Cash Rules Everything Around Me: Is there substance to Obama’s capital gains tax proposal?

This is the first in a series of pieces by E&F resident economist, Joshua Land, who will be writing about money. 


During his State of the Union Address last week, President Obama proposed to restore the top tax rate on capital gains and dividend income to 28 percent, effectively undoing one provision of the Bush tax cuts.

Economists hate taxes on capital income. The traditional view has been that taxes on dividends increase the cost of capital to firms by reducing the amount of money potentially available for investment. A higher cost of capital then causes a reduction in investment, which in turn reduces the rate of overall economic growth. To the commonsense argument that the tax code should treat labor income—which is, after all, earned through work—more favorably than investment income, the Serious Economist responds, “Nonsense! Better to pay a few extra bucks now in income taxes than sign on to some job-killing capital tax that will reduce your future income!” Case closed.

It’s a sensible argument, as long as one accepts the initial link between dividend taxation and capital cost.

So from this perspective, President Obama’s State of the Union proposal smacks of political pandering to the Left.

Or maybe not. A new paper from UC Berkeley’s Danny Yagan provides new evidence that the relationship between dividend taxation and investment may not be so straightforward (h/t to Mike Konczal, whose Next New Deal post brought this paper to my attention last week .)

The issue of how changes in tax policy affect investment is difficult to study empirically, as it can be impossible to separate the effects of taxation from the myriad other factors that might affect investment. Yagan’s paper comes up with a nifty solution to this problem, exploiting the difference between C- and S-corporations. All corporations are required to adopt either “C” or “S” status for purposes of federal taxation. There are a number of differences between the two, but the most important for the purposes of Yagan’s study is that C-corporations are subject to dividend taxation while S-corporations are not. If we make the assumption that the two classes of corporations should trend similarly in the absence of a change in tax policy, then it becomes possible to identify the effects of the policy change on investment. Yagan looks at corporate tax returns from 1996-2008, the years immediately before and after the Bush tax cuts. He finds no difference whatsoever between investment trends for the two types, either before or after the tax cuts. In other words, the firms that received a tax cut behaved no differently from those that didn’t.

So if the extra money from a dividend tax cut isn’t being invested, then where is it going? Yagan’s paper suggests into the pockets of wealthy investors. He finds that payouts to shareholders by C-corporations spiked by 21% in 2003 relative to S-corporation payouts. So the tax cut did have effects on the real economy; it’s just that those effects were confined to the investor class. This result is consistent with changing norms in finance. For example, it is now commonplace for firms to borrow money to increase payouts to shareholders, behavior that in most cases would have been considered unethical 30 years ago. Clearly, further research is needed, but Yagan’s paper provides the strongest evidence yet that the new era of “disgorge the cash” may be undermining traditional models of tax policy. Perhaps the pandering politicians are right after all.


Joshua Land is a freelance writer who lives in Madison, Wisconsin, with his wife and son. He is currently a fourth-year PhD student in applied economics at the University of Wisconsin.


I Don’t Even Know Why I Wrote It

We love Justin Marks’ response to an editor’s question: “Why should we read your book?”

“Why should you read my book?” he begins. “I have no fucking clue. I don’t even know why I wrote it, except that doing so was part of a compulsion I have to make things, and the only means I have for doing that, the “talent” I have, is writing.”

We have the same compulsion to make things, Justin, and we appreciate the mystery of that compulsion as well as efforts to resist demystification of that process.

We read and write to dwell in mystery of existence; why sadistically ask writers to lamely undertake reductive deconstruction on their own work?

Marks has more to say about his book, “You’re Going to Miss Me When I’m Bored,” and gives a stellar synopsis of its themes. I love the frustration palpable behind the words – frustration at the absurdity of the question, the content, and perhaps even the compulsion toward the writing process itself.

Thanks for writing this, Justin.

Read the response here:

And link to buy the book here:!bored-justin-marks/cv4z



Everything is Inevitable

by David Nelson Pollock


“Truth is, nothing on this Earth is inevitable.” – Darren Fleet with Stefanie Krasnow, “Deep Anger” Adbusters, Blueprint for a New World, Part 2: Eco


The Argument:

I am an anarchist. My body is a hand.

It holds a pink cloud called resurgent anger.

History can be worked with my hand.

