Originally Posted by Brian Rush

Rather more to the point, the bottom line on the graph JPT posted -- the one representing tax revenues -- was factually wrong. That makes the comparison wrong as well.

Regarding the earlier discussion in which I posted some observations about the nature of profit and how it should not be confused with earned income, and JPT jumped to the conclusion that I was calling profit "evil," perhaps I should clarify what I do think about profit on a moral basis -- even though that has nothing to do with what I was saying earlier. Just to get it out of the way.

Gain can be called other things than profit, and for some people (farmers and other operators of small businesses), profit, however meager, is their living. A family making a $60,000 profit from their sole livelihood that requires considerable effort and time (usual criteria by which wages are issued) is clearly not the fruit of oppression of working people. Pensions that elderly people collect are often the proceeds of interest and dividends -- basically rewards for enforced savings. It's also possible to determine that professional fees are in part profit -- again a return on investment.

Profit isn't a dirty word in itself. It can be a reward for service and sacrifice, for careful stewardship of precious assets, and of course competence in business. The alternative to such profit is "socialism" of the most objectionable kind -- that of government ownership and operation of businesses down to pushcart businesses.

We live in an imperfect world. Behaviors that are not particularly praiseworthy must often be tolerated when they are not harmful enough to warrant the expense, effort, and undesirable side effects of trying to suppress them. But that's tolerated -- not praised, admired, lauded, or encouraged.

The best that capitalism can ever do is to turn profit into an incentive to do real good. Not everyone can be a salaried worker because they would slack off and it would be grossly inequitable to not create incentives for useful efforts. It is arguable that much of our economic pathology results from too little capitalism (in the form of small businesses) instead of too much.

Money-grabbing is a different matter, and it need not be called profit. It can be fees, commissions, salaries, and unlimited expense accounts -- if not outright crime. Even 'socialist' systems are known for creating opportunities for people getting the chance to take cuts of transactions between state enterprises because there is no accountability within the system. But that can happen here. Business subsidies to giant, for-profit entities should offend people -- but they seem not to trouble those politicians 'owned' by those entities. Subsidized loans cut the cost for some firms while giving a competitive detriment to competitors. The cozy relationship between corporate boards and executive elites ensure that executive compensation can become entrepreneurial rewards despite having made no investment.

I begin to wonder how far an economy can get increasing profits by treating employees badly. Such is the difference between the US and western Europe in economic inequality. How many people will drop out? Modern capitalism depends upon the proletariat as a customer base as well as toilers. If workers are reduced to toilers who endure compulsory destitution for the sake of an economic elite, then just think where that can lead.

"The profit motive" is a fancy three-word expression that means the same thing as a single word with a bad connotation: greed. It's a common sin, and in most cases a petty sin. We all want things; sometimes we are tempted to want more in the way of material gain than we should. Most of the time, this is something that should be tolerated. It's not bad enough to be worth suppressing; the cure would be much worse than the disease. But it's not praiseworthy, either. It's not admirable. And it should not be encouraged. It isn't even the main motivation of those who build business success in any way that benefits the economy or the nation as a whole.

Just let the profit motive lead people to do good -- to take calculated risks, to work more than normal hours without clear guarantees of pay, to protect scarce resources, to develop rare and useful skills, to serve people more conscientiously and competently, make shrewd investments... and we can get good effects.

James50, in a post on another thread (I think), expressed this attitude well: profit is like air. A person doesn't live to breathe, but must breathe in order to do other things for which he or she does live. Similarly, a business doesn't exist for the purpose of making a profit (or anyway, his business doesn't), but must make a profit if it is going to survive to do the things it does exist to do. If all businesspeople, particularly those owning and running big businesses, had an attitude like that, capitalism would exhibit few problems. Regrettably, that's not the case. Regrettably, capitalism is rife with the profit motive -- with greed.

If you go to the original advocate of capitalism, Adam Smith (18th century), you will find that enlightened self-interest is the best that people look for. Pathological self-interest is a different matter. A small farmer needs the incentive to plant and reap at opportune times, and capitalism at its best rewards that. A heroin trafficker, in contrast, seeks to make a profit off human destruction. Such is a great difference.

It may be that in the end, a radical solution and the end of capitalism is going to be necessary. I suspect that's the case, as for capitalism to work at all requires that full employment be a necessity of production -- and even then it only works if regulated appropriately to ensure that workers are well paid and wealth doesn't concentrate too much. We approach an economy in which paid work will be a rare thing, which will mean the complete and permanent breakdown of capitalism and the requirement that it be replaced with another system.

Maybe not. Capitalism has had a proclivity for adaptation to political as well as technological change. It could be the policies of taxation and spending that must change -- heavily taxing the easy money and leaving the hardest-earned money alone, and then apply the tax receipts to some social dividend. As a rule it is the hard-earned money that is almost invariably closest to basic human need and the most-easily satisfiable needs and desires. Saudi Arabia, hardly the most progressive of social orders, does that with oil revenue.

However, such radical change should be approached with caution, and I don't pretend to have a good replacement worked out in full detail. In the meantime, though, let's at least recognize this: greed is not good. Greed is not praiseworthy. Greed is not something we should encourage. Perhaps it must be tolerated. But if so, we need to keep a careful eye on it, and not blindly trust it.

Pathological acquisitiveness is by definition counter-productive or even evil. There's a huge difference between a family farm and a meth lab, not always in earnings.

Originally Posted by pbrower2a

Gain can be called other things than profit

The point I was making earlier is that there is an existential, fundamental difference in kind between someone who makes a million dollars a year from investments, and someone who is paid a million dollars a year in salary. A sports star is NOT in the same category as a capitalist, and the difference between the two is much, much, much more important and significant than the difference between a sports star and a minimum-wage worker.

Profit isn't a dirty word in itself.

Again, you (like JPT) seem to want to turn this into a moral discussion. I was only talking about the facts, the objective description of what "profit" means when a business has employees, as most do. Once the facts are straight, assuming our core values are understood, the moral implications become obvious. But given that you seem to be more concerned with how much money a person has in income, instead of with how he/she made that money, I don't think you do have the facts straight, any more than he does.

