Trickle-down economics has been proven not to work.
This is an awful example. Yes, by the 1980s the Trabant was awful. But in 1957 it was one of the most innovative cars ever built. Unibody construction, a transversely mounted front-wheel drive arrangement and full independent suspension would all ultimately go on to become the underpinnings of most modern cars. Duroplast turned out to be a poor panel material because it was hard to dispose of, but initially it was a stroke of genius.
That’s because you are looking at these things in the abstract. I agree that the situation you describe is perfectly okay. But in the real world, people who have made tons of money making the things other people want spend huge amounts of it to protect their positions when people no longer want their things.
In the 1870s, John D. Rockefeller was a brilliant visionary and business innovator. From about 1880 until 1911, Rockefeller was an asshole who used his massive wealth to stifle every competitor and protect his monopoly.
The argument is this:
- Rich people want to be rich.
- Rich people have the ability to become richer.
- Society benefits from the side-effects of rich people becoming richer.
If you disprove any of the premises then the argument falls apart.
But if you do accept the premises then my conclusion follows naturally from them. Rich people have the ability to become rich and the desire to be rich. So the way to get them to use their ability is to make them not-rich. The desire to go back to being rich will then motivate them to use their ability.
I didn’t say it was my argument.
I was agreeing with you.
Nope, I’m going to build another house, because I want a house. And I will build a second house, so there is one to burn.
Loopholes are a side issue from your basic point I answered so I won’t belabor that except to say if the rate is supposedly 95% but there are lots of loopholes…it isn’t really 95%. And how close it really is depends how many. And the workability or efficiency depends also what they are. IOW it’s impossible to reasonably discuss a particular rate (again even a serious suggestion of one not 95%) if there are major exceptions but they aren’t stated.
The main point deals which what I just quoted of your recent post. It’s fine if you don’t agree with a 100% deduction on investment. But assuming a very high effective tax rate on pre reinvestment income such a high rate cannot cause individuals or companies to invest more in ‘stimulating the economy’ as through hiring, building things etc. And that’s not a debate about incentives, it’s simple arithmetic. If the tax system were to take 95% of income/profit above a certain level not deducting investment, there would be hardly any money to invest even if it had zero effect of discouraging economic activity.
The only plausible way to say what you did originally, ‘high tax rate to get corps/rich people to invest more in the real economy’ is high tax rates on profit income minus reinvestment. Otherwise you have to accept one of two related realities: the higher tax rates mean less money in the private sector’s hands to invest, and the govt having been the collector would now be responsible to invest in things we currently expect the private sector to invest in.
Only a progressive consumption tax (higher rates but on income profit excluding what is reinvested) could have higher rates while increasing investment*. But in your latest post you kind of contradicted your own earlier point. Now it seems you don’t want more investment because it might be ‘excessive’. That’s not what you said originally.
*again with rates within reason. Obviously even if reinvestment was exempt from tax people wouldn’t invest to ever at any point in the future be able to consume 5% of what they’d earned. Which is why loopholes in a such a system of super high taxes have to be extensive, and typically (and historically) the product of inside dealing. Otherwise things just don’t work. The Economist, which is hardly ‘right wing’ is fond of quoting the IMF’s finding that the point at which tax revenue starts to actually decline with higher marginal rates on individual income is around 44%, used by Economist to reject US GOP arguments that cuts from say 40% to 37% (or back to the 20’s or whatever as is sometimes proposed) would raise revenue. However, with perhaps loose UK journalist view of US taxes they neglect to consider that the effective highest US federal rate was prior to latest tax bill actually in the low 40’s including deduction phaseouts and Medicare tax surcharge above a certain level, then states have up to 10% or so rates on top of that. Now in the new tax plan the highest nominal rate on ‘ordinary’ income is 37, but most state taxes aren’t deductible anymore for high earners. So most high US earners are at or near the point where IMF says a higher marginal rates would mean less revenue. And for the general chorus of ‘why can’t the US be more like Europe?’, European countries don’t have max income tax rates much higher than the US including state/local. The two big differences are less unequal income distributions before tax in Europe, and big ‘regressive’ taxes like VAT’s and high fuel taxes in Europe which raise much more than state/local sales taxes do in the US.
