A lesson for Joseph Muscat, in language he can understand – thank you, Mony
BAR STOOL ECONOMICS
David R. Kamerschen, Ph.D.
Professor of Economics, University of Georgia
Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:
The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.
So, that’s what they decided to do. The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve.
“Since you are all such good customers” he said, “I’m going to reduce the cost of your daily beer by $20.”
Drinks for the ten now cost just $80.
The group still wanted to pay their bill the way we pay our taxes – so the first four men were unaffected. They would still drink for free.
But what about the other six men – the paying customers? How could they divide the $20 windfall so that everyone would get his ‘fair share?’
They realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man’s bill by roughly the same amount, and he proceeded to work out the amounts each should pay.!
And so:
The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now pay $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).
Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.
“I only got a dollar out of the $20,” declared the sixth man. He pointed to the tenth man, “but he got $10!”
“Yeah, that’s right,” exclaimed the fifth man. “I too only saved a dollar”
It’s unfair that he got ten times more than I!”
‘That’s true!!’ shouted the seventh man. ‘Why should he get $10 back when I got only two? The wealthy get all the breaks!’
‘Wait a minute,’ yelled the first four men in unison. ‘We didn’t get anything at all. The system exploits the poor!’
The nine men surrounded the tenth and beat him up.
The next night the tenth man didn’t show up for drinks, so the nine sat down and had beers without him.
But when it came time to pay the bill, they discovered something important.
They didn’t have enough money between all of them for even half of the bill!
*** *** *** *** *** *** *** ***
And that, boys and girls, journalists and college professors, is how our tax system works.
The people who pay the highest taxes get the most benefit from a tax reduction.
Tax them too much, attack them for being wealthy, and they just may not show up anymore.
In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.
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A good explanation of the progressive tax system, although it would make more sense if the barman were replaced by a compassionate thief.
For those who understand, no explanation is needed.
For those who do not understand, no explanation is
possible.
which is why I switched my business to another EU country where I am only charged 12% tax. Not to mention all the unnecessary bureaucracy, red tape and licences etc that I was being forced to go through in Malta. So now another country receives millionsof euros in taxes that could have gone into Malta’s ecnomy. Go figure. Malta’s government policy is obstructive to good business; they only favour the small SMEs.
Your calculation(a parable, really!)is OK,except it excludes most of the self-employed(businessmen,doctors,architects,lawyers,painters,technicians,etc etc) and the scroungers who pay very little taxes (just VAT, really!), and the very rich who employ very clever accountants to avoid paying most of the tax;the calculation just applies to the middle class and most of them pay through their noses so the rest can continue to evade!
[Daphne – My calculation is OK…gee, thanks. Except that it’s not my ‘calculation’. Read the by-line.]
Hi Daphne,
As the Canadian economist and long ago aquaintance, I salute your blog. I read MONY’s piece a few weeks ago in the Economist–a nicely simplified piece. However, I fear the little bearded wonder will still not ‘get it’.
I also enjoyed your ‘Amazing’ blog. Stayed up all night and watched the acceptance speech through very teary eyes. Now all we need is that he sends a new black ambassador to your wonderful isle.
[Daphne – Hi, Harry. What a surprise. A black ambassador would be very appropriate.]
Harry and Daphne,
The last time I checked, the appropriate term was African American not black.
[Daphne – You haven’t been watching much television over the last 36 hours, then. What would you call a black person who’s British? An Afro-Caribbean Briton?]
@ Tino: what’s so wrong with “black”? Same as, what’s so wrong with “white”? Facts are facts. It’s silly to hide behind long, fancy terms when one can be so easily understood using one short word.
Ms.Caruana Galizia,
It certainly is your calculation since you did not bother to check that Prof.Kamerschen denies having written this internet folklore!:vide:http://davidk.myweb.uga.edu/
[Daphne – It’s still not my ‘calculation’. Somebody sent it in and I posted it. It’s pretty good.]
An abridged version of this ‘story’ was narrated yesterday by Minister Tonio Fenech on a super one programme. Those who were participating in the show, including the host but maybe excluding Charles Mangion, were not amused. I suspect they didn’t even get it!