We all have hands. We release our pink clouds

Into the streets. We have clouds in our mouths

Because mouths are symbolic of palms.

History neither began, nor will end.

Sometimes I envision a mysterious egg of light

Opening above my head. It’s like a hysterical film still

That liberated itself from a movie,

And I pretend like I don’t see it,

Like it’s not happening to me.


The Response:

Thought is a sensual instrument, brother anarchist.

Sister anarchist, action is the sometimes song of thought.

Here she is personified as your blood sister who has fallen

On the street, perhaps having twisted her ankle

After having tripped on some metal protrusion

That’s sticking up from the ground. Listen to her song:

An erotic whimper from pain or humming irritant,

A gentle violence that rises and falls.

Be a good anarchist. Kneel down to caress

Her swollen ankle that’s raspberried

While the others pass and vanish,

Then you two will sleep. The police will leave you alone

And storefront windows will shatter by themselves

And planes overhead will photograph your erotic sleep

In one another’s arms amid … what? The fiery sleep of history.


Everything on this Earth is Inevitable Because it’s Happened:

The prince of the festival is the Lord of Time.

He watches “in the distance” among pastel

Hills of thought, sad and delighted.



The world of malleable future you envision

Is called “in the distance.” Overbearing

Gray figures languish “in the distance.”



You are not mortal.

You can stand, confronting clouds

Advancing in a line on a street in the financial district,

But where a god appears, there is different clarity.



The Lord of Time languishes “in the distance.”

Why is your mouth full of smoke, brother anarchist?

Sister anarchist? Was it a psychoanalyst

In red buttons coolly explaining that anger

Is a natural appropriate response to violating behavior?


Our boundaries have been crossed, brother.

But the smoke gathering around your head

Does not belong to you, sister.


Overbearing figures are languishing.

You should prefer a metaphoric fruit tree

From which hangs glass plasma.

No, not having a say whether ecocide is going to whatever.

Not being asked to participate in a calm and nice debate

About should the tar sands expand or not.

Boundaries violations.



If you are not mortal, then you cannot

Have any will. If you know you are not mortal

Then you find yourselves behaving like listless

Bureaucrats, with “in the distance” before you

And behind you. The languishing gray figures

Are your friends looking from rivers that are walls,

Urging you there is nowhere to go here,

There is nowhere to go there.



What separates Adbusters

From other political mags …

What allows it top seller status

Among periodicals that call for

Violent overthrow of the capitalist state:

Style. There is no political language.



Large gray forms are languishing

On mental hills “in the distance”

The anarchists are invited into the hall.

The prince of the festival isn’t of the present,

Yet doesn’t come unannounced.

There is fire in the glasses.

Cloud expansion is seen as impolite,

brutish, violent, indulgent.


To make a point about the unspoken rules of the hall,

The anarchists have decided to expand their clouds.


The erotic dream of the Lord of Time expands

“In the distance,” brother and sister anarchist.

Put your fingers in your mouths.

Your political language is stumbling

On your tongue’s avenue.

Be good sweet anarchists and help her up.



We fear anger

Like we obsess over the placement

Of smoke on a doomed landscape.

The Lord of Time languishes in the distance.

Eroticism is dark and dirty,

But Deep Anger is a form of even love,

Think the anarchists, each to his or herself.



The anarchists were invited to a dinner party.

There was smoke in the glasses. Large figures

Languished behind oddly hung drapery.

It was impossible to lose the feeling

They were actually here among the guests,

Enemies of life mingling, becoming metaphors,

Transporting action into mere thought.

These large figures in the hills

Are not the clouds, the resurgent anger,

But obviously they are.

Anarchists felt Deep Anger.

They all agreed it was Deep Anger.

The prince of the festival watched from “in the distance,”

Sad and delighted at the erotic dreams of his childhood.


David Nelson Pollock is a founding editor of Essays & Fictions. 



Finger on the Trigger

By Danielle Marie Winterton

The New York Times recently ran an informative article on trigger warnings as applied to works of literature in college settings, but an early March New Republic article by Jennie Jarvie on this topic covered much of the same ground while constructing a coherent argument against trigger warnings for the false impressions they lend the reader about how language and narrative function within the individual and the broader culture.

