Free Republic Browse · Search News/Activism Topics · Post Article

BAR STOOL ECONOMICS
Sound Politics ^ | April 12, 2007 | David R. Kamerschen

Posted on 10/10/2008 5:57:59 AM PDT by new cruelty

Bar Stool Economics

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 on 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.

TOPICS: Business/Economy; Extended News; Government; Politics/Elections
KEYWORDS: beer; taxes
This has been around for a while in some form or another, but I heard the morning talk radio guy discussing it and thought I'd share it here.
1 posted on 10/10/2008 5:58:00 AM PDT by new cruelty

To: new cruelty
Great!

Thanks

2 posted on 10/10/2008 6:02:14 AM PDT by G.Mason (Duty, Honor, Country)

To: new cruelty

Principle works regardless if its beer or white wine consumed.

3 posted on 10/10/2008 6:04:08 AM PDT by Jumpmaster (Defund the left!)

To: new cruelty

Genius. We could teach a lot of folks a lot of things with this pithy piece. Kudos.

4 posted on 10/10/2008 6:07:39 AM PDT by major-pelham

To: Jumpmaster

Yes it does. It even works with donuts!

5 posted on 10/10/2008 6:09:36 AM PDT by new cruelty (I don't want my daughters punished with obama.)

To: new cruelty
I love this explanation. It should become a campaign poster. This economic mess is going to make the people scream worse when the jobs really start to end. The wealthier folks have the ability to take their money elsewhere, and probably will.

The poor in this country are not like the poor from the 1930’s. Back then they had survival skills, now they only know how to hold their hands out, and many won't survive. It's sad how they've allowed themselves to be indoctrinated that they're owed a living because they're “disadvantaged”. They don't know how to do without. It's gonna get ugly.

6 posted on 10/10/2008 6:15:48 AM PDT by graywaiter (Gotta love those gun tote'n mommas.......)

To: new cruelty

But with beer, it held my interest.

7 posted on 10/10/2008 6:17:58 AM PDT by hunter112 (Gov. Palin is ten times the woman Hillary could've hoped to be, if she had stayed a "Goldwater Girl")

To: major-pelham

The real lesson is the need to rid ourselves of the graduated income tax. A system that pits. as in the bar story, the freeloaders and the producers.

All should pay and all should pay the same percentage regardless. If you don’t contribute you don’t vote. Simple. Unfortunately no one seems to understand that it isn’t tax cuts for the rich, it is tax cuts for taxpayers.

I’m not really excited about having freeloaders deciding with government to heist my dough for their welfare and that is precisely what is happening and as freeloaders become the majority, the producers will either be forced to quit, or forced to live with the system.

8 posted on 10/10/2008 6:24:03 AM PDT by wita

To: Jumpmaster
I'm in the restaurant industry. The younger employees are big Obama fans and all for taxing the evil rich guy. I keep telling them that it is the “RICH” that frequent our eating establishment that allows them to earn \$200-\$300 a night. They don't seem to understand that taking an extra \$20,000 in taxes from Mr Jones is equal to about what he spends with us every year and that's just Mr Jones. Mr Smith will also likely have \$20,000 LESS to spend in with us and so on and so on. They always retort that Obama is going to cut taxes for the little guy and make the RICH pay their fair share. I always tell them to take a good long look at Mr Smith and Mr Jones cause they wont be seeing either one very much in the coming future !!
9 posted on 10/10/2008 6:25:41 AM PDT by keypro (On the right in Richmond)

To: new cruelty

I was surprised to see the author was employed at a college. But this college also had Newt on the payroll once (I think it was UoG), so that dampened the surprise somewhat. I guess not all colleges are populated with 100% loony leftists.

10 posted on 10/10/2008 6:27:32 AM PDT by ByteMercenary (9-11: supported everywhere by followers of the the cult of islam.)

To: hunter112
LOL.

More for me.

11 posted on 10/10/2008 6:30:06 AM PDT by new cruelty (I don't want my daughters punished with obama.)

To: ByteMercenary

I was wondering if the guy actually existed or if someone just made up the name. Apparently he does.

http://davidk.myweb.uga.edu/

12 posted on 10/10/2008 6:31:57 AM PDT by new cruelty (I don't want my daughters punished with obama.)

To: wita
All should pay and all should pay the same percentage regardless.

Then you would really hear the wealthy dropping their silver spoons. There would be no place to hide and no breaks. Fair tax!

13 posted on 10/10/2008 6:41:52 AM PDT by Realism (Some believe that the facts-of-life are open to debate.....)

To: new cruelty; NFHale; hiredhand; Squantos
Oldie but goodie, and it will become more evident as we slide off the table into socialism...

For those who understand, no explanation is needed. For those who do not understand, no explanation is possible.

LFOdrink alone...heheheh [you guys understand]...

14 posted on 10/10/2008 6:44:51 AM PDT by Gilbo_3 ("JesusChrist 08"...Trust in the Lord......=...LiveFReeOr Die...)

To: new cruelty

I think that we could safely add that under Obamanomics, the four guys who didn’t have to pay would, in fact get at least \$3.00 a piece and maybe an extra beer or two.
FWIW, I know someone who is with economists every single day and yesterday that person said that every one of these people think that part of the panic is the prospect of Obamanomics becoming a reality. These are people who live in his part of Chicago, Hyde Park and they think his Presidency would be a disaster....there are some sane people even in Hyde Park.

15 posted on 10/10/2008 7:26:13 AM PDT by madinmadtown

Let’s hope they all show up at the polls at vote against obama.

16 posted on 10/10/2008 7:35:46 AM PDT by new cruelty (I don't want my daughters punished with obama.)

To: new cruelty

The leftist solution = The tenth man must pay wether he drinks or not.

17 posted on 10/10/2008 9:02:32 AM PDT by cdpap

To: keypro

did you also tell them that if they see less of mr’s Smith and Jones, they will have less hr’s of work

18 posted on 10/10/2008 10:36:38 PM PDT by markman46 (engage brain before using keyboard!!!)

To: new cruelty

I can think of several people that need to see this...but they’re so big-headed it’ll probably be like banging my head against a brick wall. Like it says in my quote, let ‘em learn the hard way.

19 posted on 10/11/2008 2:48:45 PM PDT by RWB Patriot ("Let 'em learn the hard way, 'cause teaching them is more trouble than they're worth,")

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

 Free Republic Browse · Search News/Activism Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794