Passed in 1890... read up on it. the president at the time believed the economic crisis was caused by this act. Please play devil's advocate with your arguments a bit. The government is all over YOUR FIRST citation. And its all over wikipedia no less. Easy.
The president of the US set up a system where in the government was in some sort of land swapping system with the banks and it wasn't regulated very well. So the banks obviously were trying to make as much money as possible and the government as usual wasn't paying attention to what it was doing which lead to unstable system. THEN because this gets better the president refused to renew the bank's charter AND pulled all the government's money out of the bank.
RESULT? Big run on the biggest bank in the US at the time followed by all sorts of stuff that were just ripple effect from that. See what I'm talking about? I hope so.
As to what you should or shouldn't be doing two years after a recession you keep assuming Bush was following Keynesian economics. He wasn't he never claimed to do it. So I don't know why you think bush is relevant. You should be talking about Obama. People in his administration have made that claim. So far as I know the bush white house never expressed affiliation with that model.
As to keeping government's hands out of the cookie jar. You stop it the same way you protect freedom of speech. You make it a constitutional amendment... separation between economy and state. No influence. No ability to pick winners... no ability to pick losers.
Obviously the government needs to buy things and that will effect the economy. But the government has to come in as a consumer not a dictator. The government can of course post an open bid for a product or service. First credible company that offers a good price they can snap up after leaving it up for a short time to see if they get a lower bid. No more closed bids. Everything in the open. Secret military projects might be a special case but everything else should be in the open.
Anyway, I believe the current government is manifestly and demonstrably incompetent to manage this economy. I wouldn't trust them to manage Paraguay let alone the US. I'd ask you to look over some of your data in light of what I proved above about the panics and approach these issues with more humility. You were wrong there... consider where else you're wrong. Because as humans we have no shortage of flaws. I have mine. Acknowledge yours. You've also proven my point in this thread again by not seeing those panics were caused by the government. My point was that democrats have a blind spots too especially on the economy.
Not really, there is a lot of data. You just need to know how to read it.
Are you telling me you can read 10,000 weather stations and determine if there is a.5 degree warming trend over 100 years? Come now.
Likewise, taxes are increased and decreased all over the world. It is rare for a 5 percent tax to result in a 5 percent increase in revenue. It will typically be more or less then five percent.
If you get lots of data you can filter out outliers and see patterns in the data. You can also graph trend lines.
Problem then will be if you'll believe the graph? What if top economists start saying you're too high up on the curve and governments should cut taxes radically? Will you believe them? What if they won't show their methodology? What if they're connected with right wing political organizations and an ex republican Vice president is trying to push their agenda?
How much do you trust them now? What if they won't release lots of data even if you hit them with FoIA requests? What if they tell judges that the data was destroyed and they can't provide raw data?
Skeptics aren't stupid or as Al Gore suggests "racists"... they just have trust issues given the source and the context. It's all very convenient for certain political organizations. Especially since ol' saint Al made a fortune selling carbon indulgences to anyone willing to buy one. What a racket.
If you want to touch that argument you need to enter it with a lot of humility because the alarmist movement abused their authority, abused the audience, and abused trust.
Once trust is lost it hast to be rebuilt patiently. Calling everyone racists or relating them to holocaust deniers isn't a good way to rebuild it.
call them like minded people... those who in a popular election you would rely upon utter to have any significance what so ever. They're your allies whether you like it or not. Without them the halls of politics you'd be one man. And I think we know what that's worth in popular politics. Slightly more then zero. Right or wrong... it is.
As to science... Sigh. You're going to go full on creationist on me aren't you? I have to personally prove carbon dating. I have to argue against all your theories about dinosaurs. I have to go through geology, stellar astronomy, and basically everything to explain the simple fact that the world isn't 6000 years old. that's what you're asking here. You're saying "prove the world is older then 6000 years old." But fine... I'll make a half assed attempt at it. I can't do better in a reasonable amount of time or in this medium.
Let me first try the short cut. Do you agree that if the government consumed 100 percent of the national product that would have a negative impact on the economy? That is... ate everything. People were not compensated for work at all. For the sake of argument just answer that question.
Okay. I'm going to assume you agreed that would cause a total collapse. We're in agreement.
Lets say hypothetically we have no taxes none. For the sake of argument we're not going into goods or services provided by the state. We're just keeping it very simple at this stage. So the government is eating NOTHING and everyone and every company gets to keep 100 percent of profits and pay no taxes at all. Can we agree that the economy would be more productive if everyone and every business were able to keep ALL it's money an pay NO taxes at all?
Again, I'm going to assume you agreed.
Okay, lets draw a line between Point A and Point B... with the line representing the function of taxation as it relates to economic productivity and thus government revenue as it takes a percentage of that revenue.
What is the shape of that line?
Is is a straight line?
Is it a jagged line that randomly goes up and done unpredictably?
Is it curved? If it curves does it curve up as increasing taxes increases revenue?
That is the laffer curve.
There is a great deal more written about it but that is it in a nutshell. I'm REALLY hoping we're if not on the same page then at least in the same library.
How did I do? Do we have enough to keep going or do I have to start proving the economic equivalent of carbon dating?:D
As to the panics do you want me to show you how England was fooling with the global price of gold? Trust me, governments have always screwed with the economy. It's never been otherwise. The bank of England messed with the price of gold until it broke them.
As to the recession only being eight months... the economy was still weak. It was not a vigorous recovery. It was thought that removing the subsidy or even increasing taxes would cause the country to slip back into recession. just so you know the logic of the time.
As to the tax cuts, you're implying that Bush was a Keynesian. I don't think the Republicans ever made that claim. I believe in that case they were actually trying to make lower taxes the new normal for their own sake as a means to make government smaller. Remember, democrats are proud of big government. Republicans are ashamed of it. Doesn't mean they don't make it too. They're just not proud of themselves afterwards.
Well, they're never going to manage the economy like you want or how I want. But of the two of us, I think my plan is more attainable. Your system requires the government to be competent. Mine only requires them to keep their hands to themselves. Again, neither of our ideas can really happen. Government cannot be relied upon to be competent all the time and neither can they be relied upon to color within the lines. They always goof and they always bleed.
Still... I think the bleed is easier to control then the goofing.
No because the government won't be producing things it will just have consumed all the profit.
It's the difference between the government running a shoe factory and the government showing up and taking ALL the shoes and paying for not one of them.
Can we agree that if the government showed up and took all the shoes and never paid for them that would have a negative impact on the shoe factory? We can. In fact, it would annihilate the factory. It couldn't survive. What are people eating? Not money made from selling shoes. They didn't sell any. The government took them all.
So sure, maybe the government then says "okay because I took all your shoes, I'll feed you and provide housing"... the economy is still going to die because while that might work for subsistence workers it provides no incentive for anyone else to work hard. It would have to trend to communism very quickly and even then they'd have to basically lower the amount the government was consuming or the government would destroy itself.
So the line between point A and B exists. Most of the other democrats in this thread LONG ago admitted that and realized that it is STUPID to deny the curve. What they argue instead is where we are as a nation ON the curve. I don't contest that. Its' debatable. I'm merely saying there is one and we're on it. Furthermore, my point was that lots of people like you in the democratic party would deny the existence of the curve. You did that.
I win.
*takes a bow, picks up some thrown roses, kisses a pretty girl.*
I disagree. I think he's denying that curve has any meaning as concept. Furthermore, which side of the curve we're on isn't the issue.
