Omnibus GOP Primary ThreadFollow

And? So 100% of all investment is in the form of loaning money to the government? It's not? Then "everything else being equal", the share that last year went into job creating investments might be higher or lower this year. And that share may change based on tax changes. It's not like loaning to the government will become less profitable relatively speaking if the tax rates change, right?

No, it's exactly like that, actually. If you want to generate x amount of income at the lowest possible risk and can do it at essentially 0% risk with T-Bills, you will. If taxation causes you to be unable to accomplish the goal at 0% risk, you likely take on >0% risk by investing.

Again, fairly well understood. Risk aversion generally goes up as market volatility does, certainly has recently. Spurring the private equity market requires some sort of mechanism to move that money out of treasuries. Incredibly high demand for treasuries is one of the primary reasons the US GOVT can borrow essentially infinite money ATM at very low marginal interest rates. While "China owns us now!!" makes for scary rhetoric, the vast majority of that debt is held by US citizens.

I'll ask again: Is 100% of all investment right now in T-bills?

If the answer is "no", then you're wrong. Can you see why?



Taxation doesn't affect the profit rate, just the resulting real profits after taxes. You get this, right? If an investment is a better risk/reward bet before taxes are raised, it'll still be a better bet afterwards. I'm puzzled that you can't figure this out.



I agree, to a point. But none of this touches on the question of whether raising taxes right now will help or hinder job growth (or have no effect at all). You're trying to argue that since T-bills are the best bet, that that's all anyone will invest in. But that clearly isn't true right now (the second part), so it's meaningless.

Taxation doesn't affect the profit rate, just the resulting real profits after taxes. You get this, right? If an investment is a better risk/reward bet before taxes are raised, it'll still be a better bet afterwards. I'm puzzled that you can't figure this out.

It's not a better bet, currently, so that's a minor problem with your theory...

Also, are you assuming an efficient market where actors would risk 100 units at 50% chance of loss to return 201 units? That may be the problem. That was proven to be no-predictive of actual investment decades ago. Dan Kahneman won the Nobel for it in 2002, but it was known in the 70s that there was a strong bias towards risk aversion in markets.

No one has modeled anything based on the idea that actors are perfectly rational in a long time. If they did, the models would fail spectacularly. Markets are made of people. People made decisions irrationally, but predictably so.

It "feels" like raising taxes on high income earners during a recession would be the worst time, but in practice it doesn't actually work that way. In practice, there's no causal link between taxes and investment for the most part, but punishing lack of investment somehow (through high headline inflation say) has proven to be the best incentive. Raising taxes at the higher income levels would accomplish that. Setting cap gains to zero might, as well, but leads to numerous complications while obviously skyrocketing the national debt.

You think the debt is a bad idea at current levels, right?

No, it's assuming they are spending almost 6,000 a month for a 2BR apartment. No sane young middle class professional would do that. They should be looking for something in the 1.8k/mo. range. Something like this.

I'm making a mental note of this. We're hoping to move out there in the next 3-4 years, and I'm definitely gonna have questions.

I couldn't help but follow the link from that page that led to this:

Yes, but the effects of their individual actions have a cumulative and (usually) relatively stable result. While the individual might make risky or non-risky choices, and some will win and some will lose, the overall market result with be pretty close to the risk/reward function. Obviously, the trick is that we don't always know the true risk/reward ratio. Which is why individuals take risks in the first place. It's not so much that they're trying to "beat the odds", but that they believe that the stated odds are wrong.


And if they are right, the market will reflect this. If the average return on a given type of investment is double what was predicted than that result was the *real* risk/reward ratio. The predictions were wrong is all. While there's always going to be small fluxuations, the trends are going to follow that rule.



Yes. Great. But since there is still money invested in other things, then someone out there is investing in stuff other than t-bills, right? We can ignore the money in tbills and ask what effect on the rest of the market will there be if those who are investing lose more money in taxes in each cycle than they do today? Everything else staying the same, we can expect less total investment in those parts of the market. And since job creating investments are a subset of that part of the market, it will *also* be affected to a similar degree.


I'm not sure why you keep obsessing on tbills.



Ok. What do you suppose will do that? Higher costs on business? Higher taxes on those who engage in business? You're making a great argument for my case, but not so much for yours.



