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Economics, Ecoshnomics!
By Lt. Ripley | December 31, 2008
Found this little “gem” over at Left in the West:
If monetary policy can’t induce spending and investment, the other option is to take the Keynesian approach and have the government start spending a hell of a lot of money or cut taxes. Presumably the tax cuts could target low-income people with a higher marginal propensity to consume (MPC). Under Keynesian theory, in a liquidity trap, rich people receiving tax cuts are likely just to hide the money under their beds, not do much in the way of increased spending. The money just gets pulled out of circulation rather than helping build the economy.
Q- What’s wrong with the above logic?
A- If you really can’t see it, watch this.
Dan Mitchell gives a great explanation of something that can be very complicated… It’s worth watching.
PS. Those richy riches don’t pull money out of circulation, they use it to build, produce, invest, and create. But, shhhhh… Don’t tell the socialists that; it’d ruin their fantasies.
Topics: Welfare State, Things That Suck, Stupid People Rule!, Economy, Zombie Apocalypse, Stupid things the Left does/says, Liberal Bias |
10 Responses to “Economics, Ecoshnomics!”
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December 31st, 2008 at 3:50 pm
It is possible for parts of our society to live simply off demand created by the wealthy - New York City has done that quite well. But for the most part, demand needs to be created in that part of society that buys consumer goods. The normal way to do that is jobs, but we’ve also used credit cards and home equity to keep the engine running. those things are pretty much tapped. So tax cuts make sense.
Your notion that the wealthy “use money to build, produce, invest, and create” is idyllic. Yes, it works that way to a degree - capital investment is important, but not ever dollar that the rich collect is reinvested that way - not even most of it. They’ve used the Bush tax cuts to invest in bubble assets - paper. They simply ran out of places to put all that money. That’s the reason for high marginal tax rates. You see, it’s not so simple as you think, or need to think.
That, and a lot of the capital investment is being done in China. American consumers are financing it.
You’ve done well to quote LITW - you’ve much more to learn. Keep going there!
January 2nd, 2009 at 1:55 pm
You are so off the wall in your ideas of the economy, that again I direct you to the video I linked to, and request that you site your sources to prove your dubious claims.
Just your first paragraph shows that you don’t actually read OR understand what I’m talking about.
Site your sources.
January 4th, 2009 at 8:51 am
The word is “cite”.
No need anyway - all you need do is explain to me how, from the end of World War II to the early 1980’s, despite high marginal tax rates, we had plenty of investment capital.
I’ll wait.
January 4th, 2009 at 9:05 pm
Seriously, Mark, what’s your problem with people with money?! Why the hatred?
I have two theories about you….
1.) You’re broke as shit and blame other people for your crappy station in life
OR (the more likely scenario)
2.) You do extremely well for yourself…college educated and whatnot, probably a nice house and a nice car…and with that, you’re riddled with guilt. You probably had either your parents or your grandparents put you through school…you had life handed to you, why shouldn’t everyone?
amirite?
January 5th, 2009 at 10:14 am
Mark, I’m going to stop approving your comments if you are going to play this game. Stick to the topic at hand, and to what my blog was about.
I don’t have to prove what it is YOU think my opinion is.
Let me remind you- Topic at hand- Keynesian theory (specifically as it relates to now and during the 30s) and the rich hiding money under their beds.
Now… GO!
January 5th, 2009 at 1:59 pm
Come to my blog sometime. I’ve never censored anyone, and don’t care if they wander off topic. It’s all just for fun.
I’m no expert on Keynesian theory, but from teh demand side, it only makes sense to put money in the hands of people who actually spend it. Giving tax breaks to millionaires simply creates surplus investment capital, which goes chasing investment opportunities, and soon runs out of opportunity. They then start investing foolishly, and we end up with a bubble economy. We’ve had two major bubbles now - the dot.com and real estate, both caused by tax cuts for the wealthy.
So you see, high marginal tax rates are actually a way of controlling capital and keeping things steady. There are also other side effects, but I’ll stop there.
Rusty - keep guessing. I am none of the above.
January 7th, 2009 at 5:45 pm
It sure is for fun… but there’s no first amendment rights on a private blog, just was giving you an fyi.
If you’re not an expert, perhaps you should brush up. Sure, give money back to those that pay taxes, then they’ll save, spend and invest more. But the bubble in the economy wasn’t caused by “rich folks” nor was it from investments.
High marginal tax rates just keep things going slowly… when taxes are low, and the market free, things grow faster. Economic bubbles should take care of themselves. Bail outs are just making things worse.
Look at my links… most “poor” people don’t pay taxes. In order to get a tax cut, you have to be paying taxes in the first place. I thought that was just logic.
January 8th, 2009 at 11:28 pm
Poor people simply pay different taxes - sales and payroll, for example.
Anyway, you sound nice in theory but don’t work in practice. I repeat what I said above, to which you responded with a threat to censor me:
all you need do is explain to me how, from the end of World War II to the early 1980’s, despite high marginal tax rates, we had plenty of investment capital.
Give it a go, genius.
January 9th, 2009 at 12:26 am
Um…only poor people pay sales tax?
To quote Chris Rock, “let’s cut the fuckin’ shit”…
Your ideal of society is everyone being 100% completely and totally equal, right? In your twisted little brain you have a set dollar amount that is “enough” for everyone to survive on…thus, you’ll steal from those who you feeeeeel make too much and give it to those that you feeeeeel don’t make enough, then we’d all be equal and all would be right with the world, correct?
Sorry to burst your bubble, but it America we’re guaranteed equality of opportunity, NOT equality of outcome.
January 9th, 2009 at 1:13 am
First, there’s no proof (which I asked you to provide) that there was “plenty” or even what you think plenty in this case means. Second, I answered that.
You are responsible for proving your own arguments, not me.