If you understand the curve you know you DO NOT want to get anywhere near the peak. A misunderstanding about the laffer curve is that the apex is the point of maximum efficiency. That's only true for ONE year. If you hit the apex in a given year you can consume ALL investment capital that would have been invested in further investment or productivity in the following year and eaten it all in taxes. If you reach the apex of the curve you're eating seed corn. You're eating the seeds that the farmer was going to plant to grow next year's harvest.
What you want is to be OFF the curve. Towards the start of the curve there is a 1:1 relationship between tax revenue and tax rate. Raise taxes 5 percent and you should get 5 percent more income. You're on the curve when the ratios stop being 1:1... and you start raising a tax 5 percent and getting a 4.999998 return. The INSTANT it drops below a 1:1 ratio economic activity is slowing as a result of taxation. Maybe the slowing is very low. But someone somewhere lost their job or wasn't hired or a factory shut down or something. And the effect was large enough that it was statistically significant in the national tax revenue. By definition small changes in in big numbers often hide bigger events simply hidden by the big number.
Point being, you don't want to even be on the curve. You can be a utilitarian and say "This tax revenue is more important then these other people having jobs. So I'd rather them be out of work then not get the money." That's fine. Just understand you made that choice. The damage doesn't start towards the end of the curve. When the curve starts to turn over that's the economy dying. That's breadlines and the doom of industries.
So understand that the laffer curve is not about the apex. It's about the curve which starts like the foot of a mountain... at the base. As soon as tax revenue stops acting in a 1:1 ratio... Understand after that point you're depressing the economy. Maybe not a lot... maybe it's worth it... justify it how you like. Simply be aware.
You don't need an exhaustive scientific test. Look at the tax receipts. You know how much you increased taxes. Did you get 1:1 return?
This probably works in both directions. If you lower taxes by 5 percent did you lose five percent revenue? If you lost 4.9 percent revenue then somewhere someone got hired because you lowered taxes. And it means you're climbing DOWN the curve. If no new economic activity had been created then you should have lost 5 percent for the 5 percent reduction.
Now obviously economies are not static qualities and you're not going to get pretty numbers out of them. The economy like trying to figure out what the level of the tide is to the mm by watching waves. It's always jumping around a little. But year over year there should be enough data to see if SOMETHING went up or down as a result. Small changes are meaningful if they react to the tax and are consistently reinforced by similar actions.
Does that mean lowering the tax 10 percent will be revenue neutral? Unlikely. But instead of losing 10 percent of your revenue you might only lose 8 or 7 percent. And that two to three percent of revenue is being used somewhere to generate new jobs. And the other eight to seven percent... well, the people that earned the money got to keep it and as of this moment aren't spending it on anything. But maybe if you let them keep the money for a few years they'll do something with it. You can't very well ask them all.
In any case... if you think I'm being unfair unreasonable... that's not my intention. I offered a meeting of minds. that was how I saw it. Take it for what it's worth and know it was meant in good faith and cheer.
Sorta... it wasn't actually good after the dotcom bust... was it? And that's when they started applying stimulus and the recovery was so slow and gradual it hard to pick a point and say "there, stop there now raise taxes."
Anyway, you're completely correct about Keynes. that said, I don't think government is competent enough to do it properly even assuming his theories were healthy.
See, just about every boom and/or bust can be related to some big bit of government intervention. And the counter Keynesian argument is that if you don't rock the boat you won't have to stabilize it. If the government stops disrupting the economy possibly corrective measures simply won't be required? It's never been tested. But there is strong correlation disruptions in the economy and government interference. That is booms and busts can be linked to government activity where as the slow steady growth tends to be a latent property of the system.
Not the laffer curve. You can't claim that taking 100 percent of the money out of the economy won't cause it to crash. Nor can you claim that taking none of the money out will not cause it to at least perform "well"... Between point A and B how exactly would you graph that line?
Do you think it would be a straight line? Do you think it would be a wavy line? Or do you think it would be a curve?
Think about the function you're modeling.
That math is simple and impossible to argue against.
it exists. It cannot not exist. It is an inevitable consequence of known market forces interacting with each other.
It wasn't people's expectations that caused the housing bubble. It was the cheap credit injected into the housing market by Freddie Mac and Fannie Mae. Congress told Freddie and Fannie to increase home ownership in America by giving loans to more people. Freddie and Fannie responded by telling mortgage lenders that they'd back stop nearly any loan to someone that wants to buy a house. Take a loan out from a hobo living in a tree. Freddie and Fannie will buy the loan. Then they got wall street involved and wall street convinced themselves that they had a genius mathematical way to make horrible investments profitable. Unfortunately the whole system created an economic feedback loop. Ever put a microphone close to a speaker. The tiny electrical whine from the microphone or the speaker will be enough to set in motion a loop in which a tiny amount of sound will be amplified by the speaker, recorded by the microphone, played by the speaker, picked up by the microphone and so on... until the speaker explodes or maxes out. It doesn't matter how much money you have... how big your economy is... that's as meaningless as just using a bigger speaker. It will just get louder.
It wasn't risk taking that caused the problem. it was the interaction between government intervention in the economy and the natural capitalistic process. What the market was doing is eating the government's money. It was a feeding frenzy. Drop a dead whale in the ocean... wait a few days and the water is slick with whale fat as hundreds of sharks take turns to take bites out of it and thousands of little fish swim around to snap up bits.
Okay well whales die in nature. That's normal. Imagine if a whale the size of road island died in the middle of atlantic... and lets remove rot and decomposition from this analogy. You'd have whole generations of life that would be born, raised, and die within the context of this giant pile of meat just being there. Explosive population growth. And then imagine the day dawns when the meat is gone. Bones picked clean. Nothing but millions... possibly billions of hungry mouths to feed and no giant dead whale to eat!!! CRISIS!!! COLLAPSE! DISASTER!
That in part is what happened with the housing bubble. Fannie and Freddie dumped money on the market for nearly 20 years. It started gradually... but it was consistent and it increased more after every recession. Every recession they said "oh and give more money to the housing fund."... and so it got more and more inflated.
The system is stable, self regulating, and self evolving. Housing prices prior to about 20 years ago remained stable in the US in relation to inflation since the Civil War. That is EXTREMELY stable. Buying a house historically was not an investment because you didn't make money on it. You wouldn't lose money on it. It could be said to be a store of value. But you'd generally sell it for what you paid plus inflation plus improvements. Minus wear and tare... and any gentrification or degradation in the community. If your community turned into a crack den in the mean time your house value was going to go down. But it could go up as easily if things improved. Point was that you couldn't flip houses prior to 20 years ago. Even doing it with improvements wasn't really worth it. You just got what the improvements were worth. You'd make more money offering yourself out as a carpenter or a plumber. That you could flip houses WAS the problem. It was a symptom of the syndrome. It was the feed back loop. And the faster houses flipped the faster the system fed back on itself. Housing prices going up and up and up and up. The same house sold a dozen times in a just a few years every time for a big profit.
Capitalism like nature upon which it is modeled can be upset by external forces. Take a lot of money out of the system and you can cause a depression or a recession. Inject a lot of money and you'll create a bubble as everything rushes in to consume the capital as quickly as possible before there's nothing left but bones.
sooo... do you think even theoretically they might be strong enough? Don't play with my emotions here... I want to believe this is possible... but you'll break my little geek heart if you tell me it will work and then I find out later it never can.
