how is this fair?

[lew]

Originally Posted by A_C_E

Again, you are making an assumption you simply CANNOT make.

You can't just say "because people have more money this is what they will do with it." You don't know how the average irrational/myopic American household will react when they are given more take-home income, since, by definition of being economically irrational, you can't know. And a significant portion of American households are irrational.

Let's assume, for a second, that the government slashes everyone's taxes like you want. The gov now cannot continue to fund research in health care technology, defense technology, energy technology, and IT technology. What do you suppose would happen when these industries lost their R&D money??? It's easy--they would collapse. The average consumer is either not going to spend, or would spend on stupid shit that doesn't contribute to overall economic growth. If everyone went out an bought a new TV with their newfound money, it wouldn't contribute half as much to the US economy as a couple major medical advances could. New technology is a major part of economic growth, and I can tell you one thing: American consumers aren't going to spend their money to promote new technological developments.

And then, since those industries which are some of the primary drivers of US economic growth have lost a lot of their funding, they can't continue the same research, and then are either forced to jack prices way up, or become stagnant. Which would be a serious economic problem given our current situation, where these industries make up the bulk of our research areas and new tech sectors.

You can use shitty examples like corn subsidies to try and make a point, but you simply cannot deny that important tech sectors depend on subsidies to survive, and it's these areas that have been the primary drivers of US economic growth over the past 25-30 years, and will continue to be the drivers in the future. Take away the R&D money and half the industry collapses, which would be simply disastrous for the US economy.

Your examples don't line up with historical examples. All of the great industries of the 19th Century, for example, beat their subsidized competitors in just about every way imaginable (prices, efficiency, employment, benefits, safety, etc).

James J. Hill, John D. Rockefeller, and Cornelius Vanderbilt all built their economic empires from humble beginnings and without subsidies.

[Ardentfrost]

Originally Posted by Thorgrim

Hoarding your gold bars/coins in storage or bank deposit boxes...not "putting money in the bank for it to use"

Haven't we been over this one before? Someone dumps all their money into gold thereby increasing the price of gold. Someone else with gold then wants to sell it at the higher price. Gold is no different than any other investment... buying and selling promotes the movement of money.

Not to mention that the increased price of gold in recent years has caused gold mining companies to be very successful on the market.

and you still have yet to refute that government spending made Sweden the first nation to recover from the great depression

I didn't know you had posed that question before. The answer, however, is quite simple: the pro-gov't spending "social democrats" didn't come to power til 1932. Before then, when Sweden used largely a free market/limited government stance, their economic growth was one of the highest in the world, and that helped it have relatively light mal-effects from the Great Depression.

However, AFTER the social democrats took over and enacted their forced egalitarian stance on Sweden, they have constantly had a slowing of growth. Post-War Sweden still had positive growth, but it was the slowest in all of Western Europe. Since the 1970's their economic growth has been dismal at best.

You can't fault them for trying a social experiment, but it's time to give it up. Their tax rates are nearly twice ours on average, and for what? Borderline stagnation? That's not the kind of country I want to live in.

If it weren't for Ikea, I'd say they were complete failures

[Thorgrim]

You know facts but you don't seem to have them all...

The GD hit Sweden around 1930, two years later Labor came into power, Gunnar Myrdal and the Swedish Finance Ministry advocated Keynesian solutions which the Government adopted and from 1932-1934 the Government spent a large deficit, after only 2 years of Labor being in power, and "leftist" economics being employed, their economic output had returned to 1929 levels, and it continued to grow at a high rate well into the war

[Thorgrim]

Why would NEUTRAL Sweden have a huge post-war boom? The rest of europe was in shambles and investment was flooding in to either promote or defeat communism

You want to go more recent, West Germany was the economic bull dog during the 1980s, while Reagan was slashing taxes to grow the economy, WG was booming at tax rates that would make American conservatives faint

[WickedLou9]

Originally Posted by Thorgrim

Why would NEUTRAL Sweden have a huge post-war boom? The rest of europe was in shambles and investment was flooding in to either promote or defeat communism

You want to go more recent, West Germany was the economic bull dog during the 1980s, while Reagan was slashing taxes to grow the economy, WG was booming at tax rates that would make American conservatives faint

I believe Korea also turned thier economy around with significant government investment into technology and education. They transformed themselves from a 3rd world country into one of the richest in the world.

