tag:blogger.com,1999:blog-8587336.post2969469492139461919..comments2024-03-28T15:48:48.514-07:00Comments on CONTRARY BRIN: Must the Rich be Lured into Investing? Who are the Real "Job Creators?"David Brinhttp://www.blogger.com/profile/14465315130418506525noreply@blogger.comBlogger41125tag:blogger.com,1999:blog-8587336.post-65406435555431413232012-02-25T10:44:51.706-08:002012-02-25T10:44:51.706-08:00One other aspect of recent political history is th...One other aspect of recent political history is that the Bush administrations own economic advisors were not convinced of the Supply side arguments regarding tax rates and revenue.<br /><br /><br /><a href="http://swordscrossed.org/node/1671" rel="nofollow">No, the Bush Tax Cuts Have NOT Generated Higher Revenues</a>Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8587336.post-89587188731440104342012-02-09T10:29:05.767-08:002012-02-09T10:29:05.767-08:00Thank you for addressing this issue again. I'...Thank you for addressing this issue again. I'd given up reading your blog for a while because it was not looking at issues I though most important. I'm glad this has been addressed again. And Paul Krugman is brilliant. I love that you referenced him.gmknoblhttps://www.blogger.com/profile/12463680561757459885noreply@blogger.comtag:blogger.com,1999:blog-8587336.post-4936808946911087142012-02-08T18:06:29.286-08:002012-02-08T18:06:29.286-08:00One small critique of a good post.
At the beginni...One small critique of a good post.<br /><br />At the beginning you say:<br />The rationale for that immense tax cut for (mostly) rich investors was simple and alluring - that super-low rates would entice more of the rich to invest in companies <b>within the U.S.</b>, helping them to increase their productive capacity and hire more workers.<br /><br />Then you say:<br />1) Supply Side assumes that the rich have a zillion other uses for their cash and thus have to be lured into investing it! <br /><br />This is one aspect, but the other is part is luring them to invest IN THE US. Sure, they will invest, but where? Taxation as a way to encourage or discourage investment in a particular country is a big part of the discussion. At best, this logic is simply wrong. At worst, it is correct, but will lead to competition between countries where the rich take their money to the lowest bidder and gain an even bigger share of the pie.Arichttps://www.blogger.com/profile/03762111080648578046noreply@blogger.comtag:blogger.com,1999:blog-8587336.post-32599156242227741072012-02-07T14:00:44.691-08:002012-02-07T14:00:44.691-08:00"But the later Keynsians now admit one should..."But the later Keynsians now admit one should buy down debt in "fat years" as Clinton started doing... so that fat is available to borrow against in lean years. This comes under the category of "duh.""<br /><br />I can't speak for Mitchell, not being familiar with his work, but Keen would absolutely agree with you on the above point, I've heard him say as much. Like you, he believes that prior administrations should have been banking surpluses in preparation for the inevitable cyclical recession/depressions. I don't believe Keen has ever said that government deficits don't matter. However, currently he claims that the level of personal debt that is present in the US is more problematic than the level of public debt, being IIRC, about triple the amount of public debt, just as personal debt was the primary problem during the Great Depression (along with asset financialization).Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8587336.post-89842395581279404622012-02-05T21:55:54.469-08:002012-02-05T21:55:54.469-08:001. It might be interesting to ponder whether flash...1. It might be interesting to ponder whether flash trading systems are programmed to be "aware" of each other, in the sense of detecting and reacting to market behavior occasioned by their rivals, and whether out of this may grow some form of self-awareness. <br /><br />2. The wagging of the dog of markets in actual goods by the tail of ineffectively regulated capital markets should concern any student of history, but I wonder if the historical division of the factors of production into labor and capital masks the growth of the significance of a 3rd factor: information technology.