Friday, May 02, 2008

Bar Stool Economics

In thinking about the recent posts regarding taxes, the 'right' to universal healthcare in the U.S., and - most importantly - our good friend Shrodinger's Cat's decision to become DOWNWARDLY MOBILE - I thought I would revisit this fun, old tale.
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 motivated, and they just may not show up anymore (in the ER, that is).
How many docs feel like the tenth guy????

55 comments:

  1. Bravo my good man. Around here, however, the story sounds better if the 10 met each night to by crack or meth, but beer works as well.

    Reminds me of the story everyone's heard about the daughter home from college. She's proud of her grades, has worked hard, and has joined all the typical groups on campus. (Save whales, Darfur, penguins, polar bears, elk, etc.). But she tells her dad her roomate has been goofing off, drinking, and making C's and D's. Her dad asks if she has been to the dean to discuss this. "Why?" his daughter asks. "So you can transfer some of your grades to her, so you can both be equal with B's. "Why would I want to do that? I worked hard for those grades."

    "Welcome to the Republican party, dear." (At least the old Republican party, not these spineless twerps who are Republican by name only.)

    ReplyDelete
  2. I just understood a few things better. Thanks!

    SC: Nice!

    ReplyDelete
  3. lofty and 'cat,

    you guys are the worst stereotypical conservative/libertarians i've ever seen. do you not appreciate, kind sirs, that you two, and i happen to know you are of Dutch extraction, are personally responsible for hundreds of years of oppresion of 'inferior' races? that you are personally responsible for putting the less fortunate in the position of helplessness that they are in? that's why we NEED the government to step in and level the playing field.

    only when everyone in this country is equally unable to get what they need and want will things be fair. then we can start afresh. until that time you should quit complaining about having to support, not just yourselves and your family, but about twenty other less fortunate folks by paying your taxes (which should be higher if anything) and giving away care.

    i can't believe you can't understand this. after all, i know you were both born into wealth and were given favorable admissions to colleges and medical school and that you didn't have to work hard there or in residency because of your dutchness.

    personally, i hate the dutch. the wooden shoes, the windmilss, all of that racist crap. if you persist in this delusion of yours i will be forced to call in the reverend al and the aclu. if i were you i would STFU right now and send those checks in to the government and be thankful you are allowed to keep any of it.

    'cat, i have already called the IRS to tell them of your plan to move to a lower tax bracket and it will not be allowed. after all, who then will fund medical care for illegals?

    you guys make me sick with your complaining. damned dutch m-f'ers. go whittle some shoes or something.

    toodles.

    ReplyDelete
  4. You guys crack me up. Lofty, that was probably the best explanation I've ever heard of it.

    I totally get why my mom was so pissed when I'd get a $3000 child tax credit when my husband was a grad student making almost nothing, and she got a big fat nothing.

    ReplyDelete
  5. Good luck to S. Cat, from the poster girl for downward mobility. It was completely worth it, and I get money BACK now.
    And what's with the Dutch bashing, 911? They were probably religious refugees who came to this country full of hopes and dreams and organized crime connections. Da? Or they may have needed a quiet place to settle with their nine wives and fifty children in prairie dresses, like my relatives.

    ReplyDelete
  6. Lofty?

    Did his Dutch jokes really offend you?

    Ya'll can make fun of my Swissness and ancestry and such. I like totally missed out on that whole neutrality thing.

    ReplyDelete
  7. Hell yes I was offended! And I'm not even Dutch. 'You people' are such Dutchists. I am going to contact the DCLU immediately...you people are going down.

    ReplyDelete
  8. They say as soon as you make money you go conservative.

    Keep this in mind, though. I'm not sure how the rich make out in places like Denmark, but if I were Danish and I were smart enough to pass my med school tests, school would be paid for (plus housing while I went to school) and I would have zero debt coming out, making a reduction in my income even by half much more palatable than the situation now, where I can make lots of money but I have tremendous debt to pay off, my health care is really expensive even if I'm working, and I'm not living in the Scandinavian utopia bestowed upon me by good clean living and liberal amounts of aquavit.

    And for CEOs, paying taxes of even 60% on the 30 million a year they get even if they totally suck at their job and cause their own company to lose value thereby sacking tons of poor saps beneath them who worked their way through college with two jobs after emigrating from the midwest to the promised land of Wall Street seems like a good deal considering they'll still have 12 million left at the end for a year's worth of shoddy work.

