# 2011: Economic growth to hit 3-4%! **URL:** \ **Category:** Great Debates\ **Created:** [December 30, 2010, 11:38pm UTC](https://boards.straightdope.com/t/2011-economic-growth-to-hit-3-4/565890 "2010-12-30T23:38:19Z")\ **Posts on this page:** 20\ **Page:** 3
**Author:** ![emacknight](https://avatars.discourse-cdn.com/v4/letter/e/3ec8ea/32.png) [@emacknight](https://boards.straightdope.com/u/emacknight)\ **Post date:** [January 2, 2011, 6:50am UTC](https://boards.straightdope.com/t/2011-economic-growth-to-hit-3-4/565890/41 "2011-01-02T06:50:35Z")
> [@Robot\_Arm](#): > > An interesting post, but who are you debating with? Eight paragraphs arguing against government stimulus of the economy, and the subject hadn’t even been brought up yet.[sup]1[/sup] Is it possible you meant to post this in some other thread? > > 1. There was a post by **Digital Stimulus** , but I think that means something else. I think it’s autogenerated when someone criticizes libertarians. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [January 2, 2011, 7:10am UTC](https://boards.straightdope.com/t/2011-economic-growth-to-hit-3-4/565890/42 "2011-01-02T07:10:20Z")
> [@Sam\_Stone](#): > > . . . and attempting to maintain the status quo by bribing consumers with stimulus money to buy **what they don’t want or need** is . . . . . . not what Keynesian policy does. If a consumer has money in his hand, whether it came from his employer or from a government handout or from an inheritance or from a printing press in his basement, he buys what **he** wants with it and nothing else. This applies even with food stamps – you can’t buy anything but food with them, but you don’t have to buy food with them if you don’t want food. Really, where are you getting this? ---
**Author:** ![Digital\_Stimulus](https://avatars.discourse-cdn.com/v4/letter/d/aeb1de/32.png) [@Digital\_Stimulus](https://boards.straightdope.com/u/Digital_Stimulus)\ **Post date:** [January 2, 2011, 5:02pm UTC](https://boards.straightdope.com/t/2011-economic-growth-to-hit-3-4/565890/43 "2011-01-02T17:02:12Z")
> [@Robot\_Arm](#): > > 1. There was a post by **Digital Stimulus** , but I think that means something else. Oh, sure, bring _me_ into it. Just 'cuz money matters require digits. Hmph. I’ll have you know that there’s _plenty_ of other stuff I can go stimulate! ---
**Author:** ![HRoark43](https://avatars.discourse-cdn.com/v4/letter/h/bc8723/32.png) [@HRoark43](https://boards.straightdope.com/u/HRoark43)\ **Post date:** [January 2, 2011, 6:11pm UTC](https://boards.straightdope.com/t/2011-economic-growth-to-hit-3-4/565890/44 "2011-01-02T18:11:58Z")
> [@BrainGlutton](#): > > And, how did Bush “get out of” [the Enron mess](http://en.wikipedia.org/wiki/Enron_scandal)? The company went bankrupt, employees lost their pensions, some executives went to prison or the grave, the door to the empty barn was closed by the Sarbanes-Oxley Act, and the whole thing played out . . . exactly as it would have if there had been no tax cuts. Come to think of it, why would anyone even **mention** tax cuts in this connection? Actually if there had been no tax cuts even fewer people would have had money to spend. We’d have that problem on TOP of Enron. My point was Bush’s tax cuts helped us not get plunged into a deeper financial crisis after 9/11 and Enron - not that it prevented them from happening. ---
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [January 2, 2011, 7:24pm UTC](https://boards.straightdope.com/t/2011-economic-growth-to-hit-3-4/565890/45 "2011-01-02T19:24:13Z")
> [@HRoark43](#): > > My point was Bush’s tax cuts helped us not get plunged into a deeper financial crisis after 9/11 and Enron - not that it prevented them from happening. There is no way to prove that. You have no way of knowing what would have happened without the tax cuts. It’s all just your opinion. ---
