What did I say? Did I not say that if you use a thing as intended it should work as intended? Did I not say that Ford made many mistakes in its anlysis of the problems with the Pinto? Are you saying that 30MPH rear ends are the proper use of Pintos? While it is certainly forseeable that such collisions could happen. And I certainly agree that Ford did not take enough precautions against them. You cannot extrapolate this case to mean that no one should ever consider the economics of a particular safety measure.
I realize that you guys are trying very hard to demonstrate something. I’m just not sure what it is.
Again, this is all very easy to say in hind site. When he left school to move to New Mexico to become part of the microchip revolution, he was taking a great risk. Through dilligence and work it paid off. Certainly lots of others were involved with the computer revolution. They were all free to make the same choices Bill did. They could even have invested in his company back then if they wanted to. We all chose not to. We certainly did not offer to make good his investment if his plan did not work out.
I am not suggesting that he does not owe taxes. Just that it is a little disengenuous to say now after his plan worked while so many plans failed that his success is due mostly to the rest of us. Why don’t we go look up the oner of CP/M and offer to pay him back his investment? Why don’t we go to the preveous owner of DOS (which bill Gates purchased) and offer to make up some of his losses for not jumping more firmly on the Microsoft bandwaggon?
We’re getting to the heart of the disagreement now. You see Gates’ success as the result of HIS hard work, HIS intelligence, HIS persistence.
What I think happened was this: conditions were right to make SOMEBODY very rich from the home computer industry. A LOT of hobbyists and scientists and engineers made their individual contributions that made the home computer industry what it was both before and after Bill Gates came along. Some like Larry Ellison and Steve Wozniak, were rewarded lavishly. Some like the inventors of Visicalc and the Altair computer, didn’t get much monetary reward at all.
But it wasn’t because Gates performed some miraculous service that helped everybody that he got to be so fucking rich. It was the “Winner Take All” effect that’s already been referred to. Gates was rewarded in sums that are whole orders of magnitude beyond his contribution. I seem him as more like a lottery winner than a super-inventor. And while the lottery is at best a fun and entertaining way to blow a few bucks a week, it’s no basis on which to rest an economic system.
It’s the best so far. Gates and thousands of other Microsoft employees and thousands of investors are today quite wealthy. I can think of no other system that would allow for such a thing to happen.
Right. But the difference cannot be reduced to mere chance. The inventors of visicalc did not seek to profit from their development. The inventor of the Altair did not suucceed in seeing the need to make his computers easier to use.
Well, that is because you don’t understand his contribution. You are stuck focussing on the direct value of his individual labor. You are ignoring the leverage effects of cooperative activity. If you add up the hours he worked, or look at your assesment of the value of the code he actually wrote, then you might conclude that his contribution was quite small. But his contribution was not one of code written, or hours worked. His conribution was in recognizing the business opportunity represented by personal computer software. Small in the big scheme of things. But miraculous enough for those of us who use computers every day.
Personally, I don’t understand the objection to “winner take all”. As I have tried to explain you have to look at the building of a business or industry at the begining, not at the end. (Referencing the OP) if you look at the means of production as a fait accompli, then you can argue dialectically how best to use them. But once you realize that industries have to be built before their value is knowable, you realize that such activity is too risky for most people to participate in.
For instance, if you want to compare the economy to a lottery, then you have to conceed that it is not 1 loterry, but an almost infinite number of them. You can’t win if you don’t play, and you can’t win unless you choose the correct lottery to play in. Furthermore, playing does not amount to buying a trivially priced ticket. You have to invest large sums of money and time up front. You have to constantly watch that your ticket is for the lottery you want to be a part of (it can change from second to second without your control), and you may have to continually invest to keep your ticket valid. Other than that, economic activities have some resemblance to lotteries.
But even if they have more resemblance than this. We don’t go around claiming that lottery winners winnings aren’t theirs. We don’t go around claiming “Hey, I bought a lottery ticket too. I deserve some of your winnings.”
It’s an assertion, but I’d gander to say it’s a very logical one.
But my point is that, yes, it removes $100,000 (which is an extremely low bond issue, I believe) but the buyers are most likely still paying taxes on the rest of their income. When a person invests all of their taxable income into the bonds, they remove themselves from the tax base.
**
Yes, I understand this.
**
Yes, but cities generally don’t invest bond money. They usually use it for munincipal projects, like bridges and parks which don’t bring them any income. They expect to be able to repay the bonds and interest out of future taxes. However, my point is that if the wealthy exempt themselves from paying any taxes by buying the bonds, then it makes it much more difficult for the city to do so.
