Volume 3, Number 79
4 August 2003
We have two letters in this issue:
Relying on Others, by Jack Powelson
The Bush Tax Cut (2), by John Spears

Relying on Others

Dear Friends,

Some thirty years ago my wife and I planned a family camping trip. Our oldest daughter, Cindy (then a teenager), announced she would bring her boyfriend and they would sleep in the same tent. "I'm not asking you," she said. "I'm telling you." Our response was to call off the trip.

That was then. We would not do that today. Instead, we would let Cindy exert her independence, even to behave in ways we disapproved.

When Cindy was researching for her PhD in psychology, her topic was students who refused to accept an authoritarian professor but who took charge of their own education. Was her choice of that topic related to her "independence" from us? In the midst of this research, she contracted a fatal cancer. She then took charge of her own death and turned it into a beautiful experience, which is written up by Timothy Quill, in A Midwife through the Dying Process. (Cindy thought up the title). I also wrote my story of Cindy ("The Brown Cushion," in Friends Journal, May 1993; also in TQE #98) Why was she always so independent?

She would not have been independent in the middle ages, where one's position in a rigid social system (king, noble, clergy, bourgeois, or serf) determined what one could or could not do, how much education one could have, whom to marry, and so on. How did our society change to one in which much greater flexibility and independence are possible? Roy Baumeister traces the changes in Western society from the middle ages, era by era, to the present, in Identity: Cultural Change and the Struggle for Self (1986). But he does not explain why the changes occurred.

I think changes in technology, economic circumstance, and knowledge were major causes of changes in culture. As population grew, as inventions occurred, as people knew more, and as they moved from farm to city, different ways of behaving (culture change) followed. Besides, there's Powelson's rule of history: What is good for everyone will ultimately happen, provided no one has the power to stop it.

How does change occur? Some one person would decide to do something differently, such as a serf moving to a town, and others — seeing the success — would follow. After a while the rule was changed: serfs became free by living in a town for a year and a day. In Western society, the changes (decline in authoritarian religion, decline in corporal punishment, less brutality in one's own country, greater privacy, etc.) until the twentieth century were always in the direction of increased freedom. This new freedom led to even more innovations, for entrepreneurs were not held back by rigid culture or excessive regulations. That (according to me) is why the West and Japan became rich. (For details, see my book, Centuries of Economic Endeavor, Univ of Michigan 1993).

Since 1900, the Western world has gradually changed from self-reliance back again to wanting others to perform our vital tasks for us, such as health care, social security, and unemployment insurance. Why? I believe that as life becomes more complex with the shift from a rural to an urban society, we want others to relieve us of as many tasks as possible. If we damage our health by smoking, we blame the tobacco companies, even if we knew the dangers when we took those puffs. If our health is harmed by anything we do (however innocent the doer and do-ee), someone else must be to blame. The government does social security and other welfare, and employers take care of our health care and our pensions.

Over time, however, we realize that these agencies do not always act in our best interests. They deceive us, and they may not keep their promises. Also, we are individuals, who do not want identical treatment with every other individual. Some of us want to make up our own minds on how much social security, health care, etc. we want (and who will provide it). We also discover that the government spends our money on activities we do not always favor (such as war in Iraq). We begin to think that the twentieth century was a mistake. Yes, we'll keep its technology, but many of us would prefer the independence of the nineteenth. (OK, the nineteenth wasn't perfect either, but at least there was more freedom).

So, how would you feel about a society in which all social benefits were available on the open market, and poor people were given enough money (through a negative income tax; see TQE #77) to buy them on their own account? We would not subsidize the rich, as we do now. If any sellers (insurance companies, schools, doctors, etc.) deceive us, we would go to others. Competition, more than the law, would keep the suppliers honest.

