TPS Posted December 18, 2015 Author Share Posted December 18, 2015 How is money used by a poor person create more demand than one used by a rich person $1000 of new income to a millionaire is mostly saved; $1000 of new income to a poor person is spent on those mass-produced products. JSP's entrepreneur will have greater sales in the latter case. Link to comment Share on other sites More sharing options...
TPS Posted December 18, 2015 Author Share Posted December 18, 2015 Still doesn't spell the end of capitalism. How else is the government going to generate revenues to pay the entitlements? If the government squeezes the productive economy, the capital will simply flee to where there's less friction. Yes, it does not mean that there can't be entrepreneurs, innovation, and profit, but it does mean government has an even larger role in ensuring there is sufficient income/demand in the economy to keep the production-consumption cycle moving. Your thinking too much in the here and now. The changes will take place over the next 20-30 years. There will be a realization by JSP's business owners that not having and paying workers = no demand. The decisions will be how best to generate demand and keep the economic cycle churning. "Entitlements" for the security state or for the masses that are no longer needed in the workforce....? Link to comment Share on other sites More sharing options...
....lybob Posted December 18, 2015 Share Posted December 18, 2015 Yes, it does not mean that there can't be entrepreneurs, innovation, and profit, but it does mean government has an even larger role in ensuring there is sufficient income/demand in the economy to keep the production-consumption cycle moving. Your thinking too much in the here and now. The changes will take place over the next 20-30 years. There will be a realization by JSP's business owners that not having and paying workers = no demand. The decisions will be how best to generate demand and keep the economic cycle churning. "Entitlements" for the security state or for the masses that are no longer needed in the workforce....? You are more optimistic than I am - for 40 years there has been a tremendous push to reduce labor costs and with an intensity not seen with reducing energy costs, material costs, increasing production efficiency, and better design of the product itself- now it doesn't take a genius to understand that while reducing labor costs may be good for the individual companies bottom line that in the aggregate it reduces consumptive power and increasingly slows economies but as I've said this has been going on for 40 years what makes you think a light bulb is going to suddenly go on- I look at China, US, and EU economies and I'm worried not because they are terrible per say but because they are so anemic with dirt cheap oil, what do those economies do if things reverse and oil is rapidly 3-4X as expensive? Link to comment Share on other sites More sharing options...
B-Large Posted December 18, 2015 Share Posted December 18, 2015 Oh !@#$ off. And restrict the flow of unskilled labor streaming across from our southen border. It should be a slam dunk partisan landslide, its mind boggling how it is not. Link to comment Share on other sites More sharing options...
unbillievable Posted December 18, 2015 Share Posted December 18, 2015 How is money used by a poor person create more demand than one used by a rich person $1000 of new income to a millionaire is mostly saved; $1000 of new income to a poor person is spent on those mass-produced products. JSP's entrepreneur will have greater sales in the latter case. Millionaires don't save money. They invest it, which is used by businesses to buy equipment, materials, etc. From your viewpoint, it would make more sense to redistribute the wealth from the middle class to the rich and poor instead. A few European countries have taken this philosophy to the next level by taxing savings accounts. Are you in favor of that policy? Link to comment Share on other sites More sharing options...
TPS Posted December 18, 2015 Author Share Posted December 18, 2015 Millionaires don't save money. They invest it, which is used by businesses to buy equipment, materials, etc. From your viewpoint, it would make more sense to redistribute the wealth from the middle class to the rich and poor instead. A few European countries have taken this philosophy to the next level by taxing savings accounts. Are you in favor of that policy? I've had this argument too many times. Financial investment does not = Business investment. Financial investment raises asset prices. Increased Sales raises business investment. One of the reasons you have a progressive tax system is the need to maintain aggregate demand (especially for mass-produced goods). And it's demand for its products which brings forth spending by businesses on equipment, etc. Link to comment Share on other sites More sharing options...
GG Posted December 18, 2015 Share Posted December 18, 2015 (edited) Yes, it does not mean that there can't be entrepreneurs, innovation, and profit, but it does mean government has an even larger role in ensuring there is sufficient income/demand in the economy to keep the production-consumption cycle moving. Your thinking too much in the here and now. The changes will take place over the next 20-30 years. There will be a realization by JSP's business owners that not having and paying workers = no demand. The decisions will be how best to generate demand and keep the economic cycle churning. "Entitlements" for the security state or for the masses that are no longer needed in the workforce....? You're also missing the component where many potential workers in the developed world are too "good" for the available jobs. To me that's a bigger problem than the Malthusian-like thought that all the human jobs will disappear. We're way far off that. The new jobs & processes will always require human involvement. And don't discount the declining birthrates in the developed world which will cause a labor shortage before technology creates a labor surplus. Edited December 18, 2015 by GG Link to comment Share on other sites More sharing options...
TPS Posted December 18, 2015 Author Share Posted December 18, 2015 You are more optimistic than I am - for 40 years there has been a tremendous push to reduce labor costs and with an intensity not seen with reducing energy costs, material costs, increasing production efficiency, and better design of the product itself- now it doesn't take a genius to understand that while reducing labor costs may be good for the individual companies bottom line that in the aggregate it reduces consumptive power and increasingly slows economies but as I've said this has been going on for 40 years what makes you think a light bulb is going to suddenly go on- I look at China, US, and EU economies and I'm worried not because they are terrible per say but because they are so anemic with dirt cheap oil, what do those economies do if things reverse and oil is rapidly 3-4X as expensive? A progressive society raises wages consistent with productivity growth. Productivity gains can also be distributed to workers by lowering the average work week while maintaining the same salary, allowing more people to work full time. This is what Germany does. Since the late 1970s, productivity gains have gone to profits, not wages. Keynes wrote "The Economic Possibilities of our Grandchildren" in 1930. Based on capitalism's productivity, he argued output per worker would expand by 3-4 times in two generations, which would allow the average person more leisure time which could be devoted to education, the arts, etc. He underestimated the power of vested interests.... Link to comment Share on other sites More sharing options...