No it isn't possible. Again this 1+1=2 stuff. It isn't possible that 1+1 SOMETIMES equals 3. It equals two.
Under real world conditions you can of course get weird results but that's like saying under real world conditions a deadly poison can sometimes be survivable. For example... many poisons can be neutralized by eating activated charcoal... if you just happened to stuff a bunch into your mouth for some reason... you could survive all sorts of deadly poisons. Doesn't make them not deadly poisons.
For example, lets say your raise the tax rate but at the same time you increase the number of loopholes such that the official tax rate is meaningless. During the 60s and 70s when the US tax rate was a great deal higher there were also a lot more loopholes. This disguised the actual tax rate which was quiet a bit lower.
In France personal income is negotiable. What you CLAIM to make is not rigorously audited as it is in the US. So the tax rate can be high but you claim to make less then you actually make thus you pay a lower tax rate. This is especially common for side investments that are harder to track and the old favorite... the Swiss bank account.
The laffer curve is not about the fake tax rate. It's about the ACTUAL tax rate. It's the tax rate after the games with the tax auditors and the loopholes. After... EVERYTHING. Once you've accounted for all the relevant variables... you should be able to see it as taxes go up. Again, too bad we don't have a country to play guinea pig with, eh? Just a few million people and we can play with the tax rate and economic structure just to see what happens.
And then when we're done we can use our giant magnifying glass in orbit to burn them from space... SIZZLE!
Sorry, I'm getting bored... tenth time I've explained the same thing to someone... in a row.:D
So... okay... we agree that straw for example... that is dried grass... is not strong enough to make such a structure. So strength is an issue. I'm just hammering certain things into place. I like to do that so I can pivot off of known variables.
Do you know how strong ROUGHLY a material must be to make such a cable... and are nano tubes that strong or stronger?
Sure, and a creationist would argue that it's impossible to know what happened 6000 years ago because we weren't there. We're just measuring isotope ratios in rocks and making calculations based on observed ratios as they relate to know time factors.
You want to claim economics is purely chaotic and therefore you can make up any economic theory you like and its as good as another? Very convenient.
For the sake of argument. If I were right about democrats having a blind spot for economics... isn't that EXACTLY what you would say IF you were blind to the issue? Just put yourself in... your own shoes.
You're doing it and you don't even realize it.
I'm not making fun of you. Cognitive dissonance does that to people. You can't know when its happening. Its like being color blind. You don't know if it's red or green. You're not stupid or foolish or ignorant. Your brain which is doubtless perfectly healthy and sane is messing with you. Brains do that. It's a known and very common psychological phenomenon. And it is extremely common with things like religion, politics, and philosophy. Basically anything that creates your world view tends to form static bonds in your mind. And if the world... through your senses tells you that your world view is wrong... it is common for people to ignore it. That isn't a moral weakness. It's neurological. It's the way our brains are wired.
And I'm sure you're going to ask how I don't know if I'm doing it right now? I don't. I could and possibly am as blind to my own issues as you are to yours. The difference is that I'm not basing my argument on whether I'm clean. I'm arguing instead that everyone is dirty. So arguing that I'm dirty won't help you. You'll have to argue that your ideology is the only one in human history to be free of self delusion. You can't win.
It's head I win the argument or tails you argue I'm corrupted but by doing so you give my argument towards universal corruption more credence and so lose.
I wasn't talking about the apex... I was talking about the CURVE. Prior to 20 percent the relationship between tax rates and revenue will likely be a 1:1 ratio. After 20 percent you should start gradually seeing diminishing returns. That doesn't mean you make less as you increase taxes. It mean the relationship between the tax increase and the revenue increase is no longer 1:1. Furthermore, in the economy your tax increase is likely causing a gradual rise in unemployment, fewer businesses are getting started, less investment is occuring... etc.
That's just the curve starting. The apex is likely somewhere between sixty percent and seventy percent. But at that point you have very high unemployment, low economic growth, and what is really a dying economy.
If you tax AT the apex that's only efficient if you only look at ONE year. For that ONE year you've maximized revenue. However, you've also likely consumed ALL capital that would have been invested in the economy to grow it. Which means zero growth. And zero growth tends to mean recession over time because businesses die... and if you create no businesses then the die off rate will be the rate at which your economy declines to zero.
So... as I said... it is believed that the curve starts somewhere after 20 percent. Maybe we're wrong. Maybe it starts sooner. But it doesn't start later then 20 percent. It's a gradual thing.
How often do some people say "oh you should let the UN take care of that" or "did you ask the UN?" or "what was the consensus of the international community"...
But offer that same august body control over the internet and everyone won't trust anywhere near it.
Exactly. And that's why it's hard to interact with the UN in all those other circumstances. It's a mess, corrupt, and highly incompetent. Count on it and it will drop you baby on the head every time... repeatedly... possibly on purpose.
Oh I wouldn't be immune. It's just that if and where I suffer it I can't be aware of it just as you can't be aware of your own failures. 'Tis the nature of these things. It's like asking a colorblind person how many times he saw the color red or green. The nature of things is that he can't know. I make no claim to perfection... merely the attempt to get a little closer then most. Am I just as blind as you? Maybe. But that does your argument no favors. My argument is that ideology blinds. Arguing am blind doesn't help you. You are in the impossible position of trying to claim your ideology has no imperfections or blindspots or aspects in which it is intolerant and given to seek convenient self delusions. You can't win that argument.
So... it's heads I win... and tails you lose.
See?... I rig the dice... all the sides are painted with smiley faces.:-)
I'm afraid you can't wish economic problems away with a group sing-a-long.
Just because something has psychological aspects involved doesn't mean you can substitute sound economic theory with dragons, elves, and witches... and other convenient bits of fantasy that you felt like incorporating because it doesn't matter what you put into it.
You don't believe in economics? Fine. Creationists don't believe in biology or chemistry. That was my point. Both your ideologies find things in the real world you don't like and you pretend they don't exist.
Ideologies do that. Join the club... there's a t-shirt and everything.
I'm afraid growth is the end all be all of things OVER TIME. And the more mature you are the more you understand that time matters. Growing up means making reservations. It means planning for the winter. It means making long term investments. It means putting some money away so you kids have college money in 18 years.
Compound interest. Lets have some fun with math!
Okay. Lets say the US and EU economy is equal as of now... just for the sake of argument. If you prefer we can say country 1 and country 2. Now lets say the US(1) Grows ONE percent faster then the EU(2) annually. After one hundred years that will mean the US(1) has an economy 2.7 times larger then EU. That's assuming everything else remains equal. So the US(1) on average will be making 2.7 times more per capita.
Do you see how a small decrease in growth over time can have an impact on revenue... OVER TIME?
Growth and compound interest are enormously important. One percent growth over a century is the difference between the first world and the second world. We're already making about 10k more a year per capita then most of europe. That's just the last few decades of 1 percent higher growth. We keep it up and the gap increases.
And if you're going to say "what about the poor people"... I'll reply with the obvious... rich countries take care of their poor. Poor countries don't and can't. What about the environment you say? Rich countries take care of the environment. Poor countries cannot and do not.
Everything is better with more money. Everything is easier. Many projects we fund today would be impossible were the US a poor country. We are a rich country because of growth. It is the end all and be all. More growth will make more of your programs sustainable and it will make us able to fund new programs you have yet to dream of.