Our recent experience with Enron, HealthSouth, Merrill Lynch, Ernst & Young, Arthur Anderson, farmers (demanding subsidies), and the like makes us flinch at that suggestion. But these agencies were not always greedy or dishonest. What made them greedy at the end of the twentieth century, when they were not earlier? I believe we endured two decades of increasing greed, not only by companies, but by labor unions, farmers, and individuals, in which we all wanted the government to subsidize us and pass laws in our favor. Greed intensifies with a prosperity bubble, such as we have just experienced. Blaming the corporations for situations far wider than their scope is just another way of demanding that others bear responsibility for our shortcomings. Now, in the twenty-first century, we will try to reverse these maladies. We will want our independence back.

"To blame one's troubles on society is to assert the powerlessness of the individual" (Baumeister, p. 86).

Here is the recommended society in my book, The Moral Economy (Michigan 1998): All persons would buy social security, health care, unemployment insurance, and other benefits in the private market. The rich would pay out of their own pockets, while the poor would be subsidized with public money.

Many of us think the poor are incompetent and would not spend their money properly (on drink and drugs instead of social insurance, for example). I believe the poor are much smarter than many of us think. When the Peruvian Indians were asked in the 1960s to prove that certain lands were theirs, they came to court with documents given them by the King of Spain centuries earlier. Pretty smart, weren't they?

But to overcome the doubts, we might require all persons to buy benefits and supply advice on how best to do it. These benefits would then be similar to the automobile insurance that most states require.

The government currently regulates, regulates, and regulates businesses. Some regulations are essential, such as to preserve the environment. However, the Bush administration, which was supposed to simplify government, has added more regulations than any previous administration in history. Instead of protecting the public, the fickleness and constant changes in regulations has made businesses wary about employing new workers and putting innovations on the market. The Economist (7/26/03) tells us: "For firms, political meddling — dubbed "stroke of the pen" risk — has also created chaotic and incoherent regulatory policies, making planning trickier and hampering investment." I'll take up regulation in another Letter. Stay tuned.

What would you think of the society that I propose?

Sincerely your friend,


PS Please note the first two sentences in Chris Viavant's letter (below). To me, these sentences reflect what ought to be the economic dimension of Quakerism.

Readers' Comments

I think the society you describe would work quite well. One-size does not and should not fit all. Right now, my concern is for all those folks who have no access to decent, affordable health care. This is not just the poor. If all members of society have the ability to purchase health insurance, pensions, etc., with the availability of the advice you describe, then we will have an empowered population, who can make their own choices. You're right, being poor is not synonymous with being stupid. Most people will make good choices for their long-term good and we can all be responsible for our own choices.

— Connie Brookes

Freedom means the freedom not only to do things of which others may not approve but also the freedom to screw up totally, e.g., in Russia, where privatization resulted in some people making millions at the expense of others through buying up the shares of stock from the unwitting for peanuts. This was entrepreneurship but perhaps operating in a vacuum of ignorance and novelty. Government regulations may have helped somewhat, but freedom/privitization inevitably means inequities. I have come to believe that love, trust, truly valuing other people mean, is, at least in part, allowing them to do their thing, even if its means bottoming out — less regulation/support in governmnental structure and in personal relationships. Regulation/support, whether governmental or personal may actually prevent a person from developing, growing, inventing.

— Norval Reece, Newtown (PA) Friends Meeting.

Your suggestions would greatly improve our individual lives as well as our collective experience as members of society. The best course is often the one that requires investment and effort at the beginning, with the payoff coming over a long period as a result of that early effort. In the case you begin to describe, the investment would be a massive program to educate individual members of society regarding their role and the potential outcomes if the individual fails in their obligation to fulfill these roles. Call it Project Head Start for Adult Citizens. The payoff would be a more content, healthier, less polarized society with a greater degree of openness and understanding. These outcomes would come not necessarily as the intended consequence, but would come nonetheless. The opposite of your described society is increased regulation and intervention. Most regulations and interventions have the greatest impact through unintended consequences. Usually, since those who intervene are generally interested in measuring success or failure (i.e. the extent that the intended consequences are achieved), the unintended consequences are either ignored or ascribed to alternative causes.

