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Bar Stool Economics

post #1 of 6
Thread Starter 
[FONT='Arial','sans-serif']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 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, 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[/font]
post #2 of 6
Great post.

Sadly, I fear that the final line applies to too many American voters.
post #3 of 6
Drink for free? where its this place?
post #4 of 6
Thread Starter 
Trust me! I wish I knew.
post #5 of 6
Bingo. Nice post.
post #6 of 6
I work for a Very large company, the average person in the factory makes about $16 per hour, that is about 33,280 per year. Last year out CEO flew in from Spain in his private corporate jet, requiring a new Cadillac, silver in color waiting for him at the airport. (we rented it for the day) It had to have a certain brand of bottled water in it at room temp, not refrigerated. I believe he also required 5 types of fresh fruit in the car also , his pilot called this in just before landing. (you just cant make this stuff up, truth is really stranger than fiction) he took a tour and voiced his complaints and was gone in about 3 hours going to look at another facility, Last year his compensation without stock options was about $6730.76 per hour, he made 14 million. and I will bet you his insurance didn't have deductibles and co- pay on prescriptions

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