Question for supply siders

[WildCat]

But that money is not just "lost", it is then spend by government, reinvesting it into the economy, which can then be used for the very purposes you just outlined.

No, no and no!

The gov't cannot invest money or create wealth, the gov't can only take money from one person and give it to another - transferring wealth.

 

[RichardR]

Well, I can see that you have no interest in life here on planet earth. Good luck with your "making less is making more" philosophy; keep your taxation, and I'll keep as much of my own money as possible. If you want to convince me otherwise you'll have to offer me more than opinions.

Isn't that all you've offered?

Revisionist history? With your premise, the Germans and French would still be running the world due to their tax-funded "prosperity." You may want to look at their unemployment rates and stagnant economies before answering, however.

Labor market policy has played a large part in this. The data in the report shows growth in years of tax increases and tax cuts.

 

[brodski]

No, no and no!

The gov't cannot invest money or create wealth, the gov't can only take money from one person and give it to another - transferring wealth.

Why not? Why is government spending any different from any other service industry?
The government may not make anything physical (except in some cases), but then neither do many very successful private companies.

 

[Meadmaker]

That's silly. Reduce fixed costs like taxes, and you free up capital for growth, hiring, etc. You don't need a PhD to figure that out.

In fact, a lot of people with PhDs insist that it isn't true.

 

[WildCat]

Why not? Why is government spending any different from any other service industry?
The government may not make anything physical (except in some cases), but then neither do many very successful private companies.

Here is a list of the government agencies that turn a profit:

Do you understand now? It has nothing to do w/ whether your product is physical or a service.

Also consider that a private enterprise invests disposable, discretionary income, and their receipts are by and large from others disposable, discretionary income. Gov't takes from everyone regardless of what they want, even a welfare recipient has to pay sales taxes and taxes hidden in the purchase price of everything they buy.

Now, there are proper functions of a gov't that need to be paid for and can lay the infrastructure for private investment (such as building roads), but in and of themselves do not create wealth.

 

[brodski]

Here is a list of the government agencies that turn a profit:
.

really,your IRS cost more to run that it takes in? you've got some serious political problems then.

Do you understand now? It has nothing to do w/ whether your product is physical or a service.

You could instead measure outputs, rather than just $ profits, as government spending tens to be on those products which may be considdered a "social good", but which the market is ill equiped to provide in the necessary quantities. Defense for example.

Also consider that a private enterprise invests disposable, discretionary income, and their receipts are by and large from others disposable, discretionary income. Gov't takes from everyone regardless of what they want, even a welfare recipient has to pay sales taxes and taxes hidden in the purchase price of everything they buy..

(my bolding)


that must be one hell of a dictatorship you are living in then.
Taxation does pay for a service, think of it as the "rent" paid to be allowed to be an economic actor in society, the more economic activity you wish to engage in, the more "rent" you pay. Governments can create wealth (as distinct from profit, as government tends to reinvest its income in a manner comparable to charitable donations) in the same way any landlord can create wealth.

Now, there are proper functions of a gov't that need to be paid for and can lay the infrastructure for private investment (such as building roads), but in and of themselves do not create wealth.

so, they increase the economic output of a nation, but do not create wealth? I think you may have to talk me through that one again.

 

[jj]

You are still left with the awkward question of the evidence posted in the OP, there is no significant correlation between US tax cuts and economic growth.

And, that's the point, isn't it? Has anyone done a lag analysis as well? Since changes in economic policy don't "take" immediately, one might also want to check the correlation over a variety of lag times, as well. If the paper has done that I'm sorry, but the link isn't loading right here and now.

 

[Meadmaker]

And, that's the point, isn't it? Has anyone done a lag analysis as well? Since changes in economic policy don't "take" immediately, one might also want to check the correlation over a variety of lag times, as well. If the paper has done that I'm sorry, but the link isn't loading right here and now.

I don't know about that paper, but the numbers have been crunched over and over and over by lots of folks. There's no correlation.

 

[Vagabond]

So what you are arguing for is the right level of taxtaion at the rigth rime, rather than low taxes all round?

No, I wasn't arguing for anything. His question pertained to whether they would effect the growth rate of the economy. They might not effect the growth rate but they might make people's lives better by giving them more money. They might be a good or bad thing regardless of whether they directly effect the growth rate or not. They are mutually exclusive questions.

 

[NoZed Avenger]

I had a response, but it was eaten by the system a couple of days back.

You are looking at 5 data points, with a large one, the 1981 tax code change -- which might or might not impact the trend -- being eliminated by the author's criteria. The choice of time periods and the elimination of the 1981 data may or may not be reasonable, but it is a small number of sets to be looking at, especially given all of the extra variables that have to be controlled. These would presumably include national savings and investment rates, trade deficits and dollar strangth, inflation, and government regulation regarding minimum wage and benefits (just as a start).

