I worry about what happens to the disabled, the millions with preexisting conditions, the poor or even middle class who face bankruptcy if they get ill or get in an accident.
- I support legalized marijuana. There is evidence that marijuana is a safer substance than alcohol. The marijuana laws are not evenly enforced, but are used to oppress minorities.
- I oppose the death penalty. To me it is nothing but government sponsored murder. It is another law that is unevenly applied.
There is another big reason I am running. The odds against me winning are huge. But every voter I get to the polls will be a vote for a democrat for governor, for treasurer, for attorney general and for secretary of state. While we have a Democratic governor now, he is term limited. We have republicans in the other seats. This is a bad time for especially the attorney general and secretary of state to be republicans. In addition, District 30 is divided between US Congressional districts 6 and 4. That is Mike Coffman and Ken Buck. A big Democratic turnout in State Senate District 30 could go a long way toward dumping those two. They would be good guys to dump.
I do understand the odds. I hope you will support me in this crazy venture. If you are interested, you can go to my candidate web site, and if you are so inclined, donate. I would be so appreciative. And I could use any words of encouragement between now and November. Thank you.
Fred Koch was born in 1900 in Quanah Texas. His parents were Dutch immigrants. After attending Rice University and MIT and graduating with a degree in Chemical Engineering Practice, he started working for Texas Company, and then became chief engineer with Medway Oil and Storage in Kent, England. He moved to Wichita, Kansas, where he joined an engineering firm, later becoming a principle.
He developed a new method for turning crude oil into gasoline. After a series of lawsuits (which he won), he was broke. Thus he went to work in the Soviet Union setting up oil refineries. He also built refineries in Europe. Notably, he built the third largest refinery for the Third Reich, project personally approved by Adolf Hitler.
After the war, Fred returned to Wichita and created Koch industries, which he turned over to Charles Koch in 1966.
In 1958, Fred became a founding member of the John Birch Society, and also worked to make Kansas a Right to Work state. These two items are important to recognize in the thought processes of the to favorite sons, Charles and David.
One of the tenets of the John Birch Society is that “Their (liberal conspirators against the United States) tactics include bribing the people with their own money, employing the use of force, deception and fear, and using every other trick they can think of to acquire total government power over the lives and well-being of the American people….Totalitarian government was to be established in this nation, claimed Robert Welch, not as a result of lightning quick leaps, but through a campaign of patient gradualism designed to persuade a once-free people to vote themselves into tyranny and their nation into an all-powerful world government. The goal of the conspirators has always called for the eventual merger of all peoples and all nations into a diabolically conceived “new world order.” source: own Birch Blue Book This group opposed such things as membership in the United Nations. Sound familiar?
It is important to note that this was their basis for opposing any transfer payments to the poor, through anti-poverty programs, social security, medicare/medicaid, etc. Some was a reaction to the New Deal put forward by FDR. It was all based on a conspiracy theory that there were “insiders” in the seats of power. These programs were, they claimed, instituted to obtain control over all the people, strip them of their freedom by making them dependent on the government, and result in a totalitarian world order.
By the 60’s, the John Birch Society had between 60,000-100,000 members and had been condemned by both William F. Buckley Jr, and Barry Goldwater as a fringe group “removed from common sense.” However, their tenets remained with David and Charles Koch. The John Birch Society was a co-sponsor of the Conservative Political Action Conference.
David and Charles Koch remained active in politics. In 1980, he ran as the Vice Presidential candidate for the Libertarian party, thinking that their party could be molded into his views. When that ticket failed to catch on, the brothers began working with the power structure in the Republican party. They provided significant funding to a number of right wing think tanks, such as the Heritage Foundation. They sponsored political donor meetings at high end resorts, such as the Freedom Partners seminars. They provided much of the funding for PACs, like American Crossroads. In addition, they recruited other business moguls to join their efforts. They also supported a number of political candidates, from the school board races in Douglas County, Colorado, a suburb of Denver, to commissioners, to state legislatures, to national offices. Among their favored political figures are Scott Walker, Mike Pence, Sam Brownbeck, Snyder, Rauner, and at one time, Kasich. Newt Gingrich was one of their golden boys until his resignation. More interesting is that they also blocked or blackballed potential candidates who would not support their agenda. They also invested in Chris Jankowski’s REDMAP, to take over state legislators in time for the post 2010 redistricting. They also developed a significant voter database that they would share with their selected candidates that could target communities and even individuals with pleas that appealed to specific voters. The information in that database is coincidentally similar to information known to be in the Cambridge Analytica database that was used by the Trump campaign after Trump won the primaries.
