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How Income Inequality is Damaging the US

slo1
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10/2/2012 6:35:22 PM
Posted: 4 years ago
New research indicates that growing income inequality isn"t just unpleasant; it is seriously hurting the U.S. economy. And economists are figuring out just how the damage is done, according to a fascinating new article by the journalist Jonathan Rauch in National Journal. This challenges a long-standing consensus that, as Rauch puts it, "inequality is the price America pays for a dynamic, efficient economy. . . . As long as the bottom and the middle are moving up, there is no reason to mind if the top is moving up faster."
http://www.forbes.com...
slo1
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10/2/2012 6:38:00 PM
Posted: 4 years ago
It is too bad that supply siders basically pulled the wool over the eyes for decades and now it is just becoming acceptable to consider that the success of the bottom 99% is what drives growth in this country.
Contra
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10/2/2012 6:38:30 PM
Posted: 4 years ago
I'll try and rebut this within the next day, mark my words.
"The solution [for Republicans] is to admit that Bush was a bad president, stop this racist homophobic stuff, stop trying to give most of the tax cuts to the rich, propose a real alternative to Obamacare that actually works, and propose smart free market solutions to our economic problems." - Distraff

"Americans are better off in a dynamic, free-enterprise-based economy that fosters economic growth, opportunity and upward mobility." - Paul Ryan
Lordknukle
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10/2/2012 6:57:22 PM
Posted: 4 years ago
After reading the first two paragraphs, it amazes me how freakin' economists don't know that correlation does not mean causality.
"Easy is the descent to Avernus, for the door to the Underworld lies upon both day and night. But to retrace your steps and return to the breezes above- that's the task, that's the toil."
slo1
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10/3/2012 9:28:34 AM
Posted: 4 years ago
At 10/2/2012 6:57:22 PM, Lordknukle wrote:
After reading the first two paragraphs, it amazes me how freakin' economists don't know that correlation does not mean causality.

If you read further, it does seem like they understand the concept.

"But does that imply a cause-and-effect relationship? It looks that way, Rauch writes. Economists have been tracing the following chain of causality. Those who make the least consume the most of their income; those who make the most tend to save a great deal, and for that reason, according to the economist Christopher Brown, at Arkansas State, "income inequality can exert a significant drag on effective demand." "

Who exactly does not agree that a payroll tax will do more immediately for the economy than a tax cut for the upper brackets?
innomen
Posts: 10,052
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10/3/2012 3:12:45 PM
Posted: 4 years ago
At 10/3/2012 9:28:34 AM, slo1 wrote:
At 10/2/2012 6:57:22 PM, Lordknukle wrote:
After reading the first two paragraphs, it amazes me how freakin' economists don't know that correlation does not mean causality.

If you read further, it does seem like they understand the concept.

"But does that imply a cause-and-effect relationship? It looks that way, Rauch writes. Economists have been tracing the following chain of causality. Those who make the least consume the most of their income; those who make the most tend to save a great deal, and for that reason, according to the economist Christopher Brown, at Arkansas State, "income inequality can exert a significant drag on effective demand." "

Who exactly does not agree that a payroll tax will do more immediately for the economy than a tax cut for the upper brackets?

Removing capital from the economy will not improve the economy. If you refer to the debt, we don't have a tax problem, we have a spending problem. If you believe that we don't pay enough taxes, and by we I mean wealthy and not so wealthy, I wonder what your payroll receipt looks like. I can tell you that I pay more than enough taxes, and the taxes that I pay do less for the economy than the money that I spend after taxes.
socialpinko
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10/3/2012 3:20:19 PM
Posted: 4 years ago
At 10/2/2012 6:38:00 PM, slo1 wrote:
It is too bad that supply siders basically pulled the wool over the eyes for decades and now it is just becoming acceptable to consider that the success of the bottom 99% is what drives growth in this country.

You seem like the kind of person who says "look at how dumb conservatives are! Therefore Obama 2012!"
: At 9/29/2014 10:55:59 AM, imabench wrote:
: : At 9/29/2014 9:43:46 AM, kbub wrote:
: :
: : DDO should discredit support of sexual violence at any time and in every way.
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Ragnar_Rahl
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10/3/2012 3:27:42 PM
Posted: 4 years ago
If you read further, it does seem like they understand the concept.

"But does that imply a cause-and-effect relationship? It looks that way,
Hurr durr, really shows they understand the concept that correlation DOESNT mean causality amirite?

The fundamental problem in economies is "There's not enough stuff." It's not "We don't want enough stuff." There's never enough stuff, we need more stuff. Therefore we need supply, not demand. Economists not understanding that correlation doesn't mean causation? Pfft, economists don't even understand scarcity.

Also, how would one "Damage the US?" What would that mean?
It came to be at its height. It was commanded to command. It was a capital before its first stone was laid. It was a monument to the spirit of man.
slo1
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10/3/2012 3:56:36 PM
Posted: 4 years ago
At 10/3/2012 3:20:19 PM, socialpinko wrote:
At 10/2/2012 6:38:00 PM, slo1 wrote:
It is too bad that supply siders basically pulled the wool over the eyes for decades and now it is just becoming acceptable to consider that the success of the bottom 99% is what drives growth in this country.

You seem like the kind of person who says "look at how dumb conservatives are! Therefore Obama 2012!"

That is because you live in a black and white world where there are only two options.

I'm the type of person who says "look at how dumb conservatives and liberals are. Therefore No Obama or Romney"
slo1
Posts: 4,346
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10/3/2012 3:59:48 PM
Posted: 4 years ago
At 10/3/2012 3:12:45 PM, innomen wrote:
At 10/3/2012 9:28:34 AM, slo1 wrote:
At 10/2/2012 6:57:22 PM, Lordknukle wrote:
After reading the first two paragraphs, it amazes me how freakin' economists don't know that correlation does not mean causality.