**
Then, in my opinion, the producers of the automobiles should be required to recall their product and to pay compensatory damages to those already injured. If they continue to make the automobile knowing that it is dangerous, they should not only be civilly liable, but criminally.
**
In a way, yes. The manufacturer of automibles should expect that fender-benders and more serious accidents can occur. They cannot be held responsible for the death of a motorist caused by a 90 MPH crash, because it is not reasonable to expect a car to withstand such incredible stresses. However, a 30 MPH crash does not involve these kinds of forces. You should reasonably expect to be able to walk away alive after such a crash.
**
Yes, we do have hind-sight, but I cannot fathom that even in the “heat of the moment” that I could decide that people being burned alive was better than losing money. That’s not just ethically wrong, it’s evil. It’s my opinion that not only should the company have been sued, but the perpetrators should have been criminally prosecuted.
But this is not true. If a city taxes an economy of 1,000,000 and issues a bond of 100,000, then they know at the time of the bond issue that the 100,000 will reduce the tax base by that amount. It make absolutely no difference if the 100,000 comes from 1 person or 5 or 100,000. The ability to repay the bond is not altered in any way.
So, there are no deliterious effects from a single person buying bonds and lowering his tax burden to 0. Given that, it still seems unfair to criticize someone for dodging taxes when they are in fact loaning money to the city for things the city needs.
That’s because you are being overly reactionary to the concept. If you simply modify your statement above to mean that any amount of money, then you can justify shutting down civilization. Literally everything we use to survive has risks. Many of them could be lessened if we spent unlimited amounts of money to do so. Unfortunately this would result in making them unusable. For instance we could save 50,000 people a year by banning cars. We would have more land by getting rid of the roads, and some polution would be reduced. However, we would have to ship goods either with human or animal power. If you think that cars polute the environment, imagine moving all those things around using horse drawn carts. Some cities could not exist like that. The whole point being that you have to look at the costs when considering any sort of engineering change. Like anything else, this can be done well or it can be done poorly. But the only evil thing is not to do it at all.
BTW, I did not say that 50,000 people die due to defective cars. I said that they die due to “faulty product, or by accidents involving other drivers?” That is the deaths occur for both reasons. The question is whether the companies took reasonable precautions to prevent deaths or injuries. In Ford’s case, the answer was no. Not because they did a cost analysis, but because the analysis was faulty.
Well, I’m not sure that it is very logical. It is certainly reasonable. If you ever have you own city and wish to change the system to require lots of small investors, I would not object. But it does not seem logical to apply motives to others actions without evidence. So, if it is your opinion that bonds should be purchased by small investors, thats cool. But if you believe that this is one of the original ideas behind municipal bonds, you need to have more evidence.
Well, one problem with this winner-take-all society is that we have a system in which vast inequalities are generated because a few people are rewarded vastly out of proportion with their contributions to the society. And, even if this doesn’t bother you on the basis of the inequality aspect, what Frank and Cook argue in their book is that the “winner-take-all” markets lead to economic inefficiencies. So, the claim is that we should be able to get better efficiency and less inequality if we implement reforms (with more progressive taxation being one of them) to try to lessen the winner-take-all nature of the system. It seems to me that if Frank and Cook were correct, taking steps to correct things would be a win-win situation (unless one actually likes vast inequality just for the fun of it).
As for the specific example of Bill Gates, you seem to imply that there were few if any other people who were willing to take the sort of risks that he took. Is there really any evidence that this is the case? I.e., do you really believe the computer revolution would have been seriously set back without Gates? My impression was that his main genius was in realizing that if you were the first to market with a software product / operating system, even if it was quite defective and buggy, and were thus able to get people to buy it, then you could reach a critical mass whereby it would become a standard and others would then be pressured to buy it. (In that regard, I sometimes wonder if the society would actually have been better off without Bill Gates. But, that is an argument for another day!)
But do we really want to run our economy like a huge lottery?!? I don’t really see this as very advantageous. And, what makes it even more irksome to me is that, as our society is currently structured, it would be (or is?) a lottery where some people were born with money to purchase thousands of tickets whereas others could just afford one!
These objections rely on two assumptions which I’m not sure are valid. The first is that you are judging an individuals contribution after the fact in a way which is IMHO not fair. A person participates in economic activities with other free agents each of whom is free to judge his contribution to them. If enough people judge that person or his agents contribution worthy of monetary reward, then he is rewarded fabulously. You are trying, again after the fact, to apply some sort of hourly wage or component value to his work. The fact that each of his customers judged the work seems to have fallen out of your analysis.
Secondly, market “efficencies” make a similar mistake by assuming a group, societal, or socialistic goal. The goal of economic activity in a free market is individual fulfillment, not group fulfilment.