No … English. But we are not talking aboout english people here.
[Daphne – I just don’t get what you’re saying. Whether he’s Spanish, English or American, Obama is black.]
Tino,
How about a black person who’s Russian. Is he an African Russian or a ‘Black Russian’? A nice mixture of Vodka and Kaloua. Lighten up ‘my friend’–as McCain would say.
Tino: ‘Black’ is not a nationality, any more than ‘white’ is – no matter what the racists here (and the world over) say.
MS – “An abridged version of this ’story’ was narrated yesterday by Minister Tonio Fenech on a super one programme. Those who were participating in the show, including the host but maybe excluding Charles Mangion, were not amused. I suspect they didn’t even get it!”
Maybe Charles Mangion was far too busy heckling Tonio Fenech, constantly interrupting him, to actually hear what was being said. Mangion’s “performance” was actually reminiscent of Joseph Muscat – when still a Super One reporter.
Ok, it’s a great ‘story’ but I find it odd that many people who oppose punitive income taxes and clearly have a ‘classical liberal’ political stance have been celebrating the (total) victory of the Democrats, who represent the opposite point of view.
Could it be the case that a large majority will always support the left, as long as the election is taking place in another country?
Bernard: Much of the euphoria about Obama’s election has nothing to do with the party’s policies.
Bernard I’m one of those “classical liberals” or libertarians, but I still preferred Obama to McCain, mainly due to his anti-war, pro-choice, and pro-same-sex civil unions stances. Sure, he might be to the left of McCain on economic issues, however it would be far-fetched to say their views (on the economy) are diametrically opposed – in fact in the past few decades the government has grown to astronomical proportions under both Democrat and Republican governments. The conservates might talk to the talk, but they never walk the walk.
George Bush Senior had promised: “Read my lips: No new taxes.” Then he went on to raise taxes.
Corinne Vella: I agree with you to some extent. But would people the world over have celebrated the election of an African American conservative such as Condoleeza Rice, for example? I don’t know. Maybe.
Drew: The two candidates did have significantly different positions on personal income taxes and on corporate taxation. Not diametrically opposed, but still very different. Of course, an American libertarian focusing more on personal freedoms might be tempted to vote Democrat anyway. But what surprises me is that so many European conservatives (who probably don’t care much about the US abortion debate and who probably by now view Iraq as a closed question) have chosen to identify with the Democrats. There’s absolutely no harm in it, of course, but it’s still a bit odd.
Bar stool economics: This dropped into my inbox from a colleague in Dublin at 12.45 yesterday. At 18.50 I sent it on to my email address list. This morning I checked snopes.com; they carry a denial of authorship by Prof. Kamerschen, and by a Prof. T. Davies who says he circulated it to his students to get them to think outside the box. Snopes do not attribute authenticity of authorship.
But the whole point is the song – not the singer. Especially for those on welfare who will now move to workfare.
Drew, Obama never said he was anti-war. What he said was:
McCain and Obama are both in favour of defensive wars, and neither of them are in favour of imperialistic wars. The difference between them is a matter of interpretation rather than logic. McCain saw the state of Iraq as a direct threat to the security of his country, whereas Obama did not.
Obama is a blight. xD
Tino Thursday, 6 November 1557hrs
“Harry and Daphne,
The last time I checked, the appropriate term was African American not black.”
In other words, it is appropriate to refer to a black person as a non-white , and a white person as a non-black? Or should it be more appropriate to call a black person as a coloured person ? In which case would it be appropriate to refer to a white person as colour-less? This is as nonsensical as referring to women as persons of the female gender and men as persons of the male gender .
Bernard: Condoleeza Rice was thrilled at Obama’s election.
@[Daphne – I just don’t get what you’re saying. Whether he’s Spanish, English or American, Obama is black.]
Actually he has a white mother which makes him half black – or half white, whichever you prefer.
