Knowledge Base for Sanders Supporters: Understanding Income Inequality

 
1125px-Sanders_presidential_campaign_kickoff,_May_2015_(24317181804)
By Jake BucciBernie Sanders, CC BY 2.0.

The 2008 Economic Crisis spawned two, very different reactions in our ideologically-bifurcated nation. The first was the birth of the Tea Party following Rick Santelli’s impassioned speech from the floor of the Chicago Mercantile Exchange. Santelli’s disgust at those who irresponsibly took out loans they couldn’t repay — and the banks and government that underwrote such moral hazards — sparked a wildfire that drove the Democrats from control of the House in 2010 and proved decisive in wresting control of the Senate from Harry Reid in 2014.

The other reaction was the later birth of the Occupy Wall Street Movement which was organized along the opposite lines. The primary thrust of OWS was a complaint about the unequal distribution of income and wealth and, to some extent, an inchoate grouse about the immorality of being expected to repay loans that were irresponsibly taken out.

Both movements have splintered and stalled. In the case of the Tea Party, crass commercialization and other attempts to monetize the energy of the movement have severely blunted its message (and is worthy of its own post). OWS has largely gone underground, its myriad professional protesters still occasionally showing up to wave signs and shout down speakers they disagree with, or to populate the ranks of the Black Lives Matter movement.

But though largely invisible, both movements can still be detected, much like particles in a cloud chamber can be observed indirectly via the wakes that they leave. I want to focus on the latter: The echo OWS left in the form of Bernie Sanders.

If “immigration” is the raison d’etre of Donald Trump’s candidacy, “income inequality” is the central plank of Bernie Sanders’ appeal. At its heart, the issue is based upon a misapprehension of market economics.

Imagine that there is a society made up of Person A through Person ZZ where everybody has a job that earns approximately the same. Person A is a bit of a rebel and spends his weekends tinkering with electronics. When the tinkering results in a creation he dubs the “aPhone,” he decides that this should be his full-time job. He then approaches a group of investors with a plan to mass-produce and sell the aPhone.

Person A subsequently sells aPhones to Persons C through ZZ, and he and his investors become justifiably rich. Moreover, Persons C-ZZ have gained the utility of the aPhone and may do away with existing, less-efficient alternatives, freeing-up their previously burdened capital. So, Person A took a risk in developing the aPhone by forming capital from willing investors and enduring the opportunity cost of not engaging in work with a guaranteed return. Consequently, all of society — but Person A in particular — have ended up better off.

But what about Person B? Person B has neither obtained an aPhone nor participated in its manufacture or development. Has Person B been harmed in some way by Person A’s success? Has Person B had anything taken from him due to A’s invention of the aPhone?

The answer to both questions is obviously “no.” However the fiction upon which an entire political movement — which has culminated in the Sanders surge — has been constructed is that it is not benign for Persona A to make more than Person B, but that it is inherently harmful to B for A to have done so. The reasons for this are never explained by Sanders’ supporters except in terms of broad moral outrage. The best explanation that typically comes forth is a sort of soft Marxian appeal of from each according to their abilities to each according to their needs.

To understand how toxic such an appeal is would require an understanding of such Econ 101 topics as Comparative Advantage, Specialization and Supply and Demand.

Once you begin to apprehend the basics of these concepts, the notion of “income inequality” begins to sound more and more like a natural consequence of a market economy, with the counterbalance to the accumulation of wealth and capital of the few being the benefits that society as a whole enjoys due to the progress that naturally derives from entrepreneurship.

It should come as no surprise that as the teaching of such basics has declined that we have seen the consequent rise of the alternative narrative. To be fair to Sanders’ supporters, there is frequently a tinge of how “rigged” the game is in favor of certain interest groups, and you don’t have to look very hard to find evidence to support that notion. However, you’ll find very quickly that — rather than un-rig the game — their preferred solution is to re-rig it in a bigger, better way that leads to outcomes these economic naifs deem preferable.

In this sense, I fear that Sanders is nothing more than a forerunner, a premonition of our impending doom. Hillary Clinton will inevitably grind down the Sanders campaign as a glacier turns boulders into pebbles. But when the glacier recedes, the material that formed the boulders is littered across the landscape. In that not-too-distant future, even a tiny pebble from that glacier’s terminal moraine could be enough to start a landslide.

There are 35 comments.

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  1. drlorentz Member

    Sanders voters, and socialists in general, believe that people acquire wealth by taking it from others. They do not accept or understand the idea that money is given freely in exchange for goods or services. They are incredulous that someone could become rich by any means other than actions tantamount to theft.