I will add, of course, the caveat that I am assuming free choice on the parts of the participants. This is not always true. However, we are arguing the benifits or pitfalls of the theories, so I think I can take the liberty.
No, that is not exactly what I am arguing. I agree entirely that someone would have taken his place if Bill Gates had not. However, this person would have had to have a similar vision (that micro processors, and micro processor software in particular, would be a large market in the future) before anyone else did. He would have had to put in quite a bit of work to develop his vision. He would have had to have a good bit of timing and luck as well. In short, if the founder and leader of Microsoft were named Evil Captor right now, I would be saying the same things about what he owned and what he did not.
Another way to put it is to realize that even though someone else could have done what Bill Gates did, it does not follow that anyone could have done it. And it certainly does not follow that everyone is entitled to a piece of his wealth.
But this is my point exactly. The economy is not a lottery at all. I was only arguing that even if it were, we would still talk about winnings as if they acrued to individuals. Instead what you are proposing is that we view the labor of an individual as belonging to society as a whole in somehow, and therefore subject to confiscation at societies whim.
Personally, I think there is a lot more justification for taxes and even wealfare programs on the basis of increased benifits or decreased pain. I agree it is hard to fully justify unlimited progressivness with these concepts, but I still think some could be justified. Something along the lines of noting that the benifit gained by property increases non proportionally to the amount of property. Therefore the benifits provided by the state are non proportionally utilized by property owners. As long as we don’t go too far and suggest property tests for sufferage, or representation proportional to property, I think this theory could be used to justify the sorts of taxes we are talking about. It certainly has the advantage of not requiring a change to the notion that an individual’s life, and therefore his labor belong to him. Course, I’m just sort of blabbering at this point.
I see that we’re not going to agree on this. We simply don’t see the issue in the same way. Perhaps it’s just my opinion, but I believe that the city does suffer some deleterious affects from the wealthy avoiding their share of the tax burden by taking advantage of bond programs.
It may seem unfair to you, but I feel that’s it’s equally unfair for them not to pay taxes, when Average Joe couldn’t accomplish the same thing due to his smaller income. (Of course, life isn’t fair-- I know this.) And Average Joe feels his tax burden more than does a man who wouldn’t really miss a million or two.
[I moved this because it’s related to the discussion above.]
You’re right, I have no evidence. I wouldn’t even know where to look. It just seems “reasonable” to me that the idea would be to spread the “loan” out among many investors, so that they can get the benefits of interest, and so that the burden to paying for the city’s projects does not fall on the shoulders of a few alone.
However, I have a strong suspicion that the motivations of those who stash away huge sums of money into bonds is not civic pride. Call me a cynic, but it seems pretty obvious what the motive of such a person is: to avoid paying taxes. They’re most likely not buying bonds out of the goodness of their hearts.
Whatever it makes me, I’m a person who believes that everyone should do their part. We all benefit from city services: we use the same cops, firemen, and ambulances. We enjoy the same public facilities: parks, memorials, bridges and street lights. We should all pay for them.
To me, those who invest in order to avoid paying taxes are shirking their duty, even though they are “loaning” the city money. After all, they ostensibly remove themselves from paying Federal taxes as well, because all of their taxable income is in the bonds. So, in a way, they are putting more of the burden of paying for Social Security, schools, NASA, welfare programs, and myriad other expenses on the shoulders of those who are not rich enough to avoid paying their share by hiding their income in bonds.
Perhaps this is all philosphical. I’m willing to accept that. As I said, I think everyone should have to pay their fair share, but I know that such loopholes will always exist. They will always exist because the people that create our laws are generally rich people themselves, who want to be able to exploit them for their own benefit.
I know that everything has dangers. Mistakes can be made. A company can unknowingly issue a dangerous product, causing injury or death to the consumers. However, it ceases to be a mistake and becomes intentional when a company continues to make a product knowing that it can kill someone. It’s that intent which I believe should be a criminal offense.
I’m not talking about a lava lamp which may leak and stain the rug. Nor am I talking about a folding stroller which may pinch the fingers of someone who is storing it. I’m talking about a product which can seriously injure, or kill its user through no fault of their own.
But that’s not what I’m talking about. Deaths from pollution or car accidents are indirectly related to the product. What I’m talking about is an exploding car.
In a way, horses cause more pollution than automobiles. Frankly put, they shit, and they shit a lot. Back in the 1800s, the streets were indescribably filthy. During wet weather, they became pig sties of ankle-deep manure. In dry weather, powdered feces floated through the air. Cities stank abominably. (Oscar Wilde once said that the stench of Cincinnati, Ohio was powerful enough to “make granite eyes weep.”)