[Daphne – No, Mario, he’s black. A half-black half-white person sounds like a harlequin. It’s a reference to skin colour but also to African origins. There was a former governor of Virginia interviewed on the BBC who looked like a southern European to me, but he was being described as ‘black’ and it turned out his grandparents were plantation slaves. After all these centuries, no descendant of African slaves is without a great deal of European blood, which is why black people in the Americas, and those descended from Caribbean plantation slaves, in Britain, look nothing at all like people in Africa.]
[Daphne – No, Mario, he’s black. A half-black half-white person sounds like a harlequin.
or a zebra., you dont know if he is black with white stripes or white with black stripes.
[Daphne – No, Mario, he’s black. A half-black half-white person sounds like a harlequin. It’s a reference to skin colour but also to African origins. There was a former governor of Virginia interviewed on the BBC who looked like a southern European to me, but he was being described as ‘black’ and it turned out his grandparents were plantation slaves. After all these centuries, no descendant of African slaves is without a great deal of European blood, which is why black people in the Americas, and those descended from Caribbean plantation slaves, in Britain, look nothing at all like people in Africa.]
sorry to disagree but a black person has both parents who are black. If he has a white mother then that makes him half black. Anyway calling someone black is quite derogatory imo because it refers to the colour of the skin. The BBC properly refers to him as the first ‘African-American’ President which sounds quite right.
[Daphne – What would you call a black person who had a European grandparent or a European great-grandparent? A quarter black, and one-eighth black? You do realise, I trust, that you are using exactly the same approach summed up in the pejorative terms ‘half-caste’ and ‘mulatto’?]
Mario P: “Black” is only derogatory when used by racists. It might interest you to know that “white” is sometimes used that way too, yet I’m sure you wouldn’t balk at using the term yourself.
[Daphne – Whitey.]
I think that political correctness stems from some people’s refusal to call a spade a spade. Why should anyone care whether they’re called black, pink, yellow with red spots or whatever?
I wear glasses, without which I’m as blind as a bat. I wouldn’t call myself “visually impaired”. Plain “bloody short sighted” suits me fine.
[Daphne – I agree with you there. Give me blind, deaf and dumb any day. And as for ‘senior citizen’ and ‘the elderly’…..how about just plain old, the opposite of young?]
[Daphne – What would you call a black person who had a European grandparent or a European great-grandparent? A quarter black, and one-eighth black? You do realise, I trust, that you are using exactly the same approach summed up in the pejorative terms ‘half-caste’ and ‘mulatto’?]
Actually it’s only one’s direct parents that matter. I feel offended that someone is called ‘black’, ‘albino’ or anything else that tries to compartmentalise someone on the basis of his/her skin/looks ( ‘dumb blonde’ comes to mind)
I must say that I do not like the term African-American very much. It’s fine when it’s used to describe a culture and that’s how I always thought of it: a fusion of African and American cultures.
When used for a person, the term sounds as if we’re talking about some kind of ‘cross’ or ‘hybrid’. It may be my agricultural background perhaps but the idea of referring to people as African-Americans, Anglo-Arabs, etc, seems to reduce them to the level of domestic animals.
Having said that, the term African-American is now widespread and I suppose we have to accept it, especially as those who use it are well-meaning and not being disrespectful. It’s better than Afro-American, at least.
Mario P: Are you offended by someone calling you “white”?
I like Afro-Norwegian, or Siculo-Sino-Russian. Hispano-Inuit. Ethiopio-Finnish sounds good too.
I think we’re verging on the ridiculous now.
@ Corinne – he would be lying through his teeth!! :)
[Daphne – You do realise, I trust, that you are using exactly the same approach summed up in the pejorative terms ‘half-caste’ and ‘mulatto’?]
or as is often typical of the southern states in the US, octoroon or quadroon.
[Daphne – That’s right. Those were the terms I was looking for and couldn’t remember. Thanks.]
“Mario P Friday, 7 November 1131hrs
[Daphne – What would you call a black person who had a European grandparent or a European great-grandparent? A quarter black, and one-eighth black? You do realise, I trust, that you are using exactly the same approach summed up in the pejorative terms ‘half-caste’ and ‘mulatto’?]
