Posts tagged ‘Economics’



By Elizabeth Anne Hull

Elizabeth Anne Hull. Photo by Barb Knoff.

Anne Hull

Tax season is a good time to assess your net worth.

Recently, I read that over half of the members of Congress of both houses are millionaires, which implies that they’re rich and so cannot possibly understand the problems of the average person, much less those living below the poverty line.

Perhaps. I’m not quite ready to believe that of all of them, because it depends on how you define millionaire. High net worth is not the same thing as high annual income.

According to the traditional definition, you’re a millionaire if you have a net worth of $1,000,000 or more — not including the value of your home. More recently, however, that term has been used to describe $1 million in annual income, which makes more sense today.

Annual income often is a great deal less than $1 million for “millionaires” whose net worth is above that figure. A net worth of $1 million isn’t far out of reach of upper middle-income Americans (as shrinking as that group is). Those who are lucky enough to hang on to a good job, who save regularly, invest wisely, live frugally, don’t run up their credit, live in a house that’s much less valuable than they could afford, drive a car for as long as they can, and teach their children to have modest tastes as well, may amass at least $1 million, maybe even several millions in net worth, while having an income under $100,000 annually.

Taxes on that income are divided in two different ways: Taxes as a percentage of overall income, and types of tax per types of income.

For example, FICA taxes — the ones that fund Social Security for the elderly and disabled — are paid by every wage earner (unless they’re covered by a state pension system that usually costs those individuals more than the tax would). Minimum-wage earners pay the highest percentage of their earnings for FICA. Those making over $113,000 per year don’t pay FICA on any amount above that, and they pay it only on earned income, not on capital gains or interest income, which for people in those brackets may be considerable. Thus, while everyone who earns any wages at all pays FICA, those taxes are definitely not flat; they are regressive: the percentage paid by people who earn $1 million a year is definitely less than the percentage paid by minimum-wage earners.

The next most common type of tax is income taxes, which are progressive, to an extent. That is, if all or most of your income comes from wages or salaries, you’ll pay a gradually higher tax the higher your tax bracket is, up to a current cap of 36 percent for the highest earners. But of course, there are loopholes and tax shelters and other ways that the rich can pay less.

It’s likely that you’ll pay other taxes as well, a few at a considerably higher rate, more at a lower rate, such as capital gains. And if you are lucky enough to be a property owner, you will also pay real-estate taxes (although landlords pass along these costs to tenants), which can vary widely across the country.

Most states also have a state income tax. Only a few states don’t have sales taxes, another regressive tax (and no tax at all to companies, which can deduct them as a cost of doing business).

Hence, the aphorism that nothing is inevitable except death and taxes.

Trying to agree on a fair assessment of taxes would be difficult enough if we only had to deal with humans, but in the 2010 Citizens United vs. Federal Election Commission case, the U.S. Supreme Court, in a 5/4 split decision along party lines, ruled that corporations are people, and that money is equivalent to speech. Thus under the first amendment to the U.S. Constitution, corporations have the right to donate — in secret through 501(c)(4) PACs — to lobbying efforts and not pay taxes on that income.

(The Supreme Court has been silent about the death penalty or even prison for corporate officers when the corporations commit crimes, including causing the deaths of people. They can be sued, but the corporations — or their insurance companies — can reach a monetary “settlement” out of court when they believe they’ll lose or, as they claim, just to avoid the time and cost of defending their innocence or nonculpability.)

Thus we have some very large, mega-billion-dollar corporations paying virtually no taxes, while humans in this country, even the poorest, all pay taxes, one way or another.

Somehow, being a simple millionaire (by the old definition) doesn’t seem to be much of a big deal these days, does it?

Janet Yellen

Janet Yellen, first woman to head the Fed.

Man Bites Dog?

By Elizabeth Anne Hull

Elizabeth Anne Hull. Photo by Barb Knoff.

Anne Hull

As you probably know, the “glass ceiling” has suffered yet another crack, as Janet Yellen has started work as the first woman to head the Federal Reserve Bank. That means that the two most significant leadership positions in global money are both occupied (word chosen carefully) by women. (The other is the International Monetary Fund, helmed by Christine Lagarde.)

As the grandmother of a female commercial pilot (the first of either gender that I know of in our family), I follow “firsts” for women with special interest. So I noticed another news item that may not have hit everyone’s radar: Yellen’s husband, George Akerlof, himself a Nobel prize winner in economics, stepped down as a member of the advisory board of the UBS International Center of Economics in Society at the University of Zurich.

Even though he wasn’t paid for being on the advisory board and there was no conflict of interest, he wanted to “avoid even the appearance of conflict,” Akerlof said. UBS, Switzerland’s largest bank, operates an investment-banking business in the U.S. and is therefore regulated by the Fed.

Remember the constraints put on Caesar’s wife? This goes beyond a husband helping his wife with the housework and child care, so she can Lean In.

Bill Gates predicts an end to  poor countries by 2035.

An optimistic Bill Gates predicts an end to poor countries by 2035. Pessimists fear the U.S. will be one before then.

By Elizabeth Anne Hull

Elizabeth Anne Hull. Photo by Barb Knoff.

Anne Hull

Billionaire Bill Gates‘ recent prediction that by 2035, there will be almost no poor countries left in the world caught my eye. I can’t help wondering how much attention Mr. Gates has paid to theshrinking middle class in the United States, let alone how much understanding he has about what it’s like to be a member of a family with greatly diminished expectations, or that’s slid into poverty within the last five years.