But, again, we’re not talking about indirect harm, like pollution. We’re talking about faulty products.
I disagree. It is evil to produce a product with the full knowledge that people will die or be seriously injured from using it, having decided that your profits are more important than fixing the problem. If there’s a hell, those kind of people are heartily deserving of it. Call me a bleeding-heart if you will, but in my opinion, if the company goes bankrupt in trying to fix the product, it’s damn well worth it. After all, it’s their fault the product was faulty.
Clearly. But I don’t think it is only a difference of opinion. You think tax deffered bonds are bad which is cool. The part I am disagreeing with you on is the why. Can you list a couple deleterious effects caused by wealthy people buying bonds as opposed to poor people buying the same bonds? Remember that the tax pool is reduced by the same amount. So, the city gets the same amount of money today and later when they have to pay off the bonds.
If we assume that the untaxable income is $20,000 (I know this is not the right number, but it is close and very round so I’m using it). A person with an income of $1,000,000 needs to buy a LOT more bonds than a person with an income of $28,000 in order to avoid paying taxes. So this seems like another assertions without a basis. Did I miss something?
I did not mean to suggest that buying bonds was similar to giving to a charity. I was only suggesting that it was also not similar to stashing money in secret Caribbean accounts.
Of course. And one way we pay for them is to buy bonds. Governments don’t sell bonds simply to give rich people safe investments. They do it to raise money.
Yes, but they are reducing the burden of those of us who pay taxes today. We can argue whether or not deficit spending is a good idea. I personally don’t like it. But if governments did not sell bonds, they would only be able to afford those programs which direct taxes could pay for. If we had to try and save tax money every time we wanted a new park or to upgrade the old ones, we would have to play in empty fields.
This, again, is an unfounded assertion. Bonds are issued to the people at large. There are very few restrictions to buying them. If rich people wanted to restrict them, they could simply require they be purchased in large lots. Or any other restriction which would have the effect of shutting poor people out of the market. They do not. In fact, they encourage as many people as possible to buy bonds. That is the reason for the tax defferel in the first place. Bonds do not offer a good return on money compared to other investments. They make up for this by being far safer than almost every other form of investment and by offering tax defferal.
Like cars. We know for a certainty that 50,000 people will be killed in cars next year. Do you seriously propose that car manufacturers be put out of business?
Right, but you are arguing that we should ignore the probabilities involved. That stroller putter awayer might get infected, have to go to the hospital and die from that stroller. In fact, given the number of strollers in this country, I’d say that is almost a certainty that someone will die in this way some time in the next 10 years. Should we ban stollers to prevent it?
Right like deaths related to rear end collisions. Another word for collisions is “accidents”.
But again, you are unwilling to look at the numbers. If the problem is incredibly small and the fix is incredibly expensive, then your assertion is silly. The only way to know either situation is to measure what the risk is and what the cost is. Now, I agree that we have to have laws which require reasonable measures be taken to ensure that a product is safe. And I maintain that our present laws do a pretty good job of that. However, you are making an emotional argument that even a single death is too many. This is not true.
I’m sure you’ve heard of the power source that we could put to most American homes to reduce our dependance on foriegn oil. It could be piped direcdtly to homes similarly to electricity. It could be used to power many of the major appliances we use in our homes. If it were done, it would significantly reduce (although not eliminate) our reliance on foriegn oil. Of course, a few people would die each year as a result of using it. The benefit to America would be immense. But it would cost a few lives each year. Should we use it?
Again, they are not only removing the total value of the bonds from the tax base, but their entire taxable income.
I buy bonds myself. About ten percent of my income goes into them. If I itemized, and took that off of my taxes, I’d still be paying on the other 90%. (But I don’t itemize, so I don’t get that savings, anyway.)
If I were independantly wealthy, and could live off of the tax-free interest on my investments, I could put 100% of my taxable income into the bonds, and pay no tax at all.
If, say 300, “poor” people buy the bonds, they, too, are still paying taxes on the rest of their income. But, if five “rich” people buy all of the bonds, they remove themselves from the tax base.
Just the fact that a person making under $28,000 is highly unlikely to be buying bonds in the first place. People making that little often need every cent of their income just to pay day-to-day expenses. A millionaire who can stash away all of his taxable income in bonds is unlikely to feel the pinch.
But they can be abused. Surely you don’t think that the idea of a person stashing all of their taxable income into a bond is what the issuers intended?
Well, that would be stupid. That would be tantamount to a declaration that they don’t want the poor making investments. No politician would do that.
