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Shifting economic balance

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Re: Shifting economic balance
Post by Tenshinai   » Thu Apr 03, 2014 11:22 pm

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TheMonster wrote:How could it possibly be proven wrong?

The Laffer Curve is simply the observation that tax rates of 0 and 100% both produce no revenue at all, increasing the tax rate above 0 and decreasing it below 100% both increase revenue until the peak is reached somewhere in the middle. It does not say exactly where the peak is; only that there is one.

You might well have proven that the peak exists at a higher marginal rate than the people who controlled things at the time thought, but the fundamental idea: that if you start at 0 revenue on both ends, you must hit a maximum somewhere between those ends, is not really arguable.


A bit more complex than that, but the way it is used by politicians is almost completely as "proof" that lowering taxes increases tax income AND reduces unemployment ( due to claimed increases in how much money is circulated ).

Now, more correctly, what the curve really DO claim to show is that the tax rate will affect the size of the economy, that is in fact part of the definition, and the part that you elected to or happened to overlook.

Well, idiot govt here since 2006 has spent vast amounts of money on cutting taxes. And that has achieved, pretty much nothing.

Beyond severely worsening public services and causing the biggest drop in education scores for Sweden EVER.

While the economy wasn´t really elastic as the Laffer curve theory is based on it being and total unemployment went UP, slightly but still undoubtedly up.

And that, after 7 years of selling off public assets to pay for their stupid tax cuts.

So essentially, just about everything claimed by serious people and politicans both about it, disproven. Except specifically what you mention, that there are zero points at both ends. Which was never in doubt.
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Re: Shifting economic balance
Post by Spacekiwi   » Sat Apr 05, 2014 3:50 am

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I have to say i dont really see the point in selling assests to cover short term deficits. assest rich and cash poor suggests a need to modify the in and outgoings, but releasing assests to cover a drain for a short while leaves you worse off further own the track, especially if those assests are currently returning dividends at the moment.

Tenshinai wrote:
TheMonster wrote:How could it possibly be proven wrong?

The Laffer Curve is simply the observation that tax rates of 0 and 100% both produce no revenue at all, increasing the tax rate above 0 and decreasing it below 100% both increase revenue until the peak is reached somewhere in the middle. It does not say exactly where the peak is; only that there is one.

You might well have proven that the peak exists at a higher marginal rate than the people who controlled things at the time thought, but the fundamental idea: that if you start at 0 revenue on both ends, you must hit a maximum somewhere between those ends, is not really arguable.


A bit more complex than that, but the way it is used by politicians is almost completely as "proof" that lowering taxes increases tax income AND reduces unemployment ( due to claimed increases in how much money is circulated ).

Now, more correctly, what the curve really DO claim to show is that the tax rate will affect the size of the economy, that is in fact part of the definition, and the part that you elected to or happened to overlook.

Well, idiot govt here since 2006 has spent vast amounts of money on cutting taxes. And that has achieved, pretty much nothing.

Beyond severely worsening public services and causing the biggest drop in education scores for Sweden EVER.

While the economy wasn´t really elastic as the Laffer curve theory is based on it being and total unemployment went UP, slightly but still undoubtedly up.

And that, after 7 years of selling off public assets to pay for their stupid tax cuts.

So essentially, just about everything claimed by serious people and politicans both about it, disproven. Except specifically what you mention, that there are zero points at both ends. Which was never in doubt.
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Re: Shifting economic balance
Post by NortonIDaughter   » Sat Apr 05, 2014 4:04 am

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cthia wrote:
Hutch wrote:
Sorry for the derail, but have you ever had the opportunity to read "Man of Steel, Woman of Kleenex", by the noted SF author Larry Niven? The only place I know it exists is in one of his short story collections "All the Myraid Ways", which is a great story, too). It is a serious essay into the 'facts' of Superman's love life.... :o

Might keep an eye out for it next trip to the used book store or Amazon...


Considering that none of you have even come close to steering me wrong on book recommendations...I am slobbering. I will quickly place it on my inbox list...there!

Thanx!

Damn, you really got the cat's curiosity in me meowing.


I believe it's online if you google it. Ahh, physics.


As for Honorverse economics, I think we have to take the analysis at face value for now because A) he said it was accurate, and B) somewhere (sorry, I forget where-- help?) it's mentioned that there are now enough inhabited planets with enough history that the "soft" sciences have actually become quite mathematical. That is, the pools of data are so great and varied that they can actually model the future fairly accurately at this point, not just the handwaving with some assumed basis that we do now. (Of course, the GIGO principal still applies... how's that invincible might coming, SL?)
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Re: Shifting economic balance
Post by KNick   » Sat Apr 05, 2014 5:12 am

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NortonIDaughter wrote:I believe it's online if you google it. Ahh, physics.


As for Honorverse economics, I think we have to take the analysis at face value for now because A) he said it was accurate, and B) somewhere (sorry, I forget where-- help?) it's mentioned that there are now enough inhabited planets with enough history that the "soft" sciences have actually become quite mathematical. That is, the pools of data are so great and varied that they can actually model the future fairly accurately at this point, not just the handwaving with some assumed basis that we do now. (Of course, the GIGO principal still applies... how's that invincible might coming, SL?)