Maybe not. Capitalism has had a proclivity for adaptation to political as well as technological change.

That's exactly the problem. Capitalism has adapted to the new political regimen imposed at the end of the last Crisis in various ways that undermine it. In addition, advances in computer technology increasingly allow the replacement of human labor -- mental as well as physical -- with machines. In the past, developments like this were tolerable because there was some place for displaced workers to go and find new jobs. When farming was automated, unemployed farm workers moved to the city and found jobs in factories. As factories were automated, unemployed blue-collar workers entered the service industry. As the service industries are automated, unemployed workers will go -- where?

This is not something that capitalism can adapt to. It's too fundamental, and too much a self-destructive exploitation of capitalism's own tendencies to increase efficiency of production measured as output per dollar invested. A necessary assumption of capitalism is that human labor, and lots of it, is required to produce wealth. As long as that's true, then it becomes simply a matter of ensuring that workers are paid enough to allow them to consume what's produced. But if not enough people have jobs, there is no way this can work, and the economy will be permanently depressed. I see indications of that in the current recovery, which is not exhibiting a lot of job creation. And we are still only in the shallows of the problem. In the depths, we are looking at permanent unemployment of 50% or more.

That's why I'm thinking that we are going to face an economic crisis that will require the end of capitalism and its replacement with something else. One possibility that's occurred to me involves the distinction between a publicly-traded and privately-held company. If all publicly-traded stock were held by the public in truth, and each citizen paid an owner's share of profit from these public companies, there might be enough wealth distributed that we could accept 50% or higher unemployment without catastrophe. Privately-held companies could continue to be privately-held, but if the owners wished to sell stock, they could only do so to the public, not to other individuals or corporations.

I don't have all the details worked out by any means, and it may be that something completely different (but equally radical) will be the better way to go. But one thing I'm sure of, and that's that capitalism and high unemployment rates cannot survive together.

Originally Posted by btl2283

By definition, government spending is part of GDP.

Right. Where does the money government spends come from? It's either taken out of the private economy in taxes, or it's borrowed. If it's borrowed, it can be argued to increase GDP in the short term, although it will eventually have to be paid. If it come from taxes, you're taking money out of one pocket and putting it into another. The Keynesian "multiplier" is a fiction that has never been demonstrated in reality.

With regard to other statements that have been made above, the information is already there in this thread for you to improve your understanding. If you really think the graph I posted a while back is somehow "fake", you are ignorant on a level that is too deep for me to feel motivated to deal with. I understand that the information that graph provides to you is so disturbing to your entire world view that you have to try to reject it. You mean raising taxes on the rich doesn't really bring in more revenue to the government? How could this be?

Bottom line though, if you don't understand why this subject, along with many others, are expressed as a percentage of GDP, I don't know what to do for you.

Originally Posted by JustPassingThrough

Right. Where does the money government spends come from? It's either taken out of the private economy in taxes, or it's borrowed. If it's borrowed, it can be argued to increase GDP in the short term, although it will eventually have to be paid. If it come from taxes, you're taking money out of one pocket and putting it into another. The Keynesian "multiplier" is a fiction that has never been demonstrated in reality.

With regard to other statements that have been made above, the information is already there in this thread for you to improve your understanding. If you really think the graph I posted a while back is somehow "fake", you are ignorant on a level that is too deep for me to feel motivated to deal with. I understand that the information that graph provides to you is so disturbing to your entire world view that you have to try to reject it. You mean raising taxes on the rich doesn't really bring in more revenue to the government? How could this be?

Bottom line though, if you don't understand why this subject, along with many others, are expressed as a percentage of GDP, I don't know what to do for you.

Your understanding of macroeconomics is frighteningly poor. Intellectually, your arguing concepts that derive from Says Law, which may have been true in the agricultural age, but aren't true today.

Originally Posted by JustPassingThrough

The Keynesian "multiplier" is a fiction that has never been demonstrated in reality.

It's a theory, not "fiction" -- there's a difference. And in any event, how is this different than the supply-sider claims that we are always on the "taxes too high" side of the Laffer Curve? I hardly think the last 30 years have demonstrably proven this; to any extent tax cuts may have helped grow the economy, it has nevertheless increasingly concentrated the fruits of economic growth into the hands of a few.

Originally Posted by JustPassingThrough

Right. Where does the money government spends come from? It's either taken out of the private economy in taxes, or it's borrowed. If it's borrowed, it can be argued to increase GDP in the short term, although it will eventually have to be paid. If it come from taxes, you're taking money out of one pocket and putting it into another. The Keynesian "multiplier" is a fiction that has never been demonstrated in reality.

Never mind the multiplier, which is also going to be true of any other dollar spent or invested and is not a special characteristic of government spending. And never mind the borrowing, either. Let's deal with a dollar taken in taxes and invested by the government.

When you say that the dollar is "taken from the private economy in taxes" and that therefore one is "taking money from one pocket and putting it in another," you haven't addressed what that dollar would be used for if it wasn't taxed. You assume, implicitly, that it will be invested by private individuals or corporations in job-creating ventures, so that the government doing the same thing does not amount to a net gain. Otherwise, your argument has no weight, so this is what you must be assuming.

But a recession or depression happens precisely because money is NOT being invested in job-creating ventures. Business is not expanding, it's contracting. Sales slump, consumption is down, goods being produced now can't be sold so certainly it doesn't make sense to expand production more. The money taken in taxes would otherwise not be invested in any productive way. The government isn't taking (productive) money from the private economy, it's taking idle money, or wasted money.

This reasoning doesn't apply in boom times, but those are not the times the government tries to stimulate the economy anyway.

If you really think the graph I posted a while back is somehow "fake", you are ignorant on a level that is too deep for me to feel motivated to deal with.

I posted already a graph from another source showing tax revenues as a percentage of GDP that not only fluctuates much more than your graph stated, but also is in the 30 percent range where your graph shows it barely at 20 percent. It has nothing to do with wishful thinking or a desire to believe. It is simply that you presented false data, data contradicted by more reliable sources. Your graph simply lied. End of story.