    Agreed, however, that docs and other upper middle class hardworking people get totally shafted. So I'll probably vote republican in the end anyway since there's, like, 0% chance of the US turning into Scandinavia, which seems to be the only place in the world that can pull off their model. I'll vote republican because I'll get tired of paying my mortgage while others walk away, tired of working for my paycheck while the drug-seeker in room 12 gets theirs for nothing with subsidized dilaudid to boot, and tired of sending my kids to public community colleges while CEO's kids and second-generation immigrants populate the Ivy Leagues.

    Ah, the joys of seeing my jaded future coming, of savoring the last gasps of my populist leanings as they are asphyxiated by the airway edema of modern american life.

    Cheers.

    ReplyDelete
  9. *snort* Dutchists. *snort*

    I'm going to tell you a long and protracted random story. You'll probably be dumber after reading it.

    Of course because it's an inside joke, it's only funny to my husband and I, but I'll tell you why I giggle every time. I had this retarded friend in high school who got a German Shepherd. He names it what sounded like douche. I did a double take and asked him why he named it that. He said because that's how you pronounce "German" in German. I was like "no you moron, it's Deutch. Anyone who is familiar with German knows it's pronounced like Doitch, not douche, but my husband and I have been laughing about it ever since.

    So when my husband is irritated, and there are kids around, he just refers to whomever the current jackass is as a "bag of Germans." It lightens the mood and makes me laugh every time.

    I WIN THE RANDOM AWARD FOR TODAY!

    ReplyDelete
  10. Amy: The hardest part of transitioning from being an attorney to teaching kindergarten is remembering not to swear. No slips, I'm proud to say.

    ReplyDelete
  11. Don't even get me started on the fucking Belgians...

    Lofty, succinct and well explained: was that, like, chinese math or something that you were using?

    The Scandanavians can go fuck themselves. These pompous dickwads are so proud of their great socialist systems while being the most homogeneous, xenophobic, suicidal, sun-deprived, soft-core porn making, blond-pubed freaks. I'm soooo impressed you have such a managable population of clone robots the size of northern Rhode Island. The best thing they ever made was ABBA. And they suck.

    ReplyDelete
  12. ETOTHEIPI - you fricking kill me man. Laughing my ass off. You are a witty girl, er, young boy. Yes, by the way, I DID use a counting board and a set of counting rods called chousuan to illustrate my point. Made popular in the Han dynasty.

    ReplyDelete
  13. I love this post, it clearly explains it all. And then the comments are making me laugh like crazy. This is why I love this site. You get the informative interesting posts (most of the time) and then the comments are always amusing. You guys are awesome!

    Amy-you totally beat me at the random comment today...I was dealing with lawyers again (everything is going well...I'll update when I know anything concrete). I am feeling much better...when the lawyer turns off the tape recorder and yells out "are you kidding me???" because she finds the whole thing so ridiculous, it tends to calm a person down.

    ReplyDelete
  14. So, RadGirl..since you like the blog so much and we like you so much, which posts are not interesting? What is most interesting to y'all?

    ReplyDelete
  15. yeah radgirl and fans,
    who is the best (me) and is there someone who is consistently bad (lofty and etotheipi). i have my own opinion but i'm going to keep it to myself.

    ReplyDelete
  16. You forgot the part where the first four men were given an "earned" amount to drink the beer, clearly this is hard work and they should be rewarded.

    ReplyDelete
  17. So far my favorite was the one about me. Only kidding but that was pretty cool.

    I really like the ones that give me a glimpse into what really goes on (throckmorton was probably my favorite because how in the world would I ever have learned that anywhere else?) and make me laugh too. I think all of you are funny/write good posts. I don't think there has been anything I didn't like, although some of the more technical ones leave me with no idea what to comment...I read every post though and find them all fascinating.

    I sound like a suck-up so I will stop now. But I swear this is all true (to the best of my knowledge...sorry, leftover from the lawyer yesterday and this morning I think).

    ReplyDelete
  18. Hey, also, where has erdoc85 been lately?

    ReplyDelete
  19. 911 for president, Frank for Janet
    Reno's cabana boy, Etotheipi to ghost write Hillary's biography and Lofty for Fed Reserve board.

    ReplyDelete
  20. I just want to know which one of you is short fat and bald.

    Just kidding.

    Seriously though. I wanna play the 10 statement game where 9 of these things are true and 1 is false game. Ya'll have got to tell us something about yourselves besides the obvious tall handsome, and intelligent family men with razor wit, who coincidently happen to be very well endowed? (Did I get all of that right?)

