If you want to raise money with taxes you have to let people make money first. They make money from investment; jobs come from investment...all spending, all taxes are funded by income from investment in the past (savings), income from assets presently (income), or future income from assets invested in (debt). If you don't invest in the assets then the future income from the assets declines and you can't pay your debts for the money you already consumed. The obvious conclusion is that you should go light on taxing investment. Do you see how a cut in Social Security tax will not help you though?
People Are Finally Figuring Out: Austerity is Stupid
- Thread starter Banjo
- Start date
kind of, I make really good widgets, they don't really save you any money, but people like them, but before they can save up enough money to buy one, the government comes in and takes their savings away. If they would just let me get first crack at that money I would gladly pay taxes on my profit.
I suppose the way they look at it is, what difference does it make if we get it from them first or you second?
The money that you call to be made from investment is currently going to feed the debt. Governments make money from consumption which keeps the industries humming and people employed and paying their taxes. If end of it all, people have savings then they invest or upgrade their consumption quality or quantity.
Countries in huge debts cannot take more debt to make investments as the interest they pay (due to bad debt rating) will be much higher than the returns on the investments. What is the chance of US economy growing by 6-7% a year?
The most they can do it to divert investment from one industry to another example: from defense to healthcare or city decoration budgets to industries that feed exports etc. etc. That is called austerity in many ways.
Running an economy is in many ways running a small business shop, however in economy case the dirty word 'POLITICS' comes in. That screws up many decisions and hard pills are not taken and situation goes from bad to worse.
Toc, consumption is a surplus. There is no such thing as a consumer or a consumer economy. There is only producers who have surplus to consume or who are subsidizing others to consume. Consumption is never a driver, it is based on a surplus of production. If you borrow to promote consumption, then you are borrowing agains future production. If you do not invest; you do not get the future production. Debt only makes sense if you invest the debt in assets that have a future income stream that can pay the debt service and retire the debt. The situation where you cannot invest becasue you cannot borrow is a result of prior borrowing that was not invested in assets that can pay the debt back. If you buy into that and believe that now you cannot ivest becuase in the past you did not invest then you are hopeless. In any present economy there is income. The issue is making investment in assets before anything else...its basic insolvency behavior...when you are insolvent, the first thing you need to do is protect your income (that is the investment in and maintenance of assets). Once you secure your income, you decide what debt and ongoing expense you can pay after what is required to secure your income. That is called a reorganization work out. If you don't secure your income you get liquidated.
Well, this place is getting to the point of being useless to me now anyway, so I might as well just post uselessly in the sure knowledge that, as usual, no one will take away the correct conclusion.
Growth comes from this simple process: someone produces something that makes him some money, he then spends that money on what someone else local to him is making, and so on. In this way a small place with not much money, like say New Amsterdam in the 1600's, grows into a big place with scads of money, like say New York today.
It's the local part that counts: nations aren't the proper unit of economic analysis; cities are. New York City's economy is a separate and distinct thing from LA's, even if the two are, by way of sheer historical accident, part of the same nation. New York probably trades more with Philadelphia than it does with LA, and LA probably exchanges more goods and services with San Diego than it does with Chicago.
A city, or if you prefer, a region, since New York's economy takes in all of southeastern New York state, the northern half of NJ, Long Island, and Connecticut up to around Stamford, grows by producing stuff for itself, and exporting the surplus. The worst thing that can happen to a city is for it to have wild success exporting a single thing, like Detroit and cars, Rochester and photographic film, or Battle Creek and cereal. What happens then is that the entire economy becomes distorted around that single thing, and everything else withers. Cities that last and grow have a wide variety of exports.
"Investment", "consumption", "income", all that, are byproducts of the above. Statistics. They measure, but they don't explain. For growth to happen, you need a person with a good idea, the competence to see it through, the passion for the hard work it takes, and, finally, for all of that to take place in the context of a wider but local economy that will be open to buying what he produces and open to financing its growth if it takes off. Detroit wound up producing cars because New York bankers were skeptical of the industry, for instance. Fortunately they don't make dumb mistakes like that often enough to kill NYC's economy.
The crucial thing about investment, if you're going to obsess on that, is this: is the place you're looking at sucking up all the investment money that place produces and, ideally, more, or is it letting it go to other places? Detroit after WWII exported capital, a sure sign that its days of growth were over. Germany today does the same, and for the same reason: its businessmen don't see enough opportunity in Germany for all their investable funds, so they wind up using those funds elsewhere. Germany today is like Detroit in the fifties: it's wildly successful at exporting cars, AND it exports capital. If it keeps that up it will suffer the same fate as the Motor City.
Austerity and all the rest of that stupid nonsense don't figure in any of this because they don't count. What happened in the eurozone was a bunch of countries let go of their sovereignty, and wound up as economic colonies of Germany, the most powerful member of the club they formed. Anyone who's bothered to read and understand Jane Jacobs knew this would happen; watching it unfold has been both boring because it's so predictable and exasperating because of all the total bs you have to put up with, with people mouthing off as they, as usual, use current events to justify their preconceived notions that have precisely dick to do with what's actually happening in the real world.