The conversation you are thinking of is between Web Du Havel and Oversteegan at Cathy's party in Crown of Slaves. They were talking about politics.
_


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Re: Shifting economic balance
Post by TheMonster   » Sat Apr 05, 2014 10:08 am

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Tenshinai wrote:A bit more complex than that, but the way it is used by politicians is almost completely as "proof" that lowering taxes increases tax income AND reduces unemployment ( due to claimed increases in how much money is circulated ).
If the current marginal tax rates are above the peak, then lowering those rates does increase revenues. If you're using some form of progressive taxation with multiple brackets, it's possible for some of those rates to be on each side of the peak, so reducing all of the rates ends up collecting more taxes from the higher brackets and less from the lower. The sane thing to do in that situation is to only reduce the highest-bracket rates until they're at the peak, but politically that comes off as "giving tax cuts to the rich" (a peculiar phraseology; taking less is somehow equated with "giving". I guess Haven "gave" San Martin its freedom every day it didn't invade.) so it can't be done without the cuts at the lower brackets as well.

Reducing rates always ought to help spur employment, simply because it leaves people more money to spend/invest, but other policies can negate that effect.

Unfortunately, there is always political pressure to do things that sound good but have perverse effects, like establishing/raising minimum- and prevailing-wage levels in the name of helping workers (particularly those with low skills), which also encourage employers to invest in automation, retaining to operate the machines just the cream of the crop who can be productive enough to justify the higher wages, leaving the less-productive workers unemployed.
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Re: Shifting economic balance
Post by phillies   » Sat Apr 05, 2014 12:32 pm

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However, the Laffer implicit claims included 'there is only one maximum', 'we are above the maximum', the curve is stationary', 'the system does not have memory of the past', and 'actual yield is not affected by time rate of change of tax rates'. Also, the zeros at the two ends are actually not true, given voluntary contributions and the famous country that had a top tax rate, effective, of 102%, and still collected money on it.

Returning to the SLN, it gets most of its money from the periphery, the late Pavletic was placed both to know and to discuss this, so using DDs to shut down trade is possible when coupled with 'tactical, are you sure you can take out four SDs with four missiles?" 'we're landing them in the boat bays'.
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Re: Shifting economic balance
Post by HungryKing   » Sat Apr 05, 2014 1:51 pm

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You know that Political Science is in effect a spin-off of economics...
For example, the most mathmatical part of political science, Arrow's paradox was described in a doctoral thesis, by an economist. (It is basically a statement that there are no perfect voting systems where there are more than two choices)

KNick wrote:
NortonIDaughter wrote:I believe it's online if you google it. Ahh, physics.


As for Honorverse economics, I think we have to take the analysis at face value for now because A) he said it was accurate, and B) somewhere (sorry, I forget where-- help?) it's mentioned that there are now enough inhabited planets with enough history that the "soft" sciences have actually become quite mathematical. That is, the pools of data are so great and varied that they can actually model the future fairly accurately at this point, not just the handwaving with some assumed basis that we do now. (Of course, the GIGO principal still applies... how's that invincible might coming, SL?)


The conversation you are thinking of is between Web Du Havel and Oversteegan at Cathy's party in Crown of Slaves. They were talking about politics.
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Re: Shifting economic balance
Post by Castenea   » Sat Apr 05, 2014 3:02 pm

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SWM wrote:On the other hand, there is a limit to how fast the economy of the Alliance can grow. If you want to estimate how long it would take the Grand Alliance to equal the economy that the League has right now, then I doubt that it can be done in less than Gweon's ten to fifteen years. As is noted in that text, the Solarian economy is many times that of Manticore. It will take time for the trade routes to be established. It will take more time for the economies of Haven, Silesia, the Talbott Cluster, and the rest of the Verge to grow.

Those trade routes are already being established, as shown in Shadow Of Sagnami. I would consider it likely that the cluster is growing at emerging market rates thus places like Nuncio are likely to see GDP growth rates of 20% in some years in the next decade, however, Nuncio is so much smaller than Manticore its growth is still likely to be a rounding error for the SEM as a whole. The removal of the worst excess of the legistlaturlists and the ending of the civl war probably allowed Haven (and planets no longer part of its empire) to grow at rates in excess of 5% per annum. Remember to double an economy in 10 years takes a growth rate of under 8% per year.
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Re: Shifting economic balance
Post by SWM   » Sat Apr 05, 2014 4:31 pm

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Castenea wrote:Those trade routes are already being established, as shown in Shadow Of Sagnami. I would consider it likely that the cluster is growing at emerging market rates thus places like Nuncio are likely to see GDP growth rates of 20% in some years in the next decade, however, Nuncio is so much smaller than Manticore its growth is still likely to be a rounding error for the SEM as a whole. The removal of the worst excess of the legistlaturlists and the ending of the civl war probably allowed Haven (and planets no longer part of its empire) to grow at rates in excess of 5% per annum. Remember to double an economy in 10 years takes a growth rate of under 8% per year.