And because math is fun... and I feel like driving this point in with a solid gold sledgehammer: 200 years of 1 percent higher growth: 7.31 TIMES larger 300 years of 1 percent higher growth: 19.8 TIMES larger 400 years of 1 percent higher growth: 53.5 TIMES larger
And it just gets crazier from there on out. Compound interest.
If the US maintains it for 100 years above europe then there will be as big an economic difference between the US and Europe as there is between the US and Mexico.
If the US maintains it for 200 years then Europe will basically be a third world country in comparison to the US.
Three hundred years and were not even vaguely related civilizations anymore.
Now some might argue these figures are not sustainable. One percent is entirely sustainable. Some might say "what about natural resources, etc"... Malthusian logic fails to take into consideration advances in technology and advances in methods of doing things. His theory also fails to grasp that what was not a resource in the past can be a resource in the future. Oil for example... it was a menace in ancient times. It wasn't used for anything. It would bubbled out of the earth in some places and poison crops or kills live stock. It was bad. Today we have a modern economy based upon it. You can't predict what future generations will base their economy on or how they'll solve problems. All you can do is give them the best chance possible to solve those problems by leaving them a legacy of wealth, wisdom, and drive.
In any case, I believe in growth. To the extent I have an ideology that is my ideology. I believe in it. It is something I will sacrifice for compromise for... I see it as a goal because it achieves many things at once. And sustained growth decade over decade doesn't lie... You can fake it for a few years... maybe ten. But you can't fake it for fifty.
Check your stats again. Only Norway has that claim and possibly Luxemburg if you consider that Scandinavian.
Norway is very oil rich. It's the saudi arabia of europe. Look at their main exports.
As to Luxemburg, they're a tax shelter... and a very tiny country. Imagine the Bahamas with fewer people and worse weather... and more money laundering.
I'll point out that Qater has higher per capita GDP then Norway. Why do you think that is?.. Do you think it's all the manufacturing they're doing? Maybe its the intellectual property? Maybe it has something to do with oil and finance? I say that rhetorically because it's obvious... and I point that out because lots of people have been missing the obvious in this thread.
if you look at the per capita GDP list you'll see that Sweden makes about 40k a year and the US makes 48k. What about Germany? Germany only makes 37k a year.
If you want an example of a high per capita GDP country... Look at Singapore. Fairly large population and a higher per capita GDP then the US or Norway for that matter. Of course, they're also big oil exporters. But if it matters to you their tax rate is 14 percent of GDP. The US is reported at 15 on the same graph but latest reports have put us closer to 18 percent. In any case, your argument doesn't make any sense. The nordic states are not the utopia you imagine.
I didn't say we were no where near the point of the curve. I said where the point was is debatable.
Furthermore, I don't care where the point is for the purposes of this discussion. I merely said the curve itself exists. I pointed out that many democrats deny the entire existence of the curve which actually has to exist. It's not possible for it not to exist. And yet, they deny its existence. There are several people commenting to me in this thread that have repeatedly done that.
And did I say any of this to suggest democrats were less likely to listen to reason? No. I merely said you were the SAME. Get over yourself. You're human beings. The average test scores for democrats going through school is a C AVERAGE just like the republicans or any other political party that wins POPULAR elections. You're not a race of ubermen. You're just people... and like all people you have a large collection of idiots. I'll stress an obvious implication because some people are slow... I am saying BOTH parties have around the same proportion of idiots in their ranks. I am NOT claiming some sort of ideological superiority. The very act of aligning yourself with any large group of people tends to mean you aligned yourself with a bunch of idiots. That sounds elitist but it's simply statistics. And democrat idiots deny the laffer curve. I say that because everyone that has ever done so to me has been a democrat or a political analog of the same. And you'd have to be pretty ignorant of basic logic and economics to deny the laffer curve. It elementary. It's seriously 1+1=2 sort of logic here. Again, where the curve starts and peaks is debatable. That it exists is not.
Now, I am not saying that is a confirmation of the peak on the laffer curve for england. There could be lots of reasons for why revenue fell when the taxes went up. Maybe the economy declined for entirely unrelated reasons. Whatever. This is at MOST a data point. If we get a few dozen more data points from the UK or very similar economies that all seem to show a peak around this number... then tentatively we might conclude that COULD be where the peak of the curve is in the UK and similar economies.
Anyway, I found it funny that this article came out just as I was getting attacked by dozens of angry poodles on the internet.
it's a strength to weight ratio issue isn't it? What's stronger... 100 feet of steel cable or 100 foot long structure of equal weight made of steel?
A cable made of dental floss would snap under it's own weight after much less then a mile. Steel... again with only it's own weight to support probably wouldn't go more then a mile. Lets say optimistically that this special nano molecular cable can reach 20 miles before snapping under it's own weight... it has to reach a hell of a lot farther then that.
I'm not claiming to be an expert... I'm just a curious novice in these matters. But the strength issue seems to be far short of the requirements.
Still... it's an interesting program even if we have to use "unobtainium" to build the cable.
Oh, by "we" I meant the allies collectively. But if you like... the war did it.
Point is that the US had a vast industrial base that was untouched by the war. The only large industrial base in the world that was intact. So why did our business boom? Gee... well, they weren't going to buy from the germans because they were smashed and/or now Soviet citizens. They weren't going to buy from the Japanese as you pointed out... because we nuked them. The Germans pretty much took care of the English industrial base. To say nothing of all the little rebellions and collapses in the old European imperiums... both England and France lost much of their imperial holdings as a result of the war and that meant that resources that once flowed to europe flowed instead to anyone offering the best price. At the time, that was often the US since we could actually do something with it... turn it into a product... etc.
I really hope the US isn't nostalgic for the post war era. It sounds like a lot of people are... or look back to it as an example. It was a nice time for the US but it was made possible in large part by everyone else having their industrial base wiped out.
It's sort of like shooting everyone in the knee or if you prefer "someone" shooting everyone in the knee... except you... and then patting yourself on the back for beating them all in sprint races.
I suppose we could have "someone" shoot everyone else in the knees again... Probably would help US industry out...
It would be the most impressive structure in human history if they could do it. It would be truly awe inspiring. But... it doesn't sound strong enough.
As to your citation, that graph doesn't make any sense. Are you sure that's an actual graph of something? because it looks like the result of a child playing with powerpoint. It seems to be focusing further on corporate taxes rather then upon taxes in general. The nature of the curve is that it should focus on everything. It would be interesting to see such a graph that took into consideration all fees, licenses, and taxes at all levels. It should count income tax, sales tax, capital gains tax, payroll tax, all the licenses everyone pays to live, and all the various use fees from the special taxes on gasoline to the special taxes on cigarettes. The whole thing. Add it up and do the graph again. With the VAT tax many europeans could be paying over 75 percent in taxes and it would be hard to argue that doesn't have a negative impact on growth.
As to the contradiction, if you lose businesses as result of increasing taxes... that will do what to your revenue? It will go down. Which corresponds to what?... Oh right...
Slashdot Mirror
Don't ask me to do 200 pages worth of research while you just bust out a series of dates.
I'll do one for you. 1893 The first date you posted...
Sherman Silver Purchase Act
http://en.wikipedia.org/wiki/Sherman_Silver_Purchase_Act
Passed in 1890... read up on it. the president at the time believed the economic crisis was caused by this act. Please play devil's advocate with your arguments a bit. The government is all over YOUR FIRST citation. And its all over wikipedia no less. Easy.
