G.R.U.N.T.E.

The author’s family coat of arms.

I’ve been brain doodling some thoughts. Hopefully they’ll congeal enough to make a cogent post. I highly doubt it. Ideas flit around inside my head but somehow lose their luster by the time they get translated for the rest of the world.

G.R.U.N.T. represents my latest attempt. It stands for GRand Unification Theory of Economics.

In short, the theory states that things, economically speaking, are fucked up. (Please excuse the technical jargon.) And, when things reach the state of being fucked up too well, then Bad Shit ™ may be the result. Irrationality is the term I like to use for systems that produce unexpected and undesirable results. GRUNTE predicts a period of Bad Shit heading our way.

There are several key concepts of GRUNTE which I will attempt to elucidate:

  • Wealth Gap. Sometimes referred to as income inequity. After decades of relative stability, the wealth gap began steadily increasing again around 1980, the last year before Reagan became president.
  • Minimum Wage. The “buying power” of minimum wage hit a 51-year low in 2006. (It has since bounced back a bit.) Amazingly some economic “pundits” and fringe crazies bemoan minimum wage to this day. They’d like to see it lower. A few years back, In my home town, a restaurant posted a sign in the window that they were laying off employees due to an increase in minimum wage. My family hasn’t been back ever since.
  • Pensions/Retirement. Back when Social Security was first proposed, a “three-legged stool” model for retirement was discussed. The financial needs of retirees was to come primarily three sources: Employer-sponsored retirement plans, personal savings, and Social Security. For many, savings is insufficient or non-existent. In fact, a U.S. Treasury report in 2010 found that “more individuals are withdrawing retirement savings before retirement, which reduces the amount of income available for future retirement.” Americans don’t save and are increasingly taking from retirement plans before they’ve retired. Additionally, between 1980 and 2010, the number of working Americans with no employer plan increased from 35 percent to 40 percent. Many Americans are facing the prospects of a zero-legged stool: They didn’t save, they never had access to a retirement plan from their employer, and the future prospects of Social Security are in doubt. The question remains, right or wrong, how will our nation respond to this underfunded retirement class?
  • Work. In mom and dad’s generation, one income was enough to provide for a middle class lifestyle. Now it is necessary for both spouses to work full-time jobs to obtain some fraction of the lifestyle that their parents enjoyed. This is the first generation in U.S. history to be less well off than the previous one.
  • Health Insurance. Many oppose the concept of health insurance provided by the government. Meanwhile, the number of Americans covered by employer-sponsored health insurance plans has dropped from 70 percent in 1980 to 57 percent 2010. Americans who already work full-time are ill-equipped to buy their own coverage and in many cases, due to pre-existing conditions, can’t enroll at any cost. And, like Social Security, the future of Medicare remains in doubt. The question becomes: If government won’t provide it and employers won’t provide it and it can’t be obtained by other means, how will our nation respond to this uninsured class?
  • America’s Standing in the World: Believe it or not there was once a time when caring about this wouldn’t get you sneered at. In fact, in 1984, Ronald Reagan said increasing this was one of the reasons he should be reelected. It wasn’t until the time of George W. Bush that this became a bugaboo and mentioning it would get you called a “pussy.”

As you can see, the squeeze is on full throttle on the American middle class, and seemingly from every possible direction. And this is an abbreviated list.

In 1944 the top income tax rate hit 94 percent. That meant that top tax payers paid an overall rate of about 65 percent. These days, at 37.9 percent, the United States has one of lower marginal tax rates among developed nations. My memory may be wrong here, but back in January 2012 Mitt Romney claimed his tax rate was “probably” around 15 percent. The Barack Obama campaign then claimed it was closer to 12 percent. Romney finally settled the issue by claiming, “I’ve paid at least 13 percent tax rate in the last 10 years.”

I was personally floored by this voluntary and breathtaking revelation. 13 percent? Really? How is it possible and/or just that a wealthy person should pay such a lower rate than a working lower-middle class person? It seems inconceivable. It literally boggles my mind. (A process that produces a loud popping and fizzing noise.) And here Romney was proudly proclaiming it as if it was something significant. Wow. What a moment in U.S. history.

The only possible reasoning for such a reality is the notion that such low rates are necessary to spur investment that will encourage job creation. This notion, however, has not been born out by history. It was only by embracing such an approach that all of the basic principles of GRUNTE were put into play.

Therefore, basic GRUNTE philosophy states that the wealthy paying lower tax rates than the poor and/or middle class is immoral.

Extreme Inequity Chart. Click to enlarge.

Finally, we come to the Bad Shit as predicted by the GRUNTE model. This may eventually take many forms. The irrationalities that may eventually spawn may be unpredictable, but we can make some guesses.

First, it has been proven that there is a strong relationship between the misery index and the crime rate. The misery index is an economic indicator obtained by adding the unemployment rate to the inflation rate. As the misery index increases, so does the crime rate, usually about a year behind. I theorize that, in general, the less people have, the more likely they are to be tempted by short cuts. On the other hand, even a modest typical middle class lifestyle is enough to interest persons into criminal decisions that could risk it all. For most, the possibility of much greater wealth isn’t enough to risk a modest lifestyle where most of their needs and wants are met.

Other ways may be more ominous. Some people worried about “death panels” under Obamacare, yet what will happen if the nation is suddenly awash in elderly uninsured persons in need of health care who also have no retirement and no means of providing financially for themselves? What is going to happen to them? To me, this seems a much greater threat than an imagined boogeyman in a health care plan designed to provide more health insurance to those who previously had none. This much bigger threat, I think, may be the source of irrationalities that may shock us all and bring great damage to our country.

