Who do I thank for all the free money?Follow

What did you want? A list of names?

Yeah...



An understanding of human behavior? Let's think this through and test. What percentage of people earning say $40k today, if they were told that beginning next week their pay would increase to $80k would *then* argue that taxes on folks making $80k should be doubled? Yes. I'm asking you to speculate here. Or give us some 'not-so-random conjecture'.

It would be a low percentage, right? We all know this. It's human nature.


So when people make a big production of insisting that they'd be more than willing to pay a higher tax rate than the current level if they were making some higher amount of money, should we believe them? I get that this is a somewhat circular argument, but I just don't believe people when they say this. I believe it's far more likely that they don't see themselves ever making that higher amount of money, but want to raise taxes, don't want to pay them themselves, and realize that by saying that they'd be willing to pay that higher amount if their places were reversed, it will appear like their motives are less self centered.


Call me a skeptic, but I think their motives are self centered. Lots more people claim altruistic motives for doing things than actually act in an altruistic manner. Again, it's human nature. And before you say the words "Warren Buffet", it's easy to say you'd pay higher taxes when you have so much money that no amount of tax rate increase that wouldn't collapse the entire economy will ever affect your personal standard of living. Not to mention, his example is used as an argument for income and corporate tax rate increases, which he doesn't pay.


I'm a firm believer in the inherent selfishness of man. And while occasionally I'm pleasantly surprised by truly non-selfish behavior, it's rarely above the "I'll buy you lunch today" level, and at least as a predictor of human behavior, going with selfishness and self interest tends to win every time.

Good point. Since it wouldn't affect their standard of living, we should perhaps raise taxes on these people. We could perhaps determine what percentage they make of the US population and, for sake of clarity, round it to the nearest full integer.

I like the way you think, Gbaji!

...Yes. This.

It would not affect Warren Buffet's standard of living. Thus, he's not hurt by raising taxes on his earnings. However, it will affect all the things those tax dollars would otherwise have been invested in, and thus hurts the fortunes of many people, and the standards of living of those whom they might otherwise have employed.

See how the self interest bit comes in? He doesn't mind his taxes being raised because they don't hurt him. Those who would be hurt by his taxes being raised do mind. That's why his case does not disprove my argument. People tend to act on self interest. It's human nature. The trick is to configure what you're doing so that a group of people, all acting on their own self interest, creates a positive overall outcome, instead of a negative one.

Conservatives strive to build those positive outcome systems. Liberals build systems which require that human self interest not occur. But since it inevitably does, they have to keep regulating and mandating and restricting in order to force the square peg of their ideologically driven policies to fit into the round hole of the real world.

Edited, Feb 17th 2012 1:05pm by gbaji

Well, that was a very clear and concise response there Joph. Oh wait. It's not. So you laugh when you don't have a response and hope no one notices and just joins you I guess? Or is this another defense mechanism to avoid really thinking about the policies of those you support politically?

Now you're just being delusional.

No, the gist is that a tax increase that will in no way affect his standard of living, will somehow devastate his investments to the point where he has to hoard whatever he has left in a bank.

Right...because investing in a countries infrastructure has never increased economic gain for that country. Thanks for the smile before bed.



Also... of course, why should millions benefit from millions when one can make millions, it makes so much sense.

Edited, Feb 22nd 2012 4:11am by rdmcandie

You're changing the words. I didn't say that spending money on a country's infrastructure "never" results in economic increase. Obviously, when there's a need for that infrastructure, and the lack of said infrastructure is hindering economic growth, then spending is a good idea. The fallacy comes when you assume that since such spending *can* result in economic growth that it will *always* do so.

More to the point, if the motivation is to build necessary infrastructure, that's one thing. But when the motivation is to "create jobs", your odds of getting a positive economic return drop significantly.



That's an odd interpretation of what I said. My point was that since the owner of a private business will always act in a way which maximizes profits, we can know that if he hires someone, it's because he believes that the value of the labor gained is equal to or greater (usually greater) than the cost to employ that person. Thus, the person gains a job, and the business gains profits. Thus, employment is "free" in the sense that it results in a positive total economic outcome for everyone involved. The entire economic pie is increased by such employment.

But when the government hires people, most of the time it costs more than the value of the labor. This is acceptable when the job being done is necessary in some way (something not directly tied to economic output). So, for example, we pay lots of money to maintain a military. That military does not generate economic benefits. However, the value of that spending is not economic, so that's ok. If you think about it, most of what the government does falls into this category. It performs a variety of services (hopefully) necessary to the functioning of the government itself.


So if one argues that we need more people employed at the DMV, or we need more people employed to fight in our military, or we need more people employed shuffling papers in Washington, or we need more people employed building roads and bridges, those are valid reasons to argue for increased employment in those areas. But anyone who tries to argue that we should create those jobs because it'll cause economic growth are either confused, or lying. Those jobs will not create economic growth. They will consume economic growth. I honestly can't figure out why some people refuse to accept this.


Again, this is not to say that no government job can ever result in positive economic growth. It is to say that on average, government employment does not, and if we're creating jobs purely for the purpose of employing people, we're missing the bigger economic picture. The guy not having a job is only half the economic effect of unemployment. The other half is the loss of the productive output that person would create if he were employed. It's that other half that actually increases the total size of our economy (ie: creates economic growth). If you stop and think about this, it should be obvious. We could end unemployment tomorrow by simply paying everyone to sit at home and do nothing. That would solve their own personal economic problems, right? But would this cause the economy to grow, or shrink?

