"Supply-Side Fairy Tales"

Steve Waldman weighs in on Greg Mankiw's proposal to cut corporate taxes:

Supply side fairy tales, by Steve Waldman: Greg Mankiw offers a strong endorsement of a proposal to cut the corporate income tax from 35 to 25 percent, claiming "It is perhaps the best simple recipe for promoting long-run growth in American living standards." ... A good case can be made for cutting or even eliminating the corporate income tax. But Mankiw's argument does not cohere.

Let's start positive. Mankiw is right to point out that the "incidence" of the corporate income tax might not in fact be as progressive as its proponents would wish. He quotes studies suggesting that workers end up paying 70% to 92% of the taxes in the form of lower wages. I'm skeptical of those numbers, but it is surely true that some fraction, perhaps even a large fraction, of the corporate tax burden falls on workers and customers rather than presumptively wealthier investors. Mankiw does us all a service by reminding us of this.

Then he tells us a fairy tale ... [...continue reading...]

He concludes:

Supply side economics is a nice story, a hopeful story. It offers a clean, plausible policy framework: encourage investment, always and everywhere, and prosperity is sure to follow. But this decade has been about a pure a test of that idea as we could hope for. Capital in the United States was incredibly cheap, and what did we do? We destroyed a lot of wealth. We don't need more capital (although we might soon, if our foreign backers get skittish). We need more discriminating capital. In the meantime, the only thing I'm sure "works" about the supply side story is that it shifts the tax burden from richer to poorer. I'd rather that stop working so well.

Comments

[John V]

In order to draw lucid conclusions, shouldn't the effects of higher energy and food prices...not to mention the fall-out from bad Fed policy...be accounted for/controlled for somehow in measuring what has happened over the last 8-10 years?

[FreedomLover]

It's a fairy tale to say that the poor pay any taxes. Look at the tax receipts and you'll see the top 10% paying like 90% of the income tax.

[Student]

The trouble with Mankiw is that (although he's honest in his academic writing) he decided sometime ago that it's OK to lie to the plebes, in order to convince them to do what is 'good for them'.

[JeffF]

"It's a fairy tale to say that the poor pay any taxes. Look at the tax receipts and you'll see the top 10% paying like 90% of the income tax."

Its a fairy tale to say that income taxes are all taxes.

[cas127]

And it is a fairy tale to say that income taxes ain't a honking big part of all taxes...

[ken melvin]

Uh yes, one of the downfalls of uneven distribution is that only a few make enough money to pay taxes. Course we could redistribute so that the lower eighty got something to pay taxes on.

[anne]

http://www.cbpp.org/12-14-07inc.htm

December 14, 2007

Income Inequality Hits Record Levels: Incomes Rose $180,000 for Top 1 Percent in 2005 But Just $400 for Middle-Income Households
By Arloc Sherman

Real after-tax incomes jumped by an average of nearly $180,000 for the top 1 percent of households in 2005, while rising just $400 for middle-income households and $200 for lower-income households, according to new data from the Congressional Budget Office (CBO). [1]

This starkly uneven growth brought income inequality to its highest level since at least 1979, when CBO began gathering these data. Taken together with prior research, the new data indicate that income is now more concentrated at the top than at any time since 1929. [2]

Other highlights of the CBO data show that as of 2005:

The share of the nation's total after-tax income going to the top 1 percent of households hit the highest level on record (with data back to 1979).

The share of national after-tax income going to the middle fifth of households (the middle 20 percent) was the smallest on record.

Similarly, the share of national after-income tax going to households in the bottom fifth was the smallest on record.

In addition, the share of national after-tax income going to the top 1 percent of households more than doubled between 1979 (when it stood at 7.5 percent) and 2005 (when it reached 15.6 percent). The $180,000 average income gain for these households in 2005 is more than three times the average middle-income household's total income.

Income Growth in Recent Decades Occurring Mostly at the Top

Over the 26-year period for which the new CBO data are available, income gains among high-income households have dwarfed those of middle- and low-income households. The CBO figures show:

The average after-tax income of the top 1 percent of the population more than tripled, rising from $326,000 to over $1.07 million — for a total increase of $745,000, or 228 percent. (Figures throughout this paper were adjusted by CBO for inflation and are presented in 2005 dollars.)