    This is caused by a combination of a failure of imagination and a profound ignorance of how a modern economy works. Most folks don’t know how their cars work but that’s OK because their ignorance does not have political implications. They can still drive around and cause no more harm than they would if they understood automobile engines. Ignorance of economics in a democracy is pernicious because it affects policy.

    Once in a while, the ignorance and moral bankruptcy of the leftist view is on full display. Savor the moment:

    • #1
    • March 28, 2016, at 6:19 PM PDT
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  2. RushBabe49 Thatcher

    Yes! Change the narrative! Hereafter, refer to the concept as “EARNING INEQUALITY”, not “income inequality”. Change the entire meaning.

    • #2
    • March 28, 2016, at 6:54 PM PDT
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  3. Lazy_Millennial Member

    Excellent post Majestyk. I agree entirely.

    drlorentz:Sanders voters, and socialists in general, believe that people acquire wealth by taking it from others. They do not accept or understand the idea that money is given freely in exchange for goods or services. They are incredulous that someone could become rich by any means other than actions tantamount to theft.

    This is true, but the Sanders supporters do believe in a second source of wealth: raping the environment. In their view, wealth is accumulated by abusing other men or abusing the environment.

    Taken to its logical conclusion, this view holds that the entire increase in standard-of-living the world currently enjoys relative to before the industrial revolution is due to the abuse of past and current workers/slaves, and environmental destruction. The ones who actually think it out, become very interested in self-sufficiency, “living off the grid”, and going to live in nature or on a commune, like the hippies of the 70’s.

    Very few of them know enough history to realize how high the world standard of living is though, and few apply the thinking necessary to “take it to its logical conclusion”. The majority are still hoping that some wall street types go to jail, college loans get paid off, “Citizens United” gets overturned, and we get single-payer healthcare.

    • #3
    • March 28, 2016, at 7:01 PM PDT
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  4. drlorentz Member

    Lazy_Millennial: Sanders supporters do believe in a second source of wealth: raping the environment.

    The trouble with this belief is that it’s counterfactual. As Bjorn Lomborg and others have shown, using data instead of wishful thinking, environmental conditions have improved with wealth. One need only compare the air quality in Beijing and New York to see that.

    Lazy_Millennial: The ones who actually think it out, become very interested in self-sufficiency, “living off the grid”, and going to live in nature or on a commune, like the hippies of the 70’s.

    Self-sufficiency and other hippie-like behavior is inefficient and more damaging to the environment than modern methods of producing food and the other necessities of life. But we wouldn’t want the facts to interfere with their prejudices. So, no, they are not actually thinking about it; they are wallowing in a nostalgia for a past that never existed. The good ol’ days were awful.

    • #4
    • March 28, 2016, at 7:28 PM PDT
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  5. Brian McMenomy Inactive

    When Sir Matt Ridley says things like “How fossil fuels save the world”, you can almost see the sprockets and springs explode from the skulls of some of our young friends. They don’t understand the miracle of things like the internal combustion engine (and the impossible-to-number refinements thereof) or the concept of tradeoffs; not everything in the industrial revolution was grand, but for the 10% degradation we got the explosion of living standards, the (historically) rapid decrease in widespread poverty, longer and more fulfilling lives. In other words we had to put up with the 10% negative for the 90% positive (my ratio is conservative, it’s probably more like 97-3 to the good).

    These advances don’t happen by requiring everything to be perfect, for there to be no deleterious side-effects. People try, fail, refine, improve, repeat until they are fabulously successful. Their success is reflected in the fact that others want what they provide. Contra Mr. Sanders, we don’t want 1 type of deodorant; that’s what they have (when on the shelves) in Venezuela. We want 1000. How can you tell? We buy ’em.

    This isn’t new; back in the days of the battle of Lepanto, Muslim socialism was seen as morally superior even though the poorest Venetians lived demonstrably better that the vast majority of the Ottoman Empire. They preferred their rich be poorer, even though it made their poor truly destitute. Where would you rather be “poor”?

    • #5
    • March 28, 2016, at 8:03 PM PDT
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  6. Tom Meyer, Common Citizen Contributor

    Brian McMenomy:When Sir Matt Ridley says things like …

    Pardon, but that’s “Matthew White Ridley, 5th Viscount Ridley.”

    Otherwise, an excellent point.

    • #6
    • March 29, 2016, at 4:24 AM PDT
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  7. Man With the Axe Inactive

    You can almost define leftism as a failure to think things through.

    • #7
    • March 29, 2016, at 5:26 AM PDT
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  8. EHerring Coolidge

    They have to ignore a lot to ignore the fact that the successful folks have grown wealth, not shifted it around.

