|
paragon1 posted:Haha yeah "the Laffer curve is Econ 101" in that Econ 101 textbooks mention in "this is poo poo supply side economists believe it is pretty much all bullshit, now onto real science" My Econ 101 text, which was pretty slanted since it was by Mankiw, had a section on the Laffer curve that ended with "just because this model failed to predict reality in practice doesn't mean it doesn't have validity". Even the shills can't defend it.
|
#
?
Jan 15, 2015 09:59
|
|
|
|
| # ? May 17, 2024 14:50 |
|
|
One day I was looking over this econ student's shoulder and her notes said "Tax cuts==economic stimulus". Then again this is the inimitable Orange County.
|
|
#
?
Jan 15, 2015 16:56
|
|
|
Political Whores posted:My Econ 101 text, which was pretty slanted since it was by Mankiw, had a section on the Laffer curve that ended with "just because this model failed to predict reality in practice doesn't mean it doesn't have validity". Even the shills can't defend it. Any economics class that uses a text by Greg Mankiw is horse poo poo. Those books are more conservative propaganda than economics.
|
|
#
?
Jan 15, 2015 18:45
|
|
|
Have any actual studies been done on the idea that tax cuts = economic stimulus? In my limited knowledge it seems to do the opposite, as government income (and thus spending) goes down the whole economy suffers, plus the fact that people were depending on what ever services were cut and in many cases those services were incredibly efficient and valuable to the economy. Meanwhile companies just use the lower taxes to hoard money rather than hire/expand because who hires or expands in the middle of a bad economy? Like have there ever been cases were typical neo-liberal austerity + tax cuts + "stimulus" actually worked? Almost every case of a recession or lovely economy being fixed I can think of was a result of more government spending and intervention, more regulations, more services and public investments.
|
|
#
?
Jan 15, 2015 18:53
|
|
|
It depends on which people receive the tax cuts and their MPC. From what I recall, cutting taxes on the lowest income (ie highest MPC) people does provide a net (but extremely small) economic stimulus. Cutting taxes on the highest income individuals is almost always a losing proposition
|
|
#
?
Jan 15, 2015 19:36
|
|
|
Baronjutter posted:Have any actual studies been done on the idea that tax cuts = economic stimulus? In my limited knowledge it seems to do the opposite, as government income (and thus spending) goes down the whole economy suffers, plus the fact that people were depending on what ever services were cut and in many cases those services were incredibly efficient and valuable to the economy. Meanwhile companies just use the lower taxes to hoard money rather than hire/expand because who hires or expands in the middle of a bad economy? This isn't exactly true. Just because you cut taxes, doesn't mean you need to cut spending. The Keynesian solution for things like recessions is tax cuts + increased spending, which you do until the economy recovers, then you increase taxes and decrease spending. Of course, certain tax cuts are better than others, just like certain types of spending is better than others. The payroll tax cut was an example of a good kind of tax cut, since it's heavily weighted towards people who are gonna spend it all.
|
|
#
?
Jan 15, 2015 19:59
|
|
|
Lemming posted:This isn't exactly true. Just because you cut taxes, doesn't mean you need to cut spending. The Keynesian solution for things like recessions is tax cuts + increased spending, which you do until the economy recovers, then you increase taxes and decrease spending. Of course, certain tax cuts are better than others, just like certain types of spending is better than others. The payroll tax cut was an example of a good kind of tax cut, since it's heavily weighted towards people who are gonna spend it all. Um that implies running a deficit, which is never good under any circumstances because let me tell you about my family budget growing up.
|
|
#
?
Jan 15, 2015 20:03
|
|
|
Political Whores posted:My Econ 101 text, which was pretty slanted since it was by Mankiw, had a section on the Laffer curve that ended with "just because this model failed to predict reality in practice doesn't mean it doesn't have validity". Even the shills can't defend it. The Laffer Curve is one of those things that makes sense in theory but those that quote it as a reason to cut taxes are assuming that whatever the tax rate is right now is on the right side of the curve. Any tax rate greater than 0% is assumed to be on the right side of the curve. It's especially insane when you consider that some huge companies get so much money from the government that their effective tax rate is negative but gently caress that, cut taxes more!
|
|
#
?