By contrast, the average after-tax income of the middle fifth of the population rose a relatively modest 21 percent, or $8,700, reaching $50,200 in 2005.

The average after-tax income of the poorest fifth of the population rose just 6 percent, or $900, over the past 26 years, reaching $15,300 in 2005. [3]

As a result, the CBO figures show, the gap between the wealthiest Americans and everybody else grew to its widest point since at least 1979.

The top 1 percent of households received 70 times as much in average after-tax income as the bottom one-fifth of households in 2005 — the widest such income gap on record, with data available back to 1979. The previous record was 63 times as much, set in 2000. In 1979, by comparison, the richest households made 22 times as much as the poorest households.

The average income of the top 1 percent of households was 20 times that of the middle one-fifth of households. This, too, was the widest such ratio on record.

Income Gaps Widened in 2005

The CBO data show that gaps in income inequality widened significantly between 2004 and 2005. The share of total after-tax income going to the top 1 percent rose from 14.0 percent in 2004 to 15.6 percent in 2005, an increase of 1.6 percentage points. This amounts to nearly $180,000 per household in the top 1 percent, which is equivalent to approximately $123 billion in additional income for the top 1 percent as a whole.

The top 1 percent saw its total income rise by $180,000 in 2005 — more than the average middle-income household makes in three years.

In contrast, income gains between 2004 and 2005 were quite modest for middle- and lower-income households. Average income rose 0.8 percent (or $400) for middle-income households and 1.3 percent (or $200) for the poorest fifth of households. This compares to a stunning 20.2 percent increase in income ($180,000 per household) for the top 1 percent. In percentage terms, this was the largest one-year income gain for the top 1 percent in 17 years. [4] In dollar terms, it was the largest one-year gain since 1979, the first year for which the CBO data are available.

The growing concentration of income at the top of the income scale continues a long-term trend. Income concentration grew steadily during the latter half of the 1990s, rising through 2000, a year that the stock market hit a record high. From 2000 to 2002, income became less concentrated at the very top, partially due to the drop in the stock market; after-tax incomes fell from 2000 to 2002 for most income groups, but declined the most for the top 1 percent. From 2003 through 2005, however, the long-term trend toward growing income inequality returned. The CBO figures show that in 2005, the share of income going to the top 1 percent reached 15.6 percent, compared with the previous high of 15.5 percent in 2000. [5] ...

[don]

Waldman's criticisms show he is no economist - at least not of Mankiw's caliber. Just because the tax is borne by labor says nothing about the effects on investment of cutting the corporate income tax. Indeed, the greater the portion of the tax borne by labor, the more responsive investment is likely to be to a change in the tax rate. Also, it is true that capital was cheap, but to the wrong investors.
FreedomLover & Cas127 - Have you compared the size of individual income tax payments with the social security tax collections?

[Competition]

Steve Randy Waldman..."If, instead, we funded the change by increasing the highest marginal tax rate, or better yet, by creating a new top tax bracket, eliminating the corporate income tax would be a grand idea."

This makes sense on many levels. Workers/consumers do pay a fair percentage of corporate taxes. Taxing high individual income would be more progressive. It also allows the US to compete internationally for the most productive corporations. Many other nations have already cut the corporate rate, and we must follow or lose the best and brightest to them.

[Regressive]

"Have you compared the size of individual income tax payments with the social security tax collections?"

Also state and local receipt for highly regressive sales taxes, property taxes, etc... Then there is the cost to the poor embedded in higher prices caused by hidden taxes and regulations. The poor pay plenty of taxes, just not income taxes. Gov takes 1/3 of GDP in direct taxes, and much more in hidden taxes (inflation, regulation induced higher prices, etc...) The poor here pay a very high cost in terms of a high cost of living compared to many nations.

[FreedomLover]

Advocating for incoming redistribution is communist and anti-American.

[JeffF]

" cas127 says..."

It is a fairy tale that I said what you claimed was a fairy tale.

[jombi]

I feel a lot of things are very simple in life.
As someone said:
> The top 10% pay like 90% of the income tax.
Why? Well, because the wealthiest 1 percent of families owns roughly 34.3% of the nation's net worth, the top 10% of families owns over 71%, and the bottom 40% of the population owns way less than 1%. (2004 #'s)
> Guess who those income taxes serve to help? Rich people. I would say they are getting their money's worth right about now wouldn't you? Given that the income/wealth from 04' to 08 has continue to move their way.....

