Wherein the Author Gets to Rant and Rave about Issues Relating to Taxes, Community, and Stupid Libertarian Memes

I got the best birthday present today, an opportunity to bitch and complain about politics. I got an email this morning from my dear cousin Jean, who was unfortunate enough to receive this nonsense:

From: Murphy, Jean
Sent: Wednesday, January 30, 2008 5:18 PM
To: Joanne Warren; Erica Warren
Subject: FW: Bar Stool Economics 101

I would love a rebuttal from our New York City big whig

>> >> 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 only saved a dollar, too. 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 t he atmosphere is somewhat friendlier.

And, dear Readers, my chance to shine:

Haha. Well, since you asked, whenever people throw out that thoughtless and selfish idea that taxes are inherently wrong and that a) tax breaks are inherently good and b) rich people deserve them more, I point out two things:

1.) If you don’t like paying taxes, then stop using the roads, schools, police, social security, public universities, medicine (which is regulated by the FDA), using the public airwaves (television and radio), having your trash removed from your yard, or calling the police or fire department in time of emergency.

2.) The idea that paying taxes requires that people get the same thing back from their contribution commits a fundamental error in the understanding of democracy: it posits that we are consumers buying something rather than citizens combining our wealth to create something that is greater than the sum of our parts. If you personally feel that you as an individual are more important than your neighbor than yes, I can see how it would suck that you have to pay a few bucks extra so her kids can learn to read in a public school. However, if you have any amount of humanity, then you would realize that when we all contribute what we can afford (which is not necessarily the same amount, mind you) then we all benefit. You benefit when your neighbor’s kids get an education—not only because educating kids is a good thing, but who knows if he’ll be the next Einstein? This is how we create a meritocracy rather than a feudal kingdom where rich people get all of the benefits and less rich people have absolutely no chance of bettering themselves. Isn’t that—creating a meritocracy, a city on a hill—what the idea of “America” is supposed to be about? (And don’t even get me started on how we’d all benefit if everyone had comprehensive healthcare, unless you want a lecture about epidemics and how inhuman you have to be to admit that it’s ok if poor people just die. I have no patience for people who claim to be moral or religious yet are ok claiming that rich people are just, well, more deserving of vaccines and things.)

And that is not even addressing the fact that the “example” below is ridiculous not only because of the above examples, but also because in using the example of beer it really trivializes how money is actually spent. It assumes that all those guys have their basic needs met and actually have some extra money for drinks. When a more realistic example would be that you have $1000 that you pay to each of those 10 men, and tax the amounts listed. Because the guy who pays $59 in taxes earns $800 of the total amount, and therefore can still afford to, say, feed his family after he pays the taxes. Perhaps he can even still buy a flatscreen tv. Whereas the guys at the bottom, who don’t pay any taxes, can’t afford fresh vegetables for his kids because he’s paying $3.50 a gallon for gas for his old car that he can’t afford to replace so he can drive a hour a day to his job with no benefits three towns away that pays half as much as the old job that got downsized. Oh, but at least he doesn’t have to pay TAXES BOOGA BOOGA BOOGA!! Please.

What is more frustrating about the argument below is that it is most often used by selfish, wealthy right-wingers who want to not contribute their share and fuck over their neighbors, because poor and middle-class people aren’t real people, but they know that wouldn’t go over well so they appeal to our innate sense of individuality and claim that taxes are inherently bad because then OH NO someone else might get some help. But tell anyone who complains about paying taxes that they are more than welcome to quit their job and go work at Wal-Mart for $7/hr, and they won’t have to pay taxes either, and see what they say.

See, Jean, what happens when you get me started?

Since I am pretty sure I am preaching to the choir on this one, feel free to contribute additional ammunition for Jean to use with her fine North Carolinean colleagues.

The Radiohead Thing

If you’re hip enough to have found you way to this fine web log, then you’ve probably also heard about this band Radiohead and all of the bruhaha surrounding the “release” of their latest album In Rainbows. For those of you who don’t spend all of your time fucking around on the internet, do your homework. For the rest of you, here’s my two cents.

Most of the coverage–in print and online–surrounding the “virtual busking” of In Rainbows has focussed on dissecting how many people downloaded the songs, how much they chose to pay, and thus how much money the band made. Literally, did the band’s gamble pay off? However, this framing seems to miss the point because the issue here is not how to make money off of a commodity that has, ostensibly, become free for the taking, but rather that the standard industry model has been primed to be supplanted by a more efficient mechanism. Radiohead has presented the possibility that record labels are obsolete.

I will leave the larger discussion of illegal downloading for a different post, though discussion of both illegal and artist-provided free downloads seem to ignore one key fact: with standard major label contracts, most musicians do not make much, if any, of their money from selling CDs. They make money from touring and selling merchandise. The recording industry has thrived with its current business model because a) musicians need to build a fan base to be successful, b) people need access to the recorded music to see if they like a particular band, and c) the traditional distribution method for getting that music to potential fans is cumbersome and laden with hefty upfront costs: recording and production of the music; physical creation of the album, in whatever format; distribution to a system of retail outlets, etc. Additionally, convincing people to drop $15 on untested music requires hefty promotion and marketing expenditures.

Thus, record labels front the early production and distribution costs, and then profit from that investment; musicians get the recording and promotion they couldn’t have afforded on their own. It seems like a win-win situation when the costs of entering the system are too expensive for an individual, unknown band to support. And this would be true, if the major record labels were interested in supporting the creation of culture. However–particularly as media companies consolidate–record companies are only interested in making as much money as possible. Music is like any other commodity–toothpaste, oil, electronics–and therefore can be produced more efficiently to produce higher profits. And because the largest costs are upfront, it makes more economic sense to invest in one artist who will sell 10 million CDs rather than in 10 artists who will each sell 1 million CDs, or 100 artists who will each sell 100,000 CDs. But because people–consumers, in this framing–are unique individuals with different tastes, finding that album that will appeal to 10 million people requires that homogeneity is encouraged.

But music is not a car, or a facial cream. Music is culture, and a vibrant creative culture should be important to us all. This is why the story of a promising band “selling out” or being exploited by their record contract is such a cliche–because in many ways the standard industry model is antithetical to the process of actual creativity.

Given this situation, we are left with musicians who must either compromise their art or be locked out of this standard model, not to mention music-lovers who are denied access to the cutting edge work that is not going to be offered via traditional channels. Is it a surprise to anyone that, when presented wtih a more efficient distribution mechanism for getting their music to people (and thus building the audience necessary to sustain the job of touring, making a career as a musician a realistic possibillty) that music-lovers jump at the prospects of access to music and musicians actually benefit from providing that music to their listeners even if it is free of charge?

Which is why the “success” or “failure” of Radiohead’s pay-what-you-wish release is less about proving that money can be made through this kind of release, but rather proving that record label middle men aren’t necessary any longer if you take advantage of a new, more efficient distribution method. Ask any small band with a MySpace page the benefit of building a fan base organically and you’ll see that the necessity of a record contract to make a living as a musician has already been disputed.

The difference with the Radiohead experiment is one of scale, and of choice. The stories of bands, big and small, who have used digital distribution to their advantage are generally motivated by necessity–major labels not being a possibility for whatever reason, bands resort to a new technology. Radiohead, on the other hand, when their contract with EMI expired after the release of HAil to the Thief, were in a position to negotiate any terms with any label they would have wanted. Yet they opted not to. The In Rainbows experiment is not about whether money can be made via digital distribution. It is about showing that the traditional music industry business model is obsolete.