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Monthly Archives: January 2012

Should One-Percenters Be Hated So Much

One of the reasons, which I bet is shared by many, that I hate politics: the deviation from the pressing agenda, scoring points from the mass by swaying their emotion, the loudest duck wins. It disgusts me. The argument that this is the means to the end, and hopefully we get someone decent elected and do something good, is just, not enough. The direction all the “discussion” lead the public discourse into, the momentum it created that pushes the societal focus into a frenzy state, and the impact on everyone’s mind, makes me hate God a bit (more). Sorry dude. And by politics I don’t mean stuff politicians do; I mean all the things that captures mass’ attention, becomes a campaign, and confined itself to represent a small group of interest. I don’t understand how occupiers are that much different from t-baggers.

Except that they are cuter maybe.

Anyways. When Mitt Romney’s tax returns were to be released and everyone was so excited to see how this one-percenter can defend his ridiculously low tax rate, my reaction was like when I find out (surprisingly) how many people are religious. Simply said, I don’t understand what the hype is all about.

People who believe one-percenters should be taxed at a higher rate thinks it is “fair”.  So where do we base this notion of “fairness”? This will be some kind of tax policy question, which I do not know enough about and wonder whether the ultimate battle on this ground will be somewhat ideological (which I both admire and despise).

But since the one-percenters derive most of their income from non-wage income, basically investment income, it is very interesting to see how this part of income is taxed, overall.

Capital income is money made out of money, not (directly) from anyone sweat and blood. Basically (I think) a premium the users pay to the owner of money to utilize this capital. It seems like rent (I am just making things up here, based on my understanding). Should this kind of profits be subject to a higher rate of taxation than money made in sweatshops?

Occupiers may say, hell yah! They make the money by sitting on their ass, enjoying so much privilege from the society, and should contribute back to the society/country by paying more taxes. It is because all the work of 99% that 1% can make all that money. Et cetera, et cetera.

I am a supporter of progressivity in income taxation, as a complicated modern world, it seems to be the best way to spread the costs of having the society running. Without doing empirical and quantitative study on how much each dollar costs the “society”, and what manner of profits generating is most “taxing” for the society, we can only hope for the best, right? So I rest my case on this. But I will be ecstatic if I ever encounter some insightful explanation on this point (dig out some tax policy articles maybe, note to self)

So let’s establish the baseline here: progressivity in the income taxation. Then another question comes: should different types of income tax at different rate?

It is easy to lose sight when we look at individual taxation. Capital income, unlike other income such as wage, cascades down from some sort of business entity, first appears in the form of business profits, and then later in the form of individual capital income. Taxation happens, at least theoretically, at each appearance.

Should capital income be taxed so many rounds? I mean, why is it so hated? From an utility perspective, is hard-earned money really more solid than money from money? Should we tax based on how easy it is earned, how much it costs to be earned, or…?

But in the risk of oversimplying, Mitt Romney’s low tax rate is not necessarily unfair. I mean, it can be unfair if all the capital income is taxed on corporate level and then again at 15% or whatever his individual rate it, then this part of income can even be categorized as overtaxed. There is the problem of negative tax rate in many corporation, so if the corporate level tax is somewhat escaped, Romney is getting a god-damned one-percenter windfall. But presently, we don’t know. I hope some media can dig out some real data and then we can analyze the effective rate, rather than nominal rate, on his income stream.

WAIT, why do I care? It is so obviously politics. But maybe some one-percenter should throw in some money to hire someone do this research. It may give them some tool to fight back.

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Some final notes on today’s R&R and FinProd class.

For someone like Prof.P who believes that income should be taxed once (he doesn’t believe corporate tax is the price to pay for the privilege of access to public equity market – for him, it is either too steep a price, or basically a highway robbery that is counterproductive), corporate integration, which essentially eliminates doublet taxation on the corporate level, is the way to go. Practically, I think it makes perfect sense for reasons including, but not limited to, promoting capital deployment and re-deployment, increase financial efficiency, preventing lock-in effect, putting debt and equity on equal footing (so business are not so leveraged that the whole world is on the verge of bankruptcy). Overall, reduce the distortion effect from taxation on business/finance decisions.