Without going back to the original data (and having a couple of free weeks to look it over carefully), I cannot really comment on the methodology, but the main author (from past reading) is agenda-driven, and so I do not immediately trust it/him. I cannot say from a brief review whether the study is valid, or not - but I would like to see the takes of other economists who *do* have access to the data and free time before coming to any conclusions.

 

[brodski]

No, I wasn't arguing for anything. His question pertained to whether they would effect the growth rate of the economy. They might not effect the growth rate but they might make people's lives better by giving them more money. They might be a good or bad thing regardless of whether they directly effect the growth rate or not. They are mutually exclusive questions.

Fair enough.

 

[jj]

I don't know about that paper, but the numbers have been crunched over and over and over by lots of folks. There's no correlation.

Again, have they examined lag? Even if you have a strong correlation in a system, by not knowing the system "phase" or "lag" you may well not be able to observe it.

Conversely, if there is a cycle of inputs, you may lock onto something caused by another one of the inputs, so this does cut both ways, but you didn't answer the question "did they attempt a lag analysis"?

 

[WildCat]

really,your IRS cost more to run that it takes in? you've got some serious political problems then.

Funny, because it's true.

You could instead measure outputs, rather than just $ profits, as government spending tens to be on those products which may be considdered a "social good", but which the market is ill equiped to provide in the necessary quantities. Defense for example.

You could, but the output is always Tax Revenue minus Administration Expenses. And those admin. expenses are 10%-30% (conservatively) of revenue, and this is money taken out of private, wealth creating ventures. Which is why the gov't isn't a net creator of wealth, and shouldn't be. A private venture adds value to its product, so the value of its outputs are greater than the input for capitol, materials, and labor. This is how wealth creation works.

(my bolding)
that must be one hell of a dictatorship you are living in then.

The People's Democratic City of Chicago, the bluest city in the bluest state.

Taxation does pay for a service, think of it as the "rent" paid to be allowed to be an economic actor in society, the more economic activity you wish to engage in, the more "rent" you pay. Governments can create wealth (as distinct from profit, as government tends to reinvest its income in a manner comparable to charitable donations) in the same way any landlord can create wealth.

See above, and consider this: Chicago city garbage trucks have a crew of 3 - driver and 2 walkers. Private garbage collectors have one person on the truck. They pull at least the same amount of garbage per day as the average city crew, and they're 95% Teamsters so they're decently paid. That example doesn't even include the bloated city bureaucracy that runs the trucks - Streets and Sanitation, long a patronage-heavy haven for political clout.

Private companies can and should do some city services, and put far more into the local economy.

so, they increase the economic output of a nation, but do not create wealth? I think you may have to talk me through that one again.

For some things, a government lead role is necessary and wise. Road building, for example. Things that need a region-wide approach to avoid a hodge-podge of differing private interests. This is beneficial to the economy beyond a doubt, and a proper role of the gov't. Where road-building is not helpful is if it's purely a pork-barrel boondoggle - such as the bridge to nowhere. BTW, all the money that was withdrawn from that project was simply given to Alaska - gov't fiscal responsibility in action. I hope this example is helpful to see where the line is drawn.

 

[Mark]

Would like to see a cite on this one, Mark. I remember quite the contrary.

I'm sure you do.

Emphasis mine:

If the Administration’s latest tax proposals — which would make permanent most of the tax cuts enacted in 2001 and 2003 and establish new tax cuts on top of that — are enacted, the long-term results are likely to be even more troubling. Over the next 10 years, total tax-cut costs will equal $3.9 trillion, reaching nearly $600 billion or 3.3 percent of the economy in 2014 alone. (These calculations include the effects of the higher interest payments caused by the tax cuts.) The resulting higher deficits will slow future economic growth, saddle future generations with sizable interest payments, and leave the nation ill-prepared not only for the retirement of baby boomers but also for responding to potential future crises — from security matters to natural or environmental disasters — the particulars of which are unknown today....

...In a final, particularly audacious gimmick, in legislation sent to Congress on April 2, the Administration proposes a budget rule that would, for official purposes, make the cost of extending the 2001 and 2003 tax cuts disappear. If this change were enacted, the CBO would be required to show legislative proposals to make the tax cuts permanent as having zero cost.

http://www.cbpp.org/4-14-04tax-sum.htm

KANSAS CITY, Mo. — President Bush yesterday called for making his tax cuts permanent for the first time since signing a major tax-cut package in May that was touted as temporary in order to keep the price tag low.

http://www.washtimes.com/national/20030905-120757-2326r.htm

The single biggest change — making the tax cuts passed during Bush’s first term permanent reductions — would cost $1.1 trillion. Those laws reduced taxes on wages, investment income and inherited estates. The president would also extend, for a 10-year total of $73 billion, various temporary tax breaks for businesses.

http://www.msnbc.msn.com/id/6928662/from/RL.5/


From a conservative web site:

Confident, but also cautious: As the President urged, Congress must act immediately to make the temporary tax cuts enacted in 2001 permanent. Otherwise, the economic improvement that is seemingly springing up all around the country will disappear.

http://www.heritage.org/Research/Taxes/wm403.cfm

 

[Vagabond]

Here is a list of the government agencies that turn a profit:

Do you understand now? It has nothing to do w/ whether your product is physical or a service.