No time to answer everything, so I’ll address this.
If you go back and read my post, you will see that I said nobody paid the top tax rate.
OK but I think that rather seriously undercuts your ‘solution’ of a 95% tax rate. We’ll solve a problem by having a rate nobody pays?
Again I think the more significant confusion on your part, which would exist in a serious debate also, is the idea that higher and higher taxes on profit/income without a deduction for investment could increase investment, hiring, stimulating by the private sector. That’s arithmetically impossible.
Completely off-topic, but I just found out what Morgenstern means. What a great name!
It has been demonstrated.
Why do you insist that I am saying there are no deductions for investment? This confuses me, because I’m saying the opposite of that.
Ah yes, because no private company ever produced a dud (ignoring as someone has pointed out that the Trabant, when newly designed, wasn’t that bad), and nothing constructed in a socialist country was every good (AK-47 cough cough)
Communism isn’t the only possible solution to thinking too much money in the hand of single individuals is potentially problematic.
Among many ‘Conservatives’, the choice is binary: Rampant Capitalism, or Communism.
You have got to be kidding! It may have been ahead of its time in 1890 but in 1957? How utterly laughable! The damn thing essentially had a mid-size motorcycle engine, absolutely no frills such as even a gas gauge, no power or acceleration to speak of at all, and even at that people had to wait ten years to get one. Compare that little piece of crap with a 1957 Cadillac, Oldsmobile, Corvette, Thunderbird or any other American car produced at that time and try to tell us the Trabant was anything but a piece of crap.
I should point out also that people’s living quarters and lifestyle in general under communism were about on the same par as that woeful little car. Nothing good has ever come from trying to force economic ‘fairness’ as described as everyone having the same as everyone else.
I really don’t know how to answer your poll because it has so many embedded assumptions I don’t agree with.
TL/DR: society would be better off if we ditched the money system in its entirety, it doesn’t work for us any more
The purpose of money, as I comprehend it, is to track who has, and who has not, done their share of the work load. People should all work, do their share. If you do your share, you get to buy stuff, enjoy things, eat well, be indoors. Fuck you if you don’t. With me so far?
So we make some provisions for people who can’t work: children of course (normally taken care of by their working parents but then there’s orphans and well also lazy bums who have kids but it isn’t the kids’ fault you know?) And the elderly. And people who are sick or disabled who can’t work. So we take care of them as exceptions. With me so far?
Well somewhere in the 10,000+ years since we adopted agriculture (and most of that “somewhere” being since the 1800s) we got all technological and our relationship to resources changed and so did our need for people to do their fair share of working their butts off as equal participants. I’m not saying it wasn’t fucked up in some respects prior to the 1800s (it often was) (it wasn’t fair and equitable all along up until then or anything) but we got much more efficient as a species at acquiring sufficient resources for ourselves to subsist on. It required fewer and fewer people to actually do the completely necessary work.
Now, there’s an open market for “unnecessary” work, work that doesn’t do stuff we can’t survive without but which produces outcomes that folks will pay for, so there are still jobs… but the nature of “carrying one’s share of the load” has changed. There is intense competition for a limited number of jobs, and a vague notion that one could at any time become an entrepeneur and do something not already being done for which people would pay you.
The money system has outlived its original purpose. We don’t need to track who has and who has not done their share of the work load. There isn’t enough load to go around. The attitudes towards people not employed are holdovers from that earlier era but they make no sense whatsoever. We impose a moral obligation on people to successfully compete for a limited number of jobs or else brilliantly come up with a new clever way of doing something that people would pay you for. Why should that be a moral obligation?
The “people being rich” phenomenon was a motivator to put effort into it but also a bit of an irrelevance: we don’t, and never did, need “rich people” in order for the money system to work as a means of making sure everyone did their fair share. It’s just that when you trap a sufficient supply of currency in one pile it gives you opportunities to purchase things that make it easier for you to generate more. I suppose an economist would say that motivates invention and pushes progress. Big rewards if you can see ahead as a visionary and invest your resources and make a new industry happen.