The major fallacy JPT is engaging in he that he is assuming the non-taxed private wealth is always being invested in socially constructive areas, which, as the Financial Crisis showed, is pure BS. More than not the wealth is put into speculative crap or invested in other ways that are not socially constructive.

Originally Posted by Odin

The major fallacy JPT is engaging in he that he is assuming the non-taxed private wealth is always being invested in socially constructive areas, which, as the Financial Crisis showed, is pure BS. More than not the wealth is put into speculative crap or invested in other ways that are not socially constructive.

What it comes down to is what the limiting factor is in productive investment. The assumption behind supply-side economics is that it is availability of capital. The assumption behind real economics, which at this point isn't an assumption so much as demonstrated fact, is that it is consumer demand. Capital will be invested in production of goods and services up to the point where consumer demand is satisfied. (Demand = desire to buy + ability to buy.) After that, any more capital will be invested in activities that don't produce goods or services but simply shuffle money around, amounting to a sort of confidence game.

A good example is trade in bubble commodities. For example, the pre-Great Depression stock market bubble. Investors bought stocks not for their actual value but in order to drive the price up and resell them at a higher price. This "made money" for the investors, but produced nothing. The stock price rose for a while, then fell. At the peak of the price, right before the bubble burst, someone sold the stock at a profit, but the person who bought it from him took a loss. In effect, the entire cycle of investment did nothing but transfer money from the people who took a loss to those who made a profit. The net amount of wealth remained unchanged. (Or actually declined, given all the consequences.)

Money that would otherwise go to producing goods and services, if taken in taxes, will at best produce a wash. But money that would go into bubble-blowing, rent-seeking, and economic strip-mining, if taken in taxes, produces a net benefit to the economy, not only because it will either be invested in something that produces real wealth, or in the provision of public services that can't be provided by the private economy, or distributed in cash payments to consumers thus boosting consumer demand and so boosting private investment -- but also because a decline in money for bubble-blowing, rent-seeking, and economic strip mining is a benefit in itself.

EDIT: I want to add something here about the psychology of believers in supply-side economics, particularly followers of the Austrian school. One finds in discussions with these people that when someone disagrees with them, they are called "ignorant." It's as if the ideology being propounded were somehow demonstrated and incontrovertible fact, rather than what it is, an economic ideology, so that disagreement amounts to ignorance.

This is not unlike the attitude of some creationists who decry the fact that some people don't "know" that the Earth was created six thousand years ago and that evolution is a fable. It's a confusion of belief with knowledge, and hence of disagreement with ignorance.

In fact, the ignorance on display comes from those who have only studied supply-side or Austrian-school economics (often at a very shallow level even there), and so are ignorant of the body of thought and study which contradicts these ideas. Those who have studied economics in any serious way, whether formally and academically or on their own, almost always have some familiarity with the ideas of the Austrian school and of supply-side thinking in general. It is not ignorance that prompts the disagreement with those ideas. It is knowledge.

Originally Posted by Odin

The major fallacy JPT is engaging in he that he is assuming the non-taxed private wealth is always being invested in socially constructive areas, which, as the Financial Crisis showed, is pure BS. More than not the wealth is put into speculative crap or invested in other ways that are not socially constructive.

Assuming the money is being spent or invested at all. I think the attempts to inject liquidity with near-zero interest rates and "stimulus checks" demonstrated that it's not enough to give out money or make it "cheap" to borrow. Unless it has velocity -- changing hands in commercial economic activity that generates tax revenue and keeps people employed -- it's meaningless. If tax cuts for the wealthy don't lead them to spend it and/or invest it in productive, economically beneficial ways then the supply sider argument for "lower taxes = more economic growth" becomes very dubious. And in this recession, when you give someone more money (regardless of how they get it) they're as likely as not to save it or pay off debt with it. Those are essentially zero-velocity money moves which, as I said yesterday, are wise and responsible individual financial decisions in most cases but it doesn't achieve the desired macroeconomic results.

Throwing money at people and businesses, whether through direct "rebates" or lower taxes, isn't a panacea in and of itself. The money has to have decent velocity.

Originally Posted by Brian Rush

The point I was making earlier is that there is an existential, fundamental difference in kind between someone who makes a million dollars a year from investments, and someone who is paid a million dollars a year in salary. A sports star is NOT in the same category as a capitalist, and the difference between the two is much, much, much more important and significant than the difference between a sports star and a minimum-wage worker.

True -- just as a football linebacker is selling out his body for a few years of high pay, a coal miner is selling out his body for three or four decades of low pay. In that sense a Dallas Cowboy is as much a prole as a cowboy working at a Utah ranch. I recall a book called Class by Paul Fussell in which what defines one's 'class' is not so much what one makes on the job as how one gets one's spending money. The categories go from the 'highest' (Top Out-of- Sight) to the lowest (Bottom Out-of-Sight)

In essence it goes like this:

> 1. Inherited assets from people deceased before one was born (Top Out-of-Sight)

> 2. Assets accumulated by persons that one has known (Upper)

> 3. "High Professional" income (typically law or medicine) or business assets accumulated by oneself or one's spouse (Upper-Middle)

> 4. Salaried income or commissions typically requiring a college degree, maybe a marginally-successful start-up business (Middle)

> 5. Skilled labor (High prole)

> 6. Semi-skilled labor (Middle prole)

> 7. Unskilled labor, even if erratic or seasonal (Low prole)

> 8. Welfare, disability income, or disreputable income (Destitute, or Lumpenproletariat)

> 9. None because one is incarcerated or institutionalized (Bottom Out-of-Sight)

It's crude, and it may be somewhat dated (1980s). There is no lower-middle class because the clerical work that used to be much of it has been typically debased by its low pay. Most clerical workers are now semi-skilled machine operators whose income is basically survival income or a supplement to a spouse's meager pay. "Class" is not a matter of pay; a high-prole plumbing contractor almost certainly lives a very different life from an upper-middle class professor of classical literature even with similar income. A word for the wise: don't try to set up a skilled worker with someone upper-middle class on a date even if they seem similar in resources and intellect. One will want to travel around in an RV on a honeymoon and the other will want to take a stroll down the Champs-Elysees. A bank teller and a factory worker? Sure! Their worlds usually are much more similar because they are similarly mechanistic.

