...standard Brit policy for the colonies was to force all trade through England AND make em pay for the privilege too; the intent was to keep them rival cities down, and if you were a city with a strong economy, as was Boston in colonial days, you of course deeply resented this because you knew exactly what they were doing. Why do you think Boston was the northern capital of the revolution? It wasn't just because Sam Adams knew how to stage a good show, although that was certainly part of it.
People Are Finally Figuring Out: Austerity is Stupid
- Thread starter Banjo
- Start date
...standard Brit policy for the colonies was to force all trade through England AND make em pay for the privilege too; the intent was to keep them rival cities down, and if you were a city with a strong economy, as was Boston in colonial days, you of course deeply resented this because you knew exactly what they were doing. Why do you think Boston was the northern capital of the revolution? It wasn't just because Sam Adams knew how to stage a good show, although that was certainly part of it.
Consider the Laffer curve theory, which is relevant.
In summary this theory says that while tax rates go up, tax revenues after peaking at some point, go down to zero, as people are deterred from incorporating companies and even from sustaining them, which is important as 80% of tax money is corporate money.
Case study is Greece, where after late 2008 tax increases, GDP started to contract every year.
In summary this theory says that while tax rates go up, tax revenues after peaking at some point, go down to zero, as people are deterred from incorporating companies and even from sustaining them, which is important as 80% of tax money is corporate money.
Case study is Greece, where after late 2008 tax increases, GDP started to contract every year.
Consumption is not a driver? Do not agree.
Borrow to promote consumption? In most cases, NO Borrowing at all, which is called austerity.
If you plan to raise revenues by investments which in turn are fueled by borrowing, then your returns better be more than the cost of borrowing. If not, then walk further into the abyss or trick the borrowers with currency devaluation. If the creditors are domestic then you are throwing austerity in a different form. More than half of US creditors are domestic, so better watch out.
Toc, it is not surprising that you don't agree about consumption, but you have made no case that consumption is a driver. I guess you have ask, driver of what? Certainly it is not growth, unless you are so confused as to measure growth by spending on consumption.
I wonder if you read what I wrote becuase you repeat that you have to make money on your investment to pay back debt. Here is what I wrote that you quoted in your comment,
"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."
So, if you and I agree on that, then how do you defend borrowing to fund consumption? It would seem to me that the only borrowing you could defend would be for investment in the maintenance and growth of assets that can earn more than the cost of the debt. Consumption never does that.
You set up a straw man when you say that I suggest that there should be no borrowing. Granted, if a sovereign is insolvent it may not be possible to borrow and in that case the banks may not be able to lend, which makes borrowing difficult and expensive. The idea is to invest enough and constrain government spending and consumption 'stimulus' so that you don't get to that point.
Austerity is a result of not doing this in the first place...its not a choice, not a policy; its what happens when you can't borrow any more money because third parties that want to be paid back will not lend you any more money on the terms you can afford.
There is a foolish idea floating now that borrowing is a matter of unlimitted choice, that austerity is cause by a refusal to borrow. And that you can borrow to fund government spending that will create growth. That whole idea is a lie based on a false definition of what growth is. Politicians define growth as an increase in government spending and consumption. So, they can show growth by borrowing money and spending it. The conceit in this whole illusion is that the insolvent get to decide how much money they get to borrow and under what terms. Like Margaret Thatcher purportedly said, 'the trouble with Socialism is that eventually you run out of other peoples money.' The EU PIIGS have run out of other peoples money so they are at a point where they don't get to choose more debt, they followed a path that made them insolvent and 'austerity' is what it looks like when you are broke, its not a policy choice.
It is 'Alice in Wonderland' logic...spending is not growth, it just pushes a false GDP metric that does not increase wealth but instead destroys investment and makes everyone poorer and dumber. Growth that means increased wealth and a higher standard of living, is the result of increased present and expected future after tax income.
I wonder if you read what I wrote becuase you repeat that you have to make money on your investment to pay back debt. Here is what I wrote that you quoted in your comment,
"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."
So, if you and I agree on that, then how do you defend borrowing to fund consumption? It would seem to me that the only borrowing you could defend would be for investment in the maintenance and growth of assets that can earn more than the cost of the debt. Consumption never does that.
You set up a straw man when you say that I suggest that there should be no borrowing. Granted, if a sovereign is insolvent it may not be possible to borrow and in that case the banks may not be able to lend, which makes borrowing difficult and expensive. The idea is to invest enough and constrain government spending and consumption 'stimulus' so that you don't get to that point.