Okay, that was so easy I'll do another one for free.... 1837... Oh my god. READ IT!
http://en.wikipedia.org/wiki/Panic_of_1837
The president of the US set up a system where in the government was in some sort of land swapping system with the banks and it wasn't regulated very well. So the banks obviously were trying to make as much money as possible and the government as usual wasn't paying attention to what it was doing which lead to unstable system. THEN because this gets better the president refused to renew the bank's charter AND pulled all the government's money out of the bank.
RESULT? Big run on the biggest bank in the US at the time followed by all sorts of stuff that were just ripple effect from that. See what I'm talking about? I hope so.
As to what you should or shouldn't be doing two years after a recession you keep assuming Bush was following Keynesian economics. He wasn't he never claimed to do it. So I don't know why you think bush is relevant. You should be talking about Obama. People in his administration have made that claim. So far as I know the bush white house never expressed affiliation with that model.
As to keeping government's hands out of the cookie jar. You stop it the same way you protect freedom of speech. You make it a constitutional amendment... separation between economy and state. No influence. No ability to pick winners... no ability to pick losers.
Obviously the government needs to buy things and that will effect the economy. But the government has to come in as a consumer not a dictator. The government can of course post an open bid for a product or service. First credible company that offers a good price they can snap up after leaving it up for a short time to see if they get a lower bid. No more closed bids. Everything in the open. Secret military projects might be a special case but everything else should be in the open.
Anyway, I believe the current government is manifestly and demonstrably incompetent to manage this economy. I wouldn't trust them to manage Paraguay let alone the US. I'd ask you to look over some of your data in light of what I proved above about the panics and approach these issues with more humility. You were wrong there... consider where else you're wrong. Because as humans we have no shortage of flaws. I have mine. Acknowledge yours. You've also proven my point in this thread again by not seeing those panics were caused by the government. My point was that democrats have a blind spots too especially on the economy.
You have to admit... I got you. ;-)
Not really, there is a lot of data. You just need to know how to read it.
Are you telling me you can read 10,000 weather stations and determine if there is a .5 degree warming trend over 100 years? Come now.
Likewise, taxes are increased and decreased all over the world. It is rare for a 5 percent tax to result in a 5 percent increase in revenue. It will typically be more or less then five percent.
If you get lots of data you can filter out outliers and see patterns in the data. You can also graph trend lines.
Problem then will be if you'll believe the graph? What if top economists start saying you're too high up on the curve and governments should cut taxes radically? Will you believe them? What if they won't show their methodology? What if they're connected with right wing political organizations and an ex republican Vice president is trying to push their agenda?
How much do you trust them now? What if they won't release lots of data even if you hit them with FoIA requests? What if they tell judges that the data was destroyed and they can't provide raw data?
Skeptics aren't stupid or as Al Gore suggests "racists"... they just have trust issues given the source and the context. It's all very convenient for certain political organizations. Especially since ol' saint Al made a fortune selling carbon indulgences to anyone willing to buy one. What a racket.
If you want to touch that argument you need to enter it with a lot of humility because the alarmist movement abused their authority, abused the audience, and abused trust.
Once trust is lost it hast to be rebuilt patiently. Calling everyone racists or relating them to holocaust deniers isn't a good way to rebuild it.
call them like minded people... those who in a popular election you would rely upon utter to have any significance what so ever. They're your allies whether you like it or not. Without them the halls of politics you'd be one man. And I think we know what that's worth in popular politics. Slightly more then zero. Right or wrong... it is.
As to science... Sigh. You're going to go full on creationist on me aren't you? I have to personally prove carbon dating. I have to argue against all your theories about dinosaurs. I have to go through geology, stellar astronomy, and basically everything to explain the simple fact that the world isn't 6000 years old. that's what you're asking here. You're saying "prove the world is older then 6000 years old." But fine... I'll make a half assed attempt at it. I can't do better in a reasonable amount of time or in this medium.
Let me first try the short cut. Do you agree that if the government consumed 100 percent of the national product that would have a negative impact on the economy? That is... ate everything. People were not compensated for work at all. For the sake of argument just answer that question.
Okay. I'm going to assume you agreed that would cause a total collapse. We're in agreement.
Lets say hypothetically we have no taxes none. For the sake of argument we're not going into goods or services provided by the state. We're just keeping it very simple at this stage. So the government is eating NOTHING and everyone and every company gets to keep 100 percent of profits and pay no taxes at all. Can we agree that the economy would be more productive if everyone and every business were able to keep ALL it's money an pay NO taxes at all?
Again, I'm going to assume you agreed.
Okay, lets draw a line between Point A and Point B... with the line representing the function of taxation as it relates to economic productivity and thus government revenue as it takes a percentage of that revenue.
What is the shape of that line?
Is is a straight line?
Is it a jagged line that randomly goes up and done unpredictably?
Is it curved? If it curves does it curve up as increasing taxes increases revenue?
That is the laffer curve.
There is a great deal more written about it but that is it in a nutshell. I'm REALLY hoping we're if not on the same page then at least in the same library.
How did I do? Do we have enough to keep going or do I have to start proving the economic equivalent of carbon dating? :D
As to the panics do you want me to show you how England was fooling with the global price of gold? Trust me, governments have always screwed with the economy. It's never been otherwise. The bank of England messed with the price of gold until it broke them.
As to the recession only being eight months... the economy was still weak. It was not a vigorous recovery. It was thought that removing the subsidy or even increasing taxes would cause the country to slip back into recession. just so you know the logic of the time.
As to the tax cuts, you're implying that Bush was a Keynesian. I don't think the Republicans ever made that claim. I believe in that case they were actually trying to make lower taxes the new normal for their own sake as a means to make government smaller. Remember, democrats are proud of big government. Republicans are ashamed of it. Doesn't mean they don't make it too. They're just not proud of themselves afterwards.
Well, they're never going to manage the economy like you want or how I want. But of the two of us, I think my plan is more attainable. Your system requires the government to be competent. Mine only requires them to keep their hands to themselves. Again, neither of our ideas can really happen. Government cannot be relied upon to be competent all the time and neither can they be relied upon to color within the lines. They always goof and they always bleed.
Still... I think the bleed is easier to control then the goofing.
No because the government won't be producing things it will just have consumed all the profit.
It's the difference between the government running a shoe factory and the government showing up and taking ALL the shoes and paying for not one of them.
Can we agree that if the government showed up and took all the shoes and never paid for them that would have a negative impact on the shoe factory? We can. In fact, it would annihilate the factory. It couldn't survive. What are people eating? Not money made from selling shoes. They didn't sell any. The government took them all.
So sure, maybe the government then says "okay because I took all your shoes, I'll feed you and provide housing"... the economy is still going to die because while that might work for subsistence workers it provides no incentive for anyone else to work hard. It would have to trend to communism very quickly and even then they'd have to basically lower the amount the government was consuming or the government would destroy itself.
So the line between point A and B exists. Most of the other democrats in this thread LONG ago admitted that and realized that it is STUPID to deny the curve. What they argue instead is where we are as a nation ON the curve. I don't contest that. Its' debatable. I'm merely saying there is one and we're on it. Furthermore, my point was that lots of people like you in the democratic party would deny the existence of the curve. You did that.
I win.
*takes a bow, picks up some thrown roses, kisses a pretty girl.*
Thanks you been great.
I disagree. I think he's denying that curve has any meaning as concept. Furthermore, which side of the curve we're on isn't the issue.