<br /><br />Certainly the Lords love to concentrate capital, because it's easier to control than labor (...labor fights back or runs away, and has to be fed during slack time instead of sitting quietly in vaults. We humans are so messy!) And certainly the Lords' control of Capital is no guarantee that society as a whole will prosper; supply-and-demand can balance at many different levels of activity, and Lords have reasons to prefer a level of activity low enough to discourage the growth of a middle class willing to oppose the lords (as happened in 1776.)<br /><br />Facing down the Lords of Finance is always difficult, but today we might make them less relevant not just thru traditional means such as granges and credit unions, but also through the newer, technology-enabled kickstarters and kivas. As a progressive, I like them as a means of freeing us, in a small way, from the Lords, but why wouldn't sincere freemarketers ALSO like them as purer expression of the marketplace?rewinnhttps://www.blogger.com/profile/14008105385364113371noreply@blogger.comtag:blogger.com,1999:blog-8587336.post-13578820078544782062012-02-05T21:45:55.179-08:002012-02-05T21:45:55.179-08:00onwardonwardDavid Brinhttps://www.blogger.com/profile/14465315130418506525noreply@blogger.comtag:blogger.com,1999:blog-8587336.post-74911143383781564992012-02-05T15:00:14.114-08:002012-02-05T15:00:14.114-08:00I thought that "lure them into investing"...I thought that "lure them into investing" meant "lure them into investing HERE."<br /><br />That is, favorable tax rates could induce the wealthy to invest here and not in other countries.<br /><br />I have no idea how effective that is, but that is the impression I got.sociotardhttps://www.blogger.com/profile/11697154298087412934noreply@blogger.comtag:blogger.com,1999:blog-8587336.post-57813183105746349362012-02-05T13:48:04.587-08:002012-02-05T13:48:04.587-08:00Tangential to this post, but very interesting, fro...Tangential to this post, but very interesting, from the Guardian:<br /><br /><a href="http://ht.ly/8SNwF" rel="nofollow">Why economic inequality leads to collapse</a><br /><br /><i>The lesson of the Great Crash was that unequal enrichment provokes asset bubbles, excessive demand for debt and, finally, economic failure. Now we are painfully learning that again</i>Stefan Joneshttp://twitter.com/#!/StefanEJonesnoreply@blogger.comtag:blogger.com,1999:blog-8587336.post-22854060829471281472012-02-05T13:30:46.506-08:002012-02-05T13:30:46.506-08:00Absurd. Civilization does not owe a return on inv...Absurd. Civilization does not owe a return on investments. The US government has already bent over backwards to assist people saving for retirement. 401K and Roth plans. SEP plans that let you shelter $25,000/year from all taxes!<br /><br />Plus the safety net underpinning of Social Security... plus the mortgage interest deduction.<br /><br />And in return? Bilious venomous hatred of the satan of all satans - Franklin Roosevelt, who set up our modern world where retirement holds only modest worries, not outright terror.<br /><br />Dig it, the only problems with the old system derive from people living far far far far longer than they used to.David Brinhttps://www.blogger.com/profile/14465315130418506525noreply@blogger.comtag:blogger.com,1999:blog-8587336.post-24426376146559132722012-02-05T12:29:36.280-08:002012-02-05T12:29:36.280-08:00Back in the 80's my parents were living on the...Back in the 80's my parents were living on the interest of a handfull of T-bills, along with Social Security & Dad's pension.<br /><br />They were really pissed when Clinton was elected and interest rates on T-bill went down. But they managed ok. Bet they'd be furious at the nearly <i>negative</i> rate we have these days.Kathyhttps://www.blogger.com/profile/03176801494652946278noreply@blogger.comtag:blogger.com,1999:blog-8587336.post-48092109806134143182012-02-05T11:48:30.556-08:002012-02-05T11:48:30.556-08:00Stephen, once you have excluded foreign investment...Stephen, once you have excluded foreign investment at 15% then you have admitted that "targeting" is valid. Then it is perfectly legitimate to favor startups over passive dividends. Long term holdings over short span trading. Sci-tech over carried interest. And so on.David Brinhttps://www.blogger.com/profile/14465315130418506525noreply@blogger.comtag:blogger.com,1999:blog-8587336.post-45123766861785862432012-02-05T04:37:41.283-08:002012-02-05T04:37:41.283-08:00Here is an alternate aspect.