**Author:** ![HRoark43](https://avatars.discourse-cdn.com/v4/letter/h/bc8723/32.png) [@HRoark43](https://boards.straightdope.com/u/HRoark43)\ **Post date:** [January 2, 2011, 8:18pm UTC](https://boards.straightdope.com/t/2011-economic-growth-to-hit-3-4/565890/46 "2011-01-02T20:18:35Z")
> [@Fear\_Itself](#): > > There is no way to prove that. You have no way of knowing what would have happened without the tax cuts. It’s all just your opinion. Ok. Name me one nation that has ever taxed itself into prosperity. ---
**Author:** ![GIGObuster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/gigobuster/32/421_2.png) [@GIGObuster](https://boards.straightdope.com/u/GIGObuster)\ **Post date:** [January 2, 2011, 8:33pm UTC](https://boards.straightdope.com/t/2011-economic-growth-to-hit-3-4/565890/47 "2011-01-02T20:33:30Z")
> [@HRoark43](#): > > Ok. Name me one nation that has ever taxed itself into prosperity. I would say that the old chestnut of “can you name me one nation that has ever taxed itself into prosperity?” is the poster child of straw man questions. **Fear Itself** is not saying that we would be prosperous, only that taxes would not send us into a deeper financial crisis. I would say that if the government had proper taxation income it would have been better prepared to deal with the lean years, what is madness is to not tax when the cows are fat. It is a very old lesson that was even told by the ancients… ---
**Author:** ![HRoark43](https://avatars.discourse-cdn.com/v4/letter/h/bc8723/32.png) [@HRoark43](https://boards.straightdope.com/u/HRoark43)\ **Post date:** [January 2, 2011, 8:45pm UTC](https://boards.straightdope.com/t/2011-economic-growth-to-hit-3-4/565890/48 "2011-01-02T20:45:20Z")
> [@GIGObuster](#): > > I would say that the old chestnut of “can you name me one nation that has ever taxed itself into prosperity?” is the poster child of straw man questions. > > **Fear Itself** is not saying that we would be prosperous, only that taxes would not send us into a deeper financial crisis. > > I would say that if the government had proper taxation income it would have been better prepared to deal with the lean years, what is madness is to not tax when the cows are fat. > > It is a very old lesson that was even told by the ancients… Well, if you cut taxes you spur hiring. If you place bigger financial burdens on those who produce jobs and wealth guess what they’re going to be doing… spending more money on taxes which means less on investing and hiring. Plus employers also flee the country when taxes are too high. ---
**Author:** ![wmfellows](https://avatars.discourse-cdn.com/v4/letter/w/c2a13f/32.png) [@wmfellows](https://boards.straightdope.com/u/wmfellows)\ **Post date:** [January 2, 2011, 8:46pm UTC](https://boards.straightdope.com/t/2011-economic-growth-to-hit-3-4/565890/49 "2011-01-02T20:46:40Z")
> [@HRoark43](#): > > Ok. Name me one nation that has ever taxed itself into prosperity. \*\*United Kingdom, all of Western Europe. \*\* When good tax systems were set up, the ability to invest in infrastructure went up dramatically. In my business in Africa, it is the states that are unable to tax the population in a broad and fair manner that are the most utterly screwed up. Or lacking infrastructure. ---
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [January 2, 2011, 8:48pm UTC](https://boards.straightdope.com/t/2011-economic-growth-to-hit-3-4/565890/50 "2011-01-02T20:48:21Z")
> [@HRoark43](#): > > Ok. Name me one nation that has ever taxed itself into prosperity. America. Bill Clinton raised the top marginal tax rates, and we had the best growth in the GDP since WWII. If you are arguing that we should set tax rates so as to increase GDP growth , history says [the economy grows the fastest when the top marginal tax rates are 88%](http://open.salon.com/blog/tony_wang/2010/09/20/the_effect_of_marginal_tax_rates_on_gdp_growth): > [@](#): > > In fact, if you use history as your guide, then we should set the top marginal rate at 88 percent. Why 88 percent? Because during the time that this was the top marginal rate, the [GDP](http://en.wikipedia.org/wiki/Gross_domestic_product) expanded