The Richmond Bridge in London: funded with a tontine and has not fallen down. Coincidence?
Yesterday I got to reading Bruce Bartlett’s editorial in the Times, wherein he laments House Republicans’ passage of a bill advocating voluntary taxation. It’s not going to turn into anything; we’re talking about Congress, here. If it were a real law, though, HR 6410 would allow taxpayers to designate a contribution in addition to the liability on their returns for the purposes of deficit reduction. The IRS already has a fund for accepting gifts, so practically this bill that won’t become a law will not have changed anything if it does. It is called The Buffett Rule Act of 2012.
First of all, what a great naming strategy. The GOP producing a toothless tax bill called the Buffett Rule Act is like Nokia marketing a series of broken Game Boys called the iPhone 5. It’s a terrific idea if your goal is to mislead the public. The Republican commitment to never, ever addressing the income side of our federal budget problems is so solid that they have turned to destroying the very names of ideas that might lead to higher taxes on the rich.
Democrats have decided that such obstinacy is unrealistic, and so they continue to propose new revenue bills that stand no chance of passing either house. Back in April, their attempt to pass a real Buffett Rule got filibustered in the Senate. Any kind of new tax is a dead letter in the House. So Democrats keep coming up with new taxes and throwing them into the meat grinder, because Republicans won’t acknowledge political realities.
You see where I’m going with this. Maybe it’s time we considered new methods of funding public goods that not every member of one of our two parties has signed a written pledge to oppose. Obviously, I’m talking about a tontine.
I assume you have all seen the Flying Hellfish episode of the Simpsons and do not need this explained to you, but a tontine is a subscriber-based annuity in which each participant purchases a share or shares, which devolve to the surviving participants upon that participant’s death. Basically, you buy in and get an interest payout every year, and that payout goes up as other people die and you don’t.
In order to avoid what the economist Milton Friedman called “Agatha Christie shit,” you can replace death with an arbitrary drawing; occasionally, randomly-selected participants have to leave the tontine, as is the case with many charity fundraisers. You can also discourage murders by avoiding the rookie mistake of having everyone meet once a year in a spooky mansion. Or you can have so many members that trying to kill off other participants isn’t worth it.
In any case, do not make a tontine drinking game where everybody buys in and the last person to throw up gets the money. That would be wrong. Second, at least one study suggests that a tontine is a more effective way to raise money for public works than a lottery, with the added bonus that a tontine does not prey on a mix of the desperate and the stupid. I urge you to read that study about tontines. It contains a bunch of fun historical information along with mind-bending actuarial math. And, perhaps most excitingly, it offers a method of funding public goods that is both voluntary and reliable.
I don’t actually think a federal tontine is a good idea. I do think, though, that it’s not measurably worse than watching one party repeatedly propose budget solutions that the other party has rejected in advance. I think it’s stupid that the vast majority of Republican legislators have sworn to oppose revenue-based reductions to our national budget. I also think it’s stupid for the Democrats to act as if that refusal were a passing fad.
The two-party system is likely to stick around for a while, and at least one party is likely to remain intransigent. The federal deficit, too, is not going to evaporate on its own. Perhaps there are some other ways for the government to get money besides taxes, and perhaps if enough of us think really hard we can come up with ones we like. As any metal bassist will remind you, we’re all basically in a tontine already, when you think about it. We should better plan what the winners will get.
The only tontines I participate in are those with their annual meetings in a spooky mansion. Keeps me sharp.
We should start to pay off the national debt by taking every single penny from the people who started us down this path. Anyone who had any sort of decision power in the mortgage bubble should have their golden parachutes confiscated, their summer homes sold off, their bank accounts emptied, and be left in the wilderness with nothing but the clothes on their back and a knife. Then they can fight, Hunger Games style, for our amusement, and we can bet on the winner and enjoy the televised carnage. The winner gets a house with an adjustable-rate mortgage, and two minimum wage service jobs for a year.
I like Big Game’s idea; I don’t understand the tontine yet (now on my reading list) but it doesn’t seem that Danger has anything worthwhile to propose that Democrats do with themselves as an alternative.
Tontine War anyone?
So Big Game wants everyone who worked at a bank 1998-2008 and the hundreds of thousands of poor people who couldn’t afford the mortgage they signed up to be punished for their contribution to the recession. Seems sensible.