Jan 15, 2015 20:05
|
|
|
ToxicSlurpee posted:The Laffer Curve is one of those things that makes sense in theory but those that quote it as a reason to cut taxes are assuming that whatever the tax rate is right now is on the right side of the curve. Any tax rate greater than 0% is assumed to be on the right side of the curve. It's especially insane when you consider that some huge companies get so much money from the government that their effective tax rate is negative but gently caress that, cut taxes more! Sure but even then the picture the Laffer curve paints is so simplistic that it's basically worthless. There are so many different incentives and factors that could intervene (off the top of my head, the actual impossibility of projecting revenues/markets too far into the future) that the assumptions that underlie it, that companies will intentionally forgo opportunities for profit because whatever extra they make won't be worth it, fall apart pretty fast. Besides, companies have a poo poo ton more options to minimize their tax burdens than forgoing profits. I mean yeah I guess if you taxed 100% then maybe the assumptions would make sense, but before then the idea that companies would invest and grow if only the government would let up just a little more, as if they weren't already as ruthless as possible in their spending, is ridiculous. It's the same as arguments about how the minimum wages leads to people being fired. Why would companies spend more on labour than they need to, ever, regardless of the price? Political Whores fucked around with this message at 20:55 on Jan 15, 2015 |
|
#
?
Jan 15, 2015 20:51
|
|
|
Political Whores posted:Sure but even then the picture the Laffer curve paints is so simplistic that it's basically worthless. There are so many different incentives and factors that could intervene (off the top of my head, the actual impossibility of projecting revenues too far into the future) that the assumptions that underlie it fall apart pretty fast. Besides, companies have a poo poo ton more options to minimize their tax burdens than forgoing profits. It also assumes that overall tax revenue and corporate profit are the only things that matter but really that's a typical AnCap line of poo poo as well. They tend to ignore things like the velocity of money and how atrociously worker were treated in the past in the name of high profits. A lot of regulations exist because The Sacred Job Creators only give a poo poo about pesky things like "safety" and "workers not dying of malnutrition" when you twist their arms and force them to.
|
|
#
?
Jan 15, 2015 20:54
|
|
|
Political Whores posted:I mean yeah I guess if you taxed 100% then maybe the assumptions would make sense, but before then the idea that companies would invest and grow if only the government would let up just a little more, as if they weren't already as ruthless as possible in their spending, is ridiculous. It's the same as arguments about how the minimum wages leads to people being fired. Why would companies spend more on labour than they need to, ever, regardless of the price? Yeah, it's hard to imagine that companies would turn their nose up at profit just because it's smaller than what it might otherwise have been pre-tax, until you're getting astronomically far from the rates in any Western country (or really any country at this point). Profit is profit is profit, isn't it? e: also, fun fact for your conservative friends, the Laffer Curve was actually thought up by this dude. Muscle Tracer fucked around with this message at 21:10 on Jan 15, 2015 |
|
#
?
Jan 15, 2015 21:07
|
|
|
Yeah the supply-side poo poo never made sense to me just on a utilitarian level for two reasons: 1. Why would a business suddenly hire more people if they don't need them just cause they have some extra money left over? If I run a small store where I only employ one cashier and he's able to handle dealing with our influx of customers, I don't need to hire another person. I'm just going to pocket that extra money. 2. This especially makes no sense when enacting SS policies in a recession. If my business is doing REALLY terrible, like say I made $0 in profit for a year, even a 100% tax cut on my income is absolutely loving useless to me.
|
|
#
?
Jan 15, 2015 22:01
|
|
|
Mr Interweb posted:Yeah the supply-side poo poo never made sense to me just on a utilitarian level for two reasons: "They'd hire you shiftless millenials out of the goodness of their hearts just to give you work experience for better ones!"
|
|
#
?
Jan 15, 2015 22:02
|
|
Mr Interweb posted:1. Why would a business suddenly hire more people if they don't need them just cause they have some extra money left over? If I run a small store where I only employ one cashier and he's able to handle dealing with our influx of customers, I don't need to hire another person. I'm just going to pocket that extra money. Like a good capitalist you borrow and combine the debt with your savings to open store 2, with double the total staff.
|
|
|
#
?