Actually it’s only one’s direct parents that matter. I feel offended that someone is called ‘black’, ‘albino’ or anything else that tries to compartmentalise someone on the basis of his/her skin/looks ( ‘dumb blonde’ comes to mind)”
Ok , so what will you call a black woman? A non-white person of the female gender? Aha, and what will you call a white South African? A non-black/colourless non-European of the male gender. On television they are raising hell just because old Berlusconi referred to Obama as young, handsome and tanned. The world must be going crazy.
Zizzu Friday, 7 November 1116hrs
I wear glasses, without which I’m as blind as a bat. I wouldn’t call myself “visually impaired”. Plain “bloody short sighted” suits me fine.
The Italians would call you “quattrocchi”!
[Daphne – And four-eyes in English.]
I wonder what they would call an American of Maltese origin? Arab/Jewish/Sicilian/every other race – American?
How about asking a black person? Those on this thread are only giving their personal opinion–no problem with that. While living in Switzerland, my very best friend was black. He had no problem whatsoever in being called black. In fact, he was very proud of his black heritage. I admit that this is a small sample, however, we now have many blacks living among us, some of whom I have met and have had very interesting conversations with. I will do a ‘straw poll’ and report back.
Zizzu, did you have your tongue firmly planted in your cheek when you commented on calling ‘a spade a spade’?
Well-said Antoine. Americans of African descent prefer to be called African-Americans. Whether people in Malta think that that term is appropriate or not is irrelevant, except as a reflection of Maltese attitudes toward race.
Just finished reading the major Swiss French newspaper, ‘Le Matin’. Main article was entitled ‘Le premier president noir de l’histoire des Etats Unis’. It appears the Swiss don’t fear employing the term ‘black’ (noir) as an adjective.
See the comment below that was in the olnline version of The Times – uhmm are they going demonstrate in the ocean or what?
“Joe Farrugia (8 hours ago)
If you are confortable to pat these tarifs and are living confortable, Stay at home watching TV and if you are feeling the burden Join us for these Pacific manifestations, which we have the right to do as we are living in a democratic country.”
[Daphne – Oh my god, it’s hysterically funny. I read the comments beneath the stories in The New York Times, and they’re all literate, well-spelt and well-constructed. Then I check out Malta’s version and get this. What does ‘pat these tarifs’ means, do you think? A Pacific manifestation! The man probably doesn’t know there’s an ocean by that name.]
What’s in a name? One of my parents was born Maltese, one was born English, I was born English and am now Maltese. When people used to ask me what I considered myself I used to reply “A mongrel!” – and very proud of it. A proud Maltese and proud to have been English.
@ Sybil – you don’t get it do you? A black, white, hispanic, chinese, Italian, Irish, Maltese or wasp American is an American. Full stop.
‘Aha, and what will you call a white South African?’ – a South African, what else?
@ David Buttigieg – what do you call the black Maltese in our land? Maltese I hope. Does that answer your question?
My kids see things in simpler ways: a black person is a brown one to them; we, on the other hand, are “different shades of peach”. Neither is said in a derogatory way, but is simply said to state facts.
Synopsis of preliminary ‘straw poll’: The majority of my black friends in Malta found my question, ‘do you mind being called black?’, ridiculous. They responded by saying ‘what else would you call me, I am black.’ One of them then reminded me of the film ‘Cry Freedom’, the true story of a young black activist, Steven Biko, in South Africa who was murdered while in police custody. During his ‘trial’ one of the white judges asked him a question-‘why do you call yourself black when you look more brown or chocolate than black?’ Biko replied, ‘why do you call yourself white when you look more pink to me?’ Guess it’s all in the eyes of the beholder. Will continue the ‘straw poll’.
Daph – “What does ‘pat these tarifs’ mean, do you think?”
I’d say he meant “pay”. As for the rest …
Mr. Clews,
Just finished watching President-elect Obama’s press conference. During questions, concerning the choice of a puppy for his two daughters, he described himself as a ‘mutt’. So you’re in good company.