    • #8
    • March 29, 2016, at 5:36 AM PDT
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  9. Man With the Axe Inactive

    Not to change the subject, but the same complaint can be leveled at people on both the left and right who obstinately refuse to think it all the way through about international trade.

    • #9
    • March 29, 2016, at 6:05 AM PDT
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  10. raycon and lindacon Inactive

    The missing step that socialism exploits is informal corporatism. Rather than a formal structure like fascism, monopolies and predatory competition, coupled with political corruption, make the argument against capitalism sound plausible

    • #10
    • March 29, 2016, at 6:31 AM PDT
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  11. Spin Inactive

    At the core, I think, is the idea that there is a finite amount of wealth in the world. If there are 10 marbles to split up among 5 kids, then of course, if two of the kids have 5 marbles between them, then there is true inequality. Of course, in reality, some of the rich are floating along on their parent’s money. Many more, however, have created their wealth from nothing.

    • #11
    • March 29, 2016, at 6:37 AM PDT
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  12. Man With the Axe Inactive

    In countless discussions with left leaning people over the years, I have found that they do not seem to think that creating wealth is an issue. They only care about its distribution. They do not seem to think that those who create it through talent, work, risk-taking, or just good luck deserve to keep it.

    • #12
    • March 29, 2016, at 6:46 AM PDT
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  13. Z in MT Inactive

    The most important paragraph is the second to last. A rigged system demands an unrigging, not a rerigging.

    • #13
    • March 29, 2016, at 6:49 AM PDT
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  14. drlorentz Member

    Man With the Axe:You can almost define leftism as a failure to think things through.

    You could have left out the last two words. Or alternatively, define leftism as the triumph of feeling over thinking.

    • #14
    • March 29, 2016, at 7:06 AM PDT
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  15. cdor Member

    Spin:At the core, I think, is the idea that there is a finite amount of wealth in the world. If there are 10 marbles to split up amongst 5 kids, then of course, if two of the kids have 5 marbles between them, then there is true inequality. Of course, in reality, some of the rich are flouting along on their parent’s money. Many more, however, have created their wealth from nothing.

    And if they are living on their parents money…how or why is that anyone else’s problem?

    • #15
    • March 29, 2016, at 7:19 AM PDT
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  16. drlorentz Member

    Man With the Axe:In countless discussions with left leaning people over the years, I have found that they do not seem to think that creating wealth is an issue. They only care about its distribution. They do not seem to think that those who create it through talent, work, risk-taking, or just good luck deserve to keep it.

    The creation of wealth is counterintuitive and hard to imagine for most folks. The world appears to contain a stock of items that we divide, like fruit obtained from a tree: it’s there for us to share. The creation of complex things like cars or computers is unimaginable to most, especially those who have not witnessed it. The appearance of these items, seemingly out of nowhere, is miraculous. As Arthur Clarke put it, “Any sufficiently advanced technology is indistinguishable from magic.”

    Then there’s envy. Someone else has more so he must have stolen it or doesn’t deserve it for some other reason. How else can this injustice be explained? Never underestimate the human capacity for rationalization.

    Leftist views are robust because they are rooted in human nature, albeit some of the baser ones. But they also are rooted in compassion. Sadly, the compassion is not accompanied by rational analysis, hence this insight.

    Edit: Along these lines, this post and the comments that follow illustrate the inability or unwillingness of leftists to think things through.

    • #16
    • March 29, 2016, at 7:22 AM PDT
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  17. Johnny Dubya Inactive

    I’m always amazed at the lack of anger at the colleges themselves. According to an article in today’s Wall Street Journal, “[t]he average annual cost of a four-year, private college, including room and board, has climbed 53% in the past 10 years, to $43,921, according to the College Board.” Furthermore:

    Colleges including Stanford, Boston College and Carnegie Mellon University are referring parents to [private] loans through emails or by putting them on lists of preferred loan options. An official at Boston College also said the school approached lenders to create the loans.

    Lenders see the new products as an area of growth in an otherwise sluggish lending environment. Colleges are helping push them in part because of a quirk in federal calculations. Unlike ordinary federal student loans, the parent loans don’t count on a scorecard in which the U.S. Education Department discloses universities’ median student debt at graduation. That can ease the pressure to keep tuition increases in check at a time when heavy student debt has become a political issue.

    Bernie Pekala, director of student financial strategies at Boston College, acknowledged that including parent loans in this calculation would make the schools appear more expensive.