    Actually I am always interested in the cases you come across and the human interactions. I used to work in a hosptial lab, and I loved it! (Until the short staffed us so bad that I wanted to jump off the 7th floor.) I majored in zoology with an entomoloy emphasis and what I loved about it is the taxonomy. So you can see what really sucks me into medicine is the mystery, the diagnosis, the classification, and of course the occasional adrenaline.

    ReplyDelete
  21. Yeah, what's with the free riders? They have get to use the MDOD Lear jet, but they have no posting responsibilities. I don't think Frank is on vacation, he's in the witness protection program as a snitch for Debbie Peel

    ReplyDelete
  22. Amy-you and Radgirl have to do that on your blogs--I went first.And it's true that I ran over myself with my own car.

    ReplyDelete
  23. "he's in the witness protection program as a snitch for Debbie Peel"

    OMG! I'm dying here. Do you think DP sits at home and grinds her teeth while plotting her revenge on you HIPPA violaters?

    ReplyDelete
  24. Let's be honest here...ever since my 'Politically-Incorrect Hockey Mom' initial post, I have ruled this blog. Yes, by the way, I am handsome, fit, sexy, well-endowed, and can touch my ears with my nose (insert cat meow sound here). 911DOC, you're yesterday's news. I am this blog's Jessica Alba to your Brittany Spears. Wait, is that good? OK, since you are my mentor and you invited me along on this wonderful ride, I do have to admit you are good 911. I...I...I love you. I AM the best-looking, however, by far.

    ReplyDelete
  25. 911, Lofty and Cat are much more handsome, well-adjusted and intelligent than me. But my dong is like a knee-high tube sock stuffed full of ham salad and wrapped in a fruit roll-up. Jumping jacks are dangerous to my health. It's like an obese baby's arm, disarticulated at the shoulder, and the hand replaced by a giant snow-globe.

    You get the picture.

    ReplyDelete
  26. WTF etotheipi? i've seen that thing and it's like a pencil eraser. you have body dysmorphism. do you binge and purge too? do you have loss of enamel on your front teeth and calluses on your posterior mcp joints?

    ReplyDelete
  27. See now, Etotheipi, I knew that was you...I just can't quite imagine 911 writing that post.

    ReplyDelete
  28. What color is the sky in your world, Etotheipi?

    ReplyDelete
  29. Do you call it your "precious"? I"m sure nobody else does...

    ReplyDelete
  30. I am by far the most handsome. Also, I am half black, 1/4 Irish, and 1/4 Philipino, with the bottom half being the black half.

    ReplyDelete
  31. Like some kind of weird centaur?

    ReplyDelete
  32. Yeah, like a centaur. In fact I am and ungulate. The hospital must order special gloves.

    ReplyDelete
  33. "But my dong is like a knee-high tube sock stuffed full of ham salad and wrapped in a fruit roll-up. Jumping jacks are dangerous to my health. It's like an obese baby's arm, disarticulated at the shoulder, and the hand replaced by a giant snow-globe."

    AAAAKKKKKKKKKKKKKKK!

    You've been sniffing the formalin again haven't you Tripod.

    ReplyDelete
  34. Wait a minute S-Cat. Special gloves? For the black part? And I must know since you're an ungulate, do you have camel toes?

    ReplyDelete
  35. Congratulations, Dr. Cat: You are the first person to make me look up a word in the dictionary in a long, long time. You've made me a better person and I'm going to remember you in a client's will.

    ReplyDelete
  36. See, I can't type with hooves. I an AN ungulate. hee haw. Chicks dig it. We can ride each other, no sexual overtones or inuendos intended.

    ReplyDelete
  37. I did it again. I will dictate all further comments to my assistant. I AM an ungulate. OOps. I just dropped a patty in room 5. Housekeeping is going to love that one.

    ReplyDelete
  38. There's actually a subset of the BDSM community that's into something called "pony play", where one person dresses up in horsey gear, and the other person, well, you know...
    I can't stress enough that this arcane perversion trivia does NOT come from my own experience--it's straight from HBO. I couldn't look away.

    ReplyDelete
  39. S Cat: For being an ungulate, I must know: are you an odd-toed perissodactyl or an even-toed artiodactyl???

    ...and I can never remember: is it "hung like a horse and smart as Einstein" or "smart as a horse and hung like Einstein"??

    ReplyDelete
  40. Jeez,go away for a few days and everyones talkin about bondage and bestiality. Israel is great, will be back monday. As for the "pony play" I saw that episode Devorrah, it was from "Entourage".