— Christopher Viavant, Salt Lake City (UT) Meeting, and CFO, Wasatch Homeless Health Care.

That is quite a service to provide to your fellow Quakers. It always seem like the most thoughtful and well-intentioned services are the most taken for granted, but don't give up! It's a huge challenge to try to educate people with strong ideologies when your own conclusions differ from their beliefs; I'm not surprised you haven't received a warm reception by the Quaker organizations, although I admit I don't know much about them.

— Amanda O'Shea, Portland, OR (not a Quaker).

This is where I guess my dander rises most. Always picking on the farmers. When you describe these evil people, please remember that the option may also have with it soaring milk prices when there is a drought. Meat and vegetable prices varying depending on the weather. I believe (not sure here) that price supports for farmers came about, not to help the farmers, but to keep the prices even for others. There are many conglomerate farms out there now. I don't know a lot about the power of those farms. I do know that delivery of foodstuffs is a big industry because we can't just go to the farmers and buy what they offer anymore. I know that farming is a gamble on a yearly basis. The weather that is good for one crop may not be good for another. I know that working 16 hour days may be necessary. I know that there is "easier" work for a person to do, so getting workers who don't own the farm is difficult. I know that it is one of the most dangerous professions. I know that, on a small farm at least, you have to be able to do just about everything yourself. Because you cannot be successful if you pay plumbers, and electricians, and carpenters, and mechanics all the time to fix the things that may go wrong. I know that the price of new equipment is sometimes worth more than the price of the farm. I know that you are on call 24/7 if you have animals. Anyone wanting to go back to the "independence" of being a farmer, must go back without illusions of the peaceful quiet of a blissful farm. And with little illusion of being greedy.

— Barbara Seidel, Gwynned (PA) Meeting.

Note from Jack: Consider the following quotation, from Barry Bearak, New York Times Magazine, 7/3/03: "Why People Still Starve:"

"... wealthy nations hand out $1 billion a day to their own farmers, about six times what they give in development aid to the globe's poor. Nicholas Stern, the World Bank's chief economist, once pointed out that each day, the average European cow receives $2.50 in subsidies while 75 percent of the people in Africa are scrimping by on less than $2. These subsidies also depress commodity prices, undercutting the ability of developing nations to compete in world markets and get their nations off the dole."

I don't see the body politic neatly divided up into "free marketers" and "interveners."

All parts of the body seem quite willing to intervene to arrange the outcomes to be more favorable to themselves, whether senior citizens lobbying for drug benefits, Enron executives and investors wanting to rewrite deregulation rules for power distribution, labor unions against free trade or corporations wanting access to cheap labor and favorable pollution controls in client economies; etc.

— Jim Booth, Red Cedar Meeting, Lansing (MI).

The 1950's were a time of great prosperity and of more regulation and more progressive taxes than we have now. One cannot conclude too much from that, but one can conclude that progressive taxes and regulation do not necessarily defeat prosperity. I am glad to know that, because Jack's Moral Economy would require a more progressive tax structure.

— Bruce Hawkins, Northampton (MA) Friends Meeting

In No.79 you talked about the increased freedom in the nineteenth century. This may have been the case in business, for men, but the social rights of women and children lagged far behind, or were actually reduced by the industrialisation of work. In many countries this is still the case. Perhaps in another letter, you would like to examine how the business freedom available to men results in improvement in the life-choices for women? I think it is too facile to say that this is just the result of economic prosperity, or job opportunities. I would be interested to hear your views.

— Topsy Evans, Glen Osmond, South Australia

A Clarification

I should have specified that I was thinking of economic freedoms, meaning the freedom to transact business: buy, sell, or invest, without government oversight. Slavery was not on my mind, nor the restrictions that society placed upon women. My apologies for not being clear. This apology applies to the next comment as well. — Jack

I am very surprised by the statement [about freedom in the nineteenth century] and its lack of forethought in the midst of otherwise well thought-out articles. Freedom and independence for whom in the nineteenth century? I suppose there was plenty if you were one of the Anglo (not even European generally) males with a modicum of money.