There is no such thin...Here is an alternate aspect.<br />There is no such thing as savings (we all must live on the productivity of current primary producers), but there is investment, where you give up some portion of your current productivity (income) to invest in increasing someone else's future productivity - in exchange for a share of that productivity. To increase OUR wealth, we must also spend and invest as locally as possible - otherwise you are increasing someone else's productivity (and wealth). <br />One problem with demand side economics is that too many of our dollars are spent on "Made in China." And, as David points out, too many of our supply side investment dollars are spent on foreign investments - which do not boost our economy. <br />It makes a great deal of sense to only reward USA investments and spending - free trade be damned, until and unless we have (as we once did) a positive balance of trade, and near-zero federal debt.<br />Stop sending our hard-earned money overseas - until we have a surplus.Stephen D. Coveyhttps://www.blogger.com/profile/12946494775268235149noreply@blogger.comtag:blogger.com,1999:blog-8587336.post-87198387947377200852012-02-04T22:01:19.221-08:002012-02-04T22:01:19.221-08:00Dan, thanks. You support my notion that the thing...Dan, thanks. You support my notion that the thing about moderate democrats like Clinton is not some fealty to leftism. It is that they are MANIC in personality. If you want a problem attacked, give it to them. And if the problem is over-regulation? History shows they are the only ones who can be convinced to actually slash useless government.<br /><br />I set aside the slashing of finance industry regulation that was designed simply to allow wholesale theft and destruction of our economy. THAT was the GOP, top to bottom.<br /><br />Mind you, not all liberals "get" this distinction and too many nod their heads when the mad lefties among them rant things almost as absurd as Fox. But the effect is plain. the DP is the only American political institution still run by its moderate wing. When that changes.... duck!David Brinhttps://www.blogger.com/profile/14465315130418506525noreply@blogger.comtag:blogger.com,1999:blog-8587336.post-18664039433685608942012-02-04T21:11:12.761-08:002012-02-04T21:11:12.761-08:00David --
It seems I owe you a concession--a coup...David -- <br /><br />It seems I owe you a concession--a couple posts back I stirred things up with you regarding Obama's signing of the NDAA. It appears (upon further research) that I was wrong in lamenting its unconstitutionality. For those of your readers who've been following the issue, Richard Carrer does an excellent analysis, with detailed references to the relevant precedents, caselaw, and constitutional scholarship, which you can find here: http://freethoughtblogs.com/carrier/archives/134<br /><br />----<br />On the issue of supply side/demand side and Keynsianism vs. its competitors, I think it bears pointing out something that Clinton got right that nobody since has:<br /><br />Clinton too the Hayekian critique of the top-down aspects of Keysianism seriously, and trimmed thousands of pages of obfuscatory regulation from the different alphabet soup departments, which made a HUGE difference in operating interstate businesses over the internet, in fostering smaller-scale agriculture, and in allowing lattitude for experimentation in ossified industries that had been highly regulated in a way that disincentivized technological innovation (i.e. the regulations obsoleted, and thus became an obstacle to progress rather than facilitators OF progress, which is what good regulation does).<br /><br />EVEN IF the supply-siders are correct at the margins, any growth-slow-down that Clinton's tax increase might otherwise have contributed to was completely wiped out by his regulatory reforms (and I still find it bizarre that we've had three presidential terms in a row that have been so inept that I'm defending Bill Clinton's Presidential performance).<br /><br />That's the flip side of a vigorous economy: not tax cuts or tax breaks for businesses (though, as a small business owner, they are nice to have around), but lower regulatory barriers to entry for disruptive and innovative technologies.<br /><br />Obama has (so far) missed the boat on this one. Perhaps he'll get hip in the next few months as the election season heats up. One can hope...<br /><br />Thanks for the great post<br />-DanJ. Daniel Sawyerhttp://www.jdsawyer.netnoreply@blogger.comtag:blogger.com,1999:blog-8587336.post-91728629612828576862012-02-04T19:21:41.255-08:002012-02-04T19:21:41.255-08:00Bravo, sir, bravo! you are saying something I have...Bravo, sir, bravo! you are saying something I have been telling people for quite some time now: tax cuts for the wealthy do NOT create jobs. The problem is, those who support this idea have learned very well from Mr. Goebbels amply demonstrated 70-odd years ago, that if you tell a lie often enough, and convincingly enough, people will eventually begin to think it is the truth. That people actually believe this fiction, that they are unwilling to see the evidence to the contrary when it all around them, is a truly sad statement on the gullibility of humanity in general.