POLL: Do you believe that supply-side economics is legitimate economic theory?

[Pa(b)st Prime]

I'll be blunt: If Pedro and Maria aren't washing a rich guys car, busing his dishes, watering his lawn or cleaning the stall in his office then what are they skilled to do? The poor work at the invitation of the leisure class.

In a service economy/society with an unskilled minority/immigrant class becoming a rapidly dominant demographic the continued enrichment of the upper-muddle class is PARAMOUNT to the pursuit of semi-full employment.

It matters little if the rich "hoard" their money. Are they keeping it under a mattress? Hardly. After paying their massive tax bill they might put it in Treasuries which helps float our national debt. Or they put it in CD's helping the balance sheets of our troubled banks. If they buy stocks they're bringing in buying support to a market needing investment. Any activity short of lighting cigars with C-Notes creates utility in exchange for a nominal rate of return.

 

[jueco2005]

Not quite so..................the soviet union and cuba did not have 100% tax revenue. Where did you get that from???

Quote from 5yrtrader:

2 Major problems with the laffer curve:

1) He assumes that at 0% tax rate the government gets no revenue (which is obviously true) but also at 100% tax rate the government receives no revenue. (This is not true, the Soviet Union had more or less 100% tax rates and the government still had revenue) Conservatives usually use the laffer curve to claim that they should lower taxes from their current rates, when there is no evidence that lower the tax rates from where we are would actually increase government revenue..

That leads me to #2 and most important

2) Why in the world would anyone want a government to maximize its revenue?? I think this is why you don't here about it much, Democrats know its a defunct theory and maximizing government revenue goes againist everything Republicans claim they are for.

We currently have huge deficits, no one is claiming now that lowering taxes would help us lower the deficit, which is exactly what Reagan and "Supply-siders" claim would happen.

Although it is true that at some point between 0-100% tax rate the government would maximize revenue, there is more to the laffer curve than that.

5yr

 

[5yrtrader]

Quote from jueco2005:

Not quite so..................the soviet union and cuba did not have 100% tax revenue. Where did you get that from???

It was for all intents and purposes 100% tax rate. You worked and the government distributed money to you. It was a completely centralized and planned economy.

 

[milktruck]

how would a direct transfer to consumers not allocate the money more efficiently to capitalists via the market?

 

[jueco2005]

That's correct but there was no 100% tax. I was there.

Quote from 5yrtrader:

It was for all intents and purposes 100% tax rate. You worked and the government distributed money to you. It was a completely centralized and planned economy.

 

[Pa(b)st Prime]

Quote from 5yrtrader:

It was for all intents and purposes 100% tax rate. You worked and the government distributed money to you. It was a completely centralized and planned economy.

In theory but that wasn't the application. The U.S.S.R. swapped resources-even arms- for the best currency of all-anything not resembling a ruble. Thus they were not some mythical, self sufficient socialist utopia.

 

[Cesko]

....... I laugh at the demos who say they will work harder if you raise their taxes, raise them to 95% then, see how hard they work.

Or if they can, cheat on their taxes while moralizing about selfish right-wing bastards.

 

[Mav88]

sorry jueco, but econ 101 is trash, as I said econ is pseudo science so i don't give a crap about what any of your books say.

Exe: the supply-demand equilibrium point is a bunch of garbage, I have never seen any market reach equilibrium where all bids and offers are met and prices are flat for any decent length of time. One look at a price chart tells you that markets are always far from equilibrium.

Marginal utility is also kind of dumb, etc.

btw in pseudo sciences, the '101' class keeps changing anyway. Samuelson I believe has been revised quite a bit. Do we need anymore evidence than the constant disagreements among leading economic figures and then constantly incorrect predictions?

 

[Mav88]

I doubt the laffer curve would even apply in a command and control economy, the Soviet Union is a bad example.

 

[Thunderdog]

Quote from Mav88:

Economics is psychology, therefore it is not an empirically based science. The fact that money is a defined quantifiable unit gives it the veneer of science. There are some definite tendencies though such as too much cash= inflation, but that's not a scientific law.

Supply side is as good as most anything else then, one thing is for sure: the Laffer curve is a logical necessity and not eally revolutionary. There must lie some tax rate between 0 and 100% that maximizes government revenue, it's almost trivial.

The problem with liberalism (basically economics and law based entirely on someone's personal idea of justice) is that there are certain psychological truisms that they ignore, such as that incentives matter. You cannot change tax rate and government redistribution without changing economic incentives. I laugh at the demos who say they will work harder if you raise their taxes, raise them to 95% then, see how hard they work.

Yes and no. I agree that economics is at best a social science and that it is nowhere near a pure, hard science. However, in the main, it is not without value. Further, I don't think that all economic theories are created equal, as you alluded in the first sentence of your second paragraph. Supply-side has less to do with economics than it has to do with politics. It is not so much an area of study as it is an ideology. Most (non-partisan) people involved in the serious study of economics consider trickle-down economics laughable at best. Therefore, let's at least call supply-side what it is: the Scientology of economics. Again, let me stress that I agree with your contention that the study of economics is not a true science. However, by way of comparison, supply-side is to economics what creationism is to science.