at a rate that even countries like China and Brazil would envy – 17.5 percent. And we need to make sure that we set it at 88 percent, not 86.45 percent. Setting the tax rate at that level historically provided us with GDP contraction of 5.9 percent. > > As for the Bush tax cuts spurring economic growth, hardly. GDP growth with the 35 percent top marginal rate these tax cuts established averaged 1.6 percent. During the period before those tax cuts, the top marginal rate was 39.6 percent and economic growth averaged 3.9 percent. Economic growth during that period lagged the periods when the top marginal rate was 70 percent and 92 percent, when GDP increased by 4.2 percent annually. > > Proponents of tax cuts often talk about how the economy jumped after Reagan cut taxes from 70 percent to 50 percent. Well, that makes a great story, but it’s just not true. When tax rates were 70 percent, GDP growth averaged 4.2 percent. After Reagan cut the top marginal rate to 50 percent, GDP growth was 3.5 percent. ---
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [January 2, 2011, 8:49pm UTC](https://boards.straightdope.com/t/2011-economic-growth-to-hit-3-4/565890/51 "2011-01-02T20:49:52Z")
> [@HRoark43](#): > > Well, if you cut taxes you spur hiring. This is historically false. Name one period of tax reduction that was followed by a significant growth in employment. ---
**Author:** ![HRoark43](https://avatars.discourse-cdn.com/v4/letter/h/bc8723/32.png) [@HRoark43](https://boards.straightdope.com/u/HRoark43)\ **Post date:** [January 2, 2011, 8:50pm UTC](https://boards.straightdope.com/t/2011-economic-growth-to-hit-3-4/565890/52 "2011-01-02T20:50:55Z")
> [@wmfellows](#): > > \*\*United Kingdom, all of Western Europe. \*\* Ummm have you seen their unemployment rates? They’ve always been higher than the US. > [@](#): > > When good tax systems were set up, the ability to invest in infrastructure went up dramatically. In my business in Africa, it is the states that are unable to tax the population in a broad and fair manner that are the most utterly screwed up. Or lacking infrastructure. Africa has other problems besides taxes. ---
**Author:** ![wmfellows](https://avatars.discourse-cdn.com/v4/letter/w/c2a13f/32.png) [@wmfellows](https://boards.straightdope.com/u/wmfellows)\ **Post date:** [January 2, 2011, 8:52pm UTC](https://boards.straightdope.com/t/2011-economic-growth-to-hit-3-4/565890/53 "2011-01-02T20:52:50Z")
> [@HRoark43](#): > > Well, if you cut taxes you spur hiring. No. One _ **may** _ spur hiring. It rather depends on where the binding constraints are. If there is no demand, then hiring will not occur. Tax in the Anglo Saxon systems is not generally a large cost driver on hiring and firing, relative to other drivers. Your erecting Tax as your anti grail has about all of the analytical clarity and perspicaciousness of Marxists and their classes. > [@](#): > > If you place bigger financial burdens on those who produce jobs and wealth guess what they’re going to be doing… spending more money on taxes which means less on investing and hiring. You’ve assumed a right huge amount of things in this statement. In real economic analysis by proper economists, one recognizes that there are always trade offs - taxing for investment in productive infrastructure or the creation of future opportunity (such as in education or perhaps to support basic income to enable labour flexibility and health of the working population) can very well produce rather larger returns to the economy than the tax costs. Can of course does not mean it always does so. > [@](#): > > Plus employers also flee the country when taxes are too high. Yes, and actual data driven empirical research suggest that is at levels rather higher than seen in any of the Anglo Saxon countries. ---