But I have digressed. That once-telling work is now terribly dated in the aftermath of a ruinous meltdown of the American economy. Elites that had badly debased the lower-middle class by the mid-1980s into the proletariat seems to have tried to shove as many people as possible into the miserable insecurity once largely that of unskilled workers. The Lumpenproletariat might be useful as rent-a-mob types for rallies and thuggish enforcers, and I can readily see others in classes 8 and 9 as the sorts who wouldn't be missed if they were to be... to put it mildly, Josef Stalin appropriated the word commonly translated as 'liquidation' for what he did.

Note well that high social status hardly ensures human decency. The worst Jew-killing bastards in WWII-era Hungary came from the aristocracy, and the nastiest butchers among the Khmer Rouge were among the best-educated people in the country before they killed off any imaginable competition. Don't get me wrong; some migrant crop-picker might be a far better person than some plutocrat who does horrible things to his subordinates.

Again, you (like JPT) seem to want to turn this into a moral discussion. I was only talking about the facts, the objective description of what "profit" means when a business has employees, as most do. Once the facts are straight, assuming our core values are understood, the moral implications become obvious. But given that you seem to be more concerned with how much money a person has in income, instead of with how he/she made that money, I don't think you do have the facts straight, any more than he does.

My peeve is with anyone who treats others badly, whether directly or by proxy. The Golden Rule is a far better guide than is anything that Karl Marx or Karl Rove ever wrote. Indeed, most violent revolutions result from economic elites behaving badly -- either stirring up well-deserved hatred against themselves through their excesses and cruelties or by promoting some mass resentments against vulnerable and innocent targets. In recent years I have seen no cause to believe that our financiers, industrialists, executives, and big landowners are any better than those who fled Lenin or backed Hitler.

Some areas of economics -- like input-output analysis and dry studies of consumer demand -- have no more moral content than do studies of chemical equilibrium. Much of the rest is inseparable from moral values. I can't prove that it would be horrible if only a few had complete command of all the resources of labor and physical assets for their own indulgence and granted the cast-offs as sustenance; it simply violates my assumption that inequality requires some compensating virtue. As I have shown, I believe that some economic inequality is more objectionable than other economic inequality. If I am to apply the linear pattern of recent years (the 3T), then I can see America becoming a hierarchical economic order in which a few live like sultans and most live like serfs -- and that if anyone runs afoul of such an arrangement, then (as has happened elsewhere) one can expect brutal repression of any dissidence or revolt.

This is still early in a 4T -- the stage at which political change is often sharp and severe. I look at the Hard Right and I see people who dream of an oligarchy of political as well as economic power because democracy itself tears at class privilege.

(I said):

Capitalism has had a proclivity for adaptation to political as well as technological change.

That's exactly the problem. Capitalism has adapted to the new political regimen imposed at the end of the last Crisis in various ways that undermine it. In addition, advances in computer technology increasingly allow the replacement of human labor -- mental as well as physical -- with machines. In the past, developments like this were tolerable because there was some place for displaced workers to go and find new jobs. When farming was automated, unemployed farm workers moved to the city and found jobs in factories. As factories were automated, unemployed blue-collar workers entered the service industry. As the service industries are automated, unemployed workers will go -- where?

This is not something that capitalism can adapt to. It's too fundamental, and too much a self-destructive exploitation of capitalism's own tendencies to increase efficiency of production measured as output per dollar invested. A necessary assumption of capitalism is that human labor, and lots of it, is required to produce wealth. As long as that's true, then it becomes simply a matter of ensuring that workers are paid enough to allow them to consume what's produced. But if not enough people have jobs, there is no way this can work, and the economy will be permanently depressed. I see indications of that in the current recovery, which is not exhibiting a lot of job creation. And we are still only in the shallows of the problem. In the depths, we are looking at permanent unemployment of 50% or more.

Could the successes of technology have made scarcity unnecessary except as a means of an exploitative elite to keep control? Karl Marx was very wrong when he said that economic power results from control of the means of production. Control of the means of personal survival has always been the real source of power. If you are in possession of several thousand dollars in your wallet and some mugger says to you with a deadly object in his hand, "Your money or your life", then those several thousand dollars are no longer yours except in some legal fiction divorced from physical reality. Prosperity is a sham if it is enjoyed only as a privilege to be taken away in the caprice of some powerful and irresponsible person.

That's why I'm thinking that we are going to face an economic crisis that will require the end of capitalism and its replacement with something else. One possibility that's occurred to me involves the distinction between a publicly-traded and privately-held company. If all publicly-traded stock were held by the public in truth, and each citizen paid an owner's share of profit from these public companies, there might be enough wealth distributed that we could accept 50% or higher unemployment without catastrophe. Privately-held companies could continue to be privately-held, but if the owners wished to sell stock, they could only do so to the public, not to other individuals or corporations.

The absence of scarcity would itself imply a revolutionary change. Karl Marx may have been wrong on many things, including the idea that humanity had to go through some stage of political life known as "socialism" in which the government takes over the role of capitalists and creates even faster economic growth. But so far his is the only sketchy view aside from some religious gobbledygook on how humanity can live after scarcity is no more. He calls it Communism -- the end of the struggles for freedom and against need because tyranny of all kinds has become irrelevant and all human needs and basic desires are easy to meet with rather little labor.

So how does society share the bounties of the miracles of prosperity? We in America are doing an execrable job of it.

I don't have all the details worked out by any means, and it may be that something completely different (but equally radical) will be the better way to go. But one thing I'm sure of, and that's that capitalism and high unemployment rates cannot survive together.

Nobody has much of an idea. Many have very bad ideas.