[Ardentfrost]

Originally Posted by Thorgrim

You know facts but you don't seem to have them all...

The GD hit Sweden around 1930, two years later Labor came into power, Gunnar Myrdal and the Swedish Finance Ministry advocated Keynesian solutions which the Government adopted and from 1932-1934 the Government spent a large deficit, after only 2 years of Labor being in power, and "leftist" economics being employed, their economic output had returned to 1929 levels, and it continued to grow at a high rate well into the war

Exactly, they only had 2 years which isn't enough time to do shit with the economy. They weren't the CAUSE of the recovery, it was economic policy for decades prior that set them up to recover easily.

The US, on the other hand, had a full decade and a half of the government encroaching on the market before the GD hit. This created a situation in which we could not recover as easily, only exacerbated by extraordinarily high taxes and direct spending by the government.

[Ardentfrost]

Originally Posted by Thorgrim

Why would NEUTRAL Sweden have a huge post-war boom? The rest of europe was in shambles and investment was flooding in to either promote or defeat communism

Sweden was THE manufacturing powerhouse of the late 1800's and early 1900's (til 1930). The post-war reconstruction SHOULD have been a major boom time for them, but instead they were just no longer as good as they were. Other countries filled the gaps and Sweden's economy has been consistently slowing since.

Originally Posted by Thorgrim

You want to go more recent, West Germany was the economic bull dog during the 1980s, while Reagan was slashing taxes to grow the economy, WG was booming at tax rates that would make American conservatives faint

Are you suggesting that what Reagan did wasn't working? Because I'm pretty sure the 31 million jobs allowed to return to the market from deregulation and tax cuts disagrees with your assessment.

Or are you saying that Germany's method was just as good as Reagan's method? But then, we see how sustainable that was, don't we?

[A_C_E]

Originally Posted by lew

I disagree. Like frost said, "wartime" spending (and those other areas you mentioned) sure get increases in aid and expand, but at the expense of other industries that would be thriving due to consumer choice and the free market. Money is not magical, it must come from somewhere.

Everywhere the government spends a dollar, there is another area that now has a one dollar loss.

Elementary economics though it may be, Bastiat was correct with his broken window theory.

You're certainly entitled to this belief, and I'm not necessarily ready to say you're wrong.

I will say, though, that "Joe American Consumer" would NOT drive economic growth with his consumption spending and investment were he to be given more money to spend in tax breaks. Technological advancement in the modern (read: 1946 and on) era has come almost exclusively in government-subsidized industries via grants and the like. And it is these improvements (new auto technology, space program, the fucking internet) which have driven US economic growth over the past 50 or 60 years.

If Joe American gets to decide where money goes, we'd have an economy dominated by plasma TVs and reality shows. The technological advances which have made America the foremost economic power in the world would fall apart. It just can't be let happen.

"Consumer choice" is only a wise economic plan if your consumers are actually educated and know what the hell they're doing with their money. That doesn't play very well in America, land of morons.

Edit: As I previously said, a lot of government spending is, in fact, useless pork and unnecessary. But if a dramatic tax rollback were to take place, the areas that would have their funding cut are the ones that actually depend on the money, and do important economy-driving research with it. Missouri 4th Congressional District or whatever would still get its pet projects, and there would still be welfare spending and the like.

[Ardentfrost]

Originally Posted by A_C_E

You're certainly entitled to this belief, and I'm not necessarily ready to say you're wrong.

I will say, though, that "Joe American Consumer" would NOT drive economic growth with his consumption spending and investment were he to be given more money to spend in tax breaks. Technological advancement in the modern (read: 1946 and on) era has come almost exclusively in government-subsidized industries via grants and the like. And it is these improvements (new auto technology, space program, the fucking internet) which have driven US economic growth over the past 50 or 60 years.

If Joe American gets to decide where money goes, we'd have an economy dominated by plasma TVs and reality shows. The technological advances which have made America the foremost economic power in the world would fall apart. It just can't be let happen.

"Consumer choice" is only a wise economic plan if your consumers are actually educated and know what the hell they're doing with their money. That doesn't play very well in America, land of morons.

Edit: As I previously said, a lot of government spending is, in fact, useless pork and unnecessary. But if a dramatic tax rollback were to take place, the areas that would have their funding cut are the ones that actually depend on the money, and do important economy-driving research with it. Missouri 4th Congressional District or whatever would still get its pet projects, and there would still be welfare spending and the like.

I always hate going down this road because it just ends up in hypothetical situation after hypothetical situation. It ends up boiling down to YOU cannot say that those things wouldn't have been created, and WE cannot say they would have been. In most examples you give, I could give counter examples of private organizations that did similar things or that had started working on the projects before the government got involved. Would we have gone to the moon when we did? Probably not, though we'd have likely eventually gone to space (that dude that owns Virgin likes to go up there all the time).

Anyway, all that shit doesn't matter. Regardless of what would have happened and when it would have happened, we're where we are now, we have the things we have now, and NOW is the time to fix stuff.

If you think the health care industry can't afford to research its own shit without government grants, then wtf is it worth having all that god damned money if they're not going to use it to make their products more efficient. And since I know the health care industry is one of the larger industries who hire Industrial Engineers to further optimize their systems, I would especially be prepared to say the idea that they wouldn't advance themselves is full of shit.

This isn't to mention the politics behind government grants. My wife, who received her master's in Chemical Marine Ecology has convinced me that the biggest perpetrator of bad environmental research is the government. Money gets focused on what is real at that moment... meanwhile mass die offs of urchins in the Carribbean caused by some unknown reason cause certain types of algae to grow unchecked, and funding for that research is difficult to find (that is an example that she used). Private companies and NPO's and watchdog groups are most certainly interested in research being performed, but the government monopolizes the research to focus it on stupid shit like whether or not the climate is increasing or not, which is successful in nothing besides being used as a talking point for politicians to introduce ineffectual legislation.

[Thorgrim]

Originally Posted by Ardentfrost

Exactly, they only had 2 years which isn't enough time to do shit with the economy. They weren't the CAUSE of the recovery, it was economic policy for decades prior that set them up to recover easily.

The US, on the other hand, had a full decade and a half of the government encroaching on the market before the GD hit. This created a situation in which we could not recover as easily, only exacerbated by extraordinarily high taxes and direct spending by the government.

2 years of large spending can change an economy...do you think that 2 years of deep tax cuts can stimulate an economy?

They started the program immediately, and for the first time, the country really started growing, and it kept growing for a decade

This is really a tiring argument, when Reagan made his tax cuts in 1981-1982 and then the economy came back in 1983, it was all Reagan's tax cuts...yet other times right-leaning economists will say "oh well things only went so well now because of...what this conservative guy did 10, 20, 30, 40 years ago!"

And ofcourse economics isn't an exact science so you can say whatever you want

If that wasn't bad enough, now that same criticism goes OUTWARD from right-wingers...anything positive that happened after the liberal implemented a program from years was because of what happened decades ago, anything negative that happened after a liberal did something 2 years ago was totally their fault

It's a reason I decided againts a degree in business or economics, it's a joke, and everyone knows it's not a real academic profession, liberal arts or hard science (or a hybrid)...as the saying goes "The only people who think there should be a nobel prize for economics...are economists"

[bheld]

An undergrad econ degree doesn't really have much to do with modern economics anyway. It's basically just a major for business students that are capable of doing college-level work.

Graduate-level economics is almost unrecognizable from the undergrad courses. It's more applied math than anything else. I wouldn't judge economics based on undergraduate course offerings. The undergrad program is basically exercises in common sense and systemic thinking.

[Ardentfrost]

It was a lot more than just the early 80's the felt the effects of tax cuts. The early 80's grace period was also in part to bringing interest rates back down from what they were under the hayday of Carter (I have no idea how people bought houses with an interest rate of 17%).

But overall through Reagan's presidency, his tax cuts and deregulation spurred the economy.

And to make this a bit more relevant to today and this thread, Obama (and perhaps Hilary, I haven't looked as closely at her economic plan) wants to lower the tax burden of middle America while raising it for rich people. That might even out overall... give a lot of people a little money back and make a few people pay a lot more money. But given that we are on the decline (economically speaking), wouldn't it be better to give more money back to the market (in the form of reduced taxes across the board, not by direct spending which is a load of bullshit)?

[bheld]

No, it wouldn't be better, unless you think capital flight is a good thing for America.

[WickedLou9]

Originally Posted by Ardentfrost

It was a lot more than just the early 80's the felt the effects of tax cuts. The early 80's grace period was also in part to bringing interest rates back down from what they were under the hayday of Carter (I have no idea how people bought houses with an interest rate of 17%).

But overall through Reagan's presidency, his tax cuts and deregulation spurred the economy.

And to make this a bit more relevant to today and this thread, Obama (and perhaps Hilary, I haven't looked as closely at her economic plan) wants to lower the tax burden of middle America while raising it for rich people. That might even out overall... give a lot of people a little money back and make a few people pay a lot more money. But given that we are on the decline (economically speaking), wouldn't it be better to give more money back to the market (in the form of reduced taxes across the board, not by direct spending which is a load of bullshit)?

Why does it have to be one or the other? Countries like South Korea have proven that specific targeted government spending and investment combined with a relatively free economy can be very very successful.

[DosEquis]

Lets preface this by saying that most people would agree that an equal percentage is the only fair way to do things.

That being said my main point is that people always say how the rich allegedly get punished because they pay so much more than everyone else in income tax. As we can see, this is simply not the case. The average person is paying nearly twice that of the wealthy.

We can only cut taxes so far before the laffer curve goes the other way. We are also pumping a bunch of money in to the middle east and running up our debt in the process. Personally i'd rather see us pay as we go instead of run up debt and need 400 billion a year in taxes just for interest. How about we raise their taxes to 25% and lower the regular guys to 25%.

[DosEquis]

Originally Posted by WickedLou9

Why does it have to be one or the other? Countries like South Korea have proven that specific targeted government spending and investment combined with a relatively free economy can be very very successful.

the only issues i see happening with that is when the govt. picks the wrong industry, creates to much artificial demand, and when the govt bails on the program it ends up costing thousands of jobs and overall wasted money.

When they get it right it works really well, the problem with our govt anyway is that they don't usually get it right.

[WickedLou9]

Originally Posted by DosEquis

the only issues i see happening with that is when the govt. picks the wrong industry, creates to much artificial demand, and when the govt bails on the program it ends up costing thousands of jobs and overall wasted money.

When they get it right it works really well, the problem with our govt anyway is that they don't usually get it right.

Right now seems like a no brainer. Alternative energy. We all know with certainty that there is a global shift going on right now. Demand for oil will outstrip supply as both China and India grow and develop. Forget global warming for a second and just talk about commodities. oil as a commodity will become incredibly expensive and probably the subject of even more warefare. If the US can position it self as a leader in alternative energy we stand to gain from it. The free market is reactive. It will only move towards alt. energy when the price of oil is already painfully high. Once that happens it's too late. We can get ahead of the curve by using our brains and making a judgement that this particular technology will soon increase in importance.

[Ardentfrost]

Originally Posted by bheld

No, it wouldn't be better, unless you think capital flight is a good thing for America.

So, you're afraid of currency going to other countries?

You realize that our currency isn't usable in other countries, right. It's sorta only good for American goods. It all comes back eventually.

[DosEquis]

Originally Posted by WickedLou9

Right now seems like a no brainer. Alternative energy. We all know with certainty that there is a global shift going on right now. Demand for oil will outstrip supply as both China and India grow and develop. Forget global warming for a second and just talk about commoditie