Everyone step back away from all the numbers and the complexities of the economy for a second.... The biggest problem w/ the current day economy is that it is full of too many leeches? Who are leeches? People who don't contribute to an end-product, push innovation/increases in productivity, the more efficient use of a resource...... Basically, those who don't contribute towards the fundamental things which underly the strength and basis of currency yet take home gobs of it everyday? Net (-)... Yet, we count it as a (+) in our GDP.. How sad..

(Money) A representative resource that has been getting abused ... It is been misallocated and overmultiplied.. The results.. Inflation and economic ills...

Whether it is govt. of the financial sector.. There are just simply too many leeches sucking the blood from producers/laborers/innovators/'investors'. What has that resulted in? An overweight inefficient govt. that needs more blood to survive that is slowly weighing down the country...
An overweight and overfed class of worthless gamblers/money multipliers....

You want to solve real world problems? fix the root problem and stop meddling with the collateral effects.

Ensure money flows to improving our fundamental basic needs : food/water/shelter
Ensure money flows to increasing our productivity/intelligence/efficient use of resources....

Stamp out all of the leeches of the system and maybe you might see growth. The multiplication of money w/o the multiplication of resources/products/efficiency/productivity = INFLATION.

Fix the commodity markets.
Fix the fundamental structure of stock markets (More of a gambling house w/ an infinite pool of money). <- a huge net (-) Creation of money.. Provides no overall strength...
[Stamp out the speculative and non-investment aspects of the market]
Reduce the size of govt. and get people employeed for more productive things for America (Wars and defense spending and industries aren't one of them)

Don't want to fix these things? Then deal with the continuing progression of the economy to the pits.... To those who say, the current situation is just the way things are, have to be, and will continue to be? Well, i say, there is beauty in our design and both an ugliness... A progression towards our more ugly tendencies will all but seal our fate. Enjoy the ride.

It's high time we as a human race get back to things more important... Sadly given our short term thinking/nature we will almost certainly fail at this after continuous brushes with our 'fate'.

Looking at the global picture you are seeing a great deal of circuit breakers being tripped... Those w/ a lower tolerance being those getting tripped first. World leaders are comfortably assessing their abilities to handle a 'surge current' and are feeling content w/ their current ratings...

You want to call something inhumane? I call the above coupled w/ these nations creating the 'current' to be very inhumane.

Want to strengthen the dollar? Get people in America centered on innovative/productive things that help the world?

We continue to have this brave idea that we 'the u.s' are going to be the managers of the world's laborers? Profiting from the hard work and efforts of the many. That stupid model is going to fail just as any business w/ overweight management... And all of those 'investors' local/international who bet on such a scheme most surely will.

You want to fix problems in the world and address real issues? Focus on the ROOT CAUSE and fix it. Save the fascination/wasted efforts on non-important pointless matters for politicians and ensure their role in society is relegated to shouting on street corners much to deaf ears of the populous. Else, settle for what's coming and stop complaining.

[Steve Waldman]

Don -- I'm not an economist, let alone of Mankiw's caliber, but I'd like to understand what you're getting at. If the corporate income tax is borne predominantly by labor, its elimination might lead to a one-time short-term windfall to investors due to wage stickiness, some of which might be reinvested, and which should lead to a very small jump in stock prices. (Thanks to commenter Patrick on Interfluidity for pointing this out.) But a corporate tax cut is not billed as a one-time stimulus, but an ongoing encouragement to investment. At equilibrium, as the economists like to say, how would the elimination of a tax borne by labor lead to more capital investment? Firms would see their cost of equity fall, but their labor costs would increase exactly enough to offset this, both for existing and new projects. If this were not so, if there is a net benefit to investors at equilibrium from lifting the tax, then and to that degree, investors would be bearing some of the tax. Tax incidence, after all, is by definition a though experiment that compares people's welfare with and without a tax in place. No? Really, if I'm wrong, I'd like you to know why.

[anon]

A one-time windfall to investors is valuation based - it does nothing in terms of new funds available for real economic investment.

The question for investment is whether, taking into account any effect on wages, the firm generates more after tax return on equity - not how the cost of capital or stock prices are affected.

[Michael McKinlay]

I don't care how much corporate taxes are cut if consumers have no money to spend and are in debt up to their eyeballs.