    • #17
    • March 29, 2016, at 7:25 AM PDT
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  18. Ekosj Inactive

    Plus, the statistics can be made to lie…

    Let’s construct a simple economy composed of five families and examine one simple change and its impact on income distribution and income inequality:

    FAMILY. INCOME
    A. 100,000
    B. 80,000
    C. 60,000
    D. 40,000
    E. 20,000

    OK. What is median family income?
    60,000

    Let’s consider family C. It is a two earner married couple, each person earning 30,000 per year.

    OK. Let’s suppose EVERYONE gets a 10% raise. And let’s also suppose that family C gets divorced.

    FAMILY. INCOME
    A. 110,000
    B. 88,000
    D. 44,000
    C1. 33,000
    C2. 33,000
    E. 22,000

    What is median family income now?
    38,500. ( (44,000 + 33,000) divided by 2 )

    So. Everyone’s income went UP by 10%. But changing the composition of family C resulted in median family income falling from 60,000 to 38,500

    Ok. Now lets suppose that instead of family C getting divorced … Family E got divorced. Family E is also a 2 earner couple each originally earning 10,000. Recall, our original income distribution …

    FAMILY. INCOME
    A. 100,000
    B. 80,000
    C. 60,000
    D. 40,000
    E. 20,000

    Median family income is 60,000. Again, everyone gets a 10% raise but now family E gets divorced.

    FAMILY. INCOME
    A. 110,000
    B. 88,000
    C. 66,000
    D. 44,000
    E1 11,000
    E2. 11,000

    What is median family income now?
    55,000 ( (66,000 + 44,000) divided by 2 ). So changing the composition of family E lowered median income from 60,000 to 55,000. And income inequality has doubled. Even though everyone has received a 10% raise.

    • #18
    • March 29, 2016, at 7:25 AM PDT
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  19. Johnny Dubya Inactive

    Majestyk’s point is very well-said. And as an alleged geologist, I give him extra points for the glacier metaphor.

    The very term “income inequality” sets my teeth on edge. It might make sense to talk about the “income gap” or “income variation“, but the implied notion that “income equality” would be a good thing is absurd. Imagine a society where every job had an identical salary attached to it. That is a system that would bring about a nightmarish dystopia.

    I don’t think I need to explain why, because Ricochet members actually understand this stuff. People who don’t understand the tyranny of enforced equality of outcome should be given a copy of Kurt Vonnegut’s short short story “Harrison Bergeron”.

    Other relevant literary titles that come to mind are “The Little Red Hen” and “The Goose That Laid The Golden Egg”.

    • #19
    • March 29, 2016, at 7:47 AM PDT
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  20. GLDIII Temporarily Essential Thatcher

    Ekosj:Plus, the statistics can be made to lie…

    Let’s construct a simple economy composed of five families and examine one simple change and its impact on income distribution and income inequality:

    FAMILY. INCOME
    A. 100,000
    B. 80,000
    C. 60,000
    D. 40,000
    E. 20,000

    OK. What is median family income?
    60,000

    Let’s consider family C. It is a two earner married couple, each person earning 30,000 per year.

    OK. Let’s suppose EVERYONE gets a 10% raise. And let’s also suppose that family C gets divorced.

    FAMILY. INCOME
    A. 110,000
    B. 88,000
    D. 44,000
    C1. 33,000
    C2. 33,000
    E. 22,000

    What is median family income now?
    38,500. ( (44,000 + 33,000) divided by 2 )

    So. Everyone’s income went UP by 10%. But changing the composition of family C resulted in median family income falling from 60,000 to 38,500

    Ok. Now lets suppose that instead of family C getting divorced … Family E got divorced. Family E is also a 2 earner couple each originally earning 10,000. Recall, our original income distribution …

    FAMILY. INCOME
    A. 100,000
    B. 80,000
    C. 60,000
    D. 40,000
    E. 20,000

    Median family income is 60,000. Again, everyone gets a 10% raise but now family E gets divorced.

    FAMILY. INCOME
    A. 110,000
    B. 88,000
    C. 66,000
    D. 44,000
    E1 11,000
    E2. 11,000

    What is median family income now?
    55,000 ( (66,000 + 44,000) divided by 2 ). So changing the composition of family E lowered median income from 60,000 to 55,000. And income inequality has doubled. Even though everyone has received a 10% raise.

    The only math the left encourages is division.

    • #20
    • March 29, 2016, at 7:56 AM PDT
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  21. Shawn Buell (Majestyk) Contributor
    Shawn Buell (Majestyk) Post author

    Thanks for the responses, folks. Still convalescing, but Roger Simon had an excellent article at PJmedia about this topic as well. The idea that Bernie Sanders is a dangerous man is a hobby horse I’ve been beating for some time.

    https://pjmedia.com/diaryofamadvoter/2016/03/28/republicans-better-pay-attention-to-bernie/1/

    • #21
    • March 29, 2016, at 8:05 AM PDT
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  22. Tom Meyer, Common Citizen Contributor

    Man With the Axe:You can almost define leftism as a failure to think things through.