Jan 15, 2015 22:03
|
|
|
Mr Interweb posted:1. Why would a business suddenly hire more people if they don't need them just cause they have some extra money left over? If I run a small store where I only employ one cashier and he's able to handle dealing with our influx of customers, I don't need to hire another person. I'm just going to pocket that extra money. The theory isn't that you'd just hire more workers because you could but that you'd expand your business with the money or invest it somewhere. That's the fundamental theory of trickle-down economics. If you give a guy that's started some businesses money to start another business he'll obviously start another. What we're seeing, however, is that the rich don't let their money trickle anywhere and the only thing they use money for is getting more money. There are literally trillions of dollars (in the dozens now, I think) that are just being sat on by the rich. You know, the same people that are saying that creating more money is bad, all inflation is bad, and the poor should just borrow more money they'll so graciously lend them if they don't want to starve to death this week.
|
|
#
?
Jan 15, 2015 22:09
|
|
ToxicSlurpee posted:The theory isn't that you'd just hire more workers because you could but that you'd expand your business with the money or invest it somewhere. That's the fundamental theory of trickle-down economics. If you give a guy that's started some businesses money to start another business he'll obviously start another. What we're seeing, however, is that the rich don't let their money trickle anywhere and the only thing they use money for is getting more money. There are literally trillions of dollars (in the dozens now, I think) that are just being sat on by the rich. You know, the same people that are saying that creating more money is bad, all inflation is bad, and the poor should just borrow more money they'll so graciously lend them if they don't want to starve to death this week. Of course, small store owners are actually in the category of people who haven't done that well out of all of this rent-seeking behaviour. And the idea holds up a little: I mean, store owners with extra cash do open more stores - they just pay people minimum wage, so those people barely benefit in real terms compared to their employer. It's not that poor people make nothing in this example, it's that rich people's income multiplies by 3, 4, 5 times while some guy makes 50 cents more an hour when the store has a good year.
|
|
|
#
?
Jan 15, 2015 22:13
|
|
|
The idea of trickle down - they make more money, grow more businesses, spread the wealth - also only works if you assume that supply is all that matters. If you have ten billion dollars to make your business huge, but demand is depressed in your economy, there's going to be nobody to buy the poo poo you're making, so instead you Scrooge McDuck your money pile. It's not wrong to say that if you have money you're likely to invest it to make more, but you're missing the half of the picture which is that you can only do that in an environment where there's room to grow.
|
|
#
?
Jan 15, 2015 22:18
|
|
|
Lemming posted:The idea of trickle down - they make more money, grow more businesses, spread the wealth - also only works if you assume that supply is all that matters. If you have ten billion dollars to make your business huge, but demand is depressed in your economy, there's going to be nobody to buy the poo poo you're making, so instead you Scrooge McDuck your money pile. It's not wrong to say that if you have money you're likely to invest it to make more, but you're missing the half of the picture which is that you can only do that in an environment where there's room to grow. The basic idea behind supply-side economics is that if you create more supply then the price goes down. It was a response to the demand-side economics that things like food stamps rely on. But like you said, if there isn't demand the supply doesn't do much. Supply-side economics were also used as the argument for just handing the wealthiest among us more money. See, they'd spend that money on making more supply! Instead they just stuffed the money in a bank account and sat on it. The end result was no direct on supply but a reduction in demand because now the government has less money. A lot of this bastardization and corruption of actual economic theories. Yes, the laws of supply and demand are real. If the supply dries up and demand is the same the price goes up. If demand does not change but supply increases then the price goes down. However, that requires the supply to actually loving increase in the first place. Reaganomics didn't accomplish that.
|
|
#
?
Jan 15, 2015 22:24
|
|
|
Muscle Tracer posted:Yeah, it's hard to imagine that companies would turn their nose up at profit just because it's smaller than what it might otherwise have been pre-tax, until you're getting astronomically far from the rates in any Western country (or really any country at this point). Profit is profit is profit, isn't it? The standard (and not altogether untrue) response to this is that any attempt to make more money necessarily carries some risk of losing money--maybe you open that second store but for some reason nobody patronizes it, or whatever. The lower your potential profits are, the more likely that the risk/reward will be unfavorable, so raising taxes does theoretically discourage expansion to some extent.
|
|
#
?