[Daphne – Self-confident people don’t have hang-ups.]
Mario P Friday, 7 November 1828hrs
@ Sybil – you don’t get it do you? A black, white, hispanic, chinese, Italian, Irish, Maltese or wasp American is an American. Full stop.
‘Aha, and what will you call a white South African?’ – a South African, what else?
A NON BLACK NON EUROPEAN NATIVE?
@ David Buttigieg – what do you call the black Maltese in our land? Maltese I hope. Does that answer your question?
AW GINGER!
“Zizzu Friday, 7 November 1306hrs
I like Afro-Norwegian, or Siculo-Sino-Russian. Hispano-Inuit. Ethiopio-Finnish sounds good too.I think we’re verging on the ridiculous now.”
I sure think we are .
How about Gozi-Maltese or Malt-Gozitan for mixed-blood Maltese/Gozitan mutts?
http://www.people.com/people/article/0,,20239003,00.html?xid=rss-topheadlines
[i] The other is that “our preference would be to get a shelter dog,” which would point to the possiblity of a mixed breed, or, as Obama said, “[u]a mutt, like me[/u].” [/i]
Hilarious !!!
“Harry PurdieM Friday, 7 November 1502hrs
How about asking a black person? Those on this thread are only giving their personal opinion–no problem with that. While living in Switzerland, my very best friend was black. He had no problem whatsoever in being called black. In fact, he was very proud of his black heritage. I admit that this is a small sample, however, we now have many blacks living among us, some of whom I have met and have had very interesting conversations with. I will do a ’straw poll’ and report back”.
In my experience, the best racist jokes I ever heard about blacks are those made by blacks themselves. Which reminds me of yesterday’s TVM news coverage of that Berlusconi “tanned” joke. In hushed tones they commented on several film clips of people denouncing Berlusconi as a racist and then carried on referring to people “ta karnaggjon skur” instead of saying “suwed”.
How daft can one get?
Does this help? (Apologies if I didn’t link this properly)
http://www.manhattan-institute.org/html/_latimes-why_im_black.htm
[Daphne – Good piece, thanks.]
An excellent finish to this thread, Paula.
BTW, the last comment volunteered by an individual in my ‘straw poll’: “I can’t wait to meet the new black American ambassador to Malta”. Me too!
http://www.timesonline.co.uk/tol/news/world/us_and_americas/us_elections/article5100973.ece
I remember spending a couple of months in Ethiopia and working with both Sudanese individuals and Ethiopians. The Ethiopians quite plainly insisted on calling the Sudanese ‘black’. When I asked what they considered themselves to be, they replied ‘just not black’.
I’m sure they thought facts were facts, too.
Read India Knight’s article in the Sunday Times today
Only one thing to REMEMBER that most probably the rich are Rich at the expense of less fortunate one. They are either speculators, Hbieb tal-Hbieb etc… Probably you are one of them.
[Daphne – Spoken like a true fossil. In the southern Mediterranean, people resent those who have more than they do (instead of admiring them and trying to emulate them, as in US culture) because they perceive them as having taken ‘their’ slice of pie. Wealth and other non-material sources of security and happiness are seen to be limited, so if the total amount available is seen to be X, and Mr Borg next door has y, then what’s available for you is X minus y. In real life, sugar, that’s not how it works. You would probably still have nothing even if there weren’t any rich people around. In fact, you would probably have less than nothing, because it’s rich people who provide sources of productive work and not the state. And no, I am neither rich, nor do I clobber poor people over the head and rob them.]
David Buttigieg
“. . . uhmm are they going demonstrate in the ocean or what?”
Unfortunately Mr Farrugia, the original poster who had invited us to the Pacific manifestation, was denied the benefit of my advice about what to wear.
My foray into the fashion scene was: “Don’t forget your Hawaiian shirt and grass-skirt for the Pacific manifestation. Aloha”
Sadly, the Times moderator decided Mr Farrugia didn’t need my suggestion so it was left out. Oh well, it’s their loss.