The Current Events, News, and Politics Thread
03-06-2013, 01:29 PM
#3923
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The Laffer Curve: The most influential napkin event ever.
Literally a sketch on a bar napkin, not derived from any actual real world data set, to represent a theoretical model of human behavior. From which, only a linear relationship is ever derived or discussed. Nevermind that it's not a linear graphical representation of said theoretical model of human behavior.
Literally a sketch on a bar napkin, not derived from any actual real world data set, to represent a theoretical model of human behavior. From which, only a linear relationship is ever derived or discussed. Nevermind that it's not a linear graphical representation of said theoretical model of human behavior.
Last edited by Braineack; 10-08-2019 at 09:48 AM.
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03-06-2013, 01:44 PM
#3924
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Speaking of Laffer and his curve, guess who he named as one of the primary influences on his understanding of the theoretical principle? Not the Muslim, but the other more recent economist.
Here's a quote from the guy in question:
Mind blown?
Here's a quote from the guy in question:
Nor should the argument seem strange that taxation may be so high as to defeat its object, and that, given sufficient time to gather the fruits, a reduction of taxation will run a better chance than an increase of balancing the budget. For to take the opposite view today is to resemble a manufacturer who, running at a loss, decides to raise his price, and when his declining sales increase the loss, wrapping himself in the rectitude of plain arithmetic, decides that prudence requires him to raise the price still more--and who, when at last his account is balanced with nought on both sides, is still found righteously declaring that it would have been the act of a gambler to reduce the price when you were already making a loss.
Mind blown?
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03-06-2013, 02:48 PM
#3925
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(...) For to take the opposite view today is to resemble a manufacturer who, running at a loss, decides to raise his price, and when his declining sales increase the loss, wrapping himself in the rectitude of plain arithmetic, decides that prudence requires him to raise the price still more--and who, when at last his account is balanced with nought on both sides, is still found righteously declaring that it would have been the act of a gambler to reduce the price when you were already making a loss.
In general, we assume that manufacturers tend to operate in a competitive marketplace. The reason that sales decline after a price increase is that customers shift their purchasing towards a different manufacturer.
Contrast this with a true monopoly enterprise, such as the telephone system until the 1980s. In such an environment, customers cannot react to a price increase by opting to do business with an alternate supplier, since no alternative exists. Thus, to the degree that the demand for telephone service is not highly elastic, a reasonable positive correlation can be drawn between the price of telephone service and the revenue of the telephone company. It is for this reason that the State and Federal governments tend to regulate monopoly industries, by instituting rate controls on them.
The Federal government, as a whole, has a de-facto monopoly in the US on the job of being the Federal government. Likewise, the IRS and the Department of the Treasury also enjoy monopolies on collecting Federal taxes and being the Federal Treasury. As such, the market forces which affect the manufacturer's revenue in the competitive environment do not apply here at the level of the individual consumer. While it is technically true that an US citizen can say "**** this, I am moving to Mexico," there are certain practical disadvantages to doing so which have historically prevented mass-emigration. Therefore, the Federal government may increase the rate at which is taxes its subjects, and be reasonably assured that the revenues collected from personal income taxiation will increase accordingly.
Now, it is true that corporations enjoy a much greater latitude in electing to "move to Mexico" as it were. Strategic global re-positioning of one's business assets in order to minimize tax exposure is a common trend. No doubt some people consider this practice to constitute a "tax loophole" in the common sense. This is undoubtedly the subject of a much larger debate, however I would posit that the practical effects of such positioning pale in comparison to those which are visually difficult to distinguish but motivated instead by the desire to seek out less costly labor and materials, and to operate in an environment with fewer regulations on worker safety, hazardous materials disposal, etc. There are, for instance, relatively few industrial paint shops in the state of California. This has much less to do with California's tax code than with the fact that many high-VOC coating products are illegal here, but legal in most other states.
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03-06-2013, 06:51 PM
#3927
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Last edited by Braineack; 10-08-2019 at 09:48 AM.
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03-06-2013, 08:15 PM
#3929
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Filibustering, as a political tactic, annoys me as an emblem of all that is Bad and Wrong about consensus-based representative democracy.
On the other hand, I am truly in awe of the oratory skills of a truly competent filibusterer.
On the other hand, I am truly in awe of the oratory skills of a truly competent filibusterer.
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03-06-2013, 11:03 PM
#3931
Speaking of Laffer and his curve, guess who he named as one of the primary influences on his understanding of the theoretical principle? Not the Muslim, but the other more recent economist.
Here's a quote from the guy in question:
Mind blown?
Here's a quote from the guy in question:
Nor should the argument seem strange that taxation may be so high as to defeat its object, and that, given sufficient time to gather the fruits, a reduction of taxation will run a better chance than an increase of balancing the budget. For to take the opposite view today is to resemble a manufacturer who, running at a loss, decides to raise his price, and when his declining sales increase the loss, wrapping himself in the rectitude of plain arithmetic, decides that prudence requires him to raise the price still more--and who, when at last his account is balanced with nought on both sides, is still found righteously declaring that it would have been the act of a gambler to reduce the price when you were already making a loss.