My point was that there could be restrictions on the amount that can be invested in tax-free investments to keep people from dodging the taxman, but politicians won’t do that. They want themselves, their family, or their friends (or campaign contributors) to be able to use those loopholes.
How would putting a restriction on the amount of income a taxpayer can invest harm the poor in any way? As I pointed out before, someone making less that $28,000 is highly unlikely to be able to invest at such a rate as would make them exempt from paying taxes.
As you pointred out, the number of bonds is finite. Blocking the wealthy from investing all of their taxable income would free up more bonds to be purchased by the small-time investor.
Exactly. The wealthy could by Microsoft stock, but they’d have to pay capital gains tax. Often, it is worth more to them to avoid paying taxes than any investment could earn them.
If they are intentionally issuing a product which they know is seriously flawed, then yes sir, they should be.
[quote]
Right, but you are arguing that we should ignore the probabilities involved. That stroller putter awayer might get infected, have to go to the hospital and die from that stroller. In fact, given the number of strollers in this country, I’d say that is almost a certainty that someone will die in this way some time in the next 10 years. Should we ban stollers to prevent it?
[quote]
No, because the infection is an indirect result. Now, if that same stroller had a propensity to collapse and decapitate the baby inside, it should be banned.
As I said before, a manufacturer is not liable when a car travelling at 65 is involved in an accident and the occupant is killed. There are incredible stresses and forces involved in such a crash.
But, you should reasonably expect to be able to walk away alive if you car gets bumped from behind at 30 MPH. Hell, just last year, I was hit at a dead stop from behind by a car going 65. I walked away with no more than a severe case of whiplash.
I would not blame my contractor if the new house I built collapsed on me as the result of a tornado, but I damn sure would blame him if a stiff breeze blew it over.
I would not blame the airline if someone I loved died in a plane crash because of pilot error, but I would blame them if they knew that the plane was likely to fail but sold tickets anyway.
I would not blame the manufacturer of an appliance if I were electrocuted because I dropped the item into a tub of water, but I would blame them if it electrocuted me when I simply plugged it in.
An “incredibly small” problem does not kill or maim the consumer.
A single death when the company is knowledgeable of the defect and unwilling to fix it because it will affect their profits is unacceptable. Are you willing for that single death to be your wife, or your mother?
Speaking of which, do you think the Ford executives let their kids drive Pintos?
Explain further: would people die because the design was faulty, or from causes like allergies? What, exactly, would kill them?
But this is not true. In this case, the thier entire taxable income is only removed if it is less than the total value of the bonds. What money other than the amount of the bond is removed from the tax pool?
Or free up more bonds to be left unpurchased.
Of course. But you seem unwilling to examine what “seriously” means.
Why not? How expensive would a speed regulator be? I don’t know for sure, but I imagine that regulating the speed of cars to under 40, let’s say, would be pretty cheap. It would certainly save a lot more than a single life each year. Do you favor requiring such a device on cars?
Ok, but what do you mean by propensity. Again, given the number of strollers in use now, I’d be surprised if at least 1 infant did not die this way sometime in the last or next decade. How many occurances are required for “propensity”?
You see, you cannot talk about these things without using terms like likely. No one can. The point is that if you are going to make laws using these terms, they need to have better definitions than this. What constitutes “likely” for an airplane crash?
This also is another misunderstanding on your part. Most technological devices are a very complex interaction of multiple complex systems. A very small failure in the insullation of the right wire running through the right conduit could result in the mid air explosion of a large airliner. A wire which fails after decades of use is a minor problem.
Ok, so then you are willing to ban automobiles. Obviously many more than “single deaths” occur in them. Many of them due to failures of some sort in the car. So, by your standard we should ban cars until engineering solutions can make them safe.
Various things. The power source is different from electricity. It is dangerous in different ways. No alergies or infections are involved (that I know of). But people can die from excessive exposure to this power source. People can die from uncontrolled ignition of it as well. Obviously, precautions are taken to prevent this. However, accidents will happen no matter what we do.
I guess what I am talking about is the difference between the euphamism “perfectly safe” and the reality of life in the real world. Nothing is actually perfectly safe. But we use that phrase for many things; driving, electricity, even natural gas.
Obviously people should not be allowed to misrepresent the safety of things they sell to others. This includes an implied level of safety for most things. So, if a known problem has a reasonable solution, it should be actionable to avoid the solution. But you have to accept that not all problems fit what I mean by “known problem”. And you have to accept that not all solutions fit what I mean by “reasonable solution”. The only way to decide what problems and what solutions fit into these definitions is to analyze them.