When the Soviet Union fell in 1991 after Desert Storm and Boris Yeltsin replaced Mikhail Gorbachev as President, the Kochs decided that with that event the Soviet Union was no longer Communist and they could do business with the new administration. In 1996, Yeltsin was reelected democratically as the head of what was now Russia, and commenced on democratic reforms. His administration was a disaster. Under his watch, many former KGB agents looted the Russian economy and cornered the assets. By 1999, Yeltsin was extremely unpopular and unwell. He resigned and personally appointed Vladimir Putin as his successor. Putin, over a short time, took control of all of the Russian assets, or gave them to his oligarch friends. One of those assets was the fossil fuel industry. Both Exxon and the Kochs began discussions of worldwide control of fossil fuels. Fossil fuels became their shared interest.
The Koch brothers, through the think tanks they support and through donations, have continued to work on down ticket issues and races. We have seen legislation in many states that restricts or makes more expensive any investment by the state or individuals in fossil fuels. We have seen the whole Koch agenda enacted in Kansas and significant parts of it in Michigan and Wisconsin, and select issues in Colorado, Arizona, Florida, and Illinois. At all levels of government from county commissioner and school board up to US Congress, candidates are beholden to Koch donations and support. The Republican Party is, to a large extent, a reflection of the Koch Brothers. However, not entirely, as I investigate in my next article, The Evangelicals.
When you ask God to act
You must be prepared
To be His vehicle.
Thoughts and Prayers
Without hands and feet.
The concern that Robert Mueller will be fired is growing, and with that is a commitment by thousands to hit the streets. (If you agree with the protest and want to join in, be sure to check out this link ). Even if he doesn’t get fired, we might want to protest the passing of the fraud they are calling a tax bill. That got me to thinking – we must be thoughtful about how we conduct our protests. These protests have to count. They have to be worth the time and energy we put into them.
I read an article some time ago, in which someone had researched protests. The findings were fascinating. The research showed that a government can’t withstand the sustained protest of 3.5% of a nation’s population. By my calculations, that is roughly 14 million Americans. But the key word is sustained. If we are going to have a successful protest, we have to stay in the streets until the menace is gone. It is also imperative that our protest be peaceful. Many municipalities will call on police to disrupt the protests. It is not inconceivable that some will call out the National Guard. We must not react with violence. We can be loud, but we cannot be violent. Sit down, stand up, walk, whatever, but do not react with violence. (I plan to take my rosary, and say the rosary if the police get rough.) If they set up lines and try to move us away, we must go around behind them and continue the protest. If they use tear gas, we must put on masks and stay. We must show that we are more determined in our cause than they are in theirs.
Police have been taking protesters in to the station even when protesting peacefully. If they do that, be sure to have evidence that you were being peaceful, that the police were violating your right to assembly. Especially if you get arrested. Once you are arrested, they may try to get you to plead guilty to a lesser charge so you can be let go. DO NOT ACCEPT LESSER CHARGES! This is important for three reasons. First, it becomes an acknowledgment that what you were doing is unlawful. What you are doing is not unlawful. It is lawful and right and proper. It is what citizens are called upon to do when the government is acting badly. Second, it allows them to avoid accounting for their violation of your right to protest. Force them to make their case in court (and make sure it gets wide news coverage). Make them hear your case. Third, when you plead guilty to a lesser charge, many jurisdictions will use that guilty plea to make you ineligible to vote. This plays into their hands. Don’t give away your right to vote for convenience.
Several years ago, I got to thinking about Civil Disobedience more deeply, and I realized I needed to establish for myself and my family a set of rules to govern the right to disapprove of what our government was doing loudly, in a way the government could not ignore. This is what I came up with. If you have thoughts about these rules, please comment.
Rule 1: To perform effective Civil Disobedience, you have to live an otherwise normal life. You must be a reasonably productive, law-abiding and basically good citizen. You cannot let the authorities dilute your protest by calling you a rabble rouser, a vagrant, a miscreant or anything of that nature. Your disobedience must be a clear break from your normal behavior. You also cannot be a person who, when you bring forth a moral cause, has tables turned on you because of your own questionable character. However, in this case, I think this requirement can be waived. In the current situation, citizens of all stripes can contribute to the protest. All citizens are affected by what is going on, all need to cry out now.
Rule 2: You must pick your battles wisely. You must be sure that the object of your disobedience is contrary to the very fiber of your moral being. You cannot engage in honorable Civil Disobedience against, for example, a traffic ticket, a silly homeowner’s association rule, or a loaf of moldy bread. You must feel so strongly about your issue that you are prepared to accept any consequences of your action to make a major statement about it. This is part of not becoming known as a trouble maker. It is not effective when your arrest is simply another eye roll to wit, “there he goes again.” I think these issues are wise selections of battles.
