Anyone who likes words can’t help but make up new ones. This isn’t that unusual. Even people who don’t value words do it. Sarah Palin, word salad tosser extraordinaire, notably coined the word “refudiate.” I do it all the time.

About ten years ago, I coined the word “catastrophize.” It turns out, it is a widely used term—especially in psychology and sociology. Dictionary.com even has a definition for it:

It is a good definition, but it is not quite mine. To me, it is an active verb.

To catastrophize is take a situation or problem and extrapolate to catastrophe.

Example: the Hangnail

Situation: I have a hangnail.

Extrapolation: it could get infected; I don’t have health insurance so I will have to wait to get to the ER; by then, they will have to cut my hand off; I won’t be able to continue to work as a hand model.

Catastrophized Conclusion: I will starve to death.

Example: the Shortage

Situation: My cash drawer was $5 short today.

Extrapolation: I could get fired; I won’t be able to support my children; I will have to put my kids up for adoption; my kids are too old to be adopted.

Catastrophized Conclusion: I will have to sell my children for use as a filler in hot dogs.

Don’t Catastrophize Me!

I understand the impulse to catastrophize. Everyone does it. But it does no one any good. And it gets very tiresome. I can only stand to hear friends catastrophize themselves out of a job so many times. After a while, it is all like crying wolf, except it takes so much longer!

Do yourself and your world a favor: break the catastrophizing habit. Otherwise, your friends will stop taking your phone calls; then when your car breaks down on the road, no one will be able to help you; finally, you will die in your car after surviving for two day drinking your own urine; and it won’t matter at all that you told them things would turn out like this.

Noah Smith is a very smart and often funny young economist. He runs the Noahpinion Blog, which has a different tag line just about every day. I keep up with his blog, but I don’t spend that much time on it because it is largely over my head. However, he has a better understanding of libertarians and their foibles than anyone else I know. For example: The liberty of local bullies; Libertarianism and the Tamerlane Principle; and Libertarianism is a “low-end” strategy of state formation. This is not to say that I always agree with Smith. In fact, it seems to me that he goes out of his way to be provocative. But he’s interesting. And smart. And funny.

He was in fine form yesterday when he wrote a long article about trolls on economics blogs. I recommend reading the whole thing, but I thought you all might like to see his section on Republicans:

I particularly like the “Favorite dead economist” entry, because Art Laffer is not dead. But he might as well be. He greatly annoys me, because all he does is smile and babble.

This is an update on my article about 60 Minutes. In it, I talked almost exclusively about Romney. There was part of the Obama interview that made me cringe. It wasn’t that I didn’t know it already, but I hate to hear it.

Despite the hysterical conservative claims that he is a socialist, President Obama is a New Democrat. That means: a Democrat who doesn’t care that much about poor people. Don’t get me wrong, Romney would be oh so much worse. But as Dante showed us, not all levels of hell are equally bad. America now has two political parties that are dedicated to the interests of the economic elite. The primary difference between them is that one is also fascistic on social issues and the other is slightly less fascistic on economic issues.

Obama has made it very clear that he would like to “reform” entitlements. This is a nice “inside the Beltway” manner of saying, “Screw the poor and middle class.” This was well on display during Sunday’s interview on 60 Minutes. Steve Kroft asked, “How are you going to get [the Republicans] to change their minds and make this deal?” President Obama replied:

This is a really vile statement. He says that he is willing to make students pay more for school, the elderly to pay more for healthcare, and the poor to lose healthcare altogether (?) but he at least wants a tiny tax increase on the rich.

Let’s be clear: the poor and middle class have paid enough! The last 35 years have seen a huge redistribution from the poor and middle classes to the rich. It is not time for shared sacrifices. The 90% in this country have shouldered too much of the burden these last several decades. First, we get the rich to start paying for a proper share of the government. (Enforcing labor laws might help too.) Then, maybe we’ll see real incomes of the lower classes increase. Finally, we can talk about “shared sacrifice.”

This is the most awesome fucking thing I’ve seen in weeks: Sarah Silverman’s “Let My People Vote 2012 – Get Nana A Gun.”

A standard conservative belief is that we must lower taxes on the wealthy because they are Job Creators. I’ve written much about how this is nothing more than a myth. Put simply: businesses hire when their businesses have to because of their work requirements. This stuff is not rocket science, and anyone who was ever run any kind of business understands this.

Taxes as Subsidy

I was thinking about this question from a different perspective: could higher taxes lead to more hiring? Consider a small business owner. Let’s suppose it is an unmarried woman and she makes a net income from her business of $500,000 per year. Right now, the top tax bracket is 35% on income over $388,350.

The standard conservative calculation is that if this tax bracket went up to 40%, she would not hire anyone because it would cut into her earnings. At this new tax rate, she would be taking home $5,582.50 (5%) less than she would have taken home before.

