4est_4est_Gump
Run Forrest! RUN!
- Joined
- Sep 19, 2011
- Posts
- 89,007
It doesn't hurt to see Keynesian-dominated economies struggle and fail.
I'm Hungary for some French-fried €PIIGS!
A_J, the Incredulous
Politics and the US Economy
- Thread starter RightField
- Start date
It doesn't hurt to see Keynesian-dominated economies struggle and fail.
I'm Hungary for some French-fried €PIIGS!
A_J, the Incredulous
mercury14
Pragmatic Metaphysician
- Joined
- Jul 8, 2009
- Posts
- 22,158
It doesn't hurt to see Keynesian-dominated economies struggle and fail.
I'm Hungary for some French-fried €PIIGS!
A_J, the Incredulous
Go ahead and show us your list of supply-side economies that have succeeded.
RightField
Literotica Guru
- Joined
- Jun 30, 2003
- Posts
- 9,361
Some of the things that the Democrats won't tell you....
The Cost of Increasing Tax Rates On Capital Gains and Dividends
By Ike Brannon
Both Republicans and Democrats increasingly agree that it is high time we reform the tax code — and that’s the extent of the agreement. Republicans aim to keep marginal tax rates down, in order to reduce the code’s drag on economic growth. Meanwhile, Democrats first and foremost want the code to further ameliorate growing income inequality.
Nowhere do these two goals conflict more than in the battle over the taxation of investment income. Reducing the tax rates on dividends and capital gains was a key precept in the Bush tax cuts, and the leading Republican political figures on the tax-writing committees vigorously defend them today. At the same time Democrats have decried the unequal distribution of investment income and have used the Republicans’ defense of the lower tax rates on this income as prima facie evidence of their overarching concern for the well-off.
But Republicans understand that treating capital gains and savings as ordinary income and subjecting it to a sharply higher tax rate is an expensive and ultimately counterproductive way to raise more revenue. While those with more income from capital gains would owe more in taxes, everyone would feel the impact of the lower economic growth that would ultimately result — as would our federal budget.
There is a wealth of evidence suggesting that higher returns to saving — which a lower capital-gains tax rate engenders — ultimately result in more saving and investment. For example, former Treasury Secretary Larry Summers determined during his days as an academic economist that savings rates were extremely sensitive to the return on saving, and that high taxes on what our savings and investments earn significantly reduce how much we save. James Poterba, head of the National Bureau of Economic Research, has done research showing that increasing the return on saving via the tax code strongly affects how much we save. In his studies of how the introduction of tax-advantaged accounts such as 401ks and IRAs impacted savings rates, he found that these innovations increased savings by roughly 30-40%.
More saving increases investment, which in turn increases productivity and future economic growth as well. Nobel Laureate Robert Lucas once said that eliminating the taxation on capital income was the closest thing to a free lunch that exists in this world. He estimated that the capital stock in the U.S. (i.e., the amount of plant and equipment available for workers to use) would be 50% larger if we did not tax capital gains and dividends at all. Our economy would be trillions of dollars larger in such a world, which, I submit, would make our current budget predicament much more tractable.
Ultimately economic growth is the key ingredient to generating the revenue necessary to cure our budget ills. The two periods when revenue grew the fastest in recent history were 1997-2000 and 2004-2007. In neither occasion did tax rates increase at all — but both represent periods of strong, sustained economic growth.
There is no doubt that there are wealthy people who take advantage of tax laws and manipulate their corporate form to exploit certain tax-rate differentials. Former presidential candidate John Edwards and his machinations with his corporate form to avoid paying self-employment taxes is just one example. We should strive to prevent this from happening as much as is possible, certainly, but devising a tax code that’s unfriendly to economic growth in the name of meting out justice to a small class of ne’er-do-wells is not an appealing trade-off to most people.
The goal of a tax code should be to generate the revenue necessary to pay for our government, in the most efficient way possible, with the smallest impact possible on economic growth. This vision has been waylaid in recent years as politicians of all stripes have used the tax code to pursue any number of small-bore policy agendas, with the result being a tax code that is complex and often contradictory, and that does very little to create growth. In an environment with trillion-dollar deficits and 8% unemployment, growth is more important than ever.
Reducing income inequality is an admirable goal. However, doing so by sacrificing economic growth, which harms those at all income levels, is not an acceptable tradeoff to most people.
The Cost of Increasing Tax Rates On Capital Gains and Dividends
By Ike Brannon
Both Republicans and Democrats increasingly agree that it is high time we reform the tax code — and that’s the extent of the agreement. Republicans aim to keep marginal tax rates down, in order to reduce the code’s drag on economic growth. Meanwhile, Democrats first and foremost want the code to further ameliorate growing income inequality.
