|
Post by Elliot Kane on Feb 17, 2010 12:47:50 GMT
|
|
|
Post by Dark Phoenix Rising on Feb 17, 2010 13:28:20 GMT
Over regulation I'll give you, however tax rates don't affect the growth of the economy without there being additional problems behind the scenes - i.e. an over bloated outsourced bureaucracy for a government.
|
|
|
Post by Ubereil on Feb 17, 2010 13:37:48 GMT
Ube - actually, it has NOT been done. Research has shown that all Keynesian economics does is stretch out the recession rather than deal with it. Research have shown all kinds of things. For instance, I'm sure there's research that has shown that Keynesian economics shortens and softens recessions. It's debatable how to best battle a recession. It's far from as clear cut as you make it out to be. It's definently not an Obviously Bad Idea to do what Obama did and vote through an economic package to stimulate the economy (even though that thing was basically showering money at nothing in particular which is a bad way to do it wether you agree with the idea or not). Bad idea? Maybe. Obviously bad? As long as you're attacking the strawman verision it is. It is a fact that if you are making less money then you have to adjust your lifestyle to fit, right? Why do you think governments should be exempt from that? I'm not saying they shouldn't fix their debt problem, I'm saying they shouldn't fix their debt problem now. That's true wether you believe in Keynesian economy or not. Because even if you don't tax cuts costs money. Once again, when the economy is running normally they can reduce the debt. When the economy is running normally it's time to start looking into the art of balancing budgets (American politics needs to do that badly). Fact is, the more tax and over-regulation there is on the economy, the slower it will grow - assuming it grows at all. Well, economic growth is over-estimated anyway. We're heading straight for the point where using more is starting to have a serious backlash from the environment. I've seen figures that say that Earth can support 1,8 hectars per human being and that we're currently using 2,2. At the same time the average american was using about 10 hectars. We humans have to learn how to balance our assets. That goes both for economical budgets and for how much we take from mother nature each year. And what's going on in Georgia isn't really libertarianism. Übereil
|
|
|
Post by Glance A'Lot on Feb 17, 2010 14:31:54 GMT
Germany had been working on paying back public debts (and we had galore from the cost of the unification), and they were close to having a 'balanced budget' (which however still included sizeable interest payments for accrued debts).
The term of the day was 'reduction of new public indebtness' - now I always was wondering what my banker would have said, if I came to him with such concept... (I'm broke, but I promise to make less additional debts in the future!^^)
The point where I have me doubts is that whenever a state actually was in or close to the position of having a balanced budget (meaning expenditures do not exceed income), something very critically in need of subvention comes along - and in a federal state as Germany is, there always is a state or federal election imminent, which enduces politicians to spend money, or at least to not make unpopular cuts or refusals to 'help'.
|
|
|
Post by Elliot Kane on Feb 17, 2010 15:28:18 GMT
DPR - taxes affect the economy because they affect the amount of money available to people and businesses alike. When people have more of their own money to spend, they tend to spread it around - in effect supporting many businesses by using their products and services. The less money people have available, the less they can spend within the economy, so the less money goes to businesses.
People are the most efficient spenders of their own money.
The higher the taxes on business, the less profit businesses make and thus the less money they have to expand, take on more people, etc. Business is a better employer than the state, economically speaking, because the employed people cost the state less to keep than they pay in tax.
Worse, too high a tax burden can drive companies either to bankruptcy or to leave the country - both of which are bad for the economy as they are employers and tax payers both. Furthermore, they disincentivise the creation of new businesses. After all, who really wants to put all the work in for the government to take most of the money?
So tax levels do matter, on both a personal and business level.
***
Ube - the problem with Keynesianism is that if you skate over the idea very fast it looks plausible. It's rather like loading a bullet into a gun: the reasoning goes that in order to fire the gun you need the bullet, so you have to buy the bullet. That involves getting into debt, sure, but once the gun fires that won't matter. On the surface it does make sense and it has the definite allure to politicians of being totally in line with their favourite method of problem solving anyway: if in doubt, throw money at it. That way they can be seen to be doing SOMEthing, and if it happens to be the RIGHT thing, well, that's a nice added bonus.
The problems start coming when you look at the minutiae. Not only are people the most efficient spenders of their own money, but the vast majority of the economy is made up not of the giant mega-corporations and large businesses, but of the many hundreds of thousands (And possibly millions in places like China) of small businesses. The corner shops, the independent plumber or decorating firm - all the small businesses that survive on the edges where a tax hike can make the difference between thriving and bankruptcy. If people are spending their own money, they spend it on the services they need for themselves - which includes all the little guys. Government stimulus packages are always aimed at the big guys because that's the kind of service the government needs: major building contractors, huge arms dealers, massive soft- and hardware firms. So the stimulus actually misses where it's most needed and does so inefficiently into the bargain. Because propping up the big guys doesn't save the economy.
Once you understand all that, Keynes starts to look more than a little dodgy...
***
Glance - amazing how much becomes 'needed' close to election time, isn't it? ;D
I always wonder what would happen if I went to my bank manager and said "Hey, I know I'm in debt, but don't worry - I'm going to spend my way out of it!" Just to see the look on his face... ;D
|
|
|
Post by Dark Phoenix Rising on Feb 17, 2010 16:21:51 GMT
I disagree that people know how to spend their own money most efficiently. After all, look at the number of houses/rented accomodations that are in need of major work but people still live in them.
The truth is that people/companies/governments spend money based on a) priority and b) affordability, when the cost of what needs doing reaches a certain threshold it starts to reduce the priority of the item in question by the intrinsic nature of affordability. So the corner shop owner won't pay to get his road resurfaced, neither will the petrol station owner, nor would IBM. The corner shop owner would either get his goods by foot or buy a more sturdy car, the petrol station owner would quietly go out of business - Both because the cost of resurfacing is far more than they can afford - ever. And IBM would just move, cos it's cheaper.
Or if we had health insurance, how many people would ditch it when the going gets tough because it's not as important as putting food on the table - until they break their leg, or their child gets ill, or or or.
Or how about the people that drink rather than pay their rent/buy food?
All of these are common examples of how people are really not the most efficient people at spending their own money.
People and business are both really good at spending money on what they need now, but not so good at spending money on what they might need later, or on stuff that isn't urgent (yet) unless they see an immediate gain.
This is why we need government spending for big things like roads, electricity, water (see Thames water as a good example of how companies are good at spending money on maintenance).
edit: What do you think would happen if a company owned the roads we use?
|
|
|
Post by Elliot Kane on Feb 17, 2010 17:14:48 GMT
I said 'efficiently' not 'effectively', DPR The economy is really a bottom up thing, not a top down thing. Millions of people spending small amounts is far more efficient at supporting a bottom up thing than governments spending large amounts.
|
|