Jan 15, 2015 22:24
|
|
|
ToxicSlurpee posted:The theory isn't that you'd just hire more workers because you could but that you'd expand your business with the money or invest it somewhere. That's the fundamental theory of trickle-down economics. If you give a guy that's started some businesses money to start another business he'll obviously start another. But don't you still have the same problem in the end? If a job creator had an idea to expand/invest in another area or whatever, presumably he'd do it regardless of the tax rate. And like I said, this works even less during recessions since no one's buying poo poo to begin with.
|
|
#
?
Jan 15, 2015 22:32
|
|
|
Mr Interweb posted:But don't you still have the same problem in the end? If a job creator had an idea to expand/invest in another area or whatever, presumably he'd do it regardless of the tax rate. And like I said, this works even less during recessions since no one's buying poo poo to begin with. Yeah most AnCap or lolbertarian thoughts just fall apart if you look at them and breathe too hard in their direction.
|
|
#
?
Jan 15, 2015 22:35
|
|
|
Political Whores posted:Sure but even then the picture the Laffer curve paints is so simplistic that it's basically worthless. There are so many different incentives and factors that could intervene (off the top of my head, the actual impossibility of projecting revenues/markets too far into the future) that the assumptions that underlie it, that companies will intentionally forgo opportunities for profit because whatever extra they make won't be worth it, fall apart pretty fast. My biggest problems with it are the assumptions of independence from all other variables, that it has a single maximum, and that everything is to the right of that maximum. I really don't understand why there are people who don't just laugh at it. You could hand a kid a crayon and ask them to draw a line connecting two points, slap some axes on it and it would make just as much sense.
|
|
#
?
Jan 15, 2015 23:31
|
|
|
ToxicSlurpee posted:There are literally trillions of dollars (in the dozens now, I think) that are just being sat on by the rich.  Holy poo poo, do you have a source on that? Where can I learn more about that?
|
|
#
?
Jan 16, 2015 01:56
|
|
|
Mr Interweb posted:Yeah the supply-side poo poo never made sense to me just on a utilitarian level for two reasons: Actually supply side stuff makes tons of sense. Every business wants to hire more people to do more things and produce more/better products but is always constrained by cost. Even your small business would probably like to fancy up the window display, research new products to stock, improve their marketing material, reorganize the racks and re-paint the dingy bathroom. Demand is functionally infinite, it's supply that is fundamentally limited and it's improvements in technology on the supply side that have brought us out of the stone age and continued to improve standards of living. The problem is that like anything else in a complex system you can't create a religion around one component of many and no one thing is the solution to every problem. Issues of demand are a very real thing in the fallible real-world financial system.
|
|
#
?
Jan 16, 2015 03:15
|
|
|
Muscle Tracer posted:
http://www.theatlantic.com/business/archive/2014/03/the-em-trillions-em-of-dollars-us-companies-are-hoarding-overseas/359928/ https://www.cnbc.com/id/101354173 https://www.forbes.com/sites/frederickallen/2012/07/23/super-rich-hide-21-trillion-offshore-study-says/ https://www.reuters.com/article/2012/07/16/us-column-dcjohnston-idlecash-idUSBRE86F0GK20120716 https://www.businessinsider.com/rbc-2-trillion-corporate-cash-balance-sheet-2012-3 Nobody is quite sure exactly how much it is because apparently a great deal of money has been just kind of disappearing into offshore accounts, overseas banks, and tax havens.
|
|
#
?
Jan 16, 2015 03:18
|
|
|
asdf32 posted:Actually supply side stuff makes tons of sense. Every business wants to hire more people to do more things and produce more/better products but is always constrained by cost. Even your small business would probably like to fancy up the window display, research new products to stock, improve their marketing material, reorganize the racks and re-paint the dingy bathroom.  Demand is in no way functionally infinite for anything. Demand can exceed supply, absolutely, but even for basic human needs there is a limit to how much people need. My demand for slow cooked greek ribs is not infinite, despite what my wife would tell you. Or what about a more inelastic good such as, a colonoscopy? I can guarantee you that demand for colonoscopies is not fundamentally infinite. If supply side stuff caused the price of a colonoscopy to fall I would not get two, since I don't much roll that way. I certainly wouldn't get ten, or twenty. I'd get one. If you're talking humanity wide, yes we are constrained in our capability to provide more goods by scarcity, but that isn't really a supply/demand issue. I think you really have it backwards. Was it improvements in technology on the supply side that have caused increased lifespans when dealing with cancer? Or was it demand for cancer treatments that drove innovations that led to the development of those treatments. Supply side economics can make textbook econ 101 sense. In a frictionless sphere world supply side economics would probably work sort of, kind of well. But in the world we live in there are tons of factors that contribute to supply side economics being a total failure. When you give huge tax cuts to businesses you have to get that money from somewhere, such as... I dunno, dismantling your nationwide mental health care system. That would patch part of the budget hole with absolutely no negative repercussions. Right?
|
|
#
?