If you understand the curve you know you DO NOT want to get anywhere near the peak. A misunderstanding about the laffer curve is that the apex is the point of maximum efficiency. That's only true for ONE year. If you hit the apex in a given year you can consume ALL investment capital that would have been invested in further investment or productivity in the following year and eaten it all in taxes. If you reach the apex of the curve you're eating seed corn. You're eating the seeds that the farmer was going to plant to grow next year's harvest.
What you want is to be OFF the curve. Towards the start of the curve there is a 1:1 relationship between tax revenue and tax rate. Raise taxes 5 percent and you should get 5 percent more income. You're on the curve when the ratios stop being 1:1 ... and you start raising a tax 5 percent and getting a 4.999998 return. The INSTANT it drops below a 1:1 ratio economic activity is slowing as a result of taxation. Maybe the slowing is very low. But someone somewhere lost their job or wasn't hired or a factory shut down or something. And the effect was large enough that it was statistically significant in the national tax revenue. By definition small changes in in big numbers often hide bigger events simply hidden by the big number.
Point being, you don't want to even be on the curve. You can be a utilitarian and say "This tax revenue is more important then these other people having jobs. So I'd rather them be out of work then not get the money." That's fine. Just understand you made that choice. The damage doesn't start towards the end of the curve. When the curve starts to turn over that's the economy dying. That's breadlines and the doom of industries.
So understand that the laffer curve is not about the apex. It's about the curve which starts like the foot of a mountain... at the base. As soon as tax revenue stops acting in a 1:1 ratio... Understand after that point you're depressing the economy. Maybe not a lot... maybe it's worth it... justify it how you like. Simply be aware.
You don't need an exhaustive scientific test. Look at the tax receipts. You know how much you increased taxes. Did you get 1:1 return?
This probably works in both directions. If you lower taxes by 5 percent did you lose five percent revenue? If you lost 4.9 percent revenue then somewhere someone got hired because you lowered taxes. And it means you're climbing DOWN the curve. If no new economic activity had been created then you should have lost 5 percent for the 5 percent reduction.
Now obviously economies are not static qualities and you're not going to get pretty numbers out of them. The economy like trying to figure out what the level of the tide is to the mm by watching waves. It's always jumping around a little. But year over year there should be enough data to see if SOMETHING went up or down as a result. Small changes are meaningful if they react to the tax and are consistently reinforced by similar actions.
Does that mean lowering the tax 10 percent will be revenue neutral? Unlikely. But instead of losing 10 percent of your revenue you might only lose 8 or 7 percent. And that two to three percent of revenue is being used somewhere to generate new jobs. And the other eight to seven percent... well, the people that earned the money got to keep it and as of this moment aren't spending it on anything. But maybe if you let them keep the money for a few years they'll do something with it. You can't very well ask them all.
In any case... if you think I'm being unfair unreasonable... that's not my intention. I offered a meeting of minds. that was how I saw it. Take it for what it's worth and know it was meant in good faith and cheer.
Sorta... it wasn't actually good after the dotcom bust... was it? And that's when they started applying stimulus and the recovery was so slow and gradual it hard to pick a point and say "there, stop there now raise taxes."
Anyway, you're completely correct about Keynes. that said, I don't think government is competent enough to do it properly even assuming his theories were healthy.
See, just about every boom and/or bust can be related to some big bit of government intervention. And the counter Keynesian argument is that if you don't rock the boat you won't have to stabilize it. If the government stops disrupting the economy possibly corrective measures simply won't be required? It's never been tested. But there is strong correlation disruptions in the economy and government interference. That is booms and busts can be linked to government activity where as the slow steady growth tends to be a latent property of the system.
Not the laffer curve. You can't claim that taking 100 percent of the money out of the economy won't cause it to crash. Nor can you claim that taking none of the money out will not cause it to at least perform "well"... Between point A and B how exactly would you graph that line?
Do you think it would be a straight line? Do you think it would be a wavy line? Or do you think it would be a curve?
Think about the function you're modeling.
That math is simple and impossible to argue against.
it exists. It cannot not exist. It is an inevitable consequence of known market forces interacting with each other.
It wasn't people's expectations that caused the housing bubble. It was the cheap credit injected into the housing market by Freddie Mac and Fannie Mae. Congress told Freddie and Fannie to increase home ownership in America by giving loans to more people. Freddie and Fannie responded by telling mortgage lenders that they'd back stop nearly any loan to someone that wants to buy a house. Take a loan out from a hobo living in a tree. Freddie and Fannie will buy the loan. Then they got wall street involved and wall street convinced themselves that they had a genius mathematical way to make horrible investments profitable. Unfortunately the whole system created an economic feedback loop. Ever put a microphone close to a speaker. The tiny electrical whine from the microphone or the speaker will be enough to set in motion a loop in which a tiny amount of sound will be amplified by the speaker, recorded by the microphone, played by the speaker, picked up by the microphone and so on... until the speaker explodes or maxes out. It doesn't matter how much money you have... how big your economy is... that's as meaningless as just using a bigger speaker. It will just get louder.
It wasn't risk taking that caused the problem. it was the interaction between government intervention in the economy and the natural capitalistic process. What the market was doing is eating the government's money. It was a feeding frenzy. Drop a dead whale in the ocean... wait a few days and the water is slick with whale fat as hundreds of sharks take turns to take bites out of it and thousands of little fish swim around to snap up bits.
Okay well whales die in nature. That's normal. Imagine if a whale the size of road island died in the middle of atlantic... and lets remove rot and decomposition from this analogy. You'd have whole generations of life that would be born, raised, and die within the context of this giant pile of meat just being there. Explosive population growth. And then imagine the day dawns when the meat is gone. Bones picked clean. Nothing but millions... possibly billions of hungry mouths to feed and no giant dead whale to eat!!! CRISIS!!! COLLAPSE! DISASTER!
That in part is what happened with the housing bubble. Fannie and Freddie dumped money on the market for nearly 20 years. It started gradually... but it was consistent and it increased more after every recession. Every recession they said "oh and give more money to the housing fund."... and so it got more and more inflated.
The system is stable, self regulating, and self evolving. Housing prices prior to about 20 years ago remained stable in the US in relation to inflation since the Civil War. That is EXTREMELY stable. Buying a house historically was not an investment because you didn't make money on it. You wouldn't lose money on it. It could be said to be a store of value. But you'd generally sell it for what you paid plus inflation plus improvements. Minus wear and tare... and any gentrification or degradation in the community. If your community turned into a crack den in the mean time your house value was going to go down. But it could go up as easily if things improved. Point was that you couldn't flip houses prior to 20 years ago. Even doing it with improvements wasn't really worth it. You just got what the improvements were worth. You'd make more money offering yourself out as a carpenter or a plumber. That you could flip houses WAS the problem. It was a symptom of the syndrome. It was the feed back loop. And the faster houses flipped the faster the system fed back on itself. Housing prices going up and up and up and up. The same house sold a dozen times in a just a few years every time for a big profit.
Capitalism like nature upon which it is modeled can be upset by external forces. Take a lot of money out of the system and you can cause a depression or a recession. Inject a lot of money and you'll create a bubble as everything rushes in to consume the capital as quickly as possible before there's nothing left but bones.
Growth is good.
sooo... do you think even theoretically they might be strong enough? Don't play with my emotions here... I want to believe this is possible... but you'll break my little geek heart if you tell me it will work and then I find out later it never can.
level with me...