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8587336.post-84565926818953902582012-02-04T19:14:52.929-08:002012-02-04T19:14:52.929-08:00That was suppose to be irresponsible. (sigh)That was suppose to be irresponsible. (sigh)Jacobhttps://www.blogger.com/profile/03773076186367856200noreply@blogger.comtag:blogger.com,1999:blog-8587336.post-57188398865342555662012-02-04T18:06:59.638-08:002012-02-04T18:06:59.638-08:00A government sovereign in it's own currency do...A government sovereign in it's own currency does not have to borrow what it may spend in deficit. It can simply create more money by fiat. And as observable fact that is how it always spends. No debt required. <br /><br />Not that issuing debt is necessarily a bad thing, I think it is mostly good, because the only way you can actually save money is to lend it. So it is generally a good thing that the government provides a source of bonds that are extremely safe (since they can always be paid in full), for those who want low risk savings.<br /><br />But there is no necessity for it to borrow to spend. To repeat, in actual fact government never borrows to spend, it spends by issuing currency to the seller, money which is created by fiat, out of "nothing". Then it may or may not, as it wishes or thinks wise, issue bonds to provide safe savings to people and institutions who want a risk free savings instrument.<br /><br />When you save you are always lending. If you save your greenbacks under your mattress you are loaning to your bed. For every amount saved there must be an equal amount loaned.Ed Seedhousehttps://www.blogger.com/profile/05193005256681783842noreply@blogger.comtag:blogger.com,1999:blog-8587336.post-72480205241294909912012-02-04T17:10:13.961-08:002012-02-04T17:10:13.961-08:00Jacob:
Borrowing is inherently wrong when you are...Jacob:<br /><i><br />Borrowing is inherently wrong when you aren't responsible for paying back what you've borrowed. If that debt is passed on without something to show for it, you've acted irresponsibly. <br /></i><br /><br />The operative phrase is "without something to show for it." Spending which helps thwart a Depression would pay for iteslf.<br /><br /><i><br />LarryHart You are projecting in the wrong direction. <br /></i><br /><br />Ok, glad to hear it.<br /><br /><i><br />I will vote D in the foreseeable future because Republicans are fiscally responsible.<br /></i><br /><br />I'm not sure I understand. It seems to me you dropped a "not" in that sentence, but I can't tell which way you meant to say it.LarryHartnoreply@blogger.comtag:blogger.com,1999:blog-8587336.post-49368053465680882562012-02-04T16:33:29.756-08:002012-02-04T16:33:29.756-08:00Ed is right that there is a certain small level of...Ed is right that there is a certain small level of deficit spending that is harmless to a great nation that needs to upgrade infrastructure and invest in science and the productive potential of generations. Nevertheless, it was good for Clinton to spend a few years in the black. If we had done that a while longer, then the reserve would have been flush when we needed it.<br /><br />Anyone who looks at the budget blowouts committed by the GOP... two hugely stupiodly clumsy land wars of attrition in Asia, gigantic, Supply Side tax cuts that never stimulated a penny of increased revenue... then the Medicare Prescription Drug Plan which (unlike Obamacare) contained no provisions at all for how to pay for it....<br /><br />There are two issues here. (a) what we ought to do... and I am willing to discuss many things including tax simplification etc.<br /><br />(b) who to trust with even a burnt match, let alone the tiller of a great nation.<br /><br />We can argue over (a). But (b) is stunningly clear. <i>Never again the neocons and oligarchs and Fox-propelled madmen who drove us off a cliff, again and again and again.</i> At best(!) they were and are morons. At worst utter traitors. Jesus said "By their fruits you shall know them."David Brinhttps://www.blogger.com/profile/14465315130418506525noreply@blogger.comtag:blogger.com,1999:blog-8587336.post-27609711570164748472012-02-04T14:52:45.764-08:002012-02-04T14:52:45.764-08:00Hi duncan cairncross,
You quoted line 1, but line...Hi duncan cairncross,<br /><br />You quoted line 1, but line 3 addressed the type of spending you are talking about. I will go further to say that immediately saving for future expenses is the best way to go about it. I wholehearted approve of the behavior I believe you are practicing.Jacobhttps://www.blogger.com/profile/03773076186367856200noreply@blogger.comtag:blogger.com,1999:blog-8587336.post-51257051970637371312012-02-04T14:36:34.936-08:002012-02-04T14:36:34.936-08:00Jumper, unfortunately your link doesn't appear...Jumper, unfortunately your link doesn't appear to work.<br /><br />Let's see if mine do:<br /><br />http://stats.oecd.org/Index.aspx?DataSetCode=SNA_TABLE12<br /><br />For 2009, the last year for which the OECD had complete data, Greece collected taxes equivalent to 30% of GDP. Ireland collected taxes equivalent to 27.8% of GDP. The average for the GDP as a whole was 33.8%. Goign back to pre-GFC days the results are similar.