Nowhere do these two goals conflict more than in the battle over the taxation of investment income. Reducing the tax rates on dividends and capital gains was a key precept in the Bush tax cuts, and the leading Republican political figures on the tax-writing committees vigorously defend them today. At the same time Democrats have decried the unequal distribution of investment income and have used the Republicans’ defense of the lower tax rates on this income as prima facie evidence of their overarching concern for the well-off.
But Republicans understand that treating capital gains and savings as ordinary income and subjecting it to a sharply higher tax rate is an expensive and ultimately counterproductive way to raise more revenue. While those with more income from capital gains would owe more in taxes, everyone would feel the impact of the lower economic growth that would ultimately result — as would our federal budget.
There is a wealth of evidence suggesting that higher returns to saving — which a lower capital-gains tax rate engenders — ultimately result in more saving and investment. For example, former Treasury Secretary Larry Summers determined during his days as an academic economist that savings rates were extremely sensitive to the return on saving, and that high taxes on what our savings and investments earn significantly reduce how much we save. James Poterba, head of the National Bureau of Economic Research, has done research showing that increasing the return on saving via the tax code strongly affects how much we save. In his studies of how the introduction of tax-advantaged accounts such as 401ks and IRAs impacted savings rates, he found that these innovations increased savings by roughly 30-40%.
More saving increases investment, which in turn increases productivity and future economic growth as well. Nobel Laureate Robert Lucas once said that eliminating the taxation on capital income was the closest thing to a free lunch that exists in this world. He estimated that the capital stock in the U.S. (i.e., the amount of plant and equipment available for workers to use) would be 50% larger if we did not tax capital gains and dividends at all. Our economy would be trillions of dollars larger in such a world, which, I submit, would make our current budget predicament much more tractable.
Ultimately economic growth is the key ingredient to generating the revenue necessary to cure our budget ills. The two periods when revenue grew the fastest in recent history were 1997-2000 and 2004-2007. In neither occasion did tax rates increase at all — but both represent periods of strong, sustained economic growth.
There is no doubt that there are wealthy people who take advantage of tax laws and manipulate their corporate form to exploit certain tax-rate differentials. Former presidential candidate John Edwards and his machinations with his corporate form to avoid paying self-employment taxes is just one example. We should strive to prevent this from happening as much as is possible, certainly, but devising a tax code that’s unfriendly to economic growth in the name of meting out justice to a small class of ne’er-do-wells is not an appealing trade-off to most people.
The goal of a tax code should be to generate the revenue necessary to pay for our government, in the most efficient way possible, with the smallest impact possible on economic growth. This vision has been waylaid in recent years as politicians of all stripes have used the tax code to pursue any number of small-bore policy agendas, with the result being a tax code that is complex and often contradictory, and that does very little to create growth. In an environment with trillion-dollar deficits and 8% unemployment, growth is more important than ever.
Reducing income inequality is an admirable goal. However, doing so by sacrificing economic growth, which harms those at all income levels, is not an acceptable tradeoff to most people.
mercury14
Pragmatic Metaphysician
- Joined
- Jul 8, 2009
- Posts
- 22,158
RightField
Literotica Guru
- Joined
- Jun 30, 2003
- Posts
- 9,361
Why don't you show us an Obama-type economy that has worked? This one certainly isn't.
4est_4est_Gump
Run Forrest! RUN!
- Joined
- Sep 19, 2011
- Posts
- 89,007
I'll put it in the words of your President:
The US economy for a long period of time was the engine of world economic growth.
Barack Hussein Obama
As JFK would put it, a rising tide lifts all boats, cut the tax rate.
As Obama would say it:
Q: You favor an increase in the capital gains tax, saying, “I certainly would not go above what existed under Bill Clinton, which was 28%.” It’s now 15%. That’s almost a doubling if you went to 28%. Bill Clinton dropped the capital gains tax to 20%, then George Bush has taken it down to 15%. And in each instance, when the rate dropped, revenues from the tax increased. And in the 1980s, when the tax was increased to 28%, the revenues went down.
A: What I’ve said is that I would look at raising the capital gains tax for purposes of fairness. The top 50 hedge fund managers made $29 billion last year--$29 billion for 50 individuals. Those who are able to work the stock market and amass huge fortunes on capital gains are paying a lower tax rate than their secretaries. That’s not fair.
Q: But history shows that when you drop the capital gains tax, the revenues go up.
A: Well, that might happen or it might not. It depends on what’s happening on Wall Street and how business is going.
Source: 2008 Philadelphia primary debate, on eve of PA primary Apr 16, 2008
The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. … Increasing America’s debt weakens us domestically and internationally. Leadership means that ‘the buck stops here. Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.
Senator Barack Hussein Obama, 2006
The problem is, is that the way Bush has done it over the last eight years is to take out a credit card from the Bank of China in the name of our children, driving up our national debt from $5 trillion for the first 42 presidents - #43 added $4 trillion by his lonesome, so that we now have over $9 trillion of debt that we are going to have to pay back -- $30,000 for every man, woman and child. That's irresponsible. It's unpatriotic.