— Rick Brooks, Green Country Friends Meeting, Tulsa, OK.

A letter from a new subscriber:

Your newsletter looks stimulating. I've wondered if there were any Quakers who found market economics more humane than the alternative. I look forward to the next issue, and I'll check out the archives.

— Bill Figlozzi, Easton (NY) Friends Meeting

Normally, I do not publish long letters (only excerpting key paragraphs). The following letter in response to TQE #77 is an exception, because it contains information on taxes that may be important to readers. — Jack


The Friends Committee on National Legislation supports increasing the tax rates on individuals with higher incomes (they don't say by how much) and, thus, making taxes more progressive than they currently are. Should the top income tax rate be 28%, as it was in 1986, or 90%, as it was before John F. Kennedy became President, or 39.6%, the top rate in 2000, or 35%, the top rate under Mr. Bush's tax cut? Should Bill Gates be taxed at a 99% rate because "he can afford it"? Should the rich be soaked? Voters will ultimately determine how progressive taxes are. When I meet a Congressman, I hand him my wallet: what I keep out of what I earn is up to the voters and Congress, not me.

It is in an individual's self-interest to have other people pay more taxes than they do. As Senator Huey Long said, "Don't tax him, don't tax me, tax that fellow behind the tree." Taxing the relatively small proportion of voters with higher incomes at higher percentage rates than what most voters pay has been a politically popular method for collecting taxes. Higher-income taxpayers can more easily afford higher amounts of taxes and higher percentage tax rates than can lower-income taxpayers. The key is how much income is kept — after taxes — to spend, invest or give away. I have never met a higher-income taxpayer who would want to trade places with a much lower income taxpayer in order to be taxed at a lower percentage rate. I think Warren Buffett said, "I'd rather pay taxes than receive taxes."

Taxpayers with incomes of $27,000 or less, who comprise 40% of all taxpayers, do not end up paying any income tax: they receive checks back from the government, in the form of the earned income tax credit, that exceed their income tax. There appears to be a natural incentive for people who pay no income tax to seek larger checks from the government by voting for candidates who seek to increase their earned income tax credits and other benefits from the government. Who will pay the increased cost? Other taxpayers. Who can most easily afford to have their taxes increased? Higher-income taxpayers.

Perspective on Income and Income Taxes in the United States

The next page has a breakdown of average income, average income taxes and average tax rate per taxpayer in the U.S. according to income category. This schedule also shows the percentage of total U.S. income earned by the taxpayers in each income category, and the percentage of total U.S. income taxes paid by the taxpayers in each income category. For example, the taxpayers whose incomes rank in the top 1% of all taxpayers had income of at least $356,000, average income of $968,358, paid average taxes of $269,135 and had an average tax rate of 27.8%. These high-earning taxpayers earned 18.4% of the total income earned by all 133 million taxpayers and paid 36.8% of the total amount of income taxes paid by all 133 million taxpayers.

Sources: Urban-Brookings Tax Policy Center Microsimulation Model; New York Times.