When we talk about corporate integration, we are talking about converging two separate set of tax regimes into on, namely integrating corporate level taxation and individual shareholder level taxation. If there is only one level of taxation,  which set should be eliminated? Should the corporation be taxed as a juristic person, and just consider taxation another business expense which are diffused by business as they wish? The concept of “incident of taxation” is repeatedly mentioned, but the question is, why do we care? This issue wasn’t addressed much at today’s class, but maybe disincentivizing people from conducting business in corporate form is one of it? Apparently evidence shows that people are being creative in shifting away from corporate form (Sub Chapter C) to avoid the tax pressure.

So we care about how taxation can influence corporate behavior and negatively impact economic efficiency. The taxation should be at a proper rate level and paid by the proper person. I think it is Avi-Yonah, who points out that it is not shareholders who make the corporate finance decision, but the officers (well, there is some corporate governance issues here, but at face it is a passable argument). So the real decision makers need to be properly incentivized; deduction, which gives them a better number to brag out, may work out better in this regard.

Something in the Fin Prod class may actually back up the argument that the one-percenters are creating enormous value/utility: they facilitate the financial products markets, which is basically the scaffolding of global economy and enables complex business transactions happening on a regular basis.

This thought needs to be dug further. But I have a dentist appointment at 830 tmr.

Ciao.

心软

今天看到柴静的博客,最后两段话很好,在此留作纪念,警醒自己

人心的事,没有经受过的人,往往想不到,所以还是留些敬畏,如得其情,哀矜为宜。如果褒贬相激,都只依据简陋的事实轻易评判他人,流于武断,有了戾气,话象车轮子一样从人心上辗过去了。时间长了,把心都硬化了,碰上什么事都进不去,象在水泥地上一样流过去了。

上次杨武案时,有各种评论,也有拿这个事当各种武器来交战的,史航说了一句,“别因为觉得自己手里攥着牛逼的道理,就拿别人的祸福荣辱来打比方。世间不缺你这个比方。咱们行走世间,靠的就是心软,心软能拯救世界。要是我们也练得心硬,能拿别人下棋,拿别人打比方,那,就太可惜了。”

Lie to Me

So I am watching this show, “Lie to Me”, and I am hoping to learn.

Look, I am a honest person; at least I try to be. I just don’t care about stuff enough to fake happiness or caring, wishing to barely getting by at a level of politeness that social order dictates and surviving necessitates.

I am also a fanatic about rationality, showing endless contempt for the hopeless romantic inside of myself, because part of me still believes in lightening strike between two souls and part of me would like to think love is just a natural conclusion after careful calculation (even if subconsciously) in our brains, based on all the info. in our dating database.

But, if we subtract god and what not from our lives, and solely worship rationality, it comes to my greatest fear to realize that, well, without all the profound insights into human nature and brain workings, I can never know what to trust. Like, I think I think this, but do I really think so? Did my brain lie to me?

(Maybe I am just misunderstanding what Voltaire and his gang are talking about? I mean, I read too little classics to use any terms really. )

This fear is greatly reaffirmed and rekindled after I read this post on Cheap Talk. It is on motivation.  Basically we sometimes/often times can’t know our true motivation;  we decide to do something, thinking (naively) that we must want this based on some information we remembered, but we don’t know what information our brain is actually using; some stuff may not be stored in a format that is “readable”, so we omit that in writing our memo to selves on our own motivation, and the memo would be … sub par, incomplete. Our brain tricks ourselves to believe in fiction it created. Your brain lies to you.

Anyways, so this got me to think, do I really know myself. In Lie to Me, they try to catch people’s micro-expression, i.e. the brief facial expression that reflects your true emotion before you cover it up with some other expression.( This would be awfully useful in dating, saving me a whole bunch of trouble in the past and future maybe. But actually Lightman looks pretty neurotic in the show, and I think maybe that’s an attempt to show how it actually sabotages a great relationship, but I think it’s sexy and cool. Viva la truth and rationality.)

Not only will that information be helpful in figuring out other people, I wonder whether it can be of use in figuring out myself. Like, if I have true emotion A towards a particular event, and for some reason,  I would like myself to cover it with emotion B. Supposedly, under this microexpression theory, you should be able to spot (if you are good) emotion A before I switch to a more long-lasting emotion B. What if my brain is pushed by this strong urge from unidentifiable source to cover emotion A with emotion B, would I able to identify my true motivation behind showing this emotion B, the fake emotion. Of course, in cases like ones in Lie to Me, people’s lie typically goes with emotion B and their micro-expression shows emotion A and gives them away. But, what if this is a lie I told myself, and because of the shown tendency of our brain tricking ourselves to think otherwise than the reality? I can be tricked into thinking I am actually feeling emotion B, when the reality is… I was made to believe that I feel that way. And there will be no one there to catch my microexpression to tell me that my brain just lied to me. What shall I do???