<br /><br />http://stats.oecd.org/Index.aspx?DataSetCode=SNA_TABLE12 (You actually need to use the menu on the right to choose the data set to display. The two i'm using are "Total government Revenue" and "National accounts - general government."<br /><br />Spending in recent years in Greece and Ireland has been dominated by bank bail-outs so a better picture is gained from pre-GFC figures.<br /><br />In 2006, Greek government spending was 44.6% of GDP, Ireland's was 33.8%. The EU average was 46.7%.<br /><br />If either taxation levels or government spending was the cause of the current crisis, the Germans and the French should be begging the Greeks and Irish to bail THEM out.Ianhttps://www.blogger.com/profile/01739671401151990700noreply@blogger.comtag:blogger.com,1999:blog-8587336.post-81877937744859235592012-02-04T14:08:42.058-08:002012-02-04T14:08:42.058-08:00"Deficit spending is taxing our children'..."Deficit spending is taxing our children's future."<br /><br />I now work in local government - when we spend money on long term assets (Water Treatment Plants, Sewers...) there is always a discussion about how to pay for them<br />If we pay from our current property taxes (rates) future ratepayers get something for nothing - paid for by the current ratepayers - is that fair?<br /><br />The other aspect is as soon as we build something we start putting money into the sock to pay for its replacement in 40 years time <br /><br />Here we use a mixture of loans (deficit spending)and taxation to pay for things - but it is a bit of a balancing act and different local authorities use different balances<br /><br />Something to think of - is it unfair to tax our children for something they will use?duncan cairncrossnoreply@blogger.comtag:blogger.com,1999:blog-8587336.post-14323157396939743082012-02-04T13:44:26.338-08:002012-02-04T13:44:26.338-08:00Jack you are simply wrong. Borrowing is inherentl...Jack you are simply wrong. Borrowing is inherently wrong when you aren't responsible for paying back what you've borrowed. If that debt is passed on without something to show for it, you've acted irresponsibly. <br /><br />There is a hell of a difference between an individual borrowing money and a nation. Investment and Trauma are the only good reasons for the later and both should be short term if possible.<br /> <br />(Good reasons - Schools, Dams, reasonable research investment, stopping an world conquest from an actual aggressive threat - not the 2nd rate nations.)<br /><br />LarryHart You are projecting in the wrong direction. I will vote D in the foreseeable future because Republicans are fiscally responsible. They have been so for the last 30 years. There is no sign of that changing. Being small government has nothing to do with being a deficit hawk or being fiscally responsible.Jacobhttps://www.blogger.com/profile/03773076186367856200noreply@blogger.comtag:blogger.com,1999:blog-8587336.post-34735522763984400482012-02-04T12:14:58.160-08:002012-02-04T12:14:58.160-08:00Jack:
"Deficit spending is taxing our childr...Jack:<br /><i><br />"Deficit spending is taxing our children's future."<br /><br />Nonsense, <br />Simplistic nonsense at that.<br />It is not the borrowing that is evil but the spending allocation. <br />Few people seem to get that.<br /></i><br /><br />Exactly!<br /><br />Not all that long ago, Republicans slammed Democrats for being "tax and spend liberals". However, the R's didn't actually spend any less. What they did was "borrow and spend" rather than "tax and spend." And because it didn't (directly) raise taxes, this was considered--by conservatives, I mean--to be a superior way of doing things.<br /><br />Dick Cheney said specifically that "Reagan showed us deficits don't matter."<br /><br />There are times when government HAS to spend money, and one good example of that is during a Great Depression. It is disingenuous in the extreme to claim that Democrats must not do so because Republicans already borrowed as much money as we can possibly afford, and then to blame Democrats for the state of affairs.<br /><br />I will bet good money that if a Republican manages to win the White House in 2012, we will suddenly be hearing from conservatives about how deficits are no big deal. They won't even acknowledge that they ever held a different position. It will be as sudden and as thorough a flip-flop as "We have always been at war with Eastasia."LarryHartnoreply@blogger.comtag:blogger.com,1999:blog-8587336.post-64909154184134372792012-02-04T12:07:54.734-08:002012-02-04T12:07:54.734-08:00Jacob:
Deficit spending is taxing our children...Jacob:<br /><i><br />Deficit spending is taxing our children's future. It is the most vile form of taxation.<br /></i><br /><br />Funny though, how you deficit hawks only manage to consider deficit spending to be evil when DEMOCRATS are (nominally) in power. For six years, when Bush not only controlled the White House but had a Republican congress, we got "Reagan showed us that deficits don't matter." Only when Democrats took back the congress, and then the White House, were you all suddenly "shocked...shocked to learn that deficit spending has been going on!"<br /><br />And before you claim that you deplore deficit spending from EITHER side of the aisle, the onus is on you to explain why that fact only gets expressed when Democrats are in power.LarryHartnoreply@blogger.com