But here’s the thing: that $5,582.50 could also be a subsidy. She hasn’t used any of those profits to hire employees in the past. She made $111,650 in that highest tax bracket. Before, the government was offering her a $39,077.50 (35%) subsidy to take a chance at expanding her business for greater future profits. Now, the government is offering her a $44,660 (40%) subsidy to take a chance at expanding her business. Maybe it wasn’t worth it before, but now it looks pretty good.

Let’s look at it the other way. Suppose the government says, “Let her keep all her income above $388,350!” Now the government is offering her no subsidy at all to hire new workers. She might as well just spend the money rather than invest in her business.

Hold On There, Fella

This is not the only economic force acting on our small business owner, of course. The higher the tax rate, the smaller the payoff for business investment. Our businesswoman may think, “Why should I invest in my business when the government will only take the future extra money away?” And this is no doubt true if the tax rate were high enough. A 99% top marginal tax rate would certainly do this. Maybe a 70% margin tax rate would as well. But it is pretty hard to argue that a 40% tax rate would stop people from investing in their businesses.

Not Stupid Policy

The point here is not that higher marginal taxes will only cause there to be more business investment. It is that there is economic forcing in both directions. Assuming that taxes only have a negative effect on investment is just stupid. What we need is something like the Laffer curve for this, to determine what tax rate would maximize investment. (I’m sure many economists have spent their whole careers doing this.) My feeling is that the maximal top marginal rate would be higher than it currently is.

There are also policy implications of this. One that comes immediately to my little brain is that future low tax rates in exchange for current business investment should be very effective at stimulating the economy. Of course, I wonder just how much we would want to stimulate business. This sounds like it might be a prescription for an overheated economy. (Not that Uncle Ben couldn’t handle that.)

Once upon a time, 60 Minutes did actual journalism. Last night, they devoted their episode to interviews with President Obama and Mitt Romney. It wasn’t terrible. I thought that the Obama interview was the more aggressive of the two. But it was clear why this was: Romney isn’t up to a probing interview. I don’t think that Republicans realize just how much affirmative action they benefit from in the form of false equivalence, softball questions, and low expectation.

I thought that Steve Kroft asked some good questions of Obama. In particular, he went after the President on the mortgage refinance program that has be disappointing. What was not so great was Kroft’s dismissive attitude. His reaction shots seemed very disrespectful to me—like it was another Bill O’Reilly interview.

Although Scott Pelley’s interview of Mitt Romney went very easy on the candidate, Romney still came off badly. I thought the most telling exchange occurred when Romney explained that he was going to cut tax rates 20% across the board but somehow make these cuts revenue neutral by closing loopholes and deductions. He went on to say that there would be a net tax cut for the middle class. Pelley pushed on this point, although he never brought up the Tax Policy Center that showed that Romney’s plan could not work as he claims. Instead, Pelley asked what specific deductions Romney would end. Romney replied:

This is a high misleading claim. As Jonathan Chait notes, “How about handing them a complete document and saying, ‘I am willing to negotiate’?” What I thought when he said this was, “What about the 20%?” Romney cannot be specific about which deductions he would end or reduce, but he is very specific about how much he would lower the tax rates. I’ve never seen anyone call him on this.

There was one part of interview where I thought Romney was right. And it isn’t new. If you push him hard enough, Romney will admit that he is a Keynesian. He understands that cutting government spending will hurt the economy. This is perhaps the most frustrating thing about Romney: he’s smarter than the candidate he plays on television.

Here Pelley asks Romney why shrinking the federal government on a large scale wouldn’t hurt the economy:

This is the correct answer! Ding ding ding! Romney wins a prize!

But there is a dark side to this. One of Romney’s big talking points is that the government can’t create jobs. Given that he understands that losing government jobs will hurt the economy, he must know that adding government jobs will help the economy. So even when Romney provides an honest and well thought out economic policy idea, it only shows how willfully ridiculous the rest of his policy ideas are.

The 60 Minutes interviews contained no new information. I suppose they are good to have because most people haven’t been following the campaign over the last three years. But the episode allowed Romney especially to give talking points that were never countered. The old 60 Minutes that I remember would have cut away after Romney stonewalled on the deductions in his tax plan, “However, the Tax Policy Center has shown that there are not enough deductions to cut that would leave the taxes on the rich unchanged. What’s more, this study found that far from lower taxes on the middle class, Romney’s plan would raise them.”

Those were the days.

Update (24 September 2012 9:11 am)

There were several other things that were repellent about Romney in this interview. One was that he claimed that the uninsured do have healthcare—all they have to do is wait for a heart attack and then go to the emergency room. What were you thinking, Mitt?! You left your top hat and monocle at home! He also noted that he should only pay a 15% tax rate because his money has already been taxed at the corporate level. This is wrong; I hope to write about it later.