Originally Posted by pbrower2a

True -- just as a football linebacker is selling out his body for a few years of high pay, a coal miner is selling out his body for three or four decades of low pay. In that sense a Dallas Cowboy is as much a prole as a cowboy working at a Utah ranch. I recall a book called Class by Paul Fussell in which what defines one's 'class' is not so much what one makes on the job as how one gets one's spending money. The categories go from the 'highest' (Top Out-of- Sight) to the lowest (Bottom Out-of-Sight)

In essence it goes like this:

> 1. Inherited assets from people deceased before one was born (Top Out-of-Sight)
> 2. Assets accumulated by persons that one has known (Upper)
> 3. "High Professional" income (typically law or medicine) or business assets accumulated by oneself or one's spouse (Upper-Middle)
> 4. Salaried income or commissions typically requiring a college degree, maybe a marginally-successful start-up business (Middle)
> 5. Skilled labor (High prole)
> 6. Semi-skilled labor (Middle prole)
> 7. Unskilled labor, even if erratic or seasonal (Low prole)
> 8. Welfare, disability income, or disreputable income (Destitute, or Lumpenproletariat)
> 9. None because one is incarcerated or institutionalized (Bottom Out-of-Sight)

I'd never seen this before, but somehow I think I'd see a lot of wrinkled eyebrows if I told folks I was in "Class 4" rather than the middle (or arguably "lower upper middle") class. And Class 1 would contain most of the folks who were born on third base and act like they hit a triple to get there - and that the rest of us need to stop bitching and get out there and hit our own triple like "they did".

[QUOTE=JustPassingThrough;372498]

Right. Where does the money government spends come from? It's either taken out of the private economy in taxes, or it's borrowed. If it's borrowed, it can be argued to increase GDP in the short term, although it will eventually have to be paid. If it come from taxes, you're taking money out of one pocket and putting it into another. The Keynesian "multiplier" is a fiction that has never been demonstrated in reality.

Really?

http://www.voxeu.org/index.php?q=node/6314
http://www.nber.org/papers/w16380

Those are just two, recent examples.

With regard to other statements that have been made above, the information is already there in this thread for you to improve your understanding. If you really think the graph I posted a while back is somehow "fake", you are ignorant on a level that is too deep for me to feel motivated to deal with. I understand that the information that graph provides to you is so disturbing to your entire world view that you have to try to reject it. You mean raising taxes on the rich doesn't really bring in more revenue to the government? How could this be?

1) I never said the graph was "fake". I said it was misleading as evidence for the point you were trying to make.
2) I can't help but notice that your arguments are light on data and logic, and heavy on insults.

Bottom line though, if you don't understand why this subject, along with many others, are expressed as a percentage of GDP, I don't know what to do for you.

Who are you responding to here?

Originally Posted by ziggyX65

I'd never seen this before, but somehow I think I'd see a lot of wrinkled eyebrows if I told folks I was in "Class 4" rather than the middle (or arguably "lower upper middle") class. And Class 1 would contain most of the folks who were born on third base and act like they hit a triple to get there - and that the rest of us need to stop bitching and get out there and hit our own triple like "they did".

The numbers really mean nothing except for formatting the list. The names that Fussell uses are his, and those are the ones that count. The descriptions are my condensations.

If you want a baseball analogy -- Classes 1 and 2 are those that inherited third base and think that they hit a triple. Class 3 really did hit the triple and knows it. Class 4 hit a double and knows it. Class 5 either singled or walked and knows it. Class 6 has come to the plate. Class 7 has a strike against it. Class 8 has two strikes against it. Class 9 has two strikes against it and must bat blindfolded against Justin Verlander.

JPT knows little about economics. I gave him a link to John Maynard Keynes' General Theory, a work that I absolutely had to read while I was studying economics because it was then the Establishment explanation of economic policies in practice in advanced capitalist economies during the 1970s. It remains relevant; indeed, as the economy is in a shaky recovery from the worst economic downturn in eighty years it is again more relevant than it was in the 1970s. He shows no sign of having read any of it. A wise person freshly introduced to it would be astonished by his own ignorance.

Keynesian economics remains the most humane and least destructive response to a very bad recession, let alone a full-blown Depression. Keynes shows through a mathematical model why retrenchment makes things worse even for the government budget. One cannot argue with the essence of the mathematics except to nitpick, and then only to the extent that one applies more refined mathematics. So far, historical reality as shown in the tool of regression analysis shows Keynes -- right.

Originally Posted by JustPassingThrough

Right. Where does the money government spends come from? It's either taken out of the private economy in taxes, or it's borrowed. If it's borrowed, it can be argued to increase GDP in the short term, although it will eventually have to be paid. If it come from taxes, you're taking money out of one pocket and putting it into another. The Keynesian "multiplier" is a fiction that has never been demonstrated in reality.

You don't even understand the basics of corporate or government finance!

The question remains: is the borrowed amount invested wisely or wasted. But even if the assets were owned outright, they too can be invested wisely or wasted. Maybe people are more cautious if they must pay back the amount borrowed -- or service the debt. In business, some entities have gigantic debt; public utilities borrow heavily for investments in capital and usually are constrained in what they can charge their captive customers. Public utilities that charge excessive rates effectively prevent other industries from locating in their bailiwicks, so such mandates governments to regulate them lest the utility owners be the only rich people around.

Public utilities keep adding debt as their capital increases. But they remain profitable, so the borrowing makes sense. Do you have problems with that?

Government can waste its funds, as shown in crony capitalism and show projects that seem to infest the countries that can least afford them. But Hoover Dam is not a show project. The Pat Tillman Memorial Bridge that hastens the drive between Phoenix and Las Vegas by about thirty minutes isn't a show project. The freeway being built between Phoenix and Las Vegas (now mostly US 93, but it will become either Interstate 11 or Interstate 13 when complete) will cut off even more time from a heavily-traveled route between two cities that are the largest two without an expressway. Sure, the freeway will cost money, but it will also make transportation cheaper. The cost will largely be paid in fuel taxes, but the savings will be returned as cost savings in future years -- many future years. On the whole the Interstate Highway system has paid for itself in reduced deaths and crippling injuries from vehicle collisions alone!

I am not saying that every dam, bridge, or highway is good in its own right. It would make no sense to build a 'highway to nowhere', 'bridge to nowhere', or 'dam with no water behind it'. Building statues to the current President in every town would be a travesty of democratic process and an obvious waste to be destroyed in the aftermath of a revolution. The Lincoln Memorial, in contrast, is a fine tourist attraction and a marvelous idea -- one that Abraham Lincoln didn't have.