Again though, you're looking at it backwards. I'm not saying to lower taxes, but to not raise them. If next year investors have slightly less money to (re)invest after taxes, which area of the market do you think they'll choose to reduce their investments in the most? Tbills? Or the other parts? And maybe even more from the job creating parts?

Starting to see my point yet? If, as you say, investors would prefer to invest in tbills, then any reduction in the amount they have to invest will first be reduced from investments in things other than tbills. If we agree that investing in tbills, while useful for the investor, isn't great for economic growth and certainly not for job creation, then raising taxes will have an adverse effect.


Get it?



Yeah. It's not.



Yes. Which is why not every dollar gets invested in the "best" investment. Which is why assuming that that's all anyone will invest in if they have a choice is silly. People will invest in a variety of things. While we can predict (or even create) trends, some will always buck them to some degree. Some folks will continue to invest some money in job creating things, even when it appears that there are better and "safer" things to put money into. But the first things people will shift away from (in general) will be those which are seen to be higher risk, or lower reward, or which take longer to develop. As I've pointed out several times, job creation tends to fall into that category.

So, raising taxes will most heavily impact the very types of investments we want and need to promote job creation and economic growth. Is that really so hard to see?



Except that in practice, it's been true pretty much every time.



That depends on how you decide something is causal. There's a hell of a lot of evidence for strong correlation, at least. Who gets to declare that just because nearly every time taxes were raised right after an economic downturn, that downturn lasted longer than average doesn't represent a causal relationship? Sounds like cart before the horse to me. Also, high inflation introduces other negative economic effects down the line which will tend to far outweigh the immediate positives. Remember the 70s?



Heaven forbid we consider just *not* raising spending through the roof in the first place. Cause that's never worked. Oh wait! It did. In the early 80s. Then again in the early(is) 90s. Then again in the early 00s. In each case, we entered a downturn, but kept spending at moderate levels (just enough to deal with the cause of the downturn) and the economy recovered within 2 years. Hell. When you look at unemployment effects during those three recessions, the critical points are nearly clockwork 2 years apart to the month.

But not this time. Why do you suppose the Obama administration called summer 2010 the "summer of recovery"? It was because that was 2 years to the month (June I believe) from when unemployment started ticking upwards during the recession (lead up to it technically). They were looking at historical trends and saw the same thing I'm talking about and just assumed that this is what happens during downturns and their own actions didn't really matter.

But they did. Their actions did have an effect. It prevented the very recovery they were counting on to pay for all the spending they did. If this wasn't such a disaster and hardship for so many American's I'd laugh at the irony of it.




Yes. Which is why we should not have spent so much money on "recovery". Probably should have spent nothing at all. TARP was sufficient to correct the problem causing the downturn. Should have stopped there and we'd be in full recovery right now. At the risk of repeating rhetoric, it was the spending that screwed us, stupid. Raising taxes to pay for that spending will just compound the problem.

It doesn't mean that everyone who identifies themselves as a conservative always acts in ways which protect individual freedoms. It does mean that the principles at work *are* intended to do so. If someone acts otherwise, then they are not acting on those principles. It's silly to then argue that "the right" doesn't want to do that. IMO the label of "right" becomes meaningless if you do.



That's not at all what "the right" wants to do. It is, however, what "the left" tells people in order to scare them away. You're confusing "making something illegal" with "not getting the government involved". There's a full range of things between banning and funding. Most of what you identify as banning (making illegal) is really about not supporting, funding, etc. Um... And the root of that misconception lies in the lefts consistent habit of equating negative actions with failing to perform positive ones.



I think you're also confusing intent with action. The left doesn't want to limit freedoms, and neither does the right. They just have different definitions of freedom, liberty, and rights, and different ideas about how best to apply them. The right believes that liberty is natural. That you have it in the absence of anyone acting to take it away. Thus, government can't give you freedom, it can only take it away. The left believes that liberty can be given to people, and further believes that failing to give certain freedoms to people is equivalent to infringing their "right" to those things.


This is why the left believes that failing to provide health care for people who don't have it (or can't afford it) infringes their "right" to health care. The right doesn't believe that the right to health care extends beyond preventing people from acting to take health care you already have away from you. One defines protection of liberty as preventing someone from taking something away from you, the other defines it as giving whatever things society decides people should have. They are completely different concepts and if you don't understand that difference, you'll eternally be confused about modern politics and arrive at the sort of incorrect motive assumptions you made earlier.