Update (24 September 2012 11:10 pm)

In Mitt Romney got one thing right, then President Obama got one thing very wrong: Obama’s Plan on 60 Minutes.

I don’t think people appreciate just how much of a Luddite I am. I am a pretty good programmer—c++, php, all that—but I have little idea what things like Twitter are all about. I do, however, know that tweets are occasionally hilarious. Here is a screen shot of one by Bill Maher yesterday that I would re-tweet if I knew what that meant:

I caught this via Crooks & Liars. The video contains a lot of information, mostly documentation that Romney has the standard Republican ideas about education: public schools baaad, private schools goood; teacher’s unions baaad, vouchers goood. These are the same ideas they had 30 years ago. If the media were as balanced as they claim to be, they wouldn’t even pay attention to this conservative non-thinking. But since the media are in fact highly conservative when it comes to so called education reform, they continue to accept the idea that charter schools are going to save us.

The payoff line comes at the 45 second mark. “At one point, I said to him, ‘I have an answer for that.’ And he said, ‘I didn’t ask you a question.'” There are a lot of ways that this is bad: obviously, it is just plain rude. But what I think is most important about it is that Romney doesn’t seem to notice. This is not just an example of the entitled rich guy who is never challenged. This is also the CEO mentality. If you question him, you’d better be a VP of Something Important. A mere teacher should know not to challenge him. He does not need teaching; he is the teacher.

It’s remarkable:

Update (24 September 2012 8:44 pm)

Regarding my response to MadKane, this is too much like Mitt Romney:

I just read The Myth of Choice by Kent Greenfield. Unlike Free Will by Sam Harris, this book looks at the question of choice from a higher vantage—particularly the law. This is no surprise given that Greenfield is a law professor who clerked for Justice David Souter.

Greenfield’s primary argument is that any choice we make is simply the last of a series of innumerable other choices by ourselves and others. Think of it this way. Imagine a line of 40 men face-to-back from the edge of a cliff. If the man furthest from the cliff trips forward, he will push the 39th man toward the cliff. And so on until the second man pushes the first man off the cliff. Is it right to say that the second man is responsible for killing the first man?

You might think that things don’t work that way in real life. But they do. People are often in positions where they seem to have choices but they really don’t. Take for example, this from real life:

Of course, the rack collapsed and the painter was badly hurt. It went all the way to the Supreme Court and fucktard Oliver Wendell Holmes, Jr. found that the employer wasn’t responsible because the employee had a choice: he could have quit.

This, of course, is a false choice. It goes right along with the cover of The Myth of Choice, which has a goldfish in a bowl with 7 fishing lines. Another good example were the people who jumped out of the Twin Towers rather than be burned alive. We can all empathize with these people and that fish. But apparently Holmes couldn’t empathize with a man who wasn’t rich.

This all has to do with what Greenfield refers to as “intellectual empathy.” This is the ability to understand people’s choices within the context of their life stories. This is very important for explicit judges to have, but we ought all to strive for it. He writes:

I have a great example of this that I try to remember when people annoy me. When I’m driving and I cut someone off, I feel terrible. In most cases, it was because I screwed up. Sometimes it is because I’m in a rush and I’m being an asshole at that moment. But I’m not an asshole in general. My occasional bad behavior does not define me. The fact is, I’m a really nice guy and I always feel bad when I act rudely.

On the other hand, when someone cuts off me, well they are assholes—then and forever! It could not possibly have been a mistake and no emergency is so important as to require such behavior. In fact, I bet they do this all the time just to piss off people.

I try to remember how ridiculous this thinking is. I think it helps me to keep things in perspective. Of course, it has also made me more annoying to my friends. Now when they tell me about some guy who cut them off, I respond, “I’ll bet he did that just to piss you off!” That one always goes down well.

The book is well worth reading. In fact, it is great fun. There are two problems with it. First, I am much more interested in choice as a philosophical question. The Myth of Choice does discuss this at some length, but it isn’t the main focus. Second, the last chapter is a great disappointment. While the rest of the book is smart and funny, the last chapter is a cloying self-help essay on how to make better choices. It probably isn’t that bad in an absolute sense, but compared to the rest of the book, it doesn’t work.

But don’t let these minor complaints stop you from reading The Myth of Choice. It grabs you from the first page. I only picked it up while I was in line at the library and found that I couldn’t put it down. Kent Greenfield has a very interesting mind and time spent with it is well used indeed.

Will sent me this photograph of his computer screen. I think he sent it because of the length of time: 292 days. I find it interesting because of the implied accuracy: 292 days and 0 hours! If it had been 292 days and 1 hours, well, that’s be outrageous.