Human investments have their returns, and children generally lack the means with which to pay for elementary education -- and poor parents often can't meet the cost, either. If you think that education is expensive, then try ignorance. Do you really want some illiterate person making you sick because he confused a white powder used as an insecticide with the flour in your pizza?

Oh wait -- the only cost that you could endure in reading http://ebooks.adelaide.edu.au/k/keyn..._maynard/k44g/ is time. This time it doesn't come from the Marxist Archive. But all in all, you can learn much more from Keynes than you can from watching reality TV or 'professional wrestling'.

With regard to other statements that have been made above, the information is already there in this thread for you to improve your understanding. If you really think the graph I posted a while back is somehow "fake", you are ignorant on a level that is too deep for me to feel motivated to deal with. I understand that the information that graph provides to you is so disturbing to your entire world view that you have to try to reject it. You mean raising taxes on the rich doesn't really bring in more revenue to the government? How could this be?

You compare apples and oranges.

The time to start reading is NOW. You will be tested!

I've had to make a statement like this before, and I'm going to make it again. I have, for the most part, decided to stop posting in this tread, not because I feel as if I've lost the argument, although if you want to tell yourselves that, you can go ahead. On the contrary, I think I've said all that needs to be said on the subject.

I don't put people on ignore. But there are certain people here who I've learned over time not to respond to because they are intellectually dishonest. It doesn't matter if 2+2=4, if they want it to equal 5, it equals 5, and nothing will convince them otherwise. It so happens that these people are all left wing Baby Boomers. There are three in particular who are the worst offenders, and who also have the habit of flooding threads with massive walls of text that almost no one here bothers to read. All three of them have posted extensively in this thread.

I have, on occasion, in the interest of giving people a second or third chance, responded to some of their posts, as I have here. I'm done with it. Life is too short. It reminds me too much of the left wing Boomers I had to deal with in school. They are exactly the kind of people that have caused my particular animus against their cohort. I could take their long, drawn out posts, respond line by line as if I was writing a college paper, with exhaustive facts, references and footnotes, exposing all of the flaws in their reasoning, and proving beyond a shadow of a doubt that what I'm saying is right, and they would look me right in the eye, draw a giant red 'F' on my paper, and laugh in my face knowing that they just damaged my future because I don't accept their dogma. That is who these people are.

I have reached the point in life where I really don't have anything more to say to Boomers of that nature. Although I occasionally try to reason with them out of good will, I should know better. Regarding all of the above long-winded Boomer posts, in the words of another Xer speaking to another Boomer:

"You know, and we know, and you know that we know, that it's nonsense". I'm done playing your game. Sorry.

Originally Posted by ziggyX65

Assuming the money is being spent or invested at all. I think the attempts to inject liquidity with near-zero interest rates and "stimulus checks" demonstrated that it's not enough to give out money or make it "cheap" to borrow. Unless it has velocity -- changing hands in commercial economic activity that generates tax revenue and keeps people employed -- it's meaningless. If tax cuts for the wealthy don't lead them to spend it and/or invest it in productive, economically beneficial ways then the supply sider argument for "lower taxes = more economic growth" becomes very dubious. And in this recession, when you give someone more money (regardless of how they get it) they're as likely as not to save it or pay off debt with it. Those are essentially zero-velocity money moves which, as I said yesterday, are wise and responsible individual financial decisions in most cases but it doesn't achieve the desired macroeconomic results.

Throwing money at people and businesses, whether through direct "rebates" or lower taxes, isn't a panacea in and of itself. The money has to have decent velocity.

I agree with you. This applies not just to tax policy, but also to monetary policy. For the last 25 years the primary behavior of the Fed has been to blow up speculative bubbles.

Originally Posted by JustPassingThrough

I've had to make a statement like this before, and I'm going to make it again. I have, for the most part, decided to stop posting in this tread, not because I feel as if I've lost the argument, although if you want to tell yourselves that, you can go ahead. On the contrary, I think I've said all that needs to be said on the subject.

I don't put people on ignore. But there are certain people here who I've learned over time not to respond to because they are intellectually dishonest. It doesn't matter if 2+2=4, if they want it to equal 5, it equals 5, and nothing will convince them otherwise. It so happens that these people are all left wing Baby Boomers. There are three in particular who are the worst offenders, and who also have the habit of flooding threads with massive walls of text that almost no one here bothers to read. All three of them have posted extensively in this thread.

I have, on occasion, in the interest of giving people a second or third chance, responded to some of their posts, as I have here. I'm done with it. Life is too short. It reminds me too much of the left wing Boomers I had to deal with in school. They are exactly the kind of people that have caused my particular animus against their cohort. I could take their long, drawn out posts, respond line by line as if I was writing a college paper, with exhaustive facts, references and footnotes, exposing all of the flaws in their reasoning, and proving beyond a shadow of a doubt that what I'm saying is right, and they would look me right in the eye, draw a giant red 'F' on my paper, and laugh in my face knowing that they just damaged my future because I don't accept their dogma. That is who these people are.

I have reached the point in life where I really don't have anything more to say to Boomers of that nature. Although I occasionally try to reason with them out of good will, I should know better. Regarding all of the above long-winded Boomer posts, in the words of another Xer speaking to another Boomer:

"You know, and we know, and you know that we know, that it's nonsense". I'm done playing your game. Sorry.

There you go with your persecution complex again, lashing out at the world and accusing people telling you that you are wrong of persecuting you. You remind me of the African American fellow in the apartment below me that thinks he's hot stuff and the only reason he can't get into law school or play his music loud is because everyone is a racist who is out to get him.

You know why I don't take your rants about your Boomer professors giving you Fs seriously? Because Creationists say the same damn thing when professors give them a big fat F.

Originally Posted by Odin

There you go with your persecution complex again, lashing out at the world and accusing people telling you that you are wrong of persecuting you. You remind me of the African American fellow in the apartment below me that thinks he's hot stuff and the only reason he can't get into law school or play his music loud is because everyone is a racist who is out to get him.

You know why I don't take your rants about your Boomer professors giving you Fs seriously? Because Creationists say the same damn thing when professors give them a big fat F.

