Tuesday, March 05, 2013

That Ol' "As a Percentage of GDP" Dodge ...


The Congressional Budget Office projects that in 2013, federal tax revenues will reach an all-time high of $2.7 trillion.

The folks at FactCheck.Org have a quibble, though:

Bob Williams of the nonpartisan Tax Policy Center said it doesn’t make much sense to talk about revenues only in nominal dollars. That doesn't account for growth in population, inflation or the growth of the economy. Say, for example, the population doubled, Williams said. You would expect the amount of revenues to double as well. So revenues would increase without the need to raise tax rates. But spending would have to go up to provide services to twice as many people.

"Provid[ing] services to twice the people," as in Williams's example, does not necessarily mean providing twice the services, nor does it necessarily mean twice the cost. As a matter of fact, it almost certainly means neither.

Just because the population got bigger, that doesn't mean the borders got any longer or that they cost any more in man-hours or equipment to "secure."

It also doesn't mean the armed forces had to get bigger or have more planes, tanks, guns or bombs. Nobody else's borders got any longer, or their territory any larger, either. The oceans are still the same size, too -- it takes exactly as many Carrier Strike Groups to patrol them as it did before.

And if the population of Unfriendlystan  got bigger too, so what? A 10-megaton nuke (just for example) will kill 98% of the people unlucky enough to be living within its 13-mile blast radius. It doesn't care if there are 10,000 of them or 100,000 of them.

Even in the areas where costs do rise, they probably don't double. Does the phrase "economies of scale" ring any bells?

So the government is sending out twice as many Social Security payments, yeah, and the total cost of the payments themselves doubled, true, but the administration shouldn't cost anything like twice as much. So they had to stick another computer in the SSA building to run more direct deposit routines. That doesn't mean they had to double their work force, or build a new building twice the size, etc.

Yellowstone and Yosemite will be the same size next year as they were last year. It doesn't take twice the staff to usher twice the number of visitors through the gates. If there are 100 people standing by to watch Old Faithful erupt today, it takes the same single tour guide to give the lecture as it took when there were 50 people there a year ago today. Yeah, they may need a larger maintenance and cleanup crew, but not double (twice as much trash may have to be picked up, but that there shrub doesn't have to be trimmed twice as often).

There will still be 435 US Representatives, not 870, and 100 Senators, not 200, and they will still operate in one Capitol building, not two. There will still be one President and White House, one Vice-President and Naval Observatory,  and so on, and so forth.

Just because the population of my household -- or the income they earn --  doubles, that doesn't mean the costs have to. Sure, they'll go up, but they won't double. It costs the same amount to light the living room for the evening with two people in it as it does with one. The rent or house payment doesn't change, nor does the cable bill or the phone bill unless we just really want an extra phone line or more DVRs or something. It costs the same amount to mow the yard or have it mowed (if we mow it ourselves, though, there are twice as many people to split the work -- more leisure for all!). I may spend more on food, but I'll probably spend about the same amount to refrigerate that food until I cook it, and the same amount on or electricity to cook it with, and less than double the amount of water on washing dishes, doing laundry, etc.

Trying to calculate taxes "as a percentage of GDP" is 100% pure Grade A horseapples.

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