I have so much faith in myself. HA.

 

 

 

Talk by Mr. Kim Hyun Sik

[Note: This post was originally written in April 2011 and I hit a wall. I was originally planning on writing on how one's idea about the world changes and not changes, but I don't have a background in neuroscience, psychology and sociology to provide any valuable insight; the whole thing would just turn into a worthless self-exploring stream of consciousness writing by a 20 something y/o female.  Enough of those on the web already, and I just know enough to stop myself from doing it, at my best]

I went to a talk by Mr. Kim Hyun Sik at Harvard on April 21. The official name of the talk was An Inside Look at How The North Korean Regime Maintains Its Power.

I was very interested in this topic because I saw the sharp change in my perspective throughout the years.  I was a loyalist with a naive critical eye until about when I turned 20, and slowly migrated to the zone of dissidents. If early year education  is of the great significance as we think it is,  what does the liberation of my mind imply? A failure of the early year education (in the sense that part of its purpose was implementing a certain ideological framework in the younger generations), rendering it a systemic failure? Or, a stronger than we might think predetermined pseudo-genetic temperament (which led me to continuous exploring and adjusting), implicating a more personal problem/trait?

So I was hoping Mr. Kim would be able to confirm or shed some light on my puzzled mind. Being an “ideological  nomad” himself, he seemed to be someone who went through a similar path with me, like, we wander around between ideologies. The idea is, we wander, we explore, we don’t settle; but we long to settle, we became tired, and it doesn’t seem that we can live off the shackle of an ideology-bound mindset, to some extent.

Oh, doesn’t this sound like bluff.

Well his talk definitely reassured me how North Korean-ish my grade school education, maybe even junior high, was. And how old men from North Korea and China share some interesting traits. He reminded me of my grandfathers. I can get what they are talking about but not where they come from, almost like an ingrained idea in their minds that got reinforced by repeated preaching to other people, without any mental flexibility, the only way they seem to integrate the current situation into their thinking is using it as a contrast to illustrate how much better things are right now, without much on why things are, allegedly,much better now.  Granted that I am drawing the conclusion based on one talk, so it seems to be the right time for me to plug in a disclaimer. Kim Hyun Sik might be awesome. I am just too ignorant.

Before I move on to talk about what Mr. Kim said about North Korean education system and my personal experience, let me take a detour to insert some of his background info. here. Kim Hyun Sik fought in the Korean Civil war and killed some American soldiers. He subsequently majored in Russian in college and graduated top of his class. He then was appointed Professor of Russian in the Pyongyang University of Education (my alma mater‘s counterpart in NK! So happy we went with the French Normale system in school naming ;)), later the Dean of the Department. He claims that he was also selected to be private tutor of Kim Jong Il and was involved in evaluating the academic aptitude of Kim Il Sung’s second wife’s nephew, which was the trial for the new extended compulsory education system in NK (testing whether young children were intellectually developed enough so that they could start the education earlier ). Later he went to Soviet Union to teach Korean (ironically after the Seoul Olympics, when people start to pay attention to the language spoken on this peninsula) , where he defected to the South, and later came to the U.S. He is now a researching professor at George Mason, and apparently his book is being selected as a Nobel Prize contender. There is no English translation yet (only Japanese, which is enjoying a “great readership there”), but you can find a summary of the book in English here .

Mr. Kim didn’t go into details how the education is structured to maintain the ruling power in his talk or his book (summary). His role, to me, seems to be more of a living fossil (a very precious one) rather than someone who is actively providing explanation based on his experience. Him, for some reason, is somewhat objectified, willingly or as a corollary.  Another victim of the western-centered discourse?

Also while he seems to be very much criticizing the situation in NK, he still believes that NK could contribute to the human capital in Korean if a unification ever happened by having young people with the great determination to serve the country. I wonder if the regime is overthrown and everyone is presented with all the opportunities that others have, would they still stick to the one option of serving the country rather than freely opting for some less altruistic goals, such as not serving the country. Statistically this is bound to happen. But anyways.

To sum up, other than an interesting personal story, I didn’t learn much from the talk. You can learn it all from the book summary.

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