The euro needs to go because it's the opposite of what Europe needs. Europe needs, and prospered, under a regime of multiple, local, and flexible currencies. It has predictably been laid low by a currency that is the precise opposite: single, continent-wide, and fixed. This has nothing to do with investment, consumption, taxes, or austerity: it's because all growth, like all politics, is local. But the world is dominated by careerists like the bureaucrats of Brussels who's interest is in making things as un-local as possible, economists who measure everything and can't explain a thing, and ideologues who know everything about nothing at all.
Growth comes from this simple process: someone produces something that makes him some money, he then spends that money on what someone else local to him is making, and so on. In this way a small place with not much money, like say New Amsterdam in the 1600's, grows into a big place with scads of money, like say New York today.
It's the local part that counts: nations aren't the proper unit of economic analysis; cities are. New York City's economy is a separate and distinct thing from LA's, even if the two are, by way of sheer historical accident, part of the same nation. New York probably trades more with Philadelphia than it does with LA, and LA probably exchanges more goods and services with San Diego than it does with Chicago.
A city, or if you prefer, a region, since New York's economy takes in all of southeastern New York state, the northern half of NJ, Long Island, and Connecticut up to around Stamford, grows by producing stuff for itself, and exporting the surplus. The worst thing that can happen to a city is for it to have wild success exporting a single thing, like Detroit and cars, Rochester and photographic film, or Battle Creek and cereal. What happens then is that the entire economy becomes distorted around that single thing, and everything else withers. Cities that last and grow have a wide variety of exports.
"Investment", "consumption", "income", all that, are byproducts of the above. Statistics. They measure, but they don't explain. For growth to happen, you need a person with a good idea, the competence to see it through, the passion for the hard work it takes, and, finally, for all of that to take place in the context of a wider but local economy that will be open to buying what he produces and open to financing its growth if it takes off. Detroit wound up producing cars because New York bankers were skeptical of the industry, for instance. Fortunately they don't make dumb mistakes like that often enough to kill NYC's economy.
The crucial thing about investment, if you're going to obsess on that, is this: is the place you're looking at sucking up all the investment money that place produces and, ideally, more, or is it letting it go to other places? Detroit after WWII exported capital, a sure sign that its days of growth were over. Germany today does the same, and for the same reason: its businessmen don't see enough opportunity in Germany for all their investable funds, so they wind up using those funds elsewhere. Germany today is like Detroit in the fifties: it's wildly successful at exporting cars, AND it exports capital. If it keeps that up it will suffer the same fate as the Motor City.
Austerity and all the rest of that stupid nonsense don't figure in any of this because they don't count. What happened in the eurozone was a bunch of countries let go of their sovereignty, and wound up as economic colonies of Germany, the most powerful member of the club they formed. Anyone who's bothered to read and understand Jane Jacobs knew this would happen; watching it unfold has been both boring because it's so predictable and exasperating because of all the total bs you have to put up with, with people mouthing off as they, as usual, use current events to justify their preconceived notions that have precisely dick to do with what's actually happening in the real world.
The euro needs to go because it's the opposite of what Europe needs. Europe needs, and prospered, under a regime of multiple, local, and flexible currencies. It has predictably been laid low by a currency that is the precise opposite: single, continent-wide, and fixed. This has nothing to do with investment, consumption, taxes, or austerity: it's because all growth, like all politics, is local. But the world is dominated by careerists like the bureaucrats of Brussels who's interest is in making things as un-local as possible, economists who measure everything and can't explain a thing, and ideologues who know everything about nothing at all.
Trefoil, your history and localism is complete garbage on its face. New York was a Dutch Colony! You don't think they traded far afield? The biggest problem in colonial Boston was the lack of specie to finance merchant trade....trade with England not Dorchester! So merchants began lending to each other, using thier capital when their ship was in so to speak...and then the merchant paper was used as currency...because there was a local shortage of currency and the British trading partners charged usurous interest for consignment...so then we got banking and bank notes...and rail roads were funded...Everywhere you look, Philadelphia, Charleston, New Orleans, Providence the growth was from trade across the land and the sea. Even your reference to Rochester and the superficial idea that the City exists because of Kodak shows ignorance of history. Rochester's nick name is the 'Flour City' its real hey day was when it milled and traded grains from the west to the east. The Genesee falls had mills, the canals and rail roads took the flour to eastern cities. Sam Patch dove off the falls when he wasn't doing diving acts in Patterson,NJ another mill town based on trade....the real issue is how these cities re make themselves or not, whether they reinvest in growth or try to milk the old infrastructure beyond a tipping point. Rochester was also the home of Xerox which was as important as Kodak before it moved. It is still the home of Baush & Lomb...I think that before the last decade Rochester had the unexpected fun fact of having more export business per capita that any other U.S. city. How about Greenwhich Village in NYC, populated by students, merchants and bankers now giving way to a new .com wave...you think that is segmented local market phenomenon?
Oldtime, you can't like what I said and what he said too; you must be completely illogical....please stop designing tax policies.
Oldtime, you can't like what I said and what he said too; you must be completely illogical....please stop designing tax policies.