I said nothing about persecution, and nothing I have posted in this thread remotely qualifies as a "rant". I just know better than to try to engage certain people in a genuine intellectual discussion. If you are someone who will never admit you're wrong, even when blatantly shown that you are (as, for example, I did to Brian Rush earlier in this thread with his own graphs), there is no point having a discussion with you. It's not complicated. It's just a waste of time.

And then you get these childish, nanny-nanny-boo-boo, elementary school playground responses from leftists that make it clear reality is not something that matters to them. It's always a problem on this board, which is not merely left wing, but heavily weighted with people who are genuine extremists. There often comes a point at which I get bored with it.

I will merely say, as I said before...the left is not interested in economic realities. They start with their political dogma, and then build economic rationalizations around it. And the economy is (almost) always why they ultimately fail, despite all of their frantic gamesmanship and manipulation. It happened to the Soviet Union, and it happened to Jimmy Carter. It's universal across the left wing spectrum. Left wing economic policy leads to failure and misery, everywhere and always. It may take some time before the left wing parasite wears down the health of the host, but it's inevitable.

"The problem with socialism is that eventually you run out of other people's money".

Originally Posted by JustPassingThrough

If you are someone who will never admit you're wrong, even when blatantly shown that you are (as, for example, I did to Brian Rush earlier in this thread with his own graphs)

You did nothing of the sort. The sequence of discussion was like this:

1) I corrected another poster (not you) about the reason why taxes were cut in the 1920s.

2) You presented the graph which purported to show that revenue has remained flat regardless of top marginal tax rate.

3) I presented a graph from a more reliable source showing that it has NOT remained flat, and also that it is higher than your graph showed; on this basis I stated that the graph you presented was factually in error.

4) You pointed out that the graph you presented was a comparison of two things, top marginal tax rate and revenues.

Number 4 is not even a coherent response to number 3, let alone showing it was wrong. The graph you originally presented separated the two things, top marginal tax rates and federal revenue. What I was saying was that it misrepresented the latter -- that it made claims about federal revenue over time that are flat, dead wrong. And I showed evidence that that is the case. I said nothing about the graph of top marginal tax rate; truth is, I didn't even look at it very closely. That the graph was wrong about federal revenue also makes the comparison it was drawing wrong.

You have not only not shown me to be wrong on this, you haven't even provided a good answer or, for that matter, shown that you have clue one what I was talking about.

I just know better than to try to engage certain people in a genuine intellectual discussion.

Such utter bullshit. You get your head handed to you time and again by those people, is what happens, you don't know how to respond, and now you are making excuses. You're fooling nobody. You're completely transparent.

I will merely say, as I said before...the left is not interested in economic realities.

No, sir. It's you that are not interested in economic realities. In fact, you don't even begin to understand what they are. You systematically and consistently confuse them with right-wing dogma, so that when evidence and arguments are presented showing that said dogma is wrong -- evidence and arguments, you see, which is more than you EVER present -- you simply hide your head in the sand.

Everything you are saying about the left is true about you. It is pure projection, nothing else.

Last one.

Originally Posted by Brian Rush

You did nothing of the sort. The sequence of discussion was like this:

1) I corrected another poster (not you) about the reason why taxes were cut in the 1920s.

2) You presented the graph which purported to show that revenue has remained flat regardless of top marginal tax rate.

3) I presented a graph from a more reliable source showing that it has NOT remained flat, and also that it is higher than your graph showed; on this basis I stated that the graph you presented was factually in error.

4) You pointed out that the graph you presented was a comparison of two things, top marginal tax rate and revenues.

Number 4 is not even a coherent response to number 3, let alone showing it was wrong. The graph you originally presented separated the two things, top marginal tax rates and federal revenue. What I was saying was that it misrepresented the latter -- that it made claims about federal revenue over time that are flat, dead wrong. And I showed evidence that that is the case. I said nothing about the graph of top marginal tax rate; truth is, I didn't even look at it very closely. That the graph was wrong about federal revenue also makes the comparison it was drawing wrong.

You have not only not shown me to be wrong on this, you haven't even provided a good answer or, for that matter, shown that you have clue one what I was talking about.

Such utter bullshit. You get your head handed to you time and again by those people, is what happens, you don't know how to respond, and now you are making excuses. You're fooling nobody. You're completely transparent.



No, sir. It's you that are not interested in economic realities. In fact, you don't even begin to understand what they are. You systematically and consistently confuse them with right-wing dogma, so that when evidence and arguments are presented showing that said dogma is wrong -- evidence and arguments, you see, which is more than you EVER present -- you simply hide your head in the sand.

Everything you are saying about the left is true about you. It is pure projection, nothing else.

Maybe you missed, or did not understand this post. The link you provided showed all government revenue, federal state and local. The graph I posted showed only federal revenue, since it was comparing it to the top federal income tax rate.

Go back to your link, and you will see buttons where you can select state, federal, local, or total. If you select federal only, you will see the same line as the graph I posted, albeit on a Y axis that only goes from 0-25, where the one I posted goes from 0-100. Revenues have stayed in the 15-20% range, averaging 19%, for the last 60 years, whether the top rate was 90%, or when it was in the 20s during the Reagan Administration.

If you select state only, you will see that the dramatic growth in state governments accounts for nearly all of the increase in total government revenue.

Originally Posted by JustPassingThrough

I've had to make a statement like this before, and I'm going to make it again. I have, for the most part, decided to stop posting in this tread, not because I feel as if I've lost the argument, although if you want to tell yourselves that, you can go ahead. On the contrary, I think I've said all that needs to be said on the subject.

I still suggest that you read the General Theory so you know what Keynesian economics is. Keynes himself can far better explain it than someone like Rush Limbaugh or Glenn Beck.

I don't put people on ignore. But there are certain people here who I've learned over time not to respond to because they are intellectually dishonest. It doesn't matter if 2+2=4, if they want it to equal 5, it equals 5, and nothing will convince them otherwise. It so happens that these people are all left wing Baby Boomers. There are three in particular who are the worst offenders, and who also have the habit of flooding threads with massive walls of text that almost no one here bothers to read. All three of them have posted extensively in this thread.