Austerity is a result of not doing this in the first place...its not a choice, not a policy; its what happens when you can't borrow any more money because third parties that want to be paid back will not lend you any more money on the terms you can afford.
There is a foolish idea floating now that borrowing is a matter of unlimitted choice, that austerity is cause by a refusal to borrow. And that you can borrow to fund government spending that will create growth. That whole idea is a lie based on a false definition of what growth is. Politicians define growth as an increase in government spending and consumption. So, they can show growth by borrowing money and spending it. The conceit in this whole illusion is that the insolvent get to decide how much money they get to borrow and under what terms. Like Margaret Thatcher purportedly said, 'the trouble with Socialism is that eventually you run out of other peoples money.' The EU PIIGS have run out of other peoples money so they are at a point where they don't get to choose more debt, they followed a path that made them insolvent and 'austerity' is what it looks like when you are broke, its not a policy choice.
It is 'Alice in Wonderland' logic...spending is not growth, it just pushes a false GDP metric that does not increase wealth but instead destroys investment and makes everyone poorer and dumber. Growth that means increased wealth and a higher standard of living, is the result of increased present and expected future after tax income.
By ignoring how the deficits largely got there in the first place?
<img src="http://talkingpointsmemo.com/images/deficit-causes.png">
And how many jobs were created with Bush's tax cuts during his administration, accounting for the steep losses that began just prior to his departure and that continued in force for a time after he was gone? In retrospect, what did the Bush tax cuts achieve, aside from budget deficits?
Brass, you tack up a graph that built on unexplained presumptions and conjectures within a model that has never been accurate and you do nothing to explain it...as if your ability to find a graph on the internet and copy paste should pass for intelligent comment; itâs cheerleading; it ain't football.
No spending variable in that Graph, huh. Spending level is just given, right? Doesn't matter; never stops; has no relationship to income, right? The whole deficit is the fault of the bastards and circumstances that didn't come up with the income. Revenue and Debt, its just like magic, its just gotta be there because I want it to. Reminds me of my little kid at the counry club at the pool; he kept coming around with part eaten ice cream cones and then throwing them on the ground, me sitting there reading The Atlantic, pretending to watch him. After I saw this three times, I asked him, "where you gettin those cones?" He said, "magic number." I said, "what number?" Then he told me my member number! After that I had a talk with the snack bar staff. Yeah, good graph, shows a lot.
Similarly, you post a selected sentence fragment attibuted to me out of context and without reference to numerous comments and explanation of proper tax policy that I espoused at length in my repeated comments in this very thread. Do, you think what you posted as quote is a fair representation of what my comment has been? If anything, my comment should stand for the proposition that not all taxes are the same. What do you think I was saying to Oldtime when he proposed broad brush 'tax stimulus'? What do you think I was saying when I suggested that the only tax cuts that promote growth are the ones that create incentives to invest? What do you think I meant when I suggested that all tax cuts should be judged by that consideration?
Are you thinking at all, or are you just jumping up down in your cute skirt and letter sweater; "Give me an 'L', give me an 'I', give me a 'B'!" Your comment is shallow misrepresented mindless parroted talking point ideology propaganda crap.
Most of the Bush tax policy did not make a lot of sense...most of it was the kind of Keynesian stimulus mistake that I pointed out to Oldtime. Glenn Hubbard doing the thinking for Bush went along with that crap to please his political opposition and it shows that Glenn has some demand side weakness...you can see that in the plan he produced for Romney which actually attacks investment in exchange for a lot of demand side tax cuts that have never worked. I loath to comment here on Obama; he's an amature, completely lost in the woods, what they call in Texas, a 'Fence Turtle.' Here is what his chief economic policy advisor for his failed policies, Larry Summers, recently said in a Financial Times Op-ED, "...for a country income is determined by spending." (FT, 4/30/12, p.11). So, much for the smartest man in the world...no wonder we are so screwed up...I guess if you apply that to your BS graph it means we are rich! The only part of the Bush tax cuts that worked were the ones that spoke to investment...cap gains and dividend cuts. Bush then went along with his political opposition and increased government spending and pushed consumption. Didn't he tell everyone to go shopping? Echo of 'Happy Monday;' Keynes gone mad; did you ever hear about 'Happy Monday' in Japan? They gave everyone money and then they told them to take Monday off and go shopping! That was 10 years ago...guess it didn't work! The part of Clinton's tax policy that worked was the capital gains reduction in his time also...along with the telecom deregulation that set up the tech boom...and the restrained spending that was forced on him by an adversary congress...and of course he screwed up by passing the tax favored subsidies to real estate investment drove the mal-investment that wiped out middle class savings recently. If you had your eyes open you could see that the Clinton administration advocated notable investment friendly tax reforms. The idea that you understand what I am saying as a partisan political position is your mistake.