*large hope filled eyes*
No it isn't possible. Again this 1+1=2 stuff. It isn't possible that 1+1 SOMETIMES equals 3. It equals two.
Under real world conditions you can of course get weird results but that's like saying under real world conditions a deadly poison can sometimes be survivable. For example... many poisons can be neutralized by eating activated charcoal... if you just happened to stuff a bunch into your mouth for some reason... you could survive all sorts of deadly poisons. Doesn't make them not deadly poisons.
For example, lets say your raise the tax rate but at the same time you increase the number of loopholes such that the official tax rate is meaningless. During the 60s and 70s when the US tax rate was a great deal higher there were also a lot more loopholes. This disguised the actual tax rate which was quiet a bit lower.
In France personal income is negotiable. What you CLAIM to make is not rigorously audited as it is in the US. So the tax rate can be high but you claim to make less then you actually make thus you pay a lower tax rate. This is especially common for side investments that are harder to track and the old favorite... the Swiss bank account.
The laffer curve is not about the fake tax rate. It's about the ACTUAL tax rate. It's the tax rate after the games with the tax auditors and the loopholes. After... EVERYTHING. Once you've accounted for all the relevant variables... you should be able to see it as taxes go up. Again, too bad we don't have a country to play guinea pig with, eh? Just a few million people and we can play with the tax rate and economic structure just to see what happens.
And then when we're done we can use our giant magnifying glass in orbit to burn them from space... SIZZLE!
Sorry, I'm getting bored... tenth time I've explained the same thing to someone... in a row. :D
So... okay... we agree that straw for example... that is dried grass... is not strong enough to make such a structure. So strength is an issue. I'm just hammering certain things into place. I like to do that so I can pivot off of known variables.
Do you know how strong ROUGHLY a material must be to make such a cable... and are nano tubes that strong or stronger?
Sure, and a creationist would argue that it's impossible to know what happened 6000 years ago because we weren't there. We're just measuring isotope ratios in rocks and making calculations based on observed ratios as they relate to know time factors.
You want to claim economics is purely chaotic and therefore you can make up any economic theory you like and its as good as another? Very convenient.
For the sake of argument. If I were right about democrats having a blind spot for economics... isn't that EXACTLY what you would say IF you were blind to the issue? Just put yourself in... your own shoes.
You're doing it and you don't even realize it.
I'm not making fun of you. Cognitive dissonance does that to people. You can't know when its happening. Its like being color blind. You don't know if it's red or green. You're not stupid or foolish or ignorant. Your brain which is doubtless perfectly healthy and sane is messing with you. Brains do that. It's a known and very common psychological phenomenon. And it is extremely common with things like religion, politics, and philosophy. Basically anything that creates your world view tends to form static bonds in your mind. And if the world... through your senses tells you that your world view is wrong... it is common for people to ignore it. That isn't a moral weakness. It's neurological. It's the way our brains are wired.
And I'm sure you're going to ask how I don't know if I'm doing it right now? I don't. I could and possibly am as blind to my own issues as you are to yours. The difference is that I'm not basing my argument on whether I'm clean. I'm arguing instead that everyone is dirty. So arguing that I'm dirty won't help you. You'll have to argue that your ideology is the only one in human history to be free of self delusion. You can't win.
It's head I win the argument or tails you argue I'm corrupted but by doing so you give my argument towards universal corruption more credence and so lose.
Either way... my argument wins.
I wasn't talking about the apex... I was talking about the CURVE. Prior to 20 percent the relationship between tax rates and revenue will likely be a 1:1 ratio. After 20 percent you should start gradually seeing diminishing returns. That doesn't mean you make less as you increase taxes. It mean the relationship between the tax increase and the revenue increase is no longer 1:1. Furthermore, in the economy your tax increase is likely causing a gradual rise in unemployment, fewer businesses are getting started, less investment is occuring... etc.
That's just the curve starting. The apex is likely somewhere between sixty percent and seventy percent. But at that point you have very high unemployment, low economic growth, and what is really a dying economy.
If you tax AT the apex that's only efficient if you only look at ONE year. For that ONE year you've maximized revenue. However, you've also likely consumed ALL capital that would have been invested in the economy to grow it. Which means zero growth. And zero growth tends to mean recession over time because businesses die... and if you create no businesses then the die off rate will be the rate at which your economy declines to zero.
So... as I said... it is believed that the curve starts somewhere after 20 percent. Maybe we're wrong. Maybe it starts sooner. But it doesn't start later then 20 percent. It's a gradual thing.
How often do some people say "oh you should let the UN take care of that" or "did you ask the UN?" or "what was the consensus of the international community"...
But offer that same august body control over the internet and everyone won't trust anywhere near it.
Exactly. And that's why it's hard to interact with the UN in all those other circumstances. It's a mess, corrupt, and highly incompetent. Count on it and it will drop you baby on the head every time... repeatedly... possibly on purpose.
Oh I wouldn't be immune. It's just that if and where I suffer it I can't be aware of it just as you can't be aware of your own failures. 'Tis the nature of these things. It's like asking a colorblind person how many times he saw the color red or green. The nature of things is that he can't know. I make no claim to perfection... merely the attempt to get a little closer then most. Am I just as blind as you? Maybe. But that does your argument no favors. My argument is that ideology blinds. Arguing am blind doesn't help you. You are in the impossible position of trying to claim your ideology has no imperfections or blindspots or aspects in which it is intolerant and given to seek convenient self delusions. You can't win that argument.
So... it's heads I win... and tails you lose.
See?... I rig the dice... all the sides are painted with smiley faces. :-)
I'm afraid you can't wish economic problems away with a group sing-a-long.
Just because something has psychological aspects involved doesn't mean you can substitute sound economic theory with dragons, elves, and witches... and other convenient bits of fantasy that you felt like incorporating because it doesn't matter what you put into it.
You don't believe in economics? Fine. Creationists don't believe in biology or chemistry. That was my point. Both your ideologies find things in the real world you don't like and you pretend they don't exist.
Ideologies do that. Join the club... there's a t-shirt and everything.
I'm afraid growth is the end all be all of things OVER TIME. And the more mature you are the more you understand that time matters. Growing up means making reservations. It means planning for the winter. It means making long term investments. It means putting some money away so you kids have college money in 18 years.
Compound interest. Lets have some fun with math!
Okay. Lets say the US and EU economy is equal as of now... just for the sake of argument. If you prefer we can say country 1 and country 2. Now lets say the US(1) Grows ONE percent faster then the EU(2) annually. After one hundred years that will mean the US(1) has an economy 2.7 times larger then EU. That's assuming everything else remains equal. So the US(1) on average will be making 2.7 times more per capita.
Do you see how a small decrease in growth over time can have an impact on revenue... OVER TIME?
Growth and compound interest are enormously important. One percent growth over a century is the difference between the first world and the second world. We're already making about 10k more a year per capita then most of europe. That's just the last few decades of 1 percent higher growth. We keep it up and the gap increases.
And if you're going to say "what about the poor people"... I'll reply with the obvious... rich countries take care of their poor. Poor countries don't and can't. What about the environment you say? Rich countries take care of the environment. Poor countries cannot and do not.
Everything is better with more money. Everything is easier. Many projects we fund today would be impossible were the US a poor country. We are a rich country because of growth. It is the end all and be all. More growth will make more of your programs sustainable and it will make us able to fund new programs you have yet to dream of.