Jan 16, 2015 03:30
|
|
|
asdf32 posted:Demand is functionally infinite, Uhhhhhhhhhhhhhhhhhhhhhhhhhhhhh
|
|
#
?
Jan 16, 2015 03:30
|
|
|
Lemming posted:Uhhhhhhhhhhhhhhhhhhhhhhhhhhhhh Too slow my man.
|
|
#
?
Jan 16, 2015 03:33
|
|
|
I'm going to go to the bank and ask for a loan to start a business that sells horse buggies. Since demand is functionally infinite, I should have no problem making a profit, right?
|
|
#
?
Jan 16, 2015 03:38
|
|
|
Caros posted:
People wanted cancer treatments before cancer treatments existed. The demand was there, the supply wasn't. Likewise for, well, basically every good in the modern economy (allowing for the fact that some goods are only useful when others have already been invented). Like many people here, I think you're assuming any discussion of "supply" involves wholesale support of reagan-esk or right wing policy. It surely doesn't.
|
|
#
?
Jan 16, 2015 03:45
|
|
|
asdf32 posted:People wanted cancer treatments before cancer treatments existed. The demand was there, the supply wasn't. Likewise for, well, basically every good in the modern economy (allowing for the fact that some goods are only useful when others have already been invented). Demand isn't infinite because it doesn't mean "I want it" it means "I want it and I am willing and able to pay for it." I want a ton of poo poo but I can only buy stuff with the money I have. If a group of people is spending about as much money as they earn and not saving much (sound like a place you know???), it doesn't matter how much more supply you create, those people aren't going to spend any more money. Please explain how you are supposed to get blood from a stone.
|
|
#
?
Jan 16, 2015 03:53
|
|
|
asdf32 posted:People wanted cancer treatments before cancer treatments existed. The demand was there, the supply wasn't. Likewise for, well, basically every good in the modern economy (allowing for the fact that some goods are only useful when others have already been invented). I'd like to hear what you think the economic definition of "demand" is, because either you're just flat out abusing the term, or you've seriously misunderstood the concept.
|
|
#
?
Jan 16, 2015 03:56
|
|
|
asdf32 posted:People wanted cancer treatments before cancer treatments existed. The demand was there, the supply wasn't. Likewise for, well, basically every good in the modern economy (allowing for the fact that some goods are only useful when others have already been invented). This coming from the guy who thinks that demand is infinite. I don't know whether or not you support Reagan-esk policies or not. I know that you said "Actually supply side stuff makes tons of sense." which to me certainly sounds like you support supply-side economic theory that has been soundly hammered by reality for pretty my entire life. I'll agree that supply-side policy is not totally worthless, the laffer curve is correct that tax revenues will go down if taxes are too high, but every implementation of those ideologies has been laughably bad... or would have been if it didnt' cause real, measurable harm to people's lives. I mean, I don't even get your argument here. Things don't exist until people build them thus we should give people tax breaks to build things? Again this sounds perfectly logical in the spherical airless void, but in reality most business owners don't give two shits about their taxes. They'll grumble about them, sure, but look at Kansas as just one example of why cutting taxes to 'make jobs' doesn't actually function in the real world. If you are talking about economics, demand based policies are simply better. They have a proven track record in the real world and a preponderance of evidence in support of them. Jack of Hearts posted:I'd like to hear what you think the economic definition of "demand" is, because either you're just flat out abusing the term, or you've seriously misunderstood the concept. I honestly think he is just switching back and forth between economic and layman definitions of things.
|
|
#
?