In the last 150 years we’ve hit the point where further “progress” is not an unalloyed good. We’ve long since departed any reality in which we needed to punish people for not being willing to do their fair share of the necessary work. The money system rewards a lot of behavior we as a species do not benefit from and the people it deprives and punishes are no longer people who have been lazy. It isn’t fun. It isn’t automatic and natural like needing to eat food or wanting to have sex and reproduce, it’s a human invention. It’s actually a threat to our survival at this point. Time to ditch it and move on to a non-money-based economy that doesn’t quantify work and worth in that manner.
1957 was the year Ford was designing the Edsel.
If the Trabant proves that the government never works then I guess the Edsel proves that private enterprise never works.
Or maybe we should concede that economics is not simple. You can’t fit a sensible economic policy on a bumper sticker. Private enterprise does a lot of things well and some thing poorly. The government does a lot of things well and some things poorly. It’s foolish to think one or the other is always the right answer.
I know, right? Look at WWII. The Chance-Vought F4U Corsair was one of the best fighters of the war. How can the planes produced in Borneo compare to that? :rolleyes:
The Citroën 2CV was produced between 1948 and 1988. Its two-cylinder engine originally made 9 hp. Eventually there were models that had 29 hp. The Fiat 500 was produced between 1949 and 1975. Its two-cylinder engine originally made 13 hp, but later ones made as much as 21 hp. The Volkswagen Beetle had a four-cylinder engine that originally made 25 hp. The Beetle is the longest-running and most-manufactured car of a single platform ever made.
What do all of those small, economical cars have in common? They’re all European. Europe’s roads are/were narrower and more twisty than American roads. Much ‘Detroit Iron’ was made to go fast in a straight line. How can you compare the Trabant with cars designed for completely different circumstances, and keep a straight face?
Income inequality has been increasing in Canada for some time now. It’s not as bad as the United States but it’s higher than most developed countries.
It would appear that you don’t comprehend it (money). The purpose of money is to provide a common medium of exchange for pigs, goats, cars, jet skis and pretty much everything else. It also provides a mechanism for communicating where society should focus it’s limited resources.
As for “fair share”, how do you define that? Eli Manning and hot dog guy at MetLife Stadium both come to work every day. Should they get to buy the same amount of stuff?
If I invent a product that creates a billion dollar company, what % of that does the high school dropout who sweeps my floors deserve?
The Edsel, unpopular though it was, was still 1,000 times the car that those little piece of shit Trabants were.
I can compare them with a straight face for the simple reason they were pieces of shit. Small Triumph roadsters were being built in those days and they damn well had 4-cycle engines with all the amenities like fuel pumps and gauges and lighters and the whole nine yards. Some of them were even convertibles. My mother, prototype hippie that she was, owned a Fiat and a Volkswagen during the fifties, and they too could get out onto a highway and up to speed, and also had the amenities one would expect in any automobile produced in the free world. Trabants, on the other hand, were foist upon the German citizenry virtually unchanged for 40 years, because: a) when the government is in control there’s no incentive to innovate; and b) there’s also no incentive to boost production to meet demand. After all, when you’re machine-gunning people to keep them from escaping your country you certainly can’t be expected to give a shit about how inconvenienced they are by not having access to timely produced automobiles.
What I can’t believe that you people can do with a straight face is defend systems like communism and the substandard lifestyles foist upon their citizenry, where everyone lived sparce and miserable lives (provided they weren’t among the 70 million or so who were starved or murdered, that is) while whinging nonstop about the economic inequities that exist in the U.S., a country whose poverty level populace lives lifestyles that would have been the envy of or unthinkable to the victims of communist governments. It’s like “Oh, yeah, they starved and murdered lots of people, and subjected their citizens to such miserable, repressed and dictatorial lives that some of them were willing to risk their lives to escape, but at least their heart was in the right place”. In the meantime though, look over there - "That guy’s a millionaire and most people aren’t, so clearly the entire system was created by greedy self-serving assholes and must be overturned so as to make everything…wait for it…fair! Which leads us right back to dictatorial regimes of the type that people were being killed 50 years ago for trying to escape to the other side and live like us.
And all while whinging incessantly over relative trivia in the U.S. like whether someone is wearing some other culture’s hairstyle or some actress in a secondary role is getting paid less that the actual star. And oh, yeah, that guy over there told a woman at work that she looked hot today, so off with his head!
Un-fucking-believable!