Income Category

Income Earned Per Taxpayer

Average Income Per Taxpayer

Average Income Taxes Per Taxpayer

Average Income Tax Rate Per Taxpayer

% of Total US Income Earned by Each Income Category

% of Total US Income Taxes Paid by Each Income Category

Lowest 20%

Less than $15k






Next 20%

$15k – $27k






Middle 20%

$27k – $44k






Next 20%

$44k – $73k






Next 10%







Next 5%







Next 4%

$147k – $356k






Top 1%

More than $356k













Here is some background information concerning income and income taxes in the U.S.: 133,835,000 tax returns were filed in 2002. 40% of these tax returns, or about 53.5 million tax returns, were for ãtaxpayersä who ended up paying no income tax. About 80.3 million taxpayers paid some income tax. There are about 200 million U.S. citizens age eighteen or over who are eligible to vote. The total amount of income taxes collected in 2002 was about $980 billion. The average amount of taxes per tax return was $7,300 ($980 billion divided by 133.835 million tax returns equals $7,300). The 20% of all taxpayers that ranked in the middle in term of income (incomes between $27,000 and $44,000), with an average income of $30,400, paid average income taxes of $1,677. The top 50% of all tax payers in terms of income paid 96% of all the income taxes collected in the U.S. and the bottom 50% paid 4%. About 26.6 million taxpayers with incomes above $73,000 — who comprise the top 20% of all income-earners — earned 60.9% of the total amount of income earned by all U.S. taxpayers and paid 83.3% of the total amount of income taxes collected by the U.S. government. The top 10% of income-earners earned about 45% of total income in the U.S. and paid nearly 70% of total U.S. income tax collections. The tax collection system in the U.S. is heavily dependent upon upper-income taxpayers.

Individuals who are in the bottom 20% income category do not tend to stay there. They move up to higher income categories over time. The U.S. Treasury did a study of 14,351 households from 1979 until 1988 and found that over this nine year period, 86% of those in the lowest income category moved up, 2/3 to the middle class, and almost 15% into the top 20% income category. Other studies covering other periods have shown the same thing.

Who Gets the Bush Income Tax Cut?

According to data from the Urban-Brookings Tax Policy Center Microsimulation Model, the dollar amount of the Bush income tax cut appears to be roughly proportional, by income category, to the amount of income taxes paid by each category, with the top income categories getting, proportionately, somewhat less of the tax cut than the proportion of total U.S. income taxes that they pay. The top 1% of all taxpayers earned 18% of the total income earned by all taxpayers, and paid 37% of the total taxes paid by all taxpayers. Urban-Brookings estimated that the top 1% will have tax savings that will amount to about 34% of the entire taxes paid by all taxpayers. (If the tax cut were completely proportionate, the top 1% would receive a proportion of the total tax cut that equaled the proportion of income taxes that they paid: 37%. They are expected to get a little less in tax savings: 34% of the tax cut, not 37%.) The middle 20% income category (individuals who earn $27,000 to $44,000) paid 4.6% of all income taxes, and is projected to receive 14% of the total tax cut. The next highest 20% income category paid 14% of all taxes and is estimated to receive about 20% of the total tax savings of all taxpayers. The next highest 10% income category paid 14% of all income taxes and is projected to receive 13.9% of the tax cut. The next highest 5% paid 12% of all taxes and is projected to receive 5.4% of the tax cut. The next highest 4% (taxpayers who earn between $147,000 and $356,000) paid 20.5% of total taxes and is estimated to receive 3.8% of the tax cut.

Any income tax cut that is somewhat proportionate, somewhat across the board, in terms of income categories, mathematically has to benefit "the rich" to a greater extent than other income categories — both in terms of the percentage of the tax cut that "the rich" will receive and in terms of the absolute dollars of tax cuts that they will receive. Any across the board, proportionate tax cut has to go in a big way to "the rich" because "the rich" pay such a large proportion and such a large amount of the total quantity of income taxes that are collected by the U.S. government. It is true that "the rich" will get the lion's share of the Bush tax cut. It is also true that "the rich" pay the lion's share of income taxes in the U.S.

The Urban-Brookings data indicates that income taxes are progressive. About 53.4 million individuals earning less than $27,000 — the bottom 40% on the income scale — pay no income taxes. However, these individuals do have amounts deducted from their pay checks for Social Security, Medicare and Medicaid, and various sales taxes are probably a larger percentage of take-home pay for these individuals than for someone who earns, say, $100,000. How progressive would taxes have to be in order to eliminate Social Security, Medicare and Medicaid payments for taxpayers who earn less than $27,000? How much would it cost to increase the after-all-tax income of ãthe poorä (keeping in mind that most people in the bottom 20% tend to move up into higher income categories over time)? What are the specifics? It seems to me that the devil is in the details: How much more taxes would taxpayers in various tax brackets have to pay? Wouldn't it be nice if politicians provided a calculation of what various spending plans would cost taxpayers in each tax bracket so that each of us could consider the effect of each proposed spending plan on our own wallet?