Corporations know that disposable income is falling and will invest accordingly ... by buying back shares and increasing dividends concentrating wealth even further.

The product of industrialization was to produce more with fewer people. They have succeeded and now they will need fewer of us.

[Steve Waldman]

anon -- S'pose so, the simple story. S'pose the tax the after-tax ROE of corporate projects instantaneously rises by ~50% (a complete elimination of the corp income tax, incidence was entirely to equityholders). Is there new investment? Maybe.

Suppose that capital structure is constant, the supply of capital is fixed, and that investors preference is to consume all capital above present returns. Very unrealistic, but work with me. In this case, obviously, no new investment can occur. Stock prices won't rise, even though economic returns do. Managers considering new capital investment would have to deliver returns consistent with existing projects, so projects that were marginal before the change are still marginal after the change. But the after tax ROE on these marginal projects is now 50% higher than it was before the change, and are still not worth funding! How would we describe this situation? We would say that economic returns have increased, but the required return for an investment project has increased commensurably, so nothing has changed in terms of capital investment.

Now that's an unrealistic extreme case. If the supply of equity capital is not fixed, but is instead modestly sensitive to returns, holding all else constant, there would be investment projects previously unfunded that the new capital would fund. To a firm manager, it would appear that after-tax cash flows from potential projects would have grown, and return requirements from equity markets would also have grown, somewhat less than after-tax ROE, so marginal projects that previously wouldn't have been funded now are worth pursuing.

We can posit any "elasticity" to the supply of new equity capital with respect to after-tax returns as we want. That's something we don't know. So, under all the assumptions above, we'd expect capital investment to increase anywhere from zero to a whole lot.

But that's not the only factor we unrealistically held constant. By eliminating the differential taxation of debt and equity, we have made deleveraging much more attractive. Ceteris paribus, that would absorb equity capital without corresponding new investment, and we have good way of predicting how much investors would choose to avoid capital structure risk when there is no financial incentive to take it on. So, we have one effect that would increase capital investment by an uncertain amount, and another that would decrease. Note that tautologically this, capital structure changes would also show up in return requirements for new projects under the reequilibriated capital structures. So, we'd have after tax ROE pushed up by the change, required returns for capital investment diminished by an increased supply in capital but increased by changes in capital structure.

Now there's a third factor we unrealistically held constant, reinvestment. If after-tax ROE increases by half, if part of the difference is reinvested, that would obviously increase capital investment relative to our unrealistic starting case. Suppose investors hold fixed the fraction of returns they wish to consume after the change. Then, one period after the tax change, capital investments that had not otherwise been undertaken would be. Again, tautologically, from the perspective of firm managers, firm cash flows are higher than they would have been, but return requirements must have increased somewhat less, for these to be positive NPV projects.

Return requirements give us a nice shorthand for capturing all of these effect. If after-tax ROE does grow, then how much new capital investment is undertaken is a function of how little return requirements grow relative to the after tax cash flows. If return requirements grow very little, there'd be a lot of new investment. If they grow very much, there could be no new investment, or potentially less investment, if the deleveraging effect predominates.

It's tempting to believe that the first factor would be the most important, that higher after tax ROEs would draw new aggregate investment. But it's not at all clear that the total supply of capital is particularly elastic to ROE. Even if there is a strong relationship between equity capital and ROE (not at all clear, when you look at how valuations jump around), much of the capital attracted might be capital diverted from fixed-income markets. In which case bond prices would fall interest rates would rise relative to ROE, increasing the deleveraging. Effectively, funds might well merely shift from bonds to stock without any new capital being made available for investment.

If you look at this decade, the savings glut era, it's plain that an important part of the aggregate growth in supply of capital was return insensitive, the decision to save was independent of return expectations. Now perhaps this period has been an anomaly, but it did happen. And generally, it's not so implausible that changes in after tax ROE would have a much stronger effect on capital structure than aggregate supply. How much to save or to consume might be much less price sensitive than whether to invest in stocks or bonds.

Eliminating the corporate income tax almost certainly would have some positive effect on after-tax ROE, though more modest than a 50% increase, since investors don't bear the entire tax. But it also almost certainly would cause some increase in required returns to capital, blunting its capacity to promote new investment. At the margin, probably it would make some otherwise unattractive projects attractive, but the magnitude of the effect might be not be large at all, especially if you believe Mankiw on incidence.