Trigger warnings increase and “reinforce the fear of words,” Jarvie writes in reference to trigger warnings as applied to classic works of literature such as Chinua Achebe’s Things Fall Apart, which an Oberlin guide to trigger warnings used as an example, because it may “trigger readers who have experienced racism, colonialism, religious persecution, violence, suicide and more.” Jarvie also pointed out that a Rutgers University sophomore recently requested an alert for F. Scott Fitzgerald’s The Great Gatsby that said “TW: suicide, domestic abuse and graphic violence.”

It is fascinating to watch values gain momentum to crescendo into unexpected outcomes. Here we see the instinct to protect the vulnerable collide with the radical imperative of great works of literature to explicate the outcomes of the social systems in which readers are enmeshed. Both of these books are devastatingly successful in showing how individuals are crushed under the wheels of unfettered colonialism and capitalism. In Things Fall Apart, a village splinters under the introduction of new influences; in The Great Gatsby, people who are glib and superficial are also hideously and thoughtlessly wealthy. In both narratives, the end result is violence to innocent and vulnerable people. It is bad enough that many people feel helpless to make significant social change in their lives and communities; trigger warnings ask us to consider averting our eyes to even the artistic representation of the outcomes of calcified class structures and the sacrificial role of some members of society.

The Times article quotes Greg Lukianoff, president of The Foundation for Individual Rights in Education , an organization that advocates for free speech, as saying this call for trigger warnings seems inevitable in a society where people increasingly expect physical and intellectual comfort. I appreciate this consumerist reading, having long noticed that many book reviewers, amateur and professional, only seem to read as consumers, picking out what they like and dislike, want or don’t want, from a text, rather than being analyzing it through theoretical filters or in various historical, cultural, or even literary contexts. But I wonder if all people increasingly expect comfort, as he claims, or if this is more specific to undergraduates, who are essentially in the toddler phase of adulthood, grabbing everything they can and stuffing it into their undeveloped intellects, and choosing what pleases them to drop into their own curriculum shopping bag.

Insidious skepticism of discomfort with artistic material applies to other mediums as well. Many were ready to throw out Woody Allen’s entire body of work because they were uncomfortable with his films’ sexualization of young women in light of accusations made my his daughter and ex-partner. Around the same time, HBO smash hit mini-series True Detective was also derided for images of violence perpetuated on women’s bodies.

One liberal value proclaims that visual and literary art is a safe space in which we can explore our darkest corners, both personal and social, and that catharsis through art is the very best way to grapple with these urges and tame them, rather than indulge them in actual practice, or ignore them and pretend they aren’t there, which can lead to repression or a loss of behavioral control. Yet another liberal value aims to shield the victim of violent social forces from re-traumatization in any mode or mechanism, and asks all people of conscience to side on behalf of the victim and demand accountability, however subjective, from the perpetrator. How to reconcile these two contradictory, seemingly sound propositions?

Regarding trigger warnings applied to literature, Jarvie brings us out of the dilemma with her good-sense reminder that a trigger warning fundamentally misunderstands the way language works. Meaning in language is not fixed, and no two people react to the same text in the same way: “understanding words as devices that activate a mechanism or cause a situation—promotes a rigid, overly deterministic approach to language,” she writes.

She continues: “There is no rational basis for applying warnings because there is no objective measure of words’ potential harm. Of course, words can inspire intense reactions, but they have no intrinsic danger. Two people who have endured similarly painful experiences, from rape to war, can read the same material and respond in wholly different ways.”

Literature and great art in any medium often intend to disturb by reflecting social values in need of change back to the reader or viewer. Without this undiluted, unqualified reflection, how do we learn the truth about ourselves? Further, Jarvie points out that trigger warnings reinforce the fear of words by depicting language as requiring regulation. It is not hard to imagine how far this tendency may spread. Engaging with ideas involves risk, Jarvie writes, and taking an increasingly solipsistic perspective to critical engagement with text only further isolates the individual and blunts the crucial intellectual exploration that literature, and, for that matter, college, needs to facilitate.

Danielle Marie Winterton is a co-founding editor of Essays & Fictions.