In conclusion, hopefully GRUNTE will provide something to think about. It helps to grunt while you ponder it.

What answers do you have? What do you think will happen to the elderly underfunded class? Or the uninsured class? Should they just go die and solve many problems the old fashioned way? Or is there some other answer? And, if solutions for these great many people are never found, how do you think that will manifest itself on our country? Will it end up being a good thing or something else?

Note: I included this post in the “humor” category merely because I’m the one who wrote it. Please don’t think I take myself too seriously. I’m just a dude with an opinion that something stinks but lacks the wits and doesn’t know how to express it well. I’m mostly serious but there is also an element of humor in my high jinx here. I do not hold myself up as an expert in anything, except, of course, my family’s coat of arms. Please take this article with a few metric tons of salt.

4 responses

  1. I’m traveling so I can’t give this post the attention it so richly deserves. In fact, there’s a wealth gap between the golden thoughts I normally produce (ha!) and the leaden remarks I will post here today. Perhaps you will be an alchemist in your reply.

    Here’s a little something about the institution of the income tax, just for fun. http://www.dummies.com/how-to/content/sat-ii-us-history-moving-through-the-progressive-e.html Back in those days, the federal government didn’t do all that much. Now, it wants to do it all. It’s too darned big, and often the more it tries to help the worse things get in some areas. Does subsidizing a service like health care make it more expensive?

    As for death panels, in some countries with national health, people at a certain age are denied certain procedures. I do have lots of examples of that. Or the waiting list for treatment is delayed so long that the patient doesn’t live to receive it. When I took health care economics in grad school, one statement was clear: There is always a cost for health care, whether money, access or time, and that demand for health care is infinite. As the standard of care is increased and more options are available, then each person will want to obtain these services. For example, what if a treatment is developed that maintains the elasticity and strength of your skin even as you age. Wouldn’t everyone want to receive it?

    If we lived the way our parents lived, families could more easily live on one income. We had a small telephone bill and only one or two landline phones, there weren’t many restaurants and eating at home made food bills cheaper, vacations were usually visiting Grandma and Grandpa and other relatives, there weren’t that many extracurricular kid activities to fund, television was three channels and there was no monthly cost, because it was free over the air. For entertainment kids read books (often from the library) and watched Saturday cartoons. We rode bikes and played outside, all free, except for the bikes. Clothes were simple, too. At least that was my childhood. There were no computers, of course. No cell phones. No i-anything. I don’t want to live without my electronic gadgets, but they are expensive. (I did go to Catholic school, so that was an extra expense.)

    My thoughts on the progressive tax rates will have to wait for another time.

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    1. I provoked someone into a comment. On my blog that’s known as a “win.” Woot!

      As always there is a wealth gap between your valuable knowledge and what you choose to share. We need to shrink that gap! 🙂

      I agree with you that the federal government has grown too big and does too much. That’s why I’m a junior member of the Tea Party. I’m on the fringe in the non-psycho wing.

      The American position towards health care can best be summed up, I think, by this idea: It is better to protect the level of care for some Americans rather than provide it to all.

      Would subsidization of health care make sense? I think it would. Prevention is worth a pound of cure and 50 million of us aren’t provided with the means for early detection and what not. And we are left to slowly die when something expensively curable comes along. Death panels, indeed! We already have them.

      Your idea that our parents lived more frugally is an interesting one. I wonder if that bears out?

      I know the arguments against progressive taxes. I’ve heard them trillions of times. (A little debt humor.) I don’t have all the answers but I do know this: Romney paying less tax than me is sick and wrong. It is, as I think I said in my article, “immoral.” I stand by that.

      My boss is a rabid frothy at the mouth Romney supporter and takes great umbrage when I point out the sheer level of effort that Romney has gone through to avoid paying tax. Offshore accounts, Swiss bank accounts, etc. (Wow. How American.) His point is that Romney puts all of his money into trust and lets other people make those decisions. How convenient. Romney is not even president yet and he’s already perfected plausible deniability. You want to do whatever you want with your money? Spend more money than I’ll make in my entire lifetime setting up confusion double-blind systems so you can feign ignorance. Brilliant!

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  2. I was listening to an article on the radio about a computer model used by economists trying to figure out how to fix the economy. They have this computer model that looks at the world economy, and were trying to figure out what changes would repair the US – mainly increase jobs. The started simple – just doing the things that were possible (although that’s not simple, just possible). The first thing they did was fix the government so that the conservative and liberal politicians were focused on fixing the country instead of getting re-elected. What they discovered was that if this occurred, and taxes were raised some and spending was cut some, unemployment could be dropped to around 5% in about 5 years.

    Now how to get the government to actually agree on raising taxes a little as well as cutting a little and what to cut. There’s the trick. Our politicians aren’t interested in fixing things. They’re interested in satisfying their extremist voters. Voting them all out of office doesn’t work – their replacements are just as screwed up.

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    1. No doubt there is a solution. As a former boss of mine used to say, “Change is not necessary. Survival is not mandatory.” I’ve heard many righties (and preachers on the morning radio show) predicting the demise of this country. Perhaps it will turn out they are correct. I hope not. Like most Americans who has never traveled the world, I happen to think my country is the best.

      I’m convinced that everyone paying their fair share, even Mitt Romney, will turn out to be a part of that. The middle class needs tax cuts and the marginal tax rate on the wealthy needs increasing. But you’ll never guess which group pays for more lobbyists, so I have my doubts if it even can be fixed.

      What percentage of Congress do you think is on the take, bought lock, stock and barrel by special interests? They have sold the sovereignty of our nation to the highest bidder. The American dream is basically a tale about profit taking.

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