Mr. Gates has every right to be an optimist. He’s taken great risks and, against the odds, come out a winner, at least financially. Throughout my lifetime I believed that most Americans were optimists, having faith in a better future. I’m not so sure a majority still feels that way, considering the state of the economy, our political paralysis, the proliferation of weapons in private hands in the U.S., shootings, and violence at home and abroad. For a number of reasons, we do not seem to be growing safer or more secure.

I once made a similar assumption for a story, “Standard Deviation” (originally titled “The Midler,” and dramatized for radio in Germany but never published in the U.S.). It was based on a December 1978 Analog science-fact article by John Gribbin, “Science Fiction is Too Gloomy,” which asserted that in 200 years we’d no longer have any of the problems we worried about at the time. Gribbin qualified his claim by assuring us that we’d have problems galore in 2178, they just wouldn’t be the same ones we fretted about then. All those problems would have come to a crisis and been solved, assuming the human race had survived at all.

So, for the purposes of my story, I waved the writer’s magic wand and assumed that major issues like global warming, pollution, overpopulation, food shortages and distribution, nutrition, access to education and technology, diseases like Alzheimer’s and cancer, all had been solved. What remained as a major problem in the story was the need all human beings seem to have to feel “special.” I might take a different tack if I were doing the story today, Although I’m still into food issues, these days I’m far more interested in feminism, human cultures, economics, politics, etc.

Pessimists worry that we won’t solve our problems and it will be the end of us, at least as we know human civilization and culture. Kurt Vonnegut wrote a comic novel, Galapagos, about human survival in a physically devolved state, wherein we had lost our big brains that had given us so many problems, and our progeny were now happily frolicking like porpoises in the water. It’s every bit as funny as Cat’s Cradle or Slaughterhouse-Five. We have to laugh so we don’t cry.


  Dwight D.


“Every gun that is made, every warship launched, every rocket fired, signifies in the final sense a theft from those who hunger and are not fed, those who are cold and are not clothed.”

                  —Dwight D. Eisenhower


Candy turkeys by Leah A. Zeldes. Photo ©2012 by Leah A. Zeldes.

Sweet turkeys by Leah A. Zeldes.

By Elizabeth Anne Hull

Elizabeth Anne Hull. Photo by Barb Knoff.

Elizabeth Anne Hull

Celebrating our first holidays at Gateway without Fred has been bittersweet. (“Gatewayis the name Fred and I gave our house.) Our Christmas decorations are a little more elaborate this year, with some extra lights to make up for the bright spot who isn’t here.

At Thanksgiving last month, we all helped make the major meal, and everyone was stuffed at the end of it. Tasty and satisfying. Only eight of us this year; we’ve often had up to twenty.

Before diving in to feast, we all shared what we were most thankful for. I said I was grateful for knowing Fred for over thirty-five years, and being married to him for more than twenty-nine years, and since Fred wasn’t there to say it, I also said I was grateful that we had begun to negotiate with Iran, and though success isn’t certain, there’s a little more chance for peace in the Middle East and for everyone in the world.

* * *

Thanksgiving is the most ecumenical and inclusive holiday we share in America. Yet all year round, Americans share something with each other: Our American lifestyle is built on trust and honesty. We rely on others to be honorable.

When we pay for a product or service, whether it’s food, clothing, a haircut, cable access, medicine, an automobile, a new smart phone, a house, insurance — we most often pay on a credit or debit card or by writing a check. We are not quite a cashless society, but the folks who sell goods and provide services expect that when people pay with plastic or electronically they will take care of the bill when it comes. Even when we pay with coins and bills, we expect that these symbols of exchange are valid tenders, not counterfeits.

We’re aware that some people cheat or are deadbeats or outright frauds, yet if the majority of us weren’t honest, our whole society would collapse. We are far too many people and our interactions are too complex to use trade and barter. We can’t all be survivalists, growing all of our own food and creating safe shelter for our families. We’re all in it together.

* * *

Upon reflection, the thing I probably was most grateful for was that we didn’t get a single annoying phone call all day trying to sell us a home-security system or a device in case “I’ve fallen and I can’t get up.”

I don’t worry so much about our survival as a species and as a country, when I’m not deluged by fear mongers.

Allen R. Sanderson

Allen R. Sanderson

According to the economist Allen R. Sanderson, writing in Chicago Life, about 40 percent of college graduates have taken at least one economics course and 5 percent have majored in it. Good news, you say? Maybe because you think that a clear understanding of the various flows of money can prevent our ever again having a crippling disaster like the Great Depression, or even a close encounter like what happened to us in 2008 again?

Maybe so, but the really bad news for economics professors, according to Sanderson, is that polls show that “there is no discernible difference in understanding basic concepts between those who have taken economics and those who haven’t.”

What economics teaches us spot on, nearly all the time, is how to use resources efficiently to maximize output. That’s probably a good thing if you’re a manufacturer and make a profit on every phoithboinder your plants turn out. Unfortunately for that view, most of us aren’t manufacturers, although maybe we work for the people who are.

We should pay close attention to the Occupiers, because what they want, they say, is simply fairness. Which economics does not measure.

And we might give an ear to old John Maynard Keynes, too, who said, “The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.”

Wouldn’t it be interesting if every college course in economics would allow now and then some random Occupier to tell them how money really flows, and what it accomplishes?