GG Posted December 18, 2015 Share Posted December 18, 2015 One of the reasons you have a progressive tax system is the need to maintain aggregate demand (especially for mass-produced goods). And it's demand for its products which brings forth spending by businesses on equipment, etc. Progressive taxes don't maintain aggregate demand. Link to comment Share on other sites More sharing options...
TPS Posted December 18, 2015 Author Share Posted December 18, 2015 You're also missing the component where many potential workers in the developed world are too "good" for the available jobs. To me that's a bigger problem than the Malthusian-like thought that all the human jobs will disappear. We're way far off that. The new jobs & processes will always require human involvement. And don't discount the declining birthrates in the developed world which will cause a labor shortage before technology creates a labor surplus. See my response to lybob. As for labor shortage, we aren't even close to robotics replacing significant numbers, but when it happens, it will happen fairly quickly... Progressive taxes don't maintain aggregate demand. The system redistributes income from those who don't spend to those who do spend. I know, you're going to tell me how higher marginal rates reduces revenues or some nonsense... Link to comment Share on other sites More sharing options...
GG Posted December 18, 2015 Share Posted December 18, 2015 See my response to lybob. As for labor shortage, we aren't even close to robotics replacing significant numbers, but when it happens, it will happen fairly quickly... But everyone has benefited from productivity gains. You conveniently ignore improved standards of living and better working conditions. People are working less than they did in Keynes times and they enjoy a lot more spoils than they did in his times. You can slam WalMart all you want, but they sell decent products at a very low price point to people you claim to help. The system redistributes income from those who don't spend to those who do spend. I know, you're going to tell me how higher marginal rates reduces revenues or some nonsense... Higher marginal rates are punitive on the most productive class. It has nothing to do with setting optimal tax rates to prop up demand from the overall tax base. Link to comment Share on other sites More sharing options...
TPS Posted December 18, 2015 Author Share Posted December 18, 2015 Higher marginal rates are punitive on the most productive class. It has nothing to do with setting optimal tax rates to prop up demand from the overall tax base. So they were created to punish the rich? It may not be explicitly stated, but that is an outcome of a progressive system. It tends to lessen inequality, and redistribute income from those who save more to those who spend more. Of course, once that "productive" class buys Congress, they put in loopholes that allow them to "pay less than Warren Buffett's secretary".... Link to comment Share on other sites More sharing options...
GG Posted December 18, 2015 Share Posted December 18, 2015 So they were created to punish the rich? It may not be explicitly stated, but that is an outcome of a progressive system. It tends to lessen inequality, and redistribute income from those who save more to those who spend more. Of course, once that "productive" class buys Congress, they put in loopholes that allow them to "pay less than Warren Buffett's secretary".... If you have a basic flat tax, you wouldn't need a cottage industry to figure out the loopholes by the class who can afford to discover those loopholes. Link to comment Share on other sites More sharing options...
Pine Barrens Mafia Posted December 18, 2015 Share Posted December 18, 2015 If you have a basic flat tax, you wouldn't need a cottage industry to figure out the loopholes by the class who can afford to discover those loopholes. For the life of me, I can't understand how anyone DOESN'T support a flat tax. Link to comment Share on other sites More sharing options...
DC Tom Posted December 18, 2015 Share Posted December 18, 2015 If you have a basic flat tax, you wouldn't need a cottage industry to figure out the loopholes by the class who can afford to discover those loopholes. Which is why we'll never see a flat tax in our lifetimes. Imagine the spike in unemployment from laid off tax CPAs. (I'm not even really kidding. The only logic behind such a complicated tax code is to create jobs for accountants.) Link to comment Share on other sites More sharing options...
Azalin Posted December 18, 2015 Share Posted December 18, 2015 For the life of me, I can't understand how anyone DOESN'T support a flat tax. Same here. Link to comment Share on other sites More sharing options...
Chef Jim Posted December 18, 2015 Share Posted December 18, 2015 Which is why we'll never see a flat tax in our lifetimes. Imagine the spike in unemployment from laid off tax CPAs. (I'm not even really kidding. The only logic behind such a complicated tax code is to create jobs for accountants.) Well that and to placate lobbyists and special interest groups. Link to comment Share on other sites More sharing options...
TPS Posted December 19, 2015 Author Share Posted December 19, 2015 Which is why we'll never see a flat tax in our lifetimes. Imagine the spike in unemployment from laid off tax CPAs. (I'm not even really kidding. The only logic behind such a complicated tax code is to create jobs for accountants.) It's definitely more appealing to me now. Link to comment Share on other sites More sharing options...
Alaska Darin Posted December 19, 2015 Share Posted December 19, 2015 Which is why we'll never see a flat tax in our lifetimes. Imagine the spike in unemployment from laid off tax CPAs. (I'm not even really kidding. The only logic behind such a complicated tax code is to create jobs for accountants.) Or the cottage industry for TurboTax, HR Block, etc. Link to comment Share on other sites More sharing options...
Pine Barrens Mafia Posted December 19, 2015 Share Posted December 19, 2015 Short term pain for long term gain isn't something this country does well Link to comment Share on other sites More sharing options...
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