Jan 16, 2015 04:02
|
|
|
Lemming posted:Demand isn't infinite because it doesn't mean "I want it" it means "I want it and I am willing and able to pay for it." And how do people with pieces of paper buy things which can't be produced. This is sort of a chicken or egg discussion except it's actually clear which one has been fundamentally more limited/important. Note: we can literally print money, do print money, and are printing money at this moment. Demand in the context you're discussing is a capitalist financial invention and a capitalist financial invention only. Yes, given that we're a capitalist economy it's important. See Keynes. So is technology and supply. Caros posted:This coming from the guy who thinks that demand is infinite. The argument is that Reagan seemingly did permanent damage to certain segment's of the population's ability to understand anything that looks like it's on the supply side. The idea that someone would speculate in this thread how tax cuts might produce stimulus is a perfect example of that. Of course tax cuts produce stimulus. So do lots of other things. Whether we want tax cuts or the other things depends on context and reality, not some foolish notion that one thing is "simply better". Clarity: I advocate more taxes on the rich because I think taxes are too low on the rich. asdf32 fucked around with this message at 04:17 on Jan 16, 2015 |
|
#
?
Jan 16, 2015 04:04
|
|
|
asdf32 posted:And how do people with pieces of paper buy things which can't be produced. This is sort of a chicken or egg discussion except it's actually clear which one has been fundamentally more limited/important. Note: we can literally print money, do print money, and are printing money at this moment. Quick check from everyone in thread, is anyone arguing that we don't need supply? Because that would be a really stupid thing to say. I thought that we were arguing that supply side economic policies in the form of tax cuts for the wealthy were generally stupid and inefficient since they don't have any practical effect in the real world, especially compared to Keynesian policies which are useful in helping us organize our economy in such a way at to lessen the boom/bust cycle wherever possible while simultaneously being far more progressively minded and helpful for those in the most dire straits. Am I wrong? Did we skip straight over to arguing that we don't need some stinking supply? Also asdf32, are you sticking with your "Demand is infinite" thing? I need to know if I should line up more Gifs.
|
|
#
?
Jan 16, 2015 04:11
|
|
|
asdf32 posted:Demand in the context you're discussing is a capitalist financial invention and a capitalist financial invention only. Yes, given that we're a capitalist economy it's important. See Keynes. So is technology and supply. Yes, and it is not infinite, because it encompasses both want for a product and ability to pay. The only possible relevant definition of the term in this discussion is the one that points to you being wrong. Also you know that even if every single good were completely free, demand would still not be infinite, right?
|
|
#
?
Jan 16, 2015 04:16
|
|
Waaaah the Christians are out to get me
|
Quantum Mechanic posted:Also you know that even if every single good were completely free, demand would still not be infinite, right? Um, excuse me, but my supply and demand graph clearly shows an asymptote there. mises.org posted:If you tell people … that medical care is going to be zero cost out of pocket, then at a zero price, the quantity of demand is going to be [all the way to the right] (of a supply and demand graph). You can’t provide that much medical care. … You could have everybody in the country working in the medical care field and you wouldn’t be able to provide as much as people will want if the price is truly zero. So what the government will then do is start to ration medical care according to some criteria of its own.
|
|
#
?
Jan 16, 2015 04:19
|
|
|
asdf32 posted:And how do people with pieces of paper buy things which can't be produced. This is sort of a chicken or egg discussion except it's actually clear which one has been fundamentally more limited/important. Note: we can literally print money, do print money, and are printing money at this moment. You don't seem to understand either that money exists as a convenient construct that represents what people produce (labor/goods whatever) and we've found ways to improve it over time, or that your demand for goods is limited by how much you are personally able to supply to others.
|
|
#
?
Jan 16, 2015 04:20
|
|
|
|
| # ? May 17, 2024 14:50 |
|
|
asdf32 posted:Demand in the context you're discussing is a capitalist financial invention and a capitalist financial invention only. Yes, given that we're a capitalist economy it's important. See Keynes. So is technology and supply. Right, but we're talking about financial terms. In a conversation about supply-side economics, it only makes sense to use the economic definitions of supply and demand. Claiming that demand is infinite in that context is a pretty stupid thing to claim, especially as an offhand remark as though that's a totally obvious conclusion to reach. You can try to pivot by claiming that you were using a colloquial, non-financial, or non-economic definition of demand, but that actually makes what you said even more dumb, not less.
|
|
#
?
Jan 16, 2015 04:25
|
|