(All this leaves aside the question of whether our failure to fund projects currently deemed marginal is harmful to future productivity and growth...)

[anne]

Steve Waldman, nicely done.

[reason]

Steve deserves better comments on this thread.

John V - I'm absolutely certain that the run up in oil prices and especially food prices is only significant recently (and they are both small in absolute size relative to the economy). And I'm not sure that I follow how "bad Fed policy" is relevant here. I know recent history has not been kind to the sort of story that Mankiw wants to tell here. But clutching at straws makes him look desperate.

[reason]

That said - I think deleveraging would be a good outcome in the long run, as part of well thought out comprehensive reform, not on the basis of reality challenged partial analysis.

[reason]

To reiterate:
http://economistsview.typepad.com/economistsview/2008/05/greg-mankiw-the.html#c117200208

[Lafayette]

km: Course we could redistribute so that the lower eighty got something to pay taxes on.

Yes, of course! We could call it ... uh, Trickle Down Economics!

Why didn't I think of that? Patent it. Make a milyun!

Hellfire and damnation!

[reason]

John V.
I read your comment here.

http://econlog.econlib.org/archives/2008/06/inflation_why_w.html

Why do you think the Austrian/Freidmann point of view represents the side of truth, and the neo-Keynesian viewpoint not? I'm puzzled about your view of truth. How do you decide what is true and what is not?

[Lafayette]

SW: If after-tax ROE does grow, then how much new capital investment is undertaken is a function of how little return requirements grow relative to the after tax cash flows.

Tidy explanation, but that's not how investment works.

Business managers don't give a damn about taxes. They are fixated on pre-tax profits. So, they busy themselves with ROI-passable projects that promise return, with little or no consideration of present net returns on capital.

Seems stupid, doesn't it? To an extent, risk taking IS stupid. Because it goes against the grain of rational investment based upon cogent reckoning of factors.

But, that's exactly what most companies do. If a Business Manager gets into the nitty-gritty of arcane reasoning based upon known principles before deciding on giving an investment green-light, then they get demoted to Chief Economist. Or worse.

So, they depend upon R-o-I (based upon current costing estimates) and reasonable inflation rates over the time-frame ... and then cross their fingers. The trick is to take a shot-gun approach to investing in markets. I.e., have a basket full of projects (whether new products or service offerings) that average-out to a decent overall return. Such an approach is defensible to Top Management.

If ALL the projects come in at the R-o-I forecast and with profit, then Bingo! Jackpot! (And the stock-options flow in.)

They know full well what their objectives are in terms of Gross Profit. It's written in their Job Description and it's never far out of mind.

[John V]

Reason,

I'm seeking truth and trying to understand at the same time.

[don]

Steve Waldman -
See the article by Gordon Wilson "Taxation of Investment and Savings in a World Economy," American Economic Review, December 1986.

[don]

Steve Waldman
Sorry - not 'Gordon Wilson,' but 'Roger Gordon.'

[reason]

John V.
You didn't answer my question. How do YOU go about recognising the truth when you see it? I have feeling you aren't looking for the truth, you are looking for a guru. But maybe I'm wrong. You just seem to me to decide that you like a particular theoretical approach (or not) - why exactly - rather than worry about whether it actually explains reality well. That is common enough, but that isn't truth seeking as I understand it. My father was a scientist. It is why I never felt comfortable in economics.

[John V]

no reason,

I'm trying to understand the arguments based on my conceptualization of the issue. And since Caplan is someone who tends to view things from the same conceptual foundation as I do, I asked him to explain.\

How do I go about recognizing truth? When it makes sense to me and I can trace the steps back to fundamental points I understand. If I can't then something is wrong...either with how I understand it or with facts of the argument being presented.

Krugman's explanation flies in the face of how I understand things so I'm seeking to understand.

It's really that benign and simple.

Your insistence and tone seem to indicate you want it to be more than that...but it isn't.

Sorry. ;)

[Tom]

"Business managers don't give a damn about taxes. They are fixated on pre-tax profits. "

Most idiotic comment of the day. Corporations are willing to pay $2 to save $3 in taxes any day of the week. The dead weight loss of corporate taxation is the real, enduring savings here.