And because math is fun... and I feel like driving this point in with a solid gold sledgehammer:
200 years of 1 percent higher growth: 7.31 TIMES larger
300 years of 1 percent higher growth: 19.8 TIMES larger
400 years of 1 percent higher growth: 53.5 TIMES larger
And it just gets crazier from there on out. Compound interest.
If the US maintains it for 100 years above europe then there will be as big an economic difference between the US and Europe as there is between the US and Mexico.
If the US maintains it for 200 years then Europe will basically be a third world country in comparison to the US.
Three hundred years and were not even vaguely related civilizations anymore.
Now some might argue these figures are not sustainable. One percent is entirely sustainable. Some might say "what about natural resources, etc"... Malthusian logic fails to take into consideration advances in technology and advances in methods of doing things. His theory also fails to grasp that what was not a resource in the past can be a resource in the future. Oil for example... it was a menace in ancient times. It wasn't used for anything. It would bubbled out of the earth in some places and poison crops or kills live stock. It was bad. Today we have a modern economy based upon it. You can't predict what future generations will base their economy on or how they'll solve problems. All you can do is give them the best chance possible to solve those problems by leaving them a legacy of wealth, wisdom, and drive.
In any case, I believe in growth. To the extent I have an ideology that is my ideology. I believe in it. It is something I will sacrifice for compromise for... I see it as a goal because it achieves many things at once. And sustained growth decade over decade doesn't lie... You can fake it for a few years... maybe ten. But you can't fake it for fifty.
Check your stats again. Only Norway has that claim and possibly Luxemburg if you consider that Scandinavian.
Norway is very oil rich. It's the saudi arabia of europe. Look at their main exports.
As to Luxemburg, they're a tax shelter... and a very tiny country. Imagine the Bahamas with fewer people and worse weather... and more money laundering.
I'll point out that Qater has higher per capita GDP then Norway. Why do you think that is?.. Do you think it's all the manufacturing they're doing? Maybe its the intellectual property? Maybe it has something to do with oil and finance? I say that rhetorically because it's obvious... and I point that out because lots of people have been missing the obvious in this thread.
if you look at the per capita GDP list you'll see that Sweden makes about 40k a year and the US makes 48k. What about Germany? Germany only makes 37k a year.
If you want an example of a high per capita GDP country... Look at Singapore. Fairly large population and a higher per capita GDP then the US or Norway for that matter. Of course, they're also big oil exporters. But if it matters to you their tax rate is 14 percent of GDP. The US is reported at 15 on the same graph but latest reports have put us closer to 18 percent. In any case, your argument doesn't make any sense. The nordic states are not the utopia you imagine.
... I think you mean both parties when they borrow and spend fail this task.
Because both parties do it. Claiming otherwise is simply willfully ignorant.
I didn't say we were no where near the point of the curve. I said where the point was is debatable.
Furthermore, I don't care where the point is for the purposes of this discussion. I merely said the curve itself exists. I pointed out that many democrats deny the entire existence of the curve which actually has to exist. It's not possible for it not to exist. And yet, they deny its existence. There are several people commenting to me in this thread that have repeatedly done that.
And did I say any of this to suggest democrats were less likely to listen to reason? No. I merely said you were the SAME. Get over yourself. You're human beings. The average test scores for democrats going through school is a C AVERAGE just like the republicans or any other political party that wins POPULAR elections. You're not a race of ubermen. You're just people... and like all people you have a large collection of idiots. I'll stress an obvious implication because some people are slow... I am saying BOTH parties have around the same proportion of idiots in their ranks. I am NOT claiming some sort of ideological superiority. The very act of aligning yourself with any large group of people tends to mean you aligned yourself with a bunch of idiots. That sounds elitist but it's simply statistics. And democrat idiots deny the laffer curve. I say that because everyone that has ever done so to me has been a democrat or a political analog of the same. And you'd have to be pretty ignorant of basic logic and economics to deny the laffer curve. It elementary. It's seriously 1+1=2 sort of logic here. Again, where the curve starts and peaks is debatable. That it exists is not.
As to where the curve starts... just for fun... I thought this was sort of funny. There was an article in the UK today about the British possibly finding the laffer curve! They increased a tax and got less revenue.
http://www.telegraph.co.uk/finance/personalfinance/consumertips/tax/9097219/50p-tax-rate-failing-to-boost-revenues.html
Now, I am not saying that is a confirmation of the peak on the laffer curve for england. There could be lots of reasons for why revenue fell when the taxes went up. Maybe the economy declined for entirely unrelated reasons. Whatever. This is at MOST a data point. If we get a few dozen more data points from the UK or very similar economies that all seem to show a peak around this number... then tentatively we might conclude that COULD be where the peak of the curve is in the UK and similar economies.
Anyway, I found it funny that this article came out just as I was getting attacked by dozens of angry poodles on the internet.
it's a strength to weight ratio issue isn't it? What's stronger... 100 feet of steel cable or 100 foot long structure of equal weight made of steel?
A cable made of dental floss would snap under it's own weight after much less then a mile. Steel... again with only it's own weight to support probably wouldn't go more then a mile. Lets say optimistically that this special nano molecular cable can reach 20 miles before snapping under it's own weight... it has to reach a hell of a lot farther then that.
I'm not claiming to be an expert... I'm just a curious novice in these matters. But the strength issue seems to be far short of the requirements.
Still... it's an interesting program even if we have to use "unobtainium" to build the cable.
Oh, by "we" I meant the allies collectively. But if you like... the war did it.
Point is that the US had a vast industrial base that was untouched by the war. The only large industrial base in the world that was intact. So why did our business boom? Gee... well, they weren't going to buy from the germans because they were smashed and/or now Soviet citizens. They weren't going to buy from the Japanese as you pointed out... because we nuked them. The Germans pretty much took care of the English industrial base. To say nothing of all the little rebellions and collapses in the old European imperiums... both England and France lost much of their imperial holdings as a result of the war and that meant that resources that once flowed to europe flowed instead to anyone offering the best price. At the time, that was often the US since we could actually do something with it... turn it into a product... etc.
I really hope the US isn't nostalgic for the post war era. It sounds like a lot of people are... or look back to it as an example. It was a nice time for the US but it was made possible in large part by everyone else having their industrial base wiped out.
It's sort of like shooting everyone in the knee or if you prefer "someone" shooting everyone in the knee... except you... and then patting yourself on the back for beating them all in sprint races.
I suppose we could have "someone" shoot everyone else in the knees again... Probably would help US industry out...
It would be the most impressive structure in human history if they could do it. It would be truly awe inspiring. But... it doesn't sound strong enough.
As to your citation, that graph doesn't make any sense. Are you sure that's an actual graph of something? because it looks like the result of a child playing with powerpoint. It seems to be focusing further on corporate taxes rather then upon taxes in general. The nature of the curve is that it should focus on everything. It would be interesting to see such a graph that took into consideration all fees, licenses, and taxes at all levels. It should count income tax, sales tax, capital gains tax, payroll tax, all the licenses everyone pays to live, and all the various use fees from the special taxes on gasoline to the special taxes on cigarettes. The whole thing. Add it up and do the graph again. With the VAT tax many europeans could be paying over 75 percent in taxes and it would be hard to argue that doesn't have a negative impact on growth.
As to the contradiction, if you lose businesses as result of increasing taxes... that will do what to your revenue? It will go down. Which corresponds to what?... Oh right...