Larry David, Harbinger of Growth

Larry David unintentionally and sarcastically makes a case for low(er) taxes.

One of my more liberal high school friends posted a link to this Larry David op-ed today. A while back, I actually wrote a huge missive responding to former Enron Advisor Paul Krugman (who by the way won a Nobel prize before selling out to become a partisan op-ed writer). I was going to post it here, but decided not to. I’m still finishing it. Let me know if you want a copy.

On a side note, I just wonder what will be posted on facebook after the evil-businessmen at the NYT have to raise the pay wall to stay in business?

Anyway, Larry David. Funny guy. I love his work, even when he’s trying to be sarcastic and fails. We all do fail from time to time (even banks!), so I’m not trying to make fun of him.

Thanks for the Tax Cut!

THERE is a God! It passed! The Bush tax cuts have been extended two years for the upper bracketeers, of which I am a proud member, thank you very much. I’m the last person in the world I’d want to be beside, but I am beside myself! This is a life changer, I tell you. A life changer!

I get it Larry, you’re rich. You’re filthy rich. This isn’t changing your life. Not that a dry-cleaner owned by a sole proprietor would appreciate your sarcasm about preventing a tax increase, but the point is made. You don’t need the money. However, your title is misleading, since your income tax rates are staying the same. Maybe it’s minutiae, but since you have a business degree and likely know better, I’m inclined to think you (or the NYT editors) are being deceptive on purpose.

To begin with, I was planning a trip to Cabo with my kids for Christmas vacation. We were going to fly coach, but now with the money I’m saving in taxes, I’m going to splurge and bump myself up to first class. First class! Somebody told me they serve warm nuts up there, and call you “mister.” I might not get off the plane!

This is where I realized that Larry might not have thought through the op-ed before hitting “send.”

One of the biggest criticisms that liberals have about keeping tax rates the same, or lower (gasp!) is that “the rich don’t spend their money.” I get that demand-siders and Keynesians tend to view things through a narrow lens, but if liberals are saying the rich won’t spend the money they’re allowed to keep (compared to if tax rates expired and increased) what does Larry David say he’ll do with the money? SPEND IT!

Since Larry had planned on visiting Cabo anyway, we cannot attribute his trip to extension of current tax rates. But now, as he sarcastically jokes with mentions of warm nuts (who doesn’t love a nut joke?), he is going to bump himself, and presumably his family, up to first class.  With that, the airline will spend more on goods for his consumption during the flight, like  better food, and copious amounts of alcohol. Unless things have changed, everyone still gets nuts on flights, but not everyone gets meals. In turn, producers of those goods benefit. The airline, its employees, and shareholders, all benefit, as the profit margin for first class is presumably higher than that of coach seats.

I’m also going to call the hotel and get another room so I don’t have to sleep on a cot in the kids’ room. Don’t get me wrong — I love a good cot. The problem is they tend to take up a lot of room, and it’s getting a little tougher in my advancing years to fold it up and drag it to the closet. I mean, I’d do it if I had to, but guess what? I don’t! Not with this windfall coming my way. Now I get to have my own room with a king-sized bed. And who knows, maybe I’ll even get some fancy bottled water from the minibar. This is shaping up to be the best vacation I’ve had in years.

Larry continues — now, he’s going to consume more hotel rooms! While the hotel is located in Mexico, it is likely owned by some multi-national hotel company. Due to our backwards tax structure, those dollars won’t likely be repatriated to the United States, because we’re one of a handful of countries that believes in double taxation of foreign-earned income. However, it still has a positive effect, since if that hotel company is U.S.-based, more room occupancy means more profit, and lessens the need of the parent company to divert capital from the U.S. to its Mexican holdings. As for the bottled water, we have no idea what water he’d drink, but liberals love drinking Fiji water, since it’s owned by some big-time U.S. liberals. However, Fiji might go the way of the dodo soon, due to burdensome higher taxes imposed by the new Fiji government. (Taxes can be burdensome, who knew?)

But even if the hotel is a local bed and breakfast, we still benefit, because Larry will have to spend those little green pieces of paper to get his hotel room. He’ll either trade them to somebody here in the U.S. for Pesos, or the hotel will accept his green dollars, and trade them with people in Mexico for Pesos. At the end of the day, those dollars are really only effective here in the United States and will have to be spent, saved, or invested here.

When I get home, thanks to the great compromise, the first thing I’m going to do is get a flat-screen TV. Finally I can throw out the 20-inch Zenith with the rabbit ears, the one I inherited from my parents when they died. The reception is terrible and I’m getting tired of going out to bars every time I want to watch a game. Last month, the antenna broke and I tried to improvise one with a metal hanger and wound up cutting myself. Every time I see that scab, I say to myself, “If, God willing, those Bush tax cuts are restored, I’m going to buy a new TV.” Well, guess what? They have been!

What will Larry do when he gets home? Spend yet even more money? Sure, there’s virtual certainty the television wasn’t made in the U.S., but since he’s buying it back in the U.S., our economy benefits. The television was likely created with money invested in the producer by Americans. The company that makes the television benefits, so its employees, both in the U.S. and abroad benefit. The producer of the boxes and packaging benefits. The shipping company that brought the TV to America benefits, as does the importing entity (if not the same as the producer). The domestic shipping company that brings the TV from port to store benefits, the person who maintains the trucks, the people that sell them gasoline, all benefit. And the store, its owners, and employees benefit from the sale. Way to go, Larry.