    ReplyDelete
  41. Perissodactyl, and it's hung like a horse and smart as Ben Stein.

    ReplyDelete
  42. Hi Frank! You shouldn't be typing words like "bestiality" in the holy land. Actually, it was "Real Sex", not "Entourage", because I have very high standards for my late night TV viewing, obviously.

    ReplyDelete
  43. 911: And why were looking at Etotheipi's Precious anyway?

    ReplyDelete
  44. COMMENT MODERATION NOW ENABLED. SORRY. A SICK SOUL FORCED THIS UPON US. HOPEFULLY, WE CAN TAKE THIS DOWN SOON.


    Wait, are you talking about etotheipi? I like him, he's funny!

    ReplyDelete
  45. devorrah,
    i looked at it once. it was like that scene from 'pulp fiction' with the trunk in the dungeon and the red, rubber ball etc... i managed to get out and i never went back. ok, once i went back. well, a lot of times really.

    ReplyDelete
  46. Now that I know that, how can I ever function as a kindergarten teacher again, thinking about you in a threesome with Kermit and Dr. Strangelove.

    ReplyDelete
  47. Did none of you bother to check what tax (b)racket you'd be in when you started a productive career after you graduated? C'mon. You went to med school to make money. Unfortunately you forgot to include the looters in your calculations.

    I inadvertently found myself in the same tax (b)racket as you guys in the mid 90's. My fed tax hit alone the last year I did computer security was $75K. So. I quit. Now I'm a total luser (read tax deduction) breeding more tax deductions. 3 so far. BTW, thanks for the incentive check, we'll get $2100 for breathing air this year. Hopefully add another tax deduction sometime in '09.

    I read Atlas Shrugged about 10 years too late though. I financed the stupid system way too long.

    Now, when are you producers gonna buy me an SUV. I really need one for my tribe.

    ReplyDelete
  48. This comment has been removed by the author.

    ReplyDelete
  49. mommy,

    with all due respect you couldn't be more wrong.

    none of us on this blog went into medicine for the money.

    if you read any number of posts here you will understand that for the 4 years of medical school and at least three years of residency (that any doctor has to do and are closer to torture than any thing you can imagine outside of, well, torture) you are actually going into debt.

    residents in medicine make an average of about 7$ an hour when you figure in the up to 120 hour work weeks, and when you add this on top to 150k of debt for medical school it is flat out stupid to go into medicine for 'money'.

    the highest paid doctors are orthopedic surgeons and neruosurgeons and they do make a lot of money. enough, in fact, that after they finish their residencies at about age 37 they can get themselves out of debt within a few years.

    by the time they are forty plus they can start livin' large except for the sleep deprivation and mandated free care. nothin' like getting called in to the OR at 3am to fix a drunk driver's broken femur.

    compare this with working for UPS out of high school and the AVERAGE doctor out-earns him right at about the time the UPS driver is retiring with a pension.

    so no, unless you are stupid, you do not go into medicine for money.
    it takes a lot more than a desire for money to commit to this. almost all of us chose this to do something that matters and to help people while earning a comfortable living. almost all of us now realize we were incredibly naive.

    ReplyDelete
  50. I made about $22,000 during my Intern year of July 88-July 89. I wasn't quite the workaholic alot of interns are but averaged around 90 hours a week. Not counting the 10 days vacation, 3 day medical conference, and 1 day to take part 3 of the boards, I made about $5/hr. Not bad in 1988, especially compared to the $5000 I made the year before thanks to my Navy scholarship.

    ReplyDelete
  51. First year in the Navy I made around $42,000. Figuring a 36 hour week, and 4 weeks vacation, comes to about $24/hr. If you took a military residency you didn't get the $10,000 annual Doctor bonus until you finished training.

    ReplyDelete
  52. frank,
    please clarify for me and my readers. i imagine you are talking about your first year as a GMO of Flight Surgeon with the Navy and not your internship or residency?

    ReplyDelete
  53. I have a friend who made 50K during his residency at the U of Arizona. That was about 2 years ago though.

    ReplyDelete
  54. It's not the salaries, it's the crushing amount of debt. I may make a fair amount, but I already own a really nice second mortgage on my loans.

    Docs can be upper middle class pretty comfortably, but they sure aren't buying golden shower curtains.

    ReplyDelete

ALL SPAM AND GRATUITOUS LINK POSTINGS WILL BE IMMEDIATELY DELETED.