Would more progressive taxes tend to reduce investments that generate the innovations and constant improvements which increase the material well being of most individuals — including the poor — in the U.S? I am in awe when I look around and consider the bounty from past investments: modern medicine, tractors, indoor plumbing, heating without having to shovel coal, labor saving tools and machines of all kinds, affordable food and clothing, air conditioning, telephones, light bulbs, air travel, fast road travel without manure: car travel, electricity, low cost entertainment from movies, records, TV, low cost education and information over the Internet, etc., etc. How progressive should taxes be? Would less progressive taxes tend to improve the living standards of more people over the long run? What is the right balance? I sure don't have the answer.

It is interesting to note that many of the former-Communist countries have adopted a flat tax. Everyone pays the same 13% income tax rate in Russia.

As a money grubbing investment manager, I admit to liking the Bush tax cut at least enough that I will probably not be sending back the dollar amount of my tax cut as a contribution to the government. With my tax cut dollars, I will be able to save/invest more, spend more or give more money away, and plan to do some of each.

As a percentage of GDP, deficits have sometimes been higher in the past than they are expected to be in the next few years. Some past forecasts of amounts of deficits (or surpluses) have turned out to have been pretty far off the mark. I have read that deficits were higher as a percentage of GDP in some years of the Reagan administration and during World War II than they are now. Like tax rates, it seems that deficits have been a yo-yo. I am not so sure that the current level of deficits and tax rates can be extrapolated. Proposed tax changes and spending changes appear to be very useful in helping politicians on both sides of the aisle to create campaigns and raise campaign contributions.

— John Spears, Princeton (NJ) Friends Meeting.


RSVP: Write to "tqe-comment," followed by "@quaker.org" to comment on this or any future Letter. (I say "followed by" to interrupt the address, so it will not be picked up by spam senders.) Use as Subject the number of the Letter to which you refer. Permission to publish your comment is presumed unless you say otherwise. Please keep it short. Letters will be edited for spelling, grammar, clarity, and brevity. Any letter over approximately 100 words may be returned without being read. Please mention your home meeting, church, or synagogue, if any (this is not required), and your location.

To subscribe (or unsubscribe) at no cost, please visit our Home Page.

Each letter of The Quaker Economist is copyright by its author. However, you have permission to forward it to your friends (Quaker or no) as you wish and invite them to subscribe at no cost. Please mention The Quaker Economist as you do so, and tell your recipient how to find it.

The Quaker Economist is not designed to persuade anyone of anything, although viewpoints are expressed. Its purpose is to stimulate discussions, both electronically and within Meetings.

Publisher and Editorial Board

Publisher: Russ Nelson, St. Lawrence Valley (NY) Friends Meeting

Editorial Board:

  • Chuck Fager, Director, Quaker House, Fayetteville, NC
  • Virginia Flagg, San Diego (CA) Friends Meeting
  • Asa Janney, Herndon (VA) Meeting.
  • Jack Powelson, Boulder (CO) Meeting of Friends, Principal Editor
  • Norval Reece, Newtown (PA) Friends Meeting.
  • J.D. von Pischke, a Friend from Reston, VA.
  • John Spears, Princeton (NJ) Friends Meeting
  • Geoffrey Williams, Attender at New York Fifteenth Street Meeting.

Members of the Editorial Board receive Letters a week in advance for their criticisms, but they do not necessarily endorse the contents of any of them.

Copyright (c) 2003 by John P. Powelson. All rights reserved. Permission is hereby granted for non-commercial reproduction.

Previous Letter | Home Page | Next Letter