Mind blown?
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03-07-2013, 08:26 AM
#3932
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I got a raise this year, it doesn't cover the payroll tax increase. this is casuing me to a little bit more conscience over what I spend money on. This is not good in a govt-induced-drawn-out-recession.
im going to have mcdonalds for dinner tonight using a 2 for 1 coupon.
im going to have mcdonalds for dinner tonight using a 2 for 1 coupon.
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03-07-2013, 09:15 AM
#3933
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Keynes gets taken out of context a lot and his work can certainly be used to justify a lot of very different prescriptions. Keynes in the quote we are discussing is talking about raising taxes during an economic contraction being counter-productive for exactly the reasons I reject blaen's discussion of a direct, single variable relationship between tax rates and revenues [edit: without other context].
That is, he is asserting that raising taxes in a time of economic malaise will [edit: likely] be counter-productive in that it removes money from the already struggling private sector which can take a slow or contracting economy backward, leading to less growth and economic activity and, less tax revenue. i.e. A bigger percentage of a smaller sum netting a reduction.
The quote is from the first chapter of The Means to Prosperity by John Maynard Keynes. Published c. 1932 or 1933. Unfortunately, the vernacular is a little dense by today's standards.
Last edited by Braineack; 10-08-2019 at 09:48 AM.
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03-07-2013, 12:53 PM
#3935
Graham, McCain blast Paul filibuster - Washington Times
Nice try.
Mr. Graham said asking whether the president has the power to kill Americans here at home is a ludicrous question.
“I do not believe that question deserves an answer,” Mr. Graham said.
“I do not believe that question deserves an answer,” Mr. Graham said.
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03-07-2013, 01:29 PM
#3936
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Keynes is speaking in the context of an economic contraction, specifically a financially and/or politically derived one.
(...)
That is, he is asserting that raising taxes in a time of economic malaise will [edit: likely] be counter-productive in that it removes money from the already struggling private sector which can take a slow or contracting economy backward, leading to less growth and economic activity and, less tax revenue.
(...)
That is, he is asserting that raising taxes in a time of economic malaise will [edit: likely] be counter-productive in that it removes money from the already struggling private sector which can take a slow or contracting economy backward, leading to less growth and economic activity and, less tax revenue.
On the other hand, no single economic theory exists in a vacuum.
The struggling manufacturer might indeed realize an increase in revenue from a reduction in cost. But if cutting their price also decreases their gross margin to a point which is insufficient to cover their costs, then they may well go bankrupt in a sea of revenue.
Likewise, we (the US) find ourselves in an interesting conundrum. On the one hand, allowing income taxes to rise back to a "normal" level might well have the effect of slightly depressing consumer spending. On the other hand, we already find ourselves in a situation wherein Federal spending exceeds revenue to the point in which the creditworthiness of the Treasury is being called into question and the Congress cannot seem to agree on which entitlement programs to decrease in order to compensate for this. While reducing income taxes even further might have the long-term effect of increasing the velocity of money, it might also have the short-term effect of bankrupting the treasury.
It's also important to recognize that, in gross terms, the velocity of money in the US (which is a valid barometer of the rate of all spending) is still at a level which is higher than its 50 year average. The spending bubble of the late 90s / early 00s has really distorted our perspective on such matters as "what is normal?"
Last edited by Braineack; 10-08-2019 at 09:48 AM.
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03-07-2013, 01:46 PM
#3937
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Who is calling in to question the credit worthiness of the US Treasury? Are they worth paying any attention to?
In what ways could the US Treasury be forced in to bankruptcy? [Adj. (of a person or organization) Declared in law unable to pay outstanding debts.]
As for the M1V, the average (mean) from 1960-01-01 through 2012-10-01 (most recent data handy from FRED) was 6.675. The median for the same time frame was 6.796.
The value for 2012-10-01 was 6.547. Source: FRBSL FRED
In what ways could the US Treasury be forced in to bankruptcy? [Adj. (of a person or organization) Declared in law unable to pay outstanding debts.]
As for the M1V, the average (mean) from 1960-01-01 through 2012-10-01 (most recent data handy from FRED) was 6.675. The median for the same time frame was 6.796.
The value for 2012-10-01 was 6.547. Source: FRBSL FRED
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03-07-2013, 02:05 PM
#3938
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Are they worth paying any attention to?
In what ways could the US Treasury be forced in to bankruptcy? [Adj. (of a person or organization) Declared in law unable to pay outstanding debts.]
As for the M1V, the average (mean) from 1960-01-01 through 2012-10-01 (most recent data handy from FRED) was 6.675. (...) The value for 2012-10-01 was 6.547.
If you downwardly weight the value of the data from the period which contained the tech bubble and the housing bubble, then we are presently above the "nominal" value.
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