Ernst Blofeld wrote:
> On Feb 24, 9:55 am, Jeffrey Turner <jtur...@[EMAIL PROTECTED]
> wrote:
>
>>>No, that's not a necessary condition for the Laffer curve to be true.
>>>As a thought experiment, imagine 100 people at 50K/yr and a constant
>>>tax rate, and one person at 1 million per year and a marginal tax rate
>>>that suddenly increases to 100% for incomes above $500K. That one
>>>person will rationally choose more leisure over working for nothing
>>>(or less), and cut back his work activities to decrease his income to
>>>$500K in exchange for more free time. Which also reduces overall tax
>>>revenue.
>>
>>If there's half a million in work to be done, someone - probably plural
>>- will do it. Maybe ten more people at 50K each. And they'll consume
>>more than that one person ever would have.
>
>
> The consumption remark describes what is called the "marginal
> propensity to consume", ie the amount that will be spent (vs. saved)
> for an extra dollar of income. Keynes believed the rich had a lower
> propensity to consume because statistics showed that they saved more,
> resulting in "underconsumption." But Friedman has refuted that idea:
>
> ----
> Friedman described Keynes's theory of a declining propensity to
> consume as "very imaginative and thoughtful." But in A Theory of the
> Consumption Function (1957), he demonstrated that while the hypothesis
> seemed to make psychological sense, it was empirically false. In
> relating income to propensity to consume, Keynes had erred in not
> distingui****ng between "transitory" and "permanent" income. In fact,
> consumption does not decline as incomes generally rise.
Man, Friedman could bull**** with the best of 'em, eh? The wealthy
are taking out payday loans because their consumption is outstripping
their income? Transitory v. permanent income? Right.
> Economists across the political spectrum agreed with Friedman's
> refutation of Keynes; as the liberal Paul Krugman of Princeton (and of
> the New York Times op-ed page) noted recently, Friedman's ideas on the
> subject provide the foundation "of how economists think about spending
> and saving to this day."
Really? Do tell.
> The idea that the work will be done by others is faulty, I think. We
> want the work to be done by the most productive people possible;
Why? Who is the most productive person on an assembly line?
> in
> effect you are ruling out the mot efficient people for doing the job
> in favor of the less productive, resulting in lower overall
> productivity.
Nonsense. Even Gretzky was off the ice regularly in his day.
> In the entrepreneurial world--say, starting up a new
> technology company--there are a limited number of people who can pull
> off the job.
Really?
"Over the last year, dozens of new technology-based firms have started
operations in Berkeley, and City officials expect the trend to
continue."
http://www.ci.berkeley.ca.us/news/2000/00feb/020700HiTec.html
Yeah, the predictions weren't so hot, but if there were dozens of people
capable of starting up a technology company in just Berkeley, CA in just
one year then the talent pool can't be that limited.
> (As some people have put it, there are only 5,000 people
> in Silicon Valley, and they just keep rotating into new companies.) If
> you exclude them from the market via 100% taxes the companies will
> simply not get off the ground. Joe Blow coder or accountant is not
> going to have the skills to pull it off.
That's nonsense.
>>>The supply siders constantly harp on marginal rates. You can hardly
>>>accuse them of obfuscating marginal tax rates when that's a major part
>>>of their spiel.
>>
>>They postulate, without evidence, that the top marginal rates are too
>>high. Judging from the historical evidence, that doesn't seem to be the
>>case.
>
> The opponents are arguing against the concept of the Laffer curve,
> period, not matter what the marginal rates. And the researchers, such
> as Manikow, have some interesting results in showing that capital
> gains tax rates have a different curve than income tax rates.
The Laughable curve doesn't hold. You want to show us the poor economy
from the 1950s, when the top marginal tax rate was over 90%? Most
capital gains is on resold stocks that don't do much for either the
economy or the company that issued the stock.
>>>It's unclear why you think capping high incomes would have a positive
>>>effect down the income scale. The more likely outcome would be more
>>>lavish non-monetary compensation for executives and stockholders,
>>>combined with decreased economic activity that hurts working stiffs.
>>
>>Stocks and bonds as compensation should be just as heavily taxed.
>>Other non-monetary compensation would require hiring people to provide
>>the goods or services.
>
> There wouldn't be any difference, aside from a probable loss of
> overall human satisfaction. If the company provides a car rather than
> increase monetary compensation above some limit, the company car is
> simply substituting for what the employee would have got with a
> paycheck. The decrease in satisfaction comes from the employee having
> to accept the company picks for the car rather than his own
> preferences, plus the inherent inefficiences of purchasing products
> through an intermediate organization.
Sob. So everyone else has to suffer so that some million-a-year prick
in a pin-stripe suit can get everything he wants?
> You can see this to an extent with employer-purchased health
> insurance. The disconnect between the consumer and the provider via
> the intermediary results in inefficient allocations of resources.
> Unfortunately since health insurance can be provided by the employer
> with pre-tax dollars while private purchasers must use post-tax
> dollars the free market has a difficult time prevailing.
Private health insurance is a ridiculous luxury.
>>>>I'm going to guess that the top-down, authoritative structure of many
>>>>workplaces might have to change if there were 100% taxation, and that
>>>>wouldn't be such a bad thing.
>>
>>>That's just goofy. The jobs would be a lot more unstructured in the
>>>sense that many wouldn't exist anymore, I'll give you that. But why on
>>>earth would you think that the structure of the workplace would
>>>change? All the socialist paradises out there are run pretty much the
>>>same way as capitalist workplaces, only badly.
>>
>>Because a workplace that eliminates pointy-haired bosses would attract
>>more workers than one which doesn't. And cooperatively run enterprises
>>often do quite well.
>
> Uh, no. The PHBs are actually pretty good at filling customer needs,
> while people like me mostly want to solve software puzzles and do cool
> stuff. They have their role, I have mine.
Advertising creates "needs." Your role is propaganda, are you well
paid?
--Jeff
--
It is only those who have neither
fired a shot nor heard the shrieks
and groans of the wounded who cry
aloud for blood, more vengeance, more
desolation. War is hell.
--William Te***seh Sherman
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