Ferrari Mailing List: Barstool Economics (was RE: Are Ferraris Losing Their Good Looks? )

[Steve Cook (stevec]

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 the 
atmosphere is somewhat friendlier. 

David R. Kamerschen, Ph.D. 
Professor of Economics, University of Georgia 

For those who understand, no explanation is needed. For those who do not 
understand, no explanation is possible
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(And by not showing up, it only takes moving things to off-shore accounts - 
which is entirely legal BTW). I'll put my money to work somewhere where it's 
appreciated and not stolen.

-steve

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-----Original Message-----
From: jashburne [at] aol.com [mailto:jashburne [at] aol.com] 
Sent: Wednesday, November 12, 2008 1:13 PM
To: Steve Cook
Cc: The FerrariList
Subject: Re: [Ferrari] Are Ferraris Losing Their Good Looks?

Growing prosperity is. a good thing.

Having incentives so that people can become prosperous is a good thing.

Risk takers, providers of capital and employers should have risks (being 
removed with bailouts now) and rewatds

T Boone has lost hundreds of millions with his new alternative fund but he 
isn't crying for relief.
Sent from my Verizon Wireless BlackBerry

-----Original Message-----
From: Michael James <cavallino_rapante [at] yahoo.com>

Date: Wed, 12 Nov 2008 11:32:55 
To: <jashburne [at] aol.com>
Cc: The FerrariList<ferrari [at] ferrarilist.com>
Subject: Re: [Ferrari] Are Ferraris Losing Their Good Looks?


I won't deny that there's a growing animosity brewing between the 'haves' and 
the 'have-nots' in this country, but its hard for me to sympathize with a 
socio-economic class of people who:
 
- are growing in numbers, both in the number of newly-minted Millionaires and 
Billionaires
- are growing in amounts/share of global wealth they personally hold
- aren't complaining or asking for relief from this situation
 
These are facts regardless of political persuasion.
 
(SO what... those facts don't support punishing MORE people with higher taxes).