Therefore we cannot penalize a company for analyzing the costs of a particular solution to a particular problem. We can certainly penalize them for doing it badly. We can certainly penalize them for refusing to make reasonable changes to prevent risks of reasonable likelyhood. But it seems reactionary and stupid to desire that all risks should be addressed regardless of the likelyhood and cost.
Okay. Nowheresville offers $1 million in bonds to build a new park annex. Bob has $500,000 in taxable income after all of his various reductions. He buys $500,000 in bonds. Bob pays no taxes now. The city pays Bob interest on his “loan” to them, but recieves no tax revenue from him in return. The city loses money on Bob. (And so does the Fed.)
Bill, Jim, and Mike are Bob’s golfing buddies. Bob tells them what he did, and they think it’s a great idea. Between the three of them, they invest another $250,000, and remove themselves from the tax pool. Now, Nowhersville must pay interest to these people, increasing the size of the city’s “debt,” without getting any tax “income” from these people to help offset it.
Carl has a taxable income of $40,000. He buys $1,000 in bonds. He pays taxes on the other $39,000. Tim, Dave, Shawn and Steve also do the same, but still keep themselves in the tax pool, while helping the city out with its projects.
As I said before, I’m not talking about a pinched finger, I’m talking about burning to death. I would consider the latter to be “serious.” If it can kill you, maim or disfigure you, cause the loss of a limb, digit, or eye, paralyse you, poison you, drown you, burn you, or cause you to become violently ill, I consider the flaw “serious.”
No, I don’t. A company cannot be expected to account for the abuse of its product. If the consumer wants to use it in a dangerous way, (such as driving recklessly, or speeding) that’s not the company’s problem. They do not need to “babysit” the consumer to make sure that s/he uses it safely and responsibly: their obligation is to see that the product itself is safe.
Once may be a freak accident. Twice may be a co-incidence, but after three reported incidents, a company should immediately begin researching the problem. If they discover it’s because the parents forgot to put in a bolt while putting the stroller together, they are free of liability, but if the stroller is dangerous as correctly assembled, it should immediately be recalled.
Consumer Reports does product safety tests all the time. All they would have to do is test the item over and over and see how often it fails. One out of a million is a fluke, but one out of ten makes it pretty obvious the product is flawed.
An accident is “likely” when a company knows that a certain part on an airplane is not maintained as it should be. Airline safety has been studied in minute detail. They know the “failure rates” of certain parts, and how often they should be changed out, or maintained. Failure to do so creates a dangerous situation likely to cause harm or death to the passengers.
For example, it would be negligent, in my opinion, if a plane had a crack in its wing which should be repaired, but the company decides to squeeze in one more flight before taking it into the hangar. They know that a crack in the wing could cause structural failure because of the expansion and cooling of the metals during flight. They created a situation of aggravated risk.
Perhaps you misunderstood me. A “minor” problem is one which causes my alarm clock to stop working. A “minor” problem is when my car’s left tail light keeps shorting out. A “minor” problem is when I keep getting one of those error mesages on my computer. A “minor” problem does not kill anybody.
In your scenario, the frayed wire in the airplance was a “major” problem which resulted in catastrophic failure. The size of the part is not important. What is important is the results of its failure.
My brother-in-law is an engineer at one of the major car companies. When I was shopping for a car, I asked him about a certian one produced by his company. He told me the car had a propensity to wear out brake pads quickly, and that some customers had reported minor electrical problems. I bought the car.
Is my car “faulty”? Yes, in a way it is. He was right about the brakes. But it’s not a flaw which will lead to my death. And the company is struggling to make it right. They’re redesigning the breaking system for that model.
I don’t think I would have bought it if he’d said, “Oh, and it has a tendancy to explode into flames when hit from behind.”
Yes, I do think we should ban the production of vehicles with serious flaws that may cause serious injury or death when they are being used in the proper manner. If they know from tests that there’s a substantial chance that a driver will be harmed or killed while operating it in normal driving conditions, then the vehicle has no place on the market.
Going back to the Pinto example, I think that as soon as the problem was discovered, Ford should have been forced to halt production, and to recall all of the cars that they had sold.
Of course nothing is ever perfectly safe. I’m not “perfectly safe” sitting here in my office typing this. Structural failures, unforseen stresses, combined with human error can cause many an accident. Hell, aspirin kills a few people per year.
But you’re still asking me to judge something blindly. I don’t have enough information to make an informed decision, thus I refrain until I get more details.
It seems pretty reasonable to me. You sold Product X. Turns out, it kills people. Announce the danger to the public. Look into it: is there a part or way it can be fixed by the consumer? No? Can’t figure out what the problem is? Recall immediately. Can the company fix it? If so, repair and give back to consumer. If not, issue refund.