Rule 3: You must be prepared to take full consequence for your behavior (see above). You must not allow it to be plea-bargained down, trivialized, or watered down. You must make it glaringly clear that what you are protesting is meaningful to you to the point that you are prepared to sacrifice to get it changed.
Rule 4: You must be very clear about what it is you are protesting, what you want changed and how you want it to wind up. During the Viet Nam war, the most effective conscientious objectors actually did time in jail rather than fight in an immoral war. They did not allow their legal representatives to water down the charges. They stood firm in what they did, repeated what they did in strong voices and faced the full extent of the law about it. The same with the Civil Rights marches. They took blows to their bodies, were locked up, and some died. But they were committed.
Rule 5: You must ensure that word of your actions gets to the world at large. You must be sure your voice, your own voice, is heard by a wide audience. You must be very clear, when you are heard, of what you believe and why you believe obeying whatever law you are protesting is immoral and you cannot support it.
Rule 6: You must have a dog in the fight. You cannot let the courts find your objections moot because you are not affected by whatever it is you are protesting. When we had a draft, women could not be considered conscientious objectors because they could not be drafted. However, they could be objectors when it was a family member who was being sent to war. (To be sure, women could and did protest, but the official recognition of conscientious objector status was not conferred on women. I know. I tried.) You must decide how it is that you have a dog in the fight and that that dog is precious to you. When it comes to war, I think it is enough to say that your government is fighting in your name and you condemn the reason for it. But you must feel it is immoral enough to sacrifice for.
When we feel strongly enough to engage in Civil Disobedience, it is not just a right, but it is an obligation. We, as Americans, are the foundation of our government. It is up to us to make our government behave morally and democratically. Our government is us. What it does is done in our names. All of us. We cannot turn away.
Back in the 60s Civil Disobedience took the form of sit-ins and marches. While that did cause the establishment to look at the protestors as trouble makers, eventually the protesters won. Same with Ghandi. And Martin Luther King and John Lewis. Effective Civil Disobedience. We must win too. We must stay out there and protest until things are made right. Our lives, our futures, the futures of our children depend on it.
It seems to me that even the economists, who should have been all over this, have missed the boat about tax cuts for the wealthy and for wealthy corporations will not create more jobs. They have also missed why tax increases on the wealthy will not cost jobs. It is the Law of Diminishing Returns.
While normally applied to factors of production, the law of diminishing returns extends to any goods or services, or anything one has acquired in life. Its definition is:
A classic economic concept that states that as more investment in an area is made, overall return on that investment increases at a declining rate, assuming that all variables remain fixed. To continue to make an investment after a certain point (which varies from context to context) is to receive a decreasing return on that input.
What does that have to do with taxes on corporations an the wealthy and its relationship to jobs? Here are a few illustrations.Illustration 1: When somebody is really hungry and has no food in the house, if he gets $10.00, he will go out and spend it all on food. After he has eaten, if he gets another $10.00, he is not as hungry, so he may only spend half of it on food. After that, getting another 10 spot may only cause him to spend $2.00 on food, and once he is full, he won’t spend any more of it on food. This is the law of diminishing returns. The first meal is a necessity, the second is a luxury, soon you need no more and trying to eat more stops being a good, it becomes a bad. You may get so stuffed that the sight of food is unappealing. Or think of zucchini. If your plant yields two zucchini, you may eat them. If it gives you 10, you may eat 8 and give two away. After 25, you may pay people to take them.
Illustration 2: Think of employees. If you have work for twice as many people as you have and can sell as much product as twice as many employees can produce, if you get some increased income or decreased expenditure, you will hire more employees. You will do so as long as the next person hired produces more than he costs. However, as soon as you have enough employees to meet demand, you stop hiring. In fact, if you hire more, they will get in each other’s way and will not benefit the company.
The wealthy and the corporations currently have their needs met, and most of their wants. They really don’t have anything compelling to spend money on. You could decrease their taxes to zero (and have in many cases), and they won’t buy more nor will they hire more. The money will sit around, lacking anything to spend it on. This is especially true for corporations in today’s economy. With people too strapped for cash to be spending freely, demand is suppressed. Making more product will not produce a return because nobody will buy it. It stops being a good and starts being a bad because you have spend money to store the excess. No well run corporation will do that.
