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Thread: Bar Stool Economics

  1. #1
    Senior Member Gerry Clinchy's Avatar
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    Default Bar Stool Economics

    You've probably seen this one before:

    Suppose that every day, ten men go out for beer and the bill for all ten
    comes to $100. If, instead of each man paying for the beer he drinks, 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 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 paid $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 got."

    "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, ladies and gentlemen, 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
    G.Clinchy@gmail.com
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  2. #2
    Senior Member dnf777's Avatar
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    Gerry,
    The problem is they are ALREADY having their drinks overseas. China, Tiawan, Indonesia, Vietnam....

    Corporate taxes are at an all-time historic low, with roughly half of Fortune 500 companies not paying any corporate tax! Yet the jobs have still fled overseas to cheaper labor markets. This has more to do with NAFTA and tax breaks encouraging outsourcing, than high taxes on the rich.

    Look at GM. We just heard folks here rightfully berate them for making cars in Mexico, after us taxpayers handed them billions of our tax money! You can't get any more charitable than THAT, and they STILL move to cheap labor. You can't stop greed.

    That's a nice allegory, except lacking somewhat in reality. The truth is, that tenth guy is probably a lobbyist, and wouldn't be caught dead drinking with working folks anyway. He's probably dining at a Congressional favorite, picking up the tab on $400 bottles of wine with his buddies planning the next corporate give away.
    God Bless PFC Jamie Harkness. The US Army's newest PFC, but still our neighbor's little girl!

  3. #3
    Senior Member sandyg's Avatar
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    DNF, you better stick to a$$holes and elbows, because you don't know $hit about economics...

  4. #4
    Senior Member dnf777's Avatar
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    Quote Originally Posted by sandyg View Post
    DNF, you better stick to a$$holes and elbows, because you don't know $hit about economics...
    Ok, what do you want to discuss?
    God Bless PFC Jamie Harkness. The US Army's newest PFC, but still our neighbor's little girl!

  5. #5
    Senior Member huntinman's Avatar
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    Quote Originally Posted by sandyg View Post
    DNF, you better stick to a$$holes and elbows, because you don't know $hit about economics...
    better leave the elbows alone too!
    Bill Davis

  6. #6
    Senior Member sandyg's Avatar
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    Quote Originally Posted by dnf777 View Post
    Ok, what do you want to discuss?
    Nothing with you. You're the master debater on POTUS. Right or wrong, you'll bob and weave and have the last word come hell or high water.

    And of course, you'll respond, because you have to have the last word.

  7. #7
    Senior Member BrianW's Avatar
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    DNF has been studying, ref. the 38 arguments.
    "It's not that government is inherently stupid, although that's a debatable question."
    Rand Paul CPAC speech 2011

    I would rather be exposed to the inconveniences attending too much liberty than to those attending too small a degree of it. Thomas Jefferson to Archibald Stuart, 1791
    ________________________________________
    Proud partner of (HR) WR SR Brian's 44Magnum Monster
    co-owned by HR Rianne's 2nd Chance Hurricane Rebel

  8. #8
    Senior Member Buzz's Avatar
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    Quote Originally Posted by sandyg View Post
    DNF, you better stick to a$$holes and elbows, because you don't know $hit about economics...

    What a priĘk.
    "For everyone to whom much is given, of him shall much be required." -- Luke 12:48

    Raven - Moneybird's Black Magic Marker***
    (Esprit's Power Play x Trumarc's Lean Cuisine)
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    (Clubmead's Road Warrior x Oakdale Whitewater Devil Dog)
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  9. #9
    Senior Member JDogger's Avatar
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    Quote Originally Posted by Buzz View Post
    What a priĘk.
    I think the operative word may be drawn from the OP.

    Barstool.

    I confess to making replies from that location. Will sandyg admit to that as well?

    If not. Then I concur with Buzz. JD
    One cannot reason someone out of something they were not reasoned into. - Jonathan Swift

  10. #10
    Senior Member M&K's Retrievers's Avatar
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    Quote Originally Posted by JDogger View Post
    I think the operative word may be drawn from the OP.

    Barstool.

    I confess to making replies from that location. Will sandyg admit to that as well?

    If not. Then I concur with Buzz. JD
    Aren't Wi-Fi and lap tops great?
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