Barack Hussein Obama
4est_4est_Gump
Run Forrest! RUN!
- Joined
- Sep 19, 2011
- Posts
- 89,007
It is popular today to blame capitalism for everything that displeases. Indeed, who is still aware of what he would have to forego if there were no "capitalism?" When great dreams do not come true, capitalism is charged immediately. This may be a proper procedure for party politics, but in Scientific discussion, it should be avoided.
Ludwig von Mises
A Critique of Interventionalism (1929)
"The more communal enterprise extends, the more attention is drawn to the bad business results of nationalized and municipalized undertakings. It is impossible to miss the cause of the difficulty: a child could see where something was lacking. So that it cannot be said that this problem has not been tackled. But the way in which it has been tackled has been deplorably inadequate. Its organic connection with the essential nature of socialist enterprise has been regarded as merely a question of better selection of persons. It has not been realized that even exceptionally gifted men of high character cannot solve the problems created by socialist control of industry."
Ludwig Heinrich Elder von Mises
"We know that the number of government jobs has been increasing steadily, and that the number of applicants is increasing still more rapidly than the number of jobs. … Is this scourge about to come to an end? How can we believe it, when we see that public opinion itself wants to have everything done by that fictitious being, the state, which signifies a collection of salaried bureaucrats? … Very soon there will be two or three of these bureaucrats around every Frenchman, one to prevent him from working too much, another to give him an education, a third to furnish him credit, a fourth to interfere with his business transactions, etc., etc. Where will we be led by the illusion that impels us to believe that the state is a person who has an inexhaustible fortune independent of ours?
Frédéric Bastiat
What class does not solicit the favors of the state? It would seem as if the principle of life resided in it. Aside from the innumerable horde of its own agents, agriculture, manufacturing, commerce, the arts, the theatre, the colonies, and the shipping industry expect everything from it. They want it to clear and irrigate land, to colonize, to teach, and even to amuse. Each begs a bounty, a subsidy, an incentive, and especially the gratuitous gift of certain services, such as education and credit. And why not ask the state for the gratuitous gift of all services? Why not require the state to provide all the citizens with food, drink, clothing, and shelter free of charge?
Frédéric Bastiat
... under the name of the state the citizens taken collectively are considered as a real being, having its own life, its own wealth, independently of the lives and the wealth of the citizens themselves; and then each addresses this fictitious being, some to obtain from it education, others employment, others credit, others food, etc., etc. Now the state can give nothing to the citizens that it has not first taken from them.
Frédéric Bastiat
Ludwig von Mises
A Critique of Interventionalism (1929)
"The more communal enterprise extends, the more attention is drawn to the bad business results of nationalized and municipalized undertakings. It is impossible to miss the cause of the difficulty: a child could see where something was lacking. So that it cannot be said that this problem has not been tackled. But the way in which it has been tackled has been deplorably inadequate. Its organic connection with the essential nature of socialist enterprise has been regarded as merely a question of better selection of persons. It has not been realized that even exceptionally gifted men of high character cannot solve the problems created by socialist control of industry."
Ludwig Heinrich Elder von Mises
"We know that the number of government jobs has been increasing steadily, and that the number of applicants is increasing still more rapidly than the number of jobs. … Is this scourge about to come to an end? How can we believe it, when we see that public opinion itself wants to have everything done by that fictitious being, the state, which signifies a collection of salaried bureaucrats? … Very soon there will be two or three of these bureaucrats around every Frenchman, one to prevent him from working too much, another to give him an education, a third to furnish him credit, a fourth to interfere with his business transactions, etc., etc. Where will we be led by the illusion that impels us to believe that the state is a person who has an inexhaustible fortune independent of ours?
Frédéric Bastiat
What class does not solicit the favors of the state? It would seem as if the principle of life resided in it. Aside from the innumerable horde of its own agents, agriculture, manufacturing, commerce, the arts, the theatre, the colonies, and the shipping industry expect everything from it. They want it to clear and irrigate land, to colonize, to teach, and even to amuse. Each begs a bounty, a subsidy, an incentive, and especially the gratuitous gift of certain services, such as education and credit. And why not ask the state for the gratuitous gift of all services? Why not require the state to provide all the citizens with food, drink, clothing, and shelter free of charge?
Frédéric Bastiat
... under the name of the state the citizens taken collectively are considered as a real being, having its own life, its own wealth, independently of the lives and the wealth of the citizens themselves; and then each addresses this fictitious being, some to obtain from it education, others employment, others credit, others food, etc., etc. Now the state can give nothing to the citizens that it has not first taken from them.
Frédéric Bastiat
4est_4est_Gump
Run Forrest! RUN!