However, if you were to tax the wealthy and the corporations, you could use that money on projects the country needs (think bridges, airports, schools). That would create jobs. At first, the new jobholders would spend on clearing debt and the necessities they have been without. That is a good thing, it gets money circulating again. Then they can start buying other things. That would stimulate demand. More demand would mean more products would be sold. More sold products means more profits for the corporations, but this time there would be a need for more employees. Who would allow the corporations to make more profits.
It is amazing that the corporations would fight the idea of ensuring people were employed so they could buy their goods. It is what the Marshall plan after WWII was all about – ensuring Europeans had income so they could buy American goods and services. It was what the labor movement has always been about – ensuring healthy laborers had income and time to enjoy it so the economy could thrive. (This also benefits employers because healthy, fed and happy employees are more productive.)
When the Republicans talk about how tax cuts for the rich creates jobs, we need to remind them of the most basic of Economic tautologies, the Law of Diminishing Returns.
I have read a lot of articles about how the new tax bill will impact people in this country and our economy. But I have read none that include the multiplier effect. That is probably the scariest aspect of the new tax bill and we had better understand it. I ran the model of the multiplier effect on this tax bill, but I only had old data, when our income inequality was not nearly as great as it is today. Even those old data indicated that the tax bill will constrict our economy by at least 15%, but with today’s income inequality numbers, the model probably understates the constriction. It won’t be just bad, it will tank our economy.
In order to understand the multiplier effect, you first need to understand the marginal propensity to consume vs. the marginal propensity to save, which I explained in a diary some time ago, here. The multiplier is the increase of money that arises from any injection into the economy.
Many models use a single marginal propensity to consume (hereafter MPC) for the aggregate economy. However, that is not accurate. The MPC is different at different levels of income. It is easy to understand why. People who are at the bottom of the economy are deciding among necessities. When they receive extra funds, they have necessities that they have had to do without, and they spend the entire amount of extra funds they get. People at higher income levels have been doing without niceties but not without necessities might save a little and spend the rest. People at the top income levels are already buying everything they want to buy, and will probably not buy more just because they get more. So while the MPC of the person at the bottom (and probably lower middle) will have an MPC of 1, people at the top will have an MPC of 0, and those in the upper middle somewhere in between. The multiplier will be around 5 when the MPC is 1, and around 0 when the MPC is 0.
So how does the multiplier work? Let’s say Ben (not his real name) is in the lower bracket. He has been putting off buying clothes and shoes for his kids and repairing the car in order to pay the rent. He gets $1000. As soon as he gets it, he goes and repairs the car for $800, and gets his kids the shoes and clothes they need, costing him $200. The repair shop has also been in tight financial circumstances, so they spend $500 on equipment maintenance and $300 on paint. The shoes and clothing store hires another person. The equipment maintenance company spends some on tools, etc. etc. etc. By the time the $1000 is circulated, it has generated $5000 worth of goods and services. As you can calculate, this is 5 times the initial cash infusion, thus the multiplier of 5.
Tom is in the next bracket. He has his basic bills paid, but has been wanting a new coat. He gets $1000, saves $200, and buys his coat for $800. The coat dealer saves a bit and spends a bit. It circulates to generate $4000 in goods and services for the $1000 injected into the economy, thus multiplier of 4.
Pete is in the top bracket. He has been buying all he wants, and has a lot stashed away. He simply adds that $1000 to what he already has. The injection of $1000 into the economy yields nothing in goods or services, thus a multiplier of 0.
This tax bill proposes to TAKE money from the bottom most extensively, and give it to the top. As a result, we will run into the negative multiplier. How does this work?
If we take $1000 from Ben, he will have to make even harder choices and do without more things. This will mean he has to somehow figure out how to not spend $1000 that he would have been spending. When he doesn’t spend, the places where he would have spent receive less income. They have to cut costs. They can either cut their purchases or their staffs. The reduced purchases and staff lead to other companies having to cut back. In the mean time, Pete is receiving more money, but he is not spending it. So no other companies have a reason to hire or buy more, Pete is doing nothing to increase demand. The economy constricts. The irony is, the large corporations and wealthy who are getting the most benefit from this income redistribution will also suffer. When people can’t buy goods and services, the wealthy have no place to generate income.
Using really old numbers, I calculated a multiplier of -15. It could be worse, depending on when and if the downward spiral is stopped. Unfortunately, there does not seem to be an equilibrium where it will stabilize. We did not see an equilibrium in the Great Depression, because of the New Deal efforts by FDR, and the world war. Had those not happened, who knows how far it would have gone?
I invite any economists who may read this to do their own calculations, hopefully on newer data. Do you find the same result? I don’t know how anyone could support this farce.