None of which touches on whether someone has a "right" to something. The economic stuff is more about which produces a better economic outcome and isn't really about rights. There are differences of opinion between left and right on that too. And while those differences do emerge from the other differences, they go in slightly different directions.



Do they? What is a "right"? And when you say that, are you talking about the right to not have those things taken away, or the right to have the government provide them for you? That's the difference between left and right. Once you understand that, a whole lot of things which don't seem to make sense suddenly do.




Again, it's not about what you have a right to, but how rights should manifest. Does having a right to something mean just that it can't be taken away, or that someone else must provide it for you. The right believes in the former, the left in the latter. As I said earlier, this is a dramatic difference of opinion and pretty much defines the political landscape. Almost all the individual causes and arguments can be defined in this context. If you don't understand that difference you really can't understand those arguments. It's just wordplay.

Edited, Jan 19th 2012 2:45pm by gbaji

Oh noes, not more word play!

How does DOMA not take away the rights of gay couples to marry? How does gay marriage in any way shape or form cost the taxpayers money. The issue of gay marriage and gays in the military is the most obvious example of how the right wants the government to interfere only when they want them to. Same thing with drug use and prostitution. You are essentially trying to protect people from themselves, and that is not freedom or liberty. People should be free to make their own choices as long as they don't infringe on the rights of others. Using drugs only hurts yourself. It may cause you to do other things that hurt people, but that's why those actions are illegal. Besides, alcohol causes people to do things that hurt others, but it's legal. Prostitution doesn't hurt anyone either, as long as certain precautions are put in place (using a condom).

You can claim that the right isn't interested in turning our country into a theocracy, but I've seen plenty of evidence that it does. It isn't a scare tactic on the part of the left. We are supposed to have a separation of church and state, but there are plenty of people on the right who have stated that they don't agree with this. Anytime someone speaks out against organized prayer in a public school, the Christian right cries out that they are being persecuted. Anytime a religious organization that receives public funding or tax exemptions gets in trouble for discriminating, they cry out that they are being persecuted. It's ridiculous. If white folks whined and cried about being persecuted by minorities like Christian folks did, there would be a public outcry, and rightly so.

The current health care system in this country doesn't work, plain and simple. Even the right agrees with that. I guess we just have different opinions of what is wrong with it? Personally, I think that health insurance companies are corrupt and evil. They purposefully deny benefits to people who need them (if they can find any loophole) just so they can turn a profit. My dad was a victim of this, he died because his health insurance company would not pay for a treatment because it was experimental. Even though we got pre-approval for it, and the treatment was done (and worked). Then they turned around and said they wouldn't pay for any additional treatments. My mom had to fight them to pay for the first treatment, because they tried to back out of that too.

Taking away a corrupt health care system is not infringing on anyone's rights. We're trying to fix what is broken. Most people who don't have health insurance can't afford it, and yet still make too much money to get Medicaid. There is something seriously wrong with that. I'm lucky that my mother is willing to pay for me to have health insurance while I'm in college. Even with my health insurance, I have to pay out of pocket for eye exams and my contacts, and all my prescriptions because my plan doesn't cover mental health. If it did, it would cost more than the prescriptions do.

I understand the different concepts between natural liberty and society given liberty. I just don't understand how you can call it liberty for people to die of illnesses that could have been treated, had their insurance company been willing to pay for it like they should have done. That doesn't even include the issue of people who can't afford health care.

Ignoring most of the last hundred posts or so because they make me want to hit my head against a wall. Multiple times.

In gossipy news, ABC let out a teaser a day or two ago that they had a BIG SCOOP from Gingrich's ex-wife that would "effectively end his political career entirely."

Word on the street is that the BIG SCOOP is....

When confronted by his wife about her husband cheating on her with a mistress, Newt demanded his wife Marianne adopt the stance of having an "open marriage" or they'd get divorced.



... how the F*CK is that a big scoop?? We already knew he was cheating on his wife, divorced her, and married his mistress (while lambasting Clinton for his affair at the same time). How does demanding that she accept he had a woman on the side change anything?

I was hoping he had stabbed a hobo or brought a wombat to bed with them. You know, something at least mildly interesting.

Edited, Jan 19th 2012 7:39pm by LockeColeMA

You did the same exact thing with McCain. It's sort of cute how self-deluded you are about what the Right -- and your candidates specifically -- want to do.

Edited, Jan 19th 2012 7:10pm by Jophiel