Relevant and even prescient commentary on news, politics and the economy.

Milestone

If you will look to your left and scroll down, you should see a number above 20,000. Whoohoo! But that’s page views, not unique visitors. On a typical day, page views are about 1.3 times unique visitors, so unique visitors will hit 20,000 by the end of the month, sooner if I get a few more big links. This is only slightly below expectations: based on the projections from the early days of this blog, the entire population of the earth should have viewed this blog by 3/14/2003.

AB

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What Cave Does Will Rasberry Live in?

See yesterday’s IncomparableTM Daily Howler for a good laugh as Washington Post Columnist William Rasberry calls outspoken lefty Arianna Huffington “an outspoken conservative”. Only it’s not funny, because it’s an example, albeit a particularly egregious one, of the laziness typical of lefties writing in the major OP-ED pages. And does anybody who knows anything about politics proofread these things?

AB

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Disingenuity without Limit

Tom Delay in the NYT: “To me, it’s a little difficult to give tax relief to people that don’t pay income tax.”

First, in all the stories I’ve read, most of the excluded are low income people who do pay income taxes. The current excluded group includes families making $10,500 to $26,625–the upper half of that range surely pays income taxes. Moreover, rampant deficit spending lead to the raiding of the Social Security “lockbox”, so payroll taxes and income taxes are essentially fungible (they basically are, anyway). And everybody with a job pays “payroll taxes”, though many of the working poor do not pay “income taxes”. So DeLay, and Republicans in general, are always careful to preface “tax” with the word “income”, whenever they talk about only being able to cut [income] taxes for those who pay them.

This is an important issue that everyone needs to be completely clear on, because it is widely used by Republicans to justify regressive tax cuts. Take a look at your pay stub. Everything that says something like “Fed Med” or “Medicare” or “OASDI” or “Social Security” is payroll tax. I’m fairly certain–commenters will fact check me–that nothing Bush has done in any tax cut plan has reduced payroll taxes. Payroll taxes are regressive, meaning that you pay less in percentage terms as your income goes up, because Social Security taxes are only applied to your first $85k of income. If you make $85k, you pay 6.2% of your income in SS taxes; if you make $170k, then you pay 3.1% of your income in SS taxes, and so forth. Back to your pay stub: look at the part with a name like “Federal Withholding”. This, and only this, is the amount DeLay is talking about when he says “Income Tax”. If you make under $40 thousand a year, depending on your family status, the part DeLay is not talking about (payroll) is probably bigger than the part he is talking about (income).

That said, I’m a bit surprised that he’s holding out on this. I figured the plan was to hit the $350 target, via the chicanery of sunsets, exclude popular taxes, and then force the Democrats and moderate Republicans to insist on inserting more tax cuts. But, as the WSJ editorial page revealed last fall, it’s important to keep taxing the poor, so that they will politically support further tax cuts.

AB

UPDATE: Jesse of Pandagon has more.

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The End of Internet Explorer?

For those who thought the Browser Wars were interesting, or for those who like reasons to complain about Microsoft, or for those who think the government sold out in the Microsoft settlement, ZDnet has an interesting story alleging that MS plans to stop offering Internet Explorer as a stand-alone browser. The business logic for this is straightforward: 95% of web sites work on any browser, but around 5%, including some important sites, do not. I strongly prefer Opera, but I am forced to use IE when I post on Blogger, visit Matt Yglesias’ blog, or do my online banking. If these glitches continue into the next generation of IE, then everyone will have to upgrade to the latest generation of Windows to get the latest browser, and Linux users will be out of luck. It’s a beautiful circle for Microsoft: a near-monopoly in the operating system market allows them to attain a near-monopoly in the browser market, allowing MS to reinforce its position in the OS market.

You could lose a lot of money betting against Microsoft’s execution of strategies like these (exception: MSN), but in this case, I’m not sure it will work. There is a substantial installed base of older machines that lack the hard drive space and RAM to run Windows XP, much less the next generation of Windows (codenamed “Longhorn”). A quick check of the stats for this blog shows that, in the non-random sample of Angry Bear readers, exactly 2/3 of my visitors are on Windows 2000 or XP. 15% are on Mac/Unix/Linux (which is how I know the sample is non-random). Online businesses simply cannot afford to cut off 15% to 33% of the market from full functionality on their sites, and so will have to update their server-side code to be robust to Opera, Netscape, and non-IE browsers. I basically agree with Jon von Tetzchner, chief executive of Opera:

“My take is that not distributing IE without Windows is good news for us. This means that a lot of companies are left with the choice between using Opera and paying Microsoft a hefty fee for a Windows upgrade that (makes obsolete) their computers. In the current market, many companies are trying to cut their costs, and a lot of them have no compelling reason to upgrade Windows.”

Why is all of this even an issue? The internet was built around the idea of open standards (e.g., any OS with any Browser would work with any website, because they would all be speaking the same language), whereas Microsoft is built around closed and proprietary standards (only MS browsers, Windows, and websites running MS servers work well together). When MS successfully crushed Netscape, the internet took a big step towards closed standards, though it still remains by and large open–for the time being. Larry Lessig’s blog and his book, The Future of Ideas, are pretty good on general open vs. closed intellectual property issues.