- Joined
- Sep 19, 2011
- Posts
- 89,007
Why is it that as the various European Socialist/Keynesian experiments, having brutally awoken to find themselves on the path to Weimar reform in the direction of Supply Side?
mercury14
Pragmatic Metaphysician
- Joined
- Jul 8, 2009
- Posts
- 22,158
Stop answering a question with a question. Go back, start over, and address what I asked. Then I'll answer your question next if you still want to answer it.
C'mon guys, show me your list of supply-side trickle-down economies that have worked. It's been days and you two can't put your heads together to come up with any kind of response at all?
Really?
Last edited:
4est_4est_Gump
Run Forrest! RUN!
- Joined
- Sep 19, 2011
- Posts
- 89,007
I gave you the one, unique place in the world.
Stop ignoring it.
Stop ignoring it.
mercury14
Pragmatic Metaphysician
- Joined
- Jul 8, 2009
- Posts
- 22,158
4est_4est_Gump
Run Forrest! RUN!
- Joined
- Sep 19, 2011
- Posts
- 89,007
We gleefully destroyed the one that became the paragon of all economies.
You celebrate that on a daily basis, that we are just like Europe now.
mercury14
Pragmatic Metaphysician
- Joined
- Jul 8, 2009
- Posts
- 22,158
So you still can't provide a list well-functioning supply-side economies? All you can come up with is these stupid little non-sequiturs then in a frantic effort to change the subject?
You seem so sure of yourself that supply-side, trickle-down economics works so well that the US should proceed down that path at full speed. So I'm sure you have examples of places it's working great in right now.
Right?
4est_4est_Gump
Run Forrest! RUN!
- Joined
- Sep 19, 2011
- Posts
- 89,007
There was only one.
The others are either still mercantilist or simply went from mercantilist to mafia-style oligarchies or mixed Socialist economies which was the main reason that we eclipsed them, but as the Progressive movement took hold here and introduced the concept of a mixed national economy we have gradually slid into the camp of central control and planning and thus we find ourselves in the patch that we are in today, idiots screaming that supply-side will never work, you can't prove it will work, therefore we need the intellectual oligarchy to rule our lives in the name of fairness.
The others are either still mercantilist or simply went from mercantilist to mafia-style oligarchies or mixed Socialist economies which was the main reason that we eclipsed them, but as the Progressive movement took hold here and introduced the concept of a mixed national economy we have gradually slid into the camp of central control and planning and thus we find ourselves in the patch that we are in today, idiots screaming that supply-side will never work, you can't prove it will work, therefore we need the intellectual oligarchy to rule our lives in the name of fairness.
J
JAMESBJOHNSON
Guest
I'm reminded of John D. Rockefeller and Standard Oil.
When Rockefeller came along in 1870 the Eastern US was almost deforested, New England whalers had almost exhausted all the whales on the planet, Pennsylvania/Ohio were toxic waste dumps, and Americas streets and streams were full of horse shit. Plus lamp oil cost 95 cents a gallon.
By 1920 all of that had changed. Almost no whaling. Forests were back. Horses were gone. Refineries were on the coasts and close to metropolitan areas. And kerosene was 5 cents a gallon.
When Rockefeller came along in 1870 the Eastern US was almost deforested, New England whalers had almost exhausted all the whales on the planet, Pennsylvania/Ohio were toxic waste dumps, and Americas streets and streams were full of horse shit. Plus lamp oil cost 95 cents a gallon.
By 1920 all of that had changed. Almost no whaling. Forests were back. Horses were gone. Refineries were on the coasts and close to metropolitan areas. And kerosene was 5 cents a gallon.
4est_4est_Gump
Run Forrest! RUN!
- Joined
- Sep 19, 2011
- Posts
- 89,007
patrick1
Literotica Guru
- Joined
- May 13, 2003
- Posts
- 1,308
<< The “fiscal multiplier” can never be more than 1.0, and is usually less than that. It isn’t the Fed that neutralizes fiscal stimulus, it’s fiscal stimulus that neutralizes fiscal stimulus.
Keynesians implicitly assume that the additional government spending is done with money that is materialized out of thin air. It is not. Stimulus spending is financed by selling bonds. The Treasury sells bonds and takes in money. Then, with some lag, it writes checks and sends the same money back out again. The best that this process can ever accomplish is to leave NGDP unchanged.
But wait, it gets worse. Although fiscal stimulus can never affect demand...>>
Whatever the merits or demerits of your fiscal stimulus, this is a serious misunderstanding of how macro-economics works.
We're passing through a bizarre era where most countries, especially over here in the Eurozone, are being forced to revisit the failed austerity pollicies of the 30's. It's going to end badly, I feel.
You're lucky enough to have had a little fiscal stimulus. Enjoy your multiplier while stocks last.