Your quarterly profits just went down the tubes, but perhaps you’ll learn from this mistake and won’t endanger the consumer next time.
For the fourth or fifth time, I am not talking about *any *risk, but the risk of serious injury or death. If you know that your product can kill people, has killed people, and will kill more people, there should be no dilly-dallying over estimates and cost analysys. Get the product off the market, and fix the problem, or refund the purchase price.
I think Lissa believes that the money removed from the tax pool is the income tax that would have been paid by the wealthy had their investments been in a vehicle without some sort of tax protection. This may be true, depending on the amounts involved and the tax structure used but I don’t think it’s affects would really make that much of a difference. I’ll use a hypothetical to illustrate.
Happy city issues bonds in the total amount of $50,000 at 5% with the expectation of paying the bondholders back after 1 year. Let’s say that the income tax is progressive as follows:
$0 - $10,000 in income is taxed at 10%
$10,000 - $20,000 is taxed at 15%
$20,000 - $30,000 is taxed at 20%
etc.
In other words if a person made $15,000 annually the first $10,000 would be taxed at 10% (for a tax of $1,000) and the next $5,000 would be taxed at 15% (for another $750 for a total taxed amount of $1,750). Let’s say that there are 6 people interested in the bond offering. 5 people who make $10,000 a year (and who also have $10,000 each saved) and 1 person who makes $20,000 a year (and who has $50,000 saved). Let’s say that the 5 people who each make $10k a year decide to purchase the bonds with their savings. Each of these people would pay $1,000 in income tax due to their annual $10,000 income and $0 on the interest they received on the bonds ($500 each, or $2,500 total). The person making $20k a year invested his $50k at the same 5% but in a taxable investment. This person was taxed for $3,000 ($2,500 for his income of $20k and another $500 from the gains from his investment which boosted his annual income to a total of $22,500).
Total taxes received by the city: $8,000
Now lets imagine that the single wealthy person bought the entire bond offering. In this case each of the people making $10,000 a year invest their saved $10,000 in a taxable investment which returns 5% (like the wealthier individual did in the last example). In this case they each pay $1075 in taxes ($1,000 for the $10,000 in income they receive and $75 for the extra $500 interest they received from their taxable investment). The wealthier person pays $2,500 taxes, all of it from their annual income since none of the interest they received from the bonds (a total amount of $2,500 just like the last scenario) is tax free.
Total taxes received by the city: $7,875
The reason for the difference is that the city lost out on the funds that would have been generated by taxing the wealthier person at the higher rate. The only amount, then, that the city can be out more if a wealthier person buys the bonds in total, is the extra amount of money that would have been taxed at the higher rate. So, as I said before, while this is certainly some money ($125 in my example, or a loss of about 1.5% of their total tax revenue) it doesn’t make that much of a difference. Of course my numbers here are hypotheticals but I think it would be unlikely for the real world figures to show that the actual amount lost was substantial (especially considering the rarity with which it seems to occur).
I just want to point out that this doesn’t invalidate my example. What is the difference between the $751,000 being invested in this example and a second hypothetical wherein 751 people, each making $40,000, invest $1,000? None from the city’s standpoint except where I already noted that those with higher incomes will be paying taxes at a higher rate. The difference in the city’s bottom line from a tax revenue standpoint will be based on the different taxation rate the wealtheir would have had to pay for part of their income (i.e. at 33% instead of at 28%, or 35% instead of at 33%, or whatever the real world numbers happen to be). If the city had a flat income tax rate then it would make no difference whatsoever from a tax revenue standpoint if all $1 million worth of the bonds were bought by a single wealthy individual or if they were bought by one million people each investing a dollar.
So far discussion regarding product design and manufacturer’s responsibility has followed automobiles. I think this is a good example so I’ll continue along in this vein. Lissa, you are correct when you state that there can be tremendous forces involved in some car crashes. So far the figures presented have been at the extremes ($11 vs. $5000) and so, I think, we might have overlooked an important piece of the puzzle, namely, that of the middle points in between. We could probably graph the expected fatalities of a given car design after holding constant the orientation of the vehicles involved in the crash while varying the speed of the vehicles. In other words, if we said that there were 100,000 cars of type X in use, and that these cars could be expected to be in Y crashes, then we could reasonably make a statement like:
There will probably be…
0 fatalities between 0 and 25 mph
1 fatality between 25 - 40 mph
3 - 5 fatalities between 40 - 50 mph
20 - 50 fatalities between 50 - 65 mph
etc.