No spending variable in that Graph, huh. Spending level is just given, right? Doesn't matter; never stops; has no relationship to income, right? The whole deficit is the fault of the bastards and circumstances that didn't come up with the income. Revenue and Debt, its just like magic, its just gotta be there because I want it to. Reminds me of my little kid at the counry club at the pool; he kept coming around with part eaten ice cream cones and then throwing them on the ground, me sitting there reading The Atlantic, pretending to watch him. After I saw this three times, I asked him, "where you gettin those cones?" He said, "magic number." I said, "what number?" Then he told me my member number! After that I had a talk with the snack bar staff. Yeah, good graph, shows a lot.
Similarly, you post a selected sentence fragment attibuted to me out of context and without reference to numerous comments and explanation of proper tax policy that I espoused at length in my repeated comments in this very thread. Do, you think what you posted as quote is a fair representation of what my comment has been? If anything, my comment should stand for the proposition that not all taxes are the same. What do you think I was saying to Oldtime when he proposed broad brush 'tax stimulus'? What do you think I was saying when I suggested that the only tax cuts that promote growth are the ones that create incentives to invest? What do you think I meant when I suggested that all tax cuts should be judged by that consideration?
Are you thinking at all, or are you just jumping up down in your cute skirt and letter sweater; "Give me an 'L', give me an 'I', give me a 'B'!" Your comment is shallow misrepresented mindless parroted talking point ideology propaganda crap.
Most of the Bush tax policy did not make a lot of sense...most of it was the kind of Keynesian stimulus mistake that I pointed out to Oldtime. Glenn Hubbard doing the thinking for Bush went along with that crap to please his political opposition and it shows that Glenn has some demand side weakness...you can see that in the plan he produced for Romney which actually attacks investment in exchange for a lot of demand side tax cuts that have never worked. I loath to comment here on Obama; he's an amature, completely lost in the woods, what they call in Texas, a 'Fence Turtle.' Here is what his chief economic policy advisor for his failed policies, Larry Summers, recently said in a Financial Times Op-ED, "...for a country income is determined by spending." (FT, 4/30/12, p.11). So, much for the smartest man in the world...no wonder we are so screwed up...I guess if you apply that to your BS graph it means we are rich! The only part of the Bush tax cuts that worked were the ones that spoke to investment...cap gains and dividend cuts. Bush then went along with his political opposition and increased government spending and pushed consumption. Didn't he tell everyone to go shopping? Echo of 'Happy Monday;' Keynes gone mad; did you ever hear about 'Happy Monday' in Japan? They gave everyone money and then they told them to take Monday off and go shopping! That was 10 years ago...guess it didn't work! The part of Clinton's tax policy that worked was the capital gains reduction in his time also...along with the telecom deregulation that set up the tech boom...and the restrained spending that was forced on him by an adversary congress...and of course he screwed up by passing the tax favored subsidies to real estate investment drove the mal-investment that wiped out middle class savings recently. If you had your eyes open you could see that the Clinton administration advocated notable investment friendly tax reforms. The idea that you understand what I am saying as a partisan political position is your mistake.
That was my point. And, therefore, neither would its continuation.
As for equating it to Keynesian policy, that's nonsense. Keynesian fiscal policy has a time and a place for stimulus and for consolidation. Bush's timing was off insofar as Keynes would be concerned, and let's not even begin to equate Bush's supply-side, tinkle-down tax policy with Keynes-style stimulus spending, shall we?
As an aside, your sophistry is most impressive. You made jem gush.
Brass, you didn't make a point. You quoted me out of context again to support a lame comment that is conclusory, does not respond to my comments and misrepresents the substance of what was wrong with the policy; you add nothing of substance; you only tatoo your ideological position. Clearly you would never answer any of my questions, so I'll answer: "No," you are not thinking, and you don't want to think. Thank God your comments are truncated.
Equating supply-side trickle-down with Keynesian policy is the very definition of not thinking. And yet, that is what you did. So here you are, in your own little skirt and letter sweater: "Give me an 'C', give me an 'O', give me a 'N'!" Don't even pretend you don't have a partisan agenda.