True, though I said doubling three or four times (we don't know exactly how many times larger the Solarian economy is). To multiply it by a factor of 8 in 10 years requires a growth rate of 23% per year. To multiply it by a factor of 16 in ten years requires a growth rate of 32% per year. Given the unusual conditions, it may be possible, but it is certainly a remarkable growth rate.
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Re: Shifting economic balance
Post by Tenshinai   » Sat Apr 05, 2014 4:51 pm

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Spacekiwi wrote:I have to say i dont really see the point in selling assests to cover short term deficits.


It´s part of the ideological belief that governments should not own or operate anything.


Spacekiwi wrote:assest rich and cash poor suggests a need to modify the in and outgoings, but releasing assests to cover a drain for a short while leaves you worse off further own the track, especially if those assests are currently returning dividends at the moment.


Most of them were profitable, some extremely so. The maker of Absolut Vodka for example, the parent company was sold off, then the buyer sold off parts of the company for a bit more than they bought the whole thing for in the first place.

Ideological blindfolds to the max. Morons couldn´t even manage to sell it at a realistic price.

*****

TheMonster wrote:Reducing rates always ought to help spur employment, simply because it leaves people more money to spend/invest, but other policies can negate that effect.


Only in theory. And rarely in reality.

Random example, if i buy twice as much food during a month, does this affect anyones employment? It might, but it´s quite possible that it´s merely a matter of scale that falls within the already existing framework.

Also, that suppostition assumes that any money not paid as taxes automatically stay within the tax payers nation.

And then there´s the bothersome little fact that investment is essentially a nonexistant thing today, >99% of all money that goes into shares or similar, is a roll of the dice in an attempt to make quick cash based on expectations in the stock/financial market games.
That money actually more often than not has NEGATIVE effects on the economy because it promotes extreme shortsightedness from companies, because it´s only the next quarterly result that matters.

And then there´s the thing about WHAT the money is spent on, the more it´s spent on luxury or exclusive items, the less beneficial to society it generally is, because it rarely generates any additional employment or financial activity.

If the current marginal tax rates are above the peak, then lowering those rates does increase revenues. If you're using some form of progressive taxation with multiple brackets, it's possible for some of those rates to be on each side of the peak, so reducing all of the rates ends up collecting more taxes from the higher brackets and less from the lower.


And those ideas are among the ones that have pretty much been shot down yes. Doesn´t work that way.

In the aftermath of our previous rightwing government disaster, in 1990s, this idea was tried. Biggest taxcuts ever, which according to economical predictions were going to provide lots of economical improvement overall, in reality the upsized economy managed less than 10% than all predictions promised.
And that was with VERY high marginal taxes, where the public sector was around 2/3 of the economy.

Essentially meaning that if the Laffer curve had any truth in it, it needs to look more like a roller-coaster on crack, than a curve.

The sane thing to do in that situation is to only reduce the highest-bracket rates until they're at the peak


That´s the worst thing you can do actually.
Because if you add money to rich, vast majority of it wont be spent on anything that helps the economy.

but politically that comes off as "giving tax cuts to the rich" (a peculiar phraseology; taking less is somehow equated with "giving". I guess Haven "gave" San Martin its freedom every day it didn't invade.)


Your prejudice shows. :twisted:
Unless of course you want to live in a world where civilisation is essentially non-existant?
Because that´s pretty much what public cash do, provide the stuff that is too expensive for any individual that want to do it, or needs it done.

So yes, taxation is a required part of civilisation as we know it.

And take a quick look at the last 30 years...
Where tax rates for rich has been lowered, what has the effect been? Good? Not really no. Unless you´re one of the rare few that are rich of course.
And interestingly, the disparity of incomes has increased insanely in that same time.

So tell me, what executive is truly WORTH having 300 (or even 3000) times the salary of the people doing the work of his company?
It´s become a total fantasy without any connection to reality.
Same as the stockmarket, where shares are bought and sold by the day or even by the second, it´s rather pathetic seeing this development.

And there´s people actually surprised that economies doesn´t work as they should? :roll:

Unfortunately, there is always political pressure to do things that sound good but have perverse effects, like establishing/raising minimum- and prevailing-wage levels in the name of helping workers (particularly those with low skills)


That has worked very well in Sweden since middle of the 20th century. In fact it is now that the labor unions are being undermined due to the EU and less due to the right wing chickenhawks, that it´s working less well.

which also encourage employers to invest in automation, retaining to operate the machines just the cream of the crop who can be productive enough to justify the higher wages, leaving the less-productive workers unemployed.


Only an idiot would NOT go for additional automation if it improves productivity and/or quality.
And in any decent society, those unemployed then go educate themselves to whatever else jobs exist.
This is effectively the reason why large parts of USA has become deindustrialised, while several parts of Europe, my own country among them, have managed to stave off that fate, as improved quality and productivity has allowed competition against low-wage "new" industrialising countries.


As an extension, perhaps you might like to read this:
http://groups.csail.mit.edu/mac/users/r ... kweek.html
"Pre-industrial workers had a shorter workweek than today's"

I do so enjoy kicking at all the stupid myths that abound.
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