A lot of smart, unproductive tax lawyers and accountants can be re provisioned elsewhere.

[reason]

John V,
that of course suggests we are very different. I start from thinking that the map and the territory are two different things. That any explaination is not anywhere near the whole truth. And I like to be able to follow several different ways of looking at things. Very often they reveal different parts of the truth (if you like it is like looking at a building from different directions). You seem to think, you have to choose one.

[reason]

John V
I grew up with my father loving the story about the blind men and the elephant.

[anne]

http://www.cbpp.org/6-4-08tax.htm

June 4, 2008

WELL-DESIGNED, FISCALLY RESPONSIBLE CORPORATE TAX REFORM COULD BENEFIT THE ECONOMY: Unpaid-For Rate Cuts Would Likely Hurt Most Americans in the Long Run
By Aviva Aron-Dine

KEY FINDINGS:

Some advocates of cutting the corporate income tax rate have greatly exaggerated both the level of tax that U.S. corporations pay and the economic effects of the corporate income tax.

While the statutory U.S. corporate tax rate is relatively high, effective corporate tax rates — the share of their profits that corporations actually pay in taxes — are much lower, due to the plethora of corporate tax breaks in the tax code.

Effective tax rates also differ substantially among different types of investment. For example, some categories of corporate investment are taxed at rates close to the statutory rate, while debt-financed investment is subject to a negative effective marginal rate.

These large discrepancies create opportunities for revenue-neutral or revenue-raising tax reforms that could benefit the economy by leveling the playing field for different types of investment and thereby removing economic distortions that the current tax code creates.

The evidence does not support claims that unpaid-for (i.e. deficit-financed) corporate tax cuts would significantly benefit the economy. In fact, a Joint Committee on Taxation analysis found that such tax cuts would actually slightly reduce economic growth over the long run.

Because deficit-financed tax cuts eventually would have to be paid for (through reductions in programs or increases in other taxes), they would probably leave most Americans worse off even if they generated small economic gains.

[Patricia Shannon]

Steve Waldman - wekk said.

We had a comment recently from a high-up executive who told us how he benefits from a lowering of corporate taxes, because of perks from the company instead of direct payments allowing hin to avoid taxes.

A few years ago, some people did a study of all sources of taxes, and found that people of all income levels paid about the same percentage of their income in taxes. I think in the neighborhood of about 1/3 of our income. Regressive local and state taxes offset the progressivity of the income tax. Come on folks, I can't be the only person in this group that saw that. Eg., when I was living in Alabama, the less money a person made, the larger a percentage of their income they paid in state and local taxes, because of the heavy reliance on the regressive sales tax. I expect this is stell true today.

[Richard Sims]

McCain's website gives the argument for cutting the corporate income tax with the claim, "businesses in the U.S. face the second highest tax rates in the world," and goes on to say that his goal is to have our business tax rate to be "no higher than that of our major trading partners." The "second highest" claim apparently comes from comparing only one tax, the corporate profit tax.

While the profits tax is major tax paid by businesses in this country, is not neccessarily the case in other nations. Businesses in many countries pay labor and social contribution taxes that greatly exceed the amount they pay in profits-based taxes. In fact, a recent World Bank study on business taxes, entitled Doing Business, finds that when all taxes paid by businesses are taken into consideration, the total U.S. business tax rate is exactly the average of the major industrialized nations, the OECD member nations.

So, do advocates of cutting the marginal corporate income rate such McCain, Greg Manqkiw, and others, think it would be OK to pay for that cut by raising the rates on these other taxes? If they do, then great, there is the source of the replacement revenue. If, on the other hand, they think these "other" taxes matter as well, then how do they justify ignoring them in their international comparisons?

[Patricia Shannon]

"If, on the other hand, they think these "other" taxes matter as well, then how do they justify ignoring them in their international comparisons?"

prayer?

[Lafayette]

Laff: "Business managers don't give a damn about taxes. They are fixated on pre-tax profits. "

Tom: Most idiotic comment of the day.

Business managers in charge of product lines do NOT care about taxes, particularly when it is a question of selling in multiple national markets.

They will think about costs of production, but will assume that taxes are the same for every supplier in a given market. Only product differentiation matters in order to obtain market share.

Americans keep harping about taxes, taxes, taxes -- when America is one of the lowest taxed countries in the world. To each their own fixation.