My guess is Larry will buy a VIZIO, and if he’s sincerely in the market for a television, I highly recommend VIZIO. They’re of great quality, and pretty much unbeatable on price. VIZIO was started in 2002 by some folks in Irvine, California. They started with $600,000 and three employees. I’m sure that in their early days, an increase in taxes would have totally helped them create more jobs. (Republicans can use sarcasm, too.) A few years later, VIZIO is the top seller of HDTVs in the North America.

It’s also going to be a boon for my health. After years of coveting them, I’ll finally be able to afford blueberries. Did you know they have a lot of antioxidants, which prevent cancer? Cancer! This tax cut just might save my life. Who said Republicans don’t support health care? I’m going to have the blueberries with my cereal, and I’m not talking Special K. Those days are over. It’s nothing but real granola from now on. The kind you get in the plastic bins in health food stores. Did someone say “organic”?

And I’m sure you can buy them at Whole Foods, whose CEO thought the health-care bill was bad policy, and by golly, I think he’s about to be proven right. That is, unless the Supreme Court rules the individual mandate is constitutional, and that isn’t likely happen.

But I am glad that you’ll consciously choose to consume more, although I sincerely doubt that you couldn’t afford blueberries before. Deep down, I realize you know you’re helping blueberry farmers keep and grow their business. Your decision to switch to blueberries, in a very small way, helps make bananas more affordable to people who couldn’t afford them in their regular diet. If more people act along the lines of Larry and choose blueberries over bananas, that leaves more affordable bananas for others, and Michelle Obama should smile because of that.

The only problem is if, God forbid, the tax cuts are repealed in two years, how will I ever go back to Special K and bananas? Well, I did quit smoking, so I’m sure if push came to shove I could summon up the willpower to get off granola and blueberries. Of course, I suppose with the money I managed to save from the “Seinfeld” syndication, I probably could continue to eat granola with blueberries, but let’s hope it doesn’t come to that.

Life was good, and now it’s even better. Thank you, Republicans. And a special thank you to President Obama and the Democrats. I didn’t know you cared.

Larry David appears in the HBO series “Curb Your Enthusiasm.”

Now, I doubt that the tax rates will expire. More likely, we’ll have tax reform that will change our deeply flawed code. Maybe thinking that is naive, I don’t know. I’m glad that Larry quit smoking, but one must consider the effect of his decision on healthcare for poor kids, now that he’s not paying federal excise taxes? How inhumane is that? Doesn’t he care about the kids?

But, as Larry paints in this picture, he’s worried he’ll have to go back to Special K and bananas, even though he has considerable savings. Savings — be they in stock, bonds, munis, ETFs, or even money market accounts, or savings accounts, help the economy.

And that’s the flawed economic view of Keynesians, who are overly obsessed with demand. Savings and investment are of little importance to Keynesians. But, to those who need capital or loans, be they businesses or individuals, they get that money from the savings of others.

Much of this post has been written to accommodate the demand-siders, hoping they’d see that in Larry’s sarcastic column, he inadvertently makes a case for the tax compromise.

Now this compromise isn’t perfect. It’s not an intrinsic boom to the economy, especially considering all of the horrendous policies that will take effect between now and 2014, but it’s far better than if taxes were increased.

The big debate between liberals and conservatives is pretty much this — where is the money that individuals earn better off? With the individuals, or with the government? Yes, deficits occur when we spend more than we take in, but extending current rates doesn’t create the deficits — overspending does. We have a spending problem. In 2011, the federal government is expected to spend about twice as much as it did a decade earlier, even though we’re collecting about 29% more in revenue since then.

Adjust the numbers for inflation, and the figures tell pretty much the same story. We collect 4.36% more in revenue than we did a decade ago, but we spend 66.58% more.

Click to Expand

And I’ll be the first to admit that much of the increases in spending took place under President Bush and a Republican Congress. But let’s not forget that Democrats had control for a fair amount of that time, 37% of the squares during the George W. Bush years. The Democrats had two years of absolute control of Congress and two years of control of the Senate.

In my view, it is a spending problem, not a revenue problem. Yes, Republicans were bad on spending, Democrats were worse, and the problem ballooned when they took back Congress and later, the Presidency. The big difference of opinion is this, where is that money better used? Private sector or public sector?

We’ve tried our hand at government-led stimulus, a bill that, in adjusted for inflation dollars, cost nearly $300 billion more than the New Deal itself. It didn’t work.

I know one thing, I won’t use the money I earned, that would have gone to the government if the Bush tax relief expired, to purchase a subscription to HBO. While it may help Larry, HBO and its investors, as well as Cox Communications, I think I’ll save that money, invest it, and maybe use the dividends to buy Larry a book or two. I’ve got one in mind, New Deal or Raw Deal — How FDR’s Economic Legacy Has Damaged America. Because those government policies sure cost us a lot of money over the years.

Anyone know the best address for him? 

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