**Author:** ![wmfellows](https://avatars.discourse-cdn.com/v4/letter/w/c2a13f/32.png) [@wmfellows](https://boards.straightdope.com/u/wmfellows)\ **Post date:** [January 2, 2011, 8:59pm UTC](https://boards.straightdope.com/t/2011-economic-growth-to-hit-3-4/565890/54 "2011-01-02T20:59:19Z")
> [@HRoark43](#): > > Ummm have you seen their unemployment rates? They’ve always been higher than the US. Yes, I have. I work in the region. And no, they have not "always"been higher than the US. For the past two decades they have. The preceding two decades rates were in the same range and even lower. Of course your statement was with respect to achieving prosperity. Current unemployment rates have fuck all to do with your question, which was countries that ‘taxed themselves to prosperity’ - which was so clumsily phrased really to allow for any kind of proper tax system. Insofar as Western Europe overall dominates rankings for wealth, quality of life, longevity, per capita income (and taken all together easily competes with the US), pointing to current unemployment is an absurd and impoverished response. > [@](#): > > Africa has other problems besides taxes. Actually no, taxation is in fact a very core problem. I do extensive business in Africa (and with quite good margins in many places), I have actual real live experience mate, so spare me anything second hand stereotypes dating from the 1970s. Right along with taxation - working systems - is investment in infrastructure and removing of horrible anti-business regulation that serves no purpose other than to make idiot Leftist Labour and anti-Market activists all starry eyed. ---
**Author:** ![HRoark43](https://avatars.discourse-cdn.com/v4/letter/h/bc8723/32.png) [@HRoark43](https://boards.straightdope.com/u/HRoark43)\ **Post date:** [January 2, 2011, 9:01pm UTC](https://boards.straightdope.com/t/2011-economic-growth-to-hit-3-4/565890/55 "2011-01-02T21:01:13Z")
> [@wmfellows](#): > > No. One _ **may** _ spur hiring. It rather depends on where the binding constraints are. If there is no demand, then hiring will not occur. Tax in the Anglo Saxon systems is not generally a large cost driver on hiring and firing, relative to other drivers. > > Your erecting Tax as your anti grail has about all of the analytical clarity and perspicaciousness of Marxists and their classes. Really? So if I’m making enough money to buy a yacht and you raise luxury taxes on the yacht, this might be enough to deter the purchase of said object. What happens to the workers who might have built the yacht? You do realize that the primary way to reduce an activity is to tax it… right? Supply and demand applies to taxes - when you raise taxes you raise the price of a good. That makes it less desirable. This is basic economics, is it not? > [@](#): > > You’ve assumed a right huge amount of things in this statement. > > In real economic analysis by proper economists, one recognizes that there are always trade offs - taxing for investment in productive infrastructure or the creation of future opportunity (such as in education or perhaps to support basic income to enable labour flexibility and health of the working population) can very well produce rather larger returns to the economy than the tax costs. Can of course does not mean it always does so. Oh boy, I’m going to be accused of trolling if I voice my opinion on this. Why can’t we privatize education and infrastructure? > [@](#): > > Yes, and actual data driven empirical research suggest that is at levels rather higher than seen in any of the Anglo Saxon countries. Uh, news flash… employers flee the United States for offshore hiring all the time. Part of it is wages, but part of it is also taxes. Last I heard the U.S. is a (mostly) anglo-saxon country. ---
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [January 2, 2011, 9:05pm UTC](https://boards.straightdope.com/t/2011-economic-growth-to-hit-3-4/565890/56 "2011-01-02T21:05:51Z")