    It’s the failure to think a certain (large) set of things through. I’d say our side is better on this point, but we’re hardly immune to first order thinking.

    • #22
    • March 29, 2016, at 8:48 AM PDT
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  23. Shawn Buell (Majestyk) Contributor
    Shawn Buell (Majestyk) Post author

    Johnny Dubya:Majestyk’s point is very well-said. And as an alleged geologist, I give him extra points for the glacier metaphor.

    I would have thought comparing Hillary to a glacier would have you rolling in the aisles then.

    • #23
    • March 29, 2016, at 10:14 AM PDT
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  24. Owen Findy Member

    “Hillary Clinton will inevitably grind down the Sanders campaign as a glacier turns boulders into pebbles. But when the glacier recedes, the material that formed the boulders is littered across the landscape. In that not-too-distant future, even a tiny pebble from that glacier’s terminal moraine could be enough to start a landslide.”

    Good metaphor, I think.

    • #24
    • March 29, 2016, at 12:35 PM PDT
    • Like
  25. Lucy Pevensie Inactive

    Majestyk:Thanks for the responses, folks. Still convalescing, but Roger Simon had an excellent article at PJmedia about this topic as well. The idea that Bernie Sanders is a dangerous man is a hobby horse I’ve been beating for some time.

    https://pjmedia.com/diaryofamadvoter/2016/03/28/republicans-better-pay-attention-to-bernie/1/

    You’re right; it’s a bit scary, and I have not been paying attention. For the Sanders fans I know, Sanders has nothing to do with socialism and everything to do with what they see as integrity in contrast with Clinton family machine politics. But just because they see it that way does not make it so.

    • #25
    • March 29, 2016, at 12:44 PM PDT
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  26. Shawn Buell (Majestyk) Contributor
    Shawn Buell (Majestyk) Post author

    Lucy Pevensie:

    Majestyk:Thanks for the responses, folks. Still convalescing, but Roger Simon had an excellent article at PJmedia about this topic as well. The idea that Bernie Sanders is a dangerous man is a hobby horse I’ve been beating for some time.

    https://pjmedia.com/diaryofamadvoter/2016/03/28/republicans-better-pay-attention-to-bernie/1/

    You’re right; it’s a bit scary, and I have not been paying attention. For the Sanders fans I know, Sanders has nothing to do with socialism and everything to do with what they see as integrity in contrast with Clinton family machine politics. But just because they see it that way does not make it so.

    They fail to understand what Socialism is but think that prefixing it with “Democratic” somehow improves it. Talk about picking up a cow pie by the clean end.

    • #26
    • March 29, 2016, at 12:56 PM PDT
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  27. drlorentz Member

    Majestyk: They neither understand what Socialism is but think that prefixing it with “Democratic” somehow improves it. Talk about picking up a cow pie by the clean end.

    Democratic socialism is an oxymoron. The only way to achieve socialism is to impose it. There’s nothing democratic about it. At best it’s semi-voluntary: those who want it can join, the rest have to be forced.

    • #27
    • March 29, 2016, at 1:17 PM PDT
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  28. Man With the Axe Inactive

    drlorentz:Then there’s envy. Someone else has more so he must have stolen it or doesn’t deserve it for some other reason. How else can this injustice be explained? Never underestimate the human capacity for rationalization.

    This reminds me of a conversation I had with a Democrat friend during the 2012 campaign. She questioned me on why Romney should be allowed to have amassed more than $200 million in wealth. I asked her if he had stolen it. She admitted that he had not. But, I said, you want to steal it from him.

    • #28
    • March 29, 2016, at 3:45 PM PDT
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  29. drlorentz Member

    Man With the Axe:

    drlorentz:Then there’s envy. Someone else has more so he must have stolen it or doesn’t deserve it for some other reason. How else can this injustice be explained? Never underestimate the human capacity for rationalization.

    This reminds me of a conversation I had with a Democrat friend during the 2012 campaign. She questioned me on why Romney should be allowed to have amassed more than $200 million in wealth. I asked her if he had stolen it. She admitted that he had not. But, I said, you want to steal it from him.

    What was her response? Stunned silence, angry denunciation…?

    • #29
    • March 29, 2016, at 4:59 PM PDT
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  30. Man With the Axe Inactive

    drlorentz:

    What was her response? Stunned silence, angry denunciation…?

    As I recall, her response was to change the subject.

    • #30
    • March 29, 2016, at 5:03 PM PDT
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