AB

P.S. As long as I’m being nerdy today, it looks like the inventors of Palm, who eventually left under unpleasant circumstances and founded Handspring, have come full circle.

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Transcript Wanted

So Al Franken, Molly Ivins, and Bill O’Reilly walk into a bar appeared together on CSPAN2 over the weekend. Yes, it does sound like the start of a good joke, but it really happened–and by all accounts it was amusing to watch O’Reilly without his mute button handy. Unfortunately, I missed it, and I can’t find a transcript anywhere. If you come across one, please email me.

AB

UPDATE: It’s definitely on this coming Sunday at 5:30 p.m. Eastern. Thanks, readers.

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Whither WMD?

Since I’m citing Orwell of late, here’s this from Josh Marshall:

My God, when they say down the memory hole, they ain’t kiddin! There now seems to be a secret competition — perhaps it was announced and I just didn’t hear it — for the Iraq-hawk who can come up with the most ingenious, Orwellian, up-is-down rewriting of the history of the year- long lead-up to the Iraq war. To this point, the strongest entries are those whispers out of the Pentagon, arguing that it was Colin Powell and the State Department who made them make such a big to-do about weapons of mass destruction. [more…]

AB

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Liberalism and Growth

Recently, I said I would try to make the case that liberalism causes growth. Certainly, correlations suggest that this is the case. For instance, income is substantially higher in Blue states than Red states. The inability of the Soviet Union to match the productive output of the United States is another example. A more remote example was the lack of growth in Western Europe prior to the Reformation. I’ve even heard the case made that the reason China and the Middle East failed to capitalize on their respective technological leads over Europe going into the second millennium is that those countries never had similar reformations. China remained a dictatorship and the Middle East remained largely theocratic, preventing the emergence of capitalism.

In a recent book, The Free-Market Innovation Machine, widely respected (i.e., neither known as left nor right, just a really smart guy) economist William Baumol makes the case that over the long run, the important feature of capitalism is not that it leads to static efficiency, meaning supply equals demands and labor and resources are directed to their most productive uses. While those are important, the key distinguishing feature of capitalism is that it forces firms to compete on the dimension of innovation. Firms that innovate more consistently and prolifically outperform; those that are innovative laggards vanish by the wayside. Innovation has positive externalities, is fecund, and leads to economic growth. Ideas and knowledge fuel innovation and, in turn, education and an open society fuel ideas and knowledge.

This is where the connection between liberalism and wealth lies. A society that, for example, burns and bans books, will not be innovatively prolific. George Orwell, writing as Emmanuel Goldstein, expresses it well; Goldstein is describing the slowdown in innovation that accompanied the rise of The Party:

Science and technology were developing [before The Party took over] at a prodigious speed, and it seemed natural to assume that they would go on developing. This failed to happened, partly because of the impoverishment caused by a long series of wars and revolutions, partly because scientific and technical progress depended on the empirical habit of thought, which could not survive in a strictly regimented society. [p. 193 of the 2003 edition]

Liberal societies are less regimented; within liberal societies, cities are generally the least regimented areas, which I hypothesize explains the Blue-Red income and wealth gap. The causal chain is that the receptiveness to new ideas that accompanies liberalism leads to the production of more ideas, leading to more innovation, leading to more growth.

AB

P.S. In another recent book,

The Rise of the Creative Class
, Economist Richard Florida of Carnegie Mellon argues that “scientists, engineers, architects, educators, writers, artists, and entertainers” constitute a creative class (about 30% of the population) that generates most of society’s new ideas. This class is drawn to cities, he argues, precisely because cities are most open to new ideas. Florida’s arguments are generally strong, but unfortunately, I thought the writing was a bit burdensome. On the other hand, I wholeheartedly recommend Baumol’s book to anyone interested in Capitalism, innovation, and growth.

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More on Priorities

Earlier, in reference to the exclusion of some lower-middle class familes from the increased child tax credit, I said that “I’m sure we’ll hear that this was an inadvertent slip (right now, the House is blaming the Senate’s $350b “limit”), but inadvertent slips tell a lot about the priorities of those making the slips.” Now, cranky but generally correct physicist Robert Park gives us another telling example of what’s included and what’s excluded:

GAS GUZZLERS: TAX BILL INCLUDES A BREAK FOR MONSTER SUVs.

Language in yesterday’s tax deal making the cost of heavy pickup trucks fully tax deductible immediately for small businesses will also apply to humongous luxury SUVs weighing more than 6000 lbs. Meanwhile, a low-income child credit provision that would have benefitted many low-income working families was dropped to stay within the $350B limit. As a House Ways and Means Committee spokesman explained, “adjustments had to be made.”

Park’s weekly newsletter is great, read the whole thing. I guess that we can always drill in ANWR to counteract the SUV subsidy embodied in the tax credit. As for the poor, let them eat cake.

AB

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