> [@HRoark43](#): > > Supply and demand applies to taxes - when you raise taxes you raise the price of a good. That makes it less desirable. This is basic economics, is it not? No, it is fantasy economics, the economics of what you wished the economy was like, not how the economy has historically performed in response to tax cuts. There is no historical correlation between tax cuts and growth in the GDP. You would like it to be so, but it just doesn’t happen. ---
**Author:** ![Johnny\_L.A](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/johnny_l.a/32/1084_2.png) [@Johnny\_L.A](https://boards.straightdope.com/u/Johnny_L.A)\ **Post date:** [January 2, 2011, 9:06pm UTC](https://boards.straightdope.com/t/2011-economic-growth-to-hit-3-4/565890/57 "2011-01-02T21:06:59Z")
> [@Fear\_Itself](#): > > You would like it to be so, but it just doesn’t happen. But if he keeps saying it, it might! ---
**Author:** ![Robot\_Arm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/robot_arm/32/18280_2.png) [@Robot\_Arm](https://boards.straightdope.com/u/Robot_Arm)\ **Post date:** [January 2, 2011, 9:08pm UTC](https://boards.straightdope.com/t/2011-economic-growth-to-hit-3-4/565890/58 "2011-01-02T21:08:31Z")
> [@HRoark43](#): > > If you place bigger financial burdens on those who produce jobs and wealth guess what they’re going to be doing… spending more money on taxes which means less on investing and hiring. I thought the libertarian mantra was that investing and hiring create wealth, not consume it. I mean, nobody’s going to hire a salesman for $100,000 per year unless they think he can bring in more than that in new revenue. If the conditions are right, you’ll hire that person even if you have to borrow the money to do it. You’d be a fool not to. So which is it, do hiring and investment consume revenue, or generate it? ---
**Author:** ![HRoark43](https://avatars.discourse-cdn.com/v4/letter/h/bc8723/32.png) [@HRoark43](https://boards.straightdope.com/u/HRoark43)\ **Post date:** [January 2, 2011, 9:10pm UTC](https://boards.straightdope.com/t/2011-economic-growth-to-hit-3-4/565890/59 "2011-01-02T21:10:22Z")
> [@wmfellows](#): > > Yes, I have. I work in the region. > > And no, they have not "always"been higher than the US. For the past two decades they have. The preceding two decades rates were in the same range and even lower. > > Of course your statement was with respect to achieving prosperity. Current unemployment rates have fuck all to do with your question, which was countries that ‘taxed themselves to prosperity’ - which was so clumsily phrased really to allow for any kind of proper tax system. > > Insofar as Western Europe overall dominates rankings for wealth, quality of life, longevity, per capita income (and taken all together easily competes with the US), pointing to current unemployment is an absurd and impoverished response. Yeah, we’ll see about that one. Last I heard the Euro was in trouble with Ireland and Greece teetering on collapse and Spain tumbling closely after. They may be wealthy on paper but all those years of social safety nets is about to drain them dry. > [@](#): > > Actually no, taxation is in fact a very core problem. In which countries? I’d say taxes are the _least_ of Zimbabwe’s problems. In South Africa they have cars that use flame throwers to deter theft. Let’s not even talk about Somalia or the Ivory Coast. Not sure how taxes are the core problem in those 2 nations. ---
**Author:** ![Robot\_Arm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/robot_arm/32/18280_2.png) [@Robot\_Arm](https://boards.straightdope.com/u/Robot_Arm)\ **Post date:** [January 2, 2011, 9:27pm UTC](https://boards.straightdope.com/t/2011-economic-growth-to-hit-3-4/565890/60 "2011-01-02T21:27:18Z")
> [@HRoark43](#): > > Last I heard the Euro was in trouble with Ireland and Greece teetering on collapses… No, you must have read that wrong. Ireland has one of the lowest corporate tax rates in the world. Why, they must be positively swimming in prosperity. [Previous page](https://boards.straightdope.com/t/2011-economic-growth-to-hit-3-4/565890.md?page=2) [Next page](https://boards.straightdope.com/t/2011-economic-growth-to-hit-3-4/565890.md?page=4)