In essence, the speed at which the vehicles collided can be shown to be a curve when represented graphically.
Therefore it’s not as simple as “if you know your product can kill people”. It’s “how many people will die because of this design, at this speed, considering the likelihood and types of crashes today?”. How fast are we saying that cars should be able to collide with 0 fatalities? If we’re saying 65mph and 0 fatalities then I believe that’s an unreasonable expectation. The engineering and materials requirements would price an automobile out of the hands of a large portion of American society starting with the poor. Would that be acceptable? If not, then at what speed should we expect collisions to produce 0 fatalities? 50 mph? 45 mph? Where do we draw the line (keeping in mind that the more stringent the requirements the fewer who can afford them, again, starting with the poor)?
It’s all about trade offs. We have to weigh the benefits of varying degrees of safety and utility with the costs involved.
Thank you for your analysis. I agree entirely that different tax structures will make a slight difference. Also, if I am not mistaken, Lissa pointed out a few other differences. Since smaller investors invest smaller amounts, they may have a higher propensity not report the investment. That is they may take standard deductions rather than itemize as Lissa suggested she does. This might make a difference as well. Although it could be offset by the savings usually had by taking standard deductions. I payed lower taxes for years by taking the standard deductions instead of itemizing. I wonder if I should claim that some poor people are hiding thier income this way?
However, I still maintain that even if there is a small difference, this is far from the same as a tax dodge. That is, if this is a loop hole, it is one the government endorses and benifits from itself. It still seems unfair to criticize people for investing in cities. At least with the same terms used to criticize people who launder money through foriegn banks and such.
Thank you again for your numbers about product liability. That is all I am trying to say.
I have to say this.
I’m sorry, you do keep saying this, but it seems to me you are unwilling to examine the consequences of this view. I’m afraid that cars fit your definition of products which should be pulled from the market. They have killed people. They do kill people. And the will kill more people. Not only people who misues them, but also people who use them as expected. I would add (even though you do not include this criteria) that there are engineering fixes which could alleviate many (though not all) of these deaths.
However, you seem to also believe that cars should not be removed from the market. I am curious how you justify this position.
Finally, just in case anyone else is following the hypothetical I introduced a few posts back. I am talking about natural gas.
This may be true, depending on the amounts involved and the tax structure used but I don’t think it’s affects would really make that much of a difference. I’ll use a hypothetical to illustrate.
Happy city issues bonds in the total amount of $50,000 at 5% with the expectation of paying the bondholders back after 1 year. Let’s say that the income tax is progressive as follows:
$0 - $10,000 in income is taxed at 10%
$10,000 - $20,000 is taxed at 15%
$20,000 - $30,000 is taxed at 20%
etc.
In other words if a person made $15,000 annually the first $10,000 would be taxed at 10% (for a tax of $1,000) and the next $5,000 would be taxed at 15% (for another $750 for a total taxed amount of $1,750). Let’s say that there are 6 people interested in the bond offering. 5 people who make $10,000 a year (and who also have $10,000 each saved) and 1 person who makes $20,000 a year (and who has $50,000 saved). Let’s say that the 5 people who each make $10k a year decide to purchase the bonds with their savings. Each of these people would pay $1,000 in income tax due to their annual $10,000 income and $0 on the interest they received on the bonds ($500 each, or $2,500 total). The person making $20k a year invested his $50k at the same 5% but in a taxable investment. This person was taxed for $3,000 ($2,500 for his income of $20k and another $500 from the gains from his investment which boosted his annual income to a total of $22,500).
Total taxes received by the city: $8,000
Now lets imagine that the single wealthy person bought the entire bond offering. In this case each of the people making $10,000 a year invest their saved $10,000 in a taxable investment which returns 5% (like the wealthier individual did in the last example). In this case they each pay $1075 in taxes ($1,000 for the $10,000 in income they receive and $75 for the extra $500 interest they received from their taxable investment). The wealthier person pays $2,500 taxes, all of it from their annual income since none of the interest they received from the bonds (a total amount of $2,500 just like the last scenario) is tax free.
Total taxes received by the city: $7,875
The reason for the difference is that the city lost out on the funds that would have been generated by taxing the wealthier person at the higher rate. The only amount, then, that the city can be out more if a wealthier person buys the bonds in total, is the extra amount of money that would have been taxed at the higher rate. So, as I said before, while this is certainly some money ($125 in my example, or a loss of about 1.5% of their total tax revenue) it doesn’t make that much of a difference. Of course my numbers here are hypotheticals but I think it would be unlikely for the real world figures to show that the actual amount lost was substantial (especially considering the rarity with which it seems to occur).
[/QUOTE]