Everybody Knows This is Nowhere: The Web of Journalistic Transparency

By Danielle Marie Winterton

Last fall in the New York Times, Glenn Greenwald and Bill Keller debated about whether or not contemporary web journalists have problematic allegiances to their subjects. The conversation sufficiently displayed the current range of public disagreement on the merest definitions of transparency and objectivity. Keller tried to draw a distinction between “crusaders” or “muckrakers” and the more sophisticated investigative journalism of the New York Times during Watergate and the more recent torture exposes. He writes that in the old tradition of journalism, you either hid your allegiances, or pretended you had none, in the interest of appearing as objective as possible:  “Journalists in this tradition have plenty of opinions,” he writes, “but by setting them aside to follow the facts — as a judge in court is supposed to set aside prejudices to follow the law and the evidence — they can often produce results that are more substantial and more credible.”

Greenwald countered that journalism absolutely has to pass rigorous standards of fact-checking and fairness, but challenged the view that it was possible to be as objective as Keller claimed: “I think those values are promoted by being honest about one’s perspectives and subjective assumptions rather than donning a voice-of-god, view-from-nowhere tone that falsely implies that journalists reside above the normal viewpoints and faction-loyalties that plague the non-journalist and the dreaded ‘activist.””

It is nearly impossible to skirt the outright classist and white supremacist implications of insisting that the “old” standards of journalism (which bear similarities to the “old” ideas of objectivity in acadamia and the sciences, creating and clinging to the holiness and sanctity of the “expert,” the one who is capable of rooting “truth” out of a mass of contradictory and chaotic data) are capable of speaking for all peoples everywhere. Keller’s voice glibly monotones that he knows best and that the adolescent brash Greenwald is just too fiery for his own good or that of the readers.

Greenwald gets the last word: “Embedded in the New York Times’ institutional perspective and reporting methodologies are all sorts of quite debatable and subjective political and cultural assumptions about the world,” he insists. “And with some noble exceptions, The Times, by design or otherwise, has long served the interests of the same set of elite and powerful factions. Its reporting is no less ‘activist,’ subjective or opinion-driven than the new media voices it sometimes condescendingly scorns.”

By now you must have surmised that I come down more on Greenwald’s side of this debate, though I still have questions about the ability of any writer to accurately understand the nature of her/his own bias.

Today, as perfectly evidenced by hyperlinks and social networking communication behaviors, hiding is much harder than it used to be, as pointed out by New York Times public editor Margaret Sullivan earlier this year. She outlines a sort of after-the-fact vigilante detective work undertaken to uncover allegiances between a writer and his or her subject, in order to cast a different light on the content of the work. Whether that  detective work is done to discredit the piece entirely or simply to add a shade of nuance depends on who is investigating and what they are looking for as much as it is the content of the illuminated allegiance.

Sullivan’s foundational source, David Weinberger, writes that “transparency brings us to reliability the way objectivity used to.” We used objectivity as a trust mechanism when a writer’s sources were opaque to us, which they no longer are thanks to the internet. Objectivity was a stone, while transparency is a web, and “transparency brings us to reliability the way objectivity used to.”

An important distinction, though: objectivity fostered and established credibility (even if only the semblance of credibility), while transparency can easily slip into the murky end-state of Absolute Relativity. This is quite evident on an interface like Facebook, where the expertise or status of each individual is reduced to a singular value among no other greater or lesser values.  A collective laziness can seep in: how many readers take the time to track down the elements of the web in each article they read? And how many writers take care to vigorously self-report their most important pieces of information and relevant affiliations and with rigorous accuracy?

The answer is, of course, that it varies wildly depending on a host of factors including publication, editor, and technical capacities. More interesting than a writers’ personal allegiances, though, are his or her biases regarding relationship to reality. How transparent can a writer be about the way he or she construes, relates to, and conveys information, to facts, and to truth? The implications of this relationship provide crucial insight into a writer’s choices regarding which facts, statistics, opinions, themes, and contexts they incorporate into their work, and if transparency is to be the useful tool it is purported to be, the reader needs to know not just about the writer’s personal and professional relations, but about his subjective biases and ideological leaps of faith as well.