Also consider that a private enterprise invests disposable, discretionary income, and their receipts are by and large from others disposable, discretionary income. Gov't takes from everyone regardless of what they want, even a welfare recipient has to pay sales taxes and taxes hidden in the purchase price of everything they buy.

Now, there are proper functions of a gov't that need to be paid for and can lay the infrastructure for private investment (such as building roads), but in and of themselves do not create wealth.

This is just stupid. The primary reason the government runs things is because they are doing things that aren't ever going to turn a profit or are very difficult to turn a profit on. Otherwise there would be private business doing it already. The National Park Service probably turns a profit, but they could do much better if "PROFIT" was their goal. But, it isn't. Their goal is to provide wilderness places for people regardless of what it costs. The Gateway Arch has millions of people pay to go up in it, but I doubt they are making much money on it considering the cost to build and maintain it. If we had to rely on profitable business for such things, they wouldn't exist.

 

[WildCat]

This is just stupid. The primary reason the government runs things is because they are doing things that aren't ever going to turn a profit or are very difficult to turn a profit on.

You may want to re-think that one. Should the gov't go into business selling mud pies? Just try to turn a profit on that!

Otherwise there would be private business doing it already. The National Park Service probably turns a profit, but they could do much better if "PROFIT" was their goal. But, it isn't. Their goal is to provide wilderness places for people regardless of what it costs. The Gateway Arch has millions of people pay to go up in it, but I doubt they are making much money on it considering the cost to build and maintain it. If we had to rely on profitable business for such things, they wouldn't exist.

The Park Service loses money, and is thus subsidized by the gov't. This doesn't mean it is bad, I actually think this is a proper use of gov't. I'm not some loony Libertarian!

 

[Jocko]

I'm sure you do.

Emphasis mine:

http://www.cbpp.org/4-14-04tax-sum.htm


http://www.washtimes.com/national/20030905-120757-2326r.htm


http://www.msnbc.msn.com/id/6928662/from/RL.5/


From a conservative web site:

http://www.heritage.org/Research/Taxes/wm403.cfm

Mark, none of these say:

The one he promised would be temporary...which he blatantly lied about.

Where's the promise? I read the papers, I know they were temporary. Every bill passed by congress is friggin' temporary. What I don't see is a promise to let them lapse, and I certainly see no lie. Neither can you, no matter how hard you squint.

Your hysteria has gotten the better of you once again, and you're caught in another lie. Golly, that must make this Tuesday.

 

[Jocko]

This is just stupid. The primary reason the government runs things is because they are doing things that aren't ever going to turn a profit or are very difficult to turn a profit on. Otherwise there would be private business doing it already. The National Park Service probably turns a profit, but they could do much better if "PROFIT" was their goal. But, it isn't. Their goal is to provide wilderness places for people regardless of what it costs. The Gateway Arch has millions of people pay to go up in it, but I doubt they are making much money on it considering the cost to build and maintain it. If we had to rely on profitable business for such things, they wouldn't exist.

Absolutely right. There are some things that only the government can do, things only the government SHOULD do. The actual number of these things, however, is firghtfully small when compared to what they ACTAULLY do, let alone what they WANT to do.

Sorry, but if you're talking about money I earned, "profitability" sure as hell is a critical determinant of where I prefer it be spent, above and beyond the minimum threshold fulfilled by government.

We can argue where that threshold is, but considering I'm talking about my money I think I'll use my own yardstick, that I bought with my money, from a store I chose to shop, run for a profit and stocked by products from other companies that make a profit... which makes all the government's loser investments possible in the first place.

 

[Mark]

Mark, none of these say:


Where's the promise? I read the papers, I know they were temporary. Every bill passed by congress is friggin' temporary. What I don't see is a promise to let them lapse, and I certainly see no lie. Neither can you, no matter how hard you squint.

Your hysteria has gotten the better of you once again, and you're caught in another lie. Golly, that must make this Tuesday.

Oh, I guess we're going back to insulting each other. I didn't lie, phlegmwad. If you want to continue to engage in selective amnesia to support your heroes, then I guess that's what you will do. How do you breathe with your nose stuck so far up Bush's arse?

 

[geni]

Here is a list of the government agencies that turn a profit:

Hmm who owns your air traffic control system?