I have put people on Ignore. I have complained to the Threadmaster about people who have made abusive posts. But you are in neither category. You have had a chance to learn about history, economics, and culture, and you seem to have learned little. You even seem to contradict Howe and Strauss without good cause.

I have, on occasion, in the interest of giving people a second or third chance, responded to some of their posts, as I have here. I'm done with it. Life is too short. It reminds me too much of the left wing Boomers I had to deal with in school. They are exactly the kind of people that have caused my particular animus against their cohort. I could take their long, drawn out posts, respond line by line as if I was writing a college paper, with exhaustive facts, references and footnotes, exposing all of the flaws in their reasoning, and proving beyond a shadow of a doubt that what I'm saying is right, and they would look me right in the eye, draw a giant red 'F' on my paper, and laugh in my face knowing that they just damaged my future because I don't accept their dogma. That is who these people are.

Paradoxically we left-wing Boomers are far more tolerant and less dogmatic than the right-wing Boomers (prime example: Rush Limbaugh). But there is objective truth, and one gets it wrong once as a learner, a second time as a wayward student, a third time as a fool, and a fourth and later times as an ignoramus. To assert that you are right beyond a shadow of a doubt is to demonstrate that you are a fool. Most knowledge has some level of uncertainty, and so it is with Keynesian economics. So why does one tolerate imperfect knowledge? Because alternatives are less reliable.

This is the simple fact: unless the knowledge is your own personal (and usually limited) knowledge, you as an undergraduate are never on the cutting edge of knowledge. Where I went to college it was still wise to go by the book and not attempt to outsmart the author of the textbook. The cutting edge of knowledge is always in grad school or among professors. This has nothing to do with ideology; it applies just the same for sciences and mathematics as it does for political sciences.

I have reached the point in life where I really don't have anything more to say to Boomers of that nature. Although I occasionally try to reason with them out of good will, I should know better. Regarding all of the above long-winded Boomer posts, in the words of another Xer speaking to another Boomer:

"You know, and we know, and you know that we know, that it's nonsense". I'm done playing your game. Sorry.

So go to the sports bar, grab some quaffs and chips, become a fan, become a learned expert on the local teams, try to make out with the opportunistic floozies (no, not really -- they aren't worth it, or they wouldn't keep trying), and have more fun than you could possibly have here. Sometimes the wise thing to do is to find another game.

Originally Posted by JustPassingThrough

Last one.

You keep saying that. I'll believe it when I see it.

The link you provided showed all government revenue, federal state and local.

It didn't clearly state that, but here's another to avoid ambiguity:

http://www.rrojasdatabank.info/IEA/lecon3.pdf

This is a long PDF file, but scroll down to page 26 and look at figure 3-39.

Actually, I have to admit that the one I presented earlier must have been all tax revenue, since this graph shows federal revenue in the 15-20% range rather than 30+. However, it also shows considerably more fluctuation than the one you presented. In particular, you can see a big spike in revenues during the World War II years, a big drop in the early 1980s associated with Reagan's tax cut, and a drop after 2000 associated with Bush's tax cut.

Ah! Now I see where the confusion lies: "albeit on an X axis that only goes from 0-25, where the one I posted goes from 0-100." So your source didn't actually lie, it just flattened the graph by artificially amplifying the Y-axis. It isn't meaningful to look at a range of 0-100 for purposes of evaluating tax revenues, since taxes never aim for anything near 100% of the economy. 15-20% of GDP is actually a considerable spread.

I was indeed wrong. However, so were you. The graph you posted did not flat-out lie, and I retract that accusation. However, it did misrepresent the data, and encouraged a conclusion not warranted by the evidence.

EDIT: Actually, going back to the graph I originally linked (http://www.usgovernmentrevenue.com/d...olor=c&local=s ) and setting it to federal revenue only, you can also see the major fluctuations that have occurred over time. It shows the same thing the graph in the PDF file does: that changes in tax rates (as well as other factors) have dramatically affected tax revenues as a percent of GDP. What you presented earlier was no more than an optical illusion.

Originally Posted by Brian Rush

You keep saying that. I'll believe it when I see it.

I am definitely done making extensive posts on this subject. I said what I had to say, and intellectually honest, objective readers can make up their own minds. You have made it clear many times over that you do not fit that description.

It didn't clearly state that, but here's another to avoid ambiguity:

http://www.rrojasdatabank.info/IEA/lecon3.pdf

This is a long PDF file, but scroll down to page 26 and look at figure 3-39.

Actually, I have to admit that the one I presented earlier must have been all tax revenue, since this graph shows federal revenue in the 15-20% range rather than 30+. However, it also shows considerably more fluctuation than the one you presented. In particular, you can see a big spike in revenues during the World War II years, a big drop in the early 1980s associated with Reagan's tax cut, and a drop after 2000 associated with Bush's tax cut.

Ah! Now I see where the confusion lies: "albeit on an X axis that only goes from 0-25, where the one I posted goes from 0-100." So your source didn't actually lie, it just flattened the graph by artificially amplifying the Y-axis. It isn't meaningful to look at a range of 0-100 for purposes of evaluating tax revenues, since taxes never aim for anything near 100% of the economy. 15-20% of GDP is actually a considerable spread.

I was indeed wrong. However, so were you. The graph you posted did not flat-out lie, and I retract that accusation. However, it did misrepresent the data, and encouraged a conclusion not warranted by the evidence.

I mis-typed X instead of Y in my previous post and corrected it...getting lazy. The reason why the graph I posted went to 100 is because it also showed the top tax rate. The fact that revenues went up so dramatically and then leveled off suggests strongly that there is an upper bound on how much government can extract from the economy in taxes before diminishing returns set in.

Originally Posted by pbrower2a

Paradoxically we left-wing Boomers are far more tolerant and less dogmatic than the right-wing Boomers (prime example: Rush Limbaugh).

You forget you are talking about boomers. Left wing intolerance is on display daily in our culture. I would not call out one side over the other, but the left wing intolerance is easier to identify because of it's overwhelming presence in journalism.

James50