Here’s a stunning example of how the Chinese government, in its drive (via central planning and “stimulus” spending) toward maintaining economic growth, is overinvesting in public infrastructure projects and creating a massive property bubble in the process (hat tip to Dave VanHoose)…

Here’s a stunning example of how the Chinese government, in its drive (via central planning and “stimulus” spending) toward maintaining economic growth, is overinvesting in public infrastructure projects and creating a massive property bubble in the process (hat tip to Dave VanHoose)…

With all the recent news about unions, it has made me think back to my own personal experiences early in my adult life as a labor union member.

Shortly after graduating from college in 1977 during the awful Carter “stagflationary” economy, I became a member of two labor unions: the American Federation of Musicians (AFM) and the International Association of Machinists and Aerospace Workers (IAMAW).  In both cases, union membership was compulsory; for my “night” job as a professional musician and for my “day” job as a factory worker.  I recall allowing my AFM union dues to lapse (not possible in the case of IAMAW since those dues were automatically deducted from my paychecks); I can’t remember for sure whether this was a sin of omission or commission on my part.  Anyway, one time at a gig in San Jose, CA, an AFM union representative showed up unannounced and wanted all of the assembled musicians to show him their AFM union cards.  Since my card had expired, I discreetly hid from him; had he caught me, I may have been barred from performing that evening.

In my day job, my primary recollection is of the union steward spending most of his time carping with the plant manager on behalf of factory workers who more often than not just didn’t do a particularly good job of appearing to be busy (e.g., by taking excessively long breaks and not working particularly hard).  However, in fairness to the workers, what’s the point in working hard when you get paid by the hour and no meaningful linkage exists between effort and pay outcomes?  Furthermore, in our collection bargaining agreement, we (the workers) had basically agreed that we would not work too hard but would make a good faith effort at trying to look like we were busy, and for whatever reason the company that I worked for agreed to these terms. This company was a subsidiary of the Xerox Corporation called Cheshire, and its primary product was book-binding machines; I was a member of a team of four workers which was given a quota for making a certain number of  machines each day.  This was a terribly boring job because the required production rate was so low that if you worked at a “normal” pace, you’d be done by lunchtime, so we had to intentionally slow down and still look like we were “busy”…

In light of my personal experiences, I am still scratching my head at Paul Krugman’s recent missive entitled “Degrees and Dollars”.  Steve Landsburg argues that Krugman’s argument basically boils down to the following proposition: “…to encourage innovation, you want to strengthen the unions”.  As a union member, I would have loved to have had the opportunity (and incentives) to innovate; perhaps things are different now…

The CBO tracks “…federal effective tax rates (taxes as a percentage of income) across household income groups for the four largest sources of federal revenues–individual income taxes, social insurance (payroll) taxes, corporate income taxes, and excise taxes–as well as the total effective rate for the four taxes combined.” (Hat tip to George Mason University’s David Henderson).  The following link from CBO’s website slices and dices these data in all sorts of different directions: http://www.cbo.gov/publications/collections/taxdistribution.cfm.

Professor Henderson provides the following summary:

• The bottom quintile paid 4.3 percent of income in taxes,
• The top quintile paid 25.8 percent of income in taxes,
• The top decile paid 27.5 percent of income in taxes,
• The top 5 percent paid 29.0 percent of income in taxes, and
• The top 1 percent paid 31.2 percent of income in taxes.

One important takeaway here is that while Social Security (i.e., the so-called “payroll” tax) “…reduces the “progressivity” of the tax system, (it) does not come close to reversing it”; federal effective tax rates are clearly quite progressive indeed!  Professor Henderson also parses some other interesting insights from these data – his blog post about this topic is well worth reading!

George Mason University economist Russ Roberts makes the case for fiscal austerity in his Congressional testimony from last week in which he critiques the American Recovery and Reinvestment Act of 2009. Dr. Roberts is the proprietor of Econtalk, which Austin Frakt so aptly describes as “the best continuing education money can’t buy“.The transcript of Dr Roberts’ testimony appears here, and here’s the video: