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Old 03-20-2019, 09:39 PM
 
Location: Ruidoso, NM
5,331 posts, read 4,953,527 times
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Quote:
Originally Posted by Mircea View Post
Part of the problem has to do with the fact that there are two distinct definitions of Supply-Side Economics, one dealing with production and the other about efficiency.
Did you just make that up? Supply-side is using government policy to directly increase the wealth of the wealthy, with the assumption that they will invest this in production. But companies only produce to match an expectation of sales, and if the rich are given a bigger part of the pie, then wages and consumer buying power are depressed (in aggregate). It creates an imbalance.

Quote:
Originally Posted by Mircea View Post
Increasing the marginal tax rate creates inefficiency, stifles job growth, ultimately leads to job losses, and then never generates the amount of anticipated revenues, which then leads the rallying cry of increasing the marginal tax rate even more to offset the revenues never realized and it goes downhill from there.
High tax rates are meant to influence behavior, not collect revenue. They are meant to encourage investment in production rather than the extraction or inflation of capital, and encourage higher wages. It worked wonderfully during the only period we've tried it.

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Old 03-21-2019, 03:54 PM
 
Location: Ohio
18,979 posts, read 13,829,235 times
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Quote:
Originally Posted by rruff View Post
Did you just make that up? Supply-side is using government policy to directly increase the wealth of the wealthy, with the assumption that they will invest this in production. But companies only produce to match an expectation of sales, and if the rich are given a bigger part of the pie, then wages and consumer buying power are depressed (in aggregate). It creates an imbalance.
I'm guessing you've never read An Inquiry into the Nature and Causes of the Wealth of Nations by Adam Smith, but then you don't have a BA in Economics like I do.

Smith defined wealth as goods and services, not as money, which in his day was gold and silver.

A State was wealthy if it produced a lot of goods and services, not money.

Smith argued the need to focus on production to increase aggregate supply, which in turn increased the amount of goods and services produced, making a State wealthier and raising the Standard of Living for the people.

Jean-Baptiste Say took Smith's idea one step further with Say's Law, which states that production and aggregate supply increase wealth and economic growth.

Because people produce solely for the purpose of consuming, you need to focus on production to increase aggregate supply, and ignore any focus on demand or consumption.

It was Hume, Lock and Montesquieu who argued centuries ago that tax policy impacts production.

Smith actually alludes to that, but doesn't make the connection.

It was Laffer and others who took Smith's ideas and Say's Law, and combined them with the tax policies of Hume, Locke and Montesquieu to come up with a new version of Supply-Side Economics.

Those are very old ideas.

Quote:
Originally Posted by rruff View Post
High tax rates are meant to influence behavior, not collect revenue.
That was not US government policy. High tax rates from FDR through Kennedy were intended to collect revenues, not influence behavior, and more specifically were intended to redistribute income via government programs.

Quote:
Originally Posted by rruff View Post
They are meant to encourage investment in production rather than the extraction or inflation of capital, and encourage higher wages.
High taxes discourage savings and investment, and worse than that, promote Capital flight, which harms the economy.

Smith also said high tax rates result in lower revenues. All Laffer did was gather data to prove Smith's claims.

Quote:
Originally Posted by rruff View Post
It worked wonderfully during the only period we've tried it.
No, it did not.

You had the 1949 Recession, plus three recessions during the Eisenhower Administration.

It was only after taxes were cut that you experienced an unprecedented 106 months of economic growth in the 20th Century.

That record stood until the 1990s. Before that, you never went more than 4 years without a recession.
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Old 03-21-2019, 05:01 PM
 
Location: Ruidoso, NM
5,331 posts, read 4,953,527 times
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Quote:
Originally Posted by Mircea View Post
Smith defined wealth as goods and services, not as money, which in his day was gold and silver.
A State was wealthy if it produced a lot of goods and services, not money.
Are you talking to me, or a strawman in your head? I frequently state that productivity=prosperity. I'm not the least bit confused about the difference between money and real stuff.

Quote:
That was not US government policy. revenues, not influence behavior, and more specifically were intended to redistribute income via government programs.
And no one noticed that it didn't do that?

Quote:
High taxes discourage savings and investment, and worse than that, promote Capital flight, which harms the economy.
Your BS level education needs to meet reality. The period from the early 30s to late 70s was the strongest economy we've ever had. It isn't a coincidence that it was when tax rates where the highest, and unions were the strongest Your comment about recessions was silly. Who cares? Median real income rose by nearly 300% in 45 years! Compare that to what has happened since! Maybe 10% in a similar time frame?

It isn't that mysterious. Production relies on consumer buying power. Companies will expand production to meet expected sales, but no further. Giving the wealthy a bigger slice of the pie doesn't increase production (rather it depresses it). The only reason the economy didn't tank during the trickle-down experiment is because it was combined with escalating public and private debt, plus the one shot deal of higher workforce participation (women). The only instance where it *could* have a positive effect is if capital is lacking, and that hasn't been the case in the US, ever. What they do with their extra wealth is bid up asset prices on things like RE and stocks, or take capital out of the US and invest somewhere else.

The high marginal tax rates don't discourage investment, rather they discourage the extraction of capital (which would be subject to tax). Instead companies are encouraged to expand and research and innovate, which is how they can increase their real capital without being taxed! And they *can* expand (in aggregate) because consumer wages are rising along with productivity, increasing demand. It's a virtuous cycle.
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Old 03-22-2019, 02:22 PM
Status: "gemütlichkeit ☕" (set 7 days ago)
 
2,410 posts, read 991,475 times
Reputation: 2265
Quote:
Originally Posted by Mircea View Post
While that might be true, the majority of companies have similar circumstances.

Minimum wage studies have borne that out.

The study that Liberals like to cite has a major flaw in its methodology.

The study said minimum wage had no impact, because labor hours didn't change.

Well, why would they?

If a fast-food restaurant is open for a certain number of hours each, it requires a minimum amount of labor hours.

The minimum wage didn't cause stores to open later or close earlier, but it did impact individual employees, which is what the study failed to consider.

If I'm an employer and forced to pay higher wages, I'm going to seriously re-evaluate how I allocate my labor resources.

I'm going to allocate more hours to the best employees and cut the hours of the mediocre and marginal employees.

That is, in fact, exactly what happened.

That's the Great Irony, because the minimum wage was intended to help the mediocre and marginal, but the end result is the mediocre and marginal got smaller paychecks, since they were given fewer hours of work, so they ended up being the losers.
If you're referring to the University of Washington study, note that they revised their initial conclusion last year. The new consensus is that the wage increase doesn't have a significant effect on the hours of low skilled employees, but they continued to note the benefit to higher skilled employees.
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Old 03-23-2019, 08:08 AM
 
984 posts, read 199,865 times
Reputation: 1678
"Everything in Wikipedia is correct." -- Abraham Lincoln
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Old Today, 03:07 PM
 
Location: Kansas City, MISSOURI
7,812 posts, read 2,325,565 times
Reputation: 6174
Quote:
Originally Posted by RationalExpectations View Post
"Everything in Wikipedia is correct." -- Abraham Lincoln
There is nothing wrong with those Wiki descriptions. You can find similar descriptions on other websites.

https://www.investopedia.com/articles/05/011805.asp
https://www.investopedia.com/ask/ans...-economics.asp
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