Edited, Feb 22nd 2012 4:20pm by gbaji

Yes. Key point being "failed companies". What I'm trying to get you to see is that when the private market invests poorly, it fails. Companies which invest well, succeed. When a private employer hires someone and that person produces more value for him than it costs to hire him, the business succeeds. When he hires someone who costs him more than he's getting, the business fails (or has to lay off workers).

The private market provides a mechanism by which we can determine if what we're doing is creating more economic value than it costs, or not. While we can (and sometimes do) step in to adjust those outcomes, we always at least know when something isn't working. The public sector has no such mechanism. There is no immediate way to tell if we're overpaying the guy working the counter at the DMV, or if subsidies for "green energy" are costing us more than the benefits of the result.

That's why the idea of "investing" by spending more money with the government is questionable at best. In the private market, you know if your investment fails. In the public arena, it's much harder to tell. And frankly, since the government doesn't have to earn its money by producing greater value than it consumes, it can always cover for its failures by consuming more from the taxpayers. This results in even worse economic outcomes as we take from those parts which are successful (by definition, since we tax profits) and spend it on things which are almost certainly not.



I think at least a little fault has to lie with the government programs in place which created those investments, set up the loan requirements, funneled them through the GSE's fanny and freddie, then covered up the problems with those loans when questions started to be raised. Absent government intervention, the private market would *never* have created mortgage backed securities, and certainly would not have used the sort of bundling system that the government created, and absolutely would not have pushed ever more sub prime customers into the mix.


Want to know why? Because the private market is profit driven. The government is not. The problem arises when the government manipulates the market (like it did here) to make it social agenda appear to be profitable in the short term. That's when you get big collapses like we saw with the financial markets.



Um... The stimulus bills. Specifically Obama's recovery act? That has done massively greater harm to our economic outlook than the economic downturn which was used as the excuse to pass it in the first place. He certainly used the "investment" label many times in relation to that spending. It was a monumental waste of money, which has slowed economic recovery IMO.


So there's your example. Of course, as I mentioned earlier, we could also talk about the "investment" in housing by the government as a core cause of the initial financial meltdown in the first place.



Huh? Government providing seed grants for R&D is one thing, but direct investment? There was very very little of that during that time period, and it had very very little to do with the tech boom. Do you think that the US government was behind the rise of Microsoft, home computers, or the internet? It helped by creating an environment in which those things could happen (more directly in the case of the internet of course), but the explosion happened when government got the hell out of the way.



Um... That's not remotely what happened. Clinton's economy did benefit from the tech boom of the late 90s, but that had nearly nothing to do with Clinton era policies. It did create a bit of a bubble though, but that's a slightly different subject. Certainly, there was no guiding hand of the government leading all of that.



This is what the Keynesian economic theorists tell themselves (and anyone else who'll listen). And while many of their theories do accurately predict outcomes, they don't actually allow for the sort of proactive control that the advocates try to claim. The problem is that those theories are based on "natural" market forces. The second you start using the government to manipulate things, those predictions stop working.


It's why the Obama administration predicted that summer 2010 would be the "summer of recovery", but it wasn't. They were looking at very consistent stable data sets which said that 2 years from the delta point on the unemployment line during an economic bubble crash, the unemployment numbers will turn around and recovery will be realized. His economic team could easily look at the factors in the economy and make that prediction. The problem is that they assumed this would happen *because* of their interaction, and didn't realize that their interaction (like the before mentioned stimulus bills) actually affected the economic reality and changed the result.

It's why we're still sitting nearly 2 years later waiting for recovery to happen. They use predictions which assume that you don't mess with the economy to justify messing with the economy, and then stand around confused when things don't work out the way they thought they would. Meanwhile, us silly uneducated conservatives tell them that it wont work, then when it doesn't work, we remind them that we told them it wouldn't work. Yet somehow we get ignored in all of this. Cause it's the liberals who know what they're doing, right?


Government is not the solution. Government is the problem.

Ill make this easy for you Gbaji.

Me: Private Investment was responsible for the 2008 GLOBAL Economic Meltdown.

Gbaji: Um... The stimulus bills. Specifically Obama's recovery act? That has done massively greater harm to our economic outlook than the economic downturn which was used as the excuse to pass it in the first place

GDP

I want you too look very closely at 2007 - 2011. See those bars below 0%, that is a GDP decline, see the bars that are above 0% That is a GDP growth.

unemployment

Again look closely at
DEC of 2007(5% 7.64M)
Dec of 2008 (7.3% 11.29M),
Dec of 2009 (9.9% 15.4M)
Dec of 2010 (9.4% 14.93M),
Dec of 2011 (8.3% 13.9M)

What this tells us is that the 2008 crisis caused by private investment mismanagement, cost the US GDP a 1% positive increase, and turned it into at its peak a 5% reduction, it also cost the jobs sector (which you claim is propped up by investment) nearly 8 million jobs at its peak.

The stimulus package, while increasing the debt of the nation, has provided at its current levels a 4% increase to GDP nearly rebounding to DEC 2007 levels. Since 2009 1.5 Million jobs have been created.

But I can see how you would misunderstand a 4% gain to GDP, and a 1.6% reduction to unemployment is on par with a 5% reduction to GDP, and a 4.9% increase to unemployment.

Want to take another swing?


Edited, Feb 24th 2012 12:03am by rdmcandie