Danielle Marie Winterton is a co-founding editor of Essays & Fictions






Proximate Neighbors: An Interview with Charles Lowe

by David Nelson Pollock

Essays & Fictions has published three of Charles Lowe’s stories, “A Flowered Rag,” “A Knotted Beach Chair,” and, in our most recent volume, “The Foreign Expert.”  Each of Lowe’s narratives is a carousel of recurring imagery as his work is set in a contemporary China that’s never at peace as place. His narrators’ attentions shift from one historical nexus to another, yet each story is rooted in a China that is real and mutable. Below is an excerpt from “The Foreign Expert” in which an American language teacher, a “foreign expert,” gets directions to his lesson:

First, I have to solve the problem of finding the company office. The addresses are not in any recognizable pattern.  Number 112 is next to number 44, number 33 wedged between 99 and 5. “At first, the whole thing makes sense,” Mei explains. “The alley is made of a few tin huts. Then, the Italians take over, burn down half a block’s worth and start in with the pillars.  The British kick them out and add some neat colonial jobs, and there’s the park, though to be fair, some farmers plant bok choy in one spot, but the British finish the thing off with a stone circle table. That’s the key.” “Why can’t the driver drop me off in front?” I interrupt Mei’s progress.

Mei has slender fingers, which she uses to tap on the wooden foldout in the middle of her mom’s kitchen, “The alleyway is only partly done and is a tight fit for any vehicle.  Nobody risks it.  Don’t worry.  It’s only a few buildings in, and if you get lost, you can find a mahjong game.  It’s a constant game. Mom misses it.  It belongs to the Neighborhood Watch.  They were big during the terrible time, but now it’s a harmless club.  That Mrs. Chi’s the leader.  She plants a little rouge on her cheeks. It really stinks.

Mr. Lowe was kind enough to answer a few questions and touches on subjects such as simulation, Roberto Bolaño, and the multiple historical periods that occupy modern China.

Where are you from originally? How did you end up in China? I am from western Massachusetts originally and came to China first to meet my wife’s family: then to travel in the west and the south of the country.  Eventually, my wife’s career brought her over here; after, I was offered a chance to teach creative writing and literature at a university in China.

Your narratives tend to be circular. Likewise, images and words tend to repeat. Can you talk a little about these tendencies in your work? The stories, appearing in Essays & Fictions, center on the survivors of the Cultural Revolution and their partners. The form of a circular narrative fits with a pattern of survivors to revisit the originating experience.  It also speaks to the circumstance of their partners who want to come to terms with the history and tend in the fiction to repeat images and words trying to translate the trauma into a safer or at least a known language. I want in my fiction, though, not to underline too much the pathos.  In “The Flowered Rag,” Li experiences the Cultural Revolution as a part of her childhood, and sees the forced exile in many ways as typical, which it was during the period, and it’s not possible for her in any case to separate the trauma from other warmer memories such as finding a pet or taking a first bus trip outside the city.

History is a force in your fiction. Geography seems to be defined as much by what happened in these places in the past as what they look like in the time of the story. Is this something particular to what you see in China? China is undergoing a revolution of economic, social and cultural magnitude that is hard I think for someone living outside to comprehend. Ten years ago, the area around my College was made up of farm fields and sidewalk stands.  Now though, it’s a part of a university town connected to the main port by a tunnel leading towards a massive bridge project that will link Zhuhai with Hong Kong.  What this exponential growth leaves is a geography that is replete with juxtapositions. I’m writing my responses, for instance, from an eighth-floor apartment overlooking a peasant standing knee deep in a pond while lowering a string net. The two of us may be proximate neighbors, but it seems at least from my view that we are living in disparate historical periods. I’ve experienced this juxtaposition, though, most viscerally watching the film Her and recognizing some of the scenes as shot on a circular walkway leading to the Super Brand mall.  What was odd was not simply spotting the glass architecture of Lujiazui in a film supposedly set in L.A. in 2025.  It was that Joaquin Phoenix was discovering heartbreak on a stairwell to a subway in the financial district of Shanghai without once feeling an elbow to the ribs or having to walk over a mother and child sleeping on a straw sheet.  It seemed a perfect instance of simulacrum and gave me a vivid awareness of how much the sharp contrasts between the pre- and postmodern have become an aspect of my being in China.

Could you talk a little bit about the dream-like narratives in your work? Where does this aesthetic come from? This seems to be related to the circular aspect of your narratives. In “The Foreign Expert” for example, there is a definite sense of surrealism about the (non)lessons and how they kind of devolve into violence. Likewise, an earlier story E&F published “A Flowered Rag” is sometimes unclear and the narrative kind of floats from incident to incident. It makes for a unique and compelling read. First, thank you so much for the generous reading of the story.  I have appreciated the chance to see my fiction appear in E&F and to read the works of others. As my wife and I were talking over my response to your questions this morning, I realized the most straightforward answer may simply be that my aesthetic is partly an aspect of my personality, and I think that’s a reason why I became interested in works that are lyrical and have an associative feel, so when starting as a poet, I was drawn especially to the surrealists such as Desnos and to writers like Char and Sefaris whose works can have a dreamy texture.  I also admire the aesthetic underlying Roberto Bolaño’s work. The narratives in Savage Detectives, for example, float comically (almost like in Buster Keaton film) from incident to incident and in 2666, circle back to a series of disturbing episodes.

Charles Lowe

Charles Lowe

I know you are prepping a collection of short stories. What attracts you to short fiction, as opposed to longer forms? Any plans to write a novel or novella? The structure of the short fiction allows me to experiment with voice and narrative technique.  I also like how stories in a collection can come together—especially when they share a common geography and history. For me, collections of stories, such as Last Evenings on Earth, have an effect similar to a montage.  I am planning, though, to work on a longer form once I do finish the collection.

Finally, which writers or works are important to your own work?  Well I’ve mentioned Roberto Bolaño, and I’ve been reading Yiyun LI’s Gold Boy, Emerald Girl and am looking over now the Empress Dowager Cixi by Jung Chang. I continue to do a lot of background reading on the Cultural Revolution, though I keep returning to Mao’s Last Revolution, which gives a very detailed and nuanced picture of day-to-day life during the period and in a tone that’s fairly neutral, and that’s hard to find in histories of Mao.

Charles Lowe‘s work has been nominated for the Pushcart Prize and has appeared twice previously in Essays & Fictions and has been published or is forthcoming in Fiction International, Guernicathe Pacific Review, Hanging Loose, and elsewhere.  His fiction has also been included in the recently published anthology, Friend. Follow. Text. #storiesFromLivingOnline.  He lives with his wife and daughter in Zhuhai, China, where he lectures at United International College.  “The Foreign Expert” is part of a collection in progress, entitled Eating Out in Goubuli.

David Nelson Pollock is a founding editor of Essays & Fictions.


E&F Volume XII Launched This Week

Cover Art VII Final

Cover Art: Beauty is One Thing, by Jeffre Dene

The twelfth issue of our parent project, Essays & Fictions, launched this week, featuring the outstanding and exciting work of Charles Lowe, Paul Stubbs, Joseph Michaels, John M. Edwards, Lee Matthew Goldberg, Adrianne Kalfopoulou, and Robert Wexelblatt, as well as excerpts from the novels-in-progress of co-founding editors Danielle Marie Winterton and David Nelson Pollock. The editors would like to thank co-founding editor Joshua Land for his copy editing expertise, webmaster Greg Sanders for his internet savvy and tech support, and artist and artistic director Jeffre Dene for his consistently excellent visual work that has given E&F its face for more than seven years.

V.XII was more than a year in the making, and we the editors are thrilled with the result. Many of the V.XII writers have appeared in the pages of E&F before and we are excited to once again bring you some of the very best contemporary literature being written today. The work we publish explores in-between spaces in cultures and in forms, crossing boundaries, blending genres, drawing from many countries of origin, destabilizing expectations, and exploring the deep, high-pitched beauty and chaotic terrains of world literary art transmitted via the internet.

Even though we sell print copies of each issue to defray the cost of our operation, we think it’s important that all content be made available online for free. We write for everyone, not just for those who can afford to pay subscription costs.

With that in mind, we do accept donations and ask that, if you have enjoyed what you’ve read in this issue, you consider making a donation to Essays & Fictions here.

Pre-orders for single print copies can be made through Paypal here as well.

For multiple pre-orders, please query us at essaysandfictions dot gmail. Include how many issues you’d like, where you’d like them shipped, and if you would like to pay with check or Paypal. We will then send you an invoice and, if necessary, a Paypal payment request.

Volume XII of Essays & Fictions can be found online in its entirety here.

We hope you enjoy reading this issue as much as we enjoyed curating and creating it. We thank you in earnest for your readership, your enthusiasm, and your support.

David Nelson Pollock and Danielle Marie Winterton, Co-Founding Editors, Essays & Fictions