If you read further, it does seem like they understand the concept.

"But does that imply a cause-and-effect relationship? It looks that way, Rauch writes. Economists have been tracing the following chain of causality. Those who make the least consume the most of their income; those who make the most tend to save a great deal, and for that reason, according to the economist Christopher Brown, at Arkansas State, "income inequality can exert a significant drag on effective demand." "

Who exactly does not agree that a payroll tax will do more immediately for the economy than a tax cut for the upper brackets?

Removing capital from the economy will not improve the economy. If you refer to the debt, we don't have a tax problem, we have a spending problem. If you believe that we don't pay enough taxes, and by we I mean wealthy and not so wealthy, I wonder what your payroll receipt looks like. I can tell you that I pay more than enough taxes, and the taxes that I pay do less for the economy than the money that I spend after taxes.

It sounds like you agree then. When capital is removed from the economy by giving the top 1% of folks tax breaks rather than the middle class, you are removing more money because a larger percentage of it sits in idle positions rather than getting spent on goods and services.

The article has nothing to do with the overall tax rate. Of course those who pay taxes pay too much for what we get.
socialpinko
Posts: 10,458
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10/3/2012 4:03:17 PM
Posted: 4 years ago
At 10/3/2012 3:56:36 PM, slo1 wrote:
At 10/3/2012 3:20:19 PM, socialpinko wrote:
At 10/2/2012 6:38:00 PM, slo1 wrote:
It is too bad that supply siders basically pulled the wool over the eyes for decades and now it is just becoming acceptable to consider that the success of the bottom 99% is what drives growth in this country.

You seem like the kind of person who says "look at how dumb conservatives are! Therefore Obama 2012!"

That is because you live in a black and white world where there are only two options.

I'm the type of person who says "look at how dumb conservatives and liberals are. Therefore No Obama or Romney"

You must be new here.
: At 9/29/2014 10:55:59 AM, imabench wrote:
: : At 9/29/2014 9:43:46 AM, kbub wrote:
: :
: : DDO should discredit support of sexual violence at any time and in every way.
:
: I disagree.
slo1
Posts: 4,346
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10/3/2012 4:08:33 PM
Posted: 4 years ago
At 10/3/2012 3:27:42 PM, Ragnar_Rahl wrote:
If you read further, it does seem like they understand the concept.

"But does that imply a cause-and-effect relationship? It looks that way,
Hurr durr, really shows they understand the concept that correlation DOESNT mean causality amirite?

The fundamental problem in economies is "There's not enough stuff." It's not "We don't want enough stuff." There's never enough stuff, we need more stuff. Therefore we need supply, not demand. Economists not understanding that correlation doesn't mean causation? Pfft, economists don't even understand scarcity.

Also, how would one "Damage the US?" What would that mean?

Everyone in Econ 101 learns the supply and demand curves. When your supply greatly exceeds demand, you can't price to make a profit. It will kill you as a business and it is the exact reason why inventory levels is used as an indicator of a predictor of deflation.

Let me put it this way. When you create supply you are making real purchases in the economy. The action of creating inventory creates purchases in the economy, but you will never turned unlimited supply into unlimited demand because of the pricing problems when you inventory far exceeds what you can sell.

You can't manufacture unlimited demand by building supply willy nilly.
innomen
Posts: 10,052
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10/3/2012 4:19:04 PM
Posted: 4 years ago
At 10/3/2012 3:59:48 PM, slo1 wrote:
At 10/3/2012 3:12:45 PM, innomen wrote:
At 10/3/2012 9:28:34 AM, slo1 wrote:
At 10/2/2012 6:57:22 PM, Lordknukle wrote:
After reading the first two paragraphs, it amazes me how freakin' economists don't know that correlation does not mean causality.

If you read further, it does seem like they understand the concept.

"But does that imply a cause-and-effect relationship? It looks that way, Rauch writes. Economists have been tracing the following chain of causality. Those who make the least consume the most of their income; those who make the most tend to save a great deal, and for that reason, according to the economist Christopher Brown, at Arkansas State, "income inequality can exert a significant drag on effective demand." "

Who exactly does not agree that a payroll tax will do more immediately for the economy than a tax cut for the upper brackets?

Removing capital from the economy will not improve the economy. If you refer to the debt, we don't have a tax problem, we have a spending problem. If you believe that we don't pay enough taxes, and by we I mean wealthy and not so wealthy, I wonder what your payroll receipt looks like. I can tell you that I pay more than enough taxes, and the taxes that I pay do less for the economy than the money that I spend after taxes.

It sounds like you agree then. When capital is removed from the economy by giving the top 1% of folks tax breaks rather than the middle class, you are removing more money because a larger percentage of it sits in idle positions rather than getting spent on goods and services.

Good point, but no. The largest contributions to the economy are by those with the largest buckets of money. Some will be saved, but most will be invested.

The article has nothing to do with the overall tax rate. Of course those who pay taxes pay too much for what we get.
Paying taxes is the worst use of money possible in an economy, particularly a struggling economy.

Spinko black and white?
socialpinko
Posts: 10,458
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10/3/2012 4:23:34 PM
Posted: 4 years ago
At 10/3/2012 4:19:04 PM, innomen wrote:

Spinko black and white?

This nice man is so kind as to be willing to educate me on the dangers of the conservative-liberal paradigm. The whole idea is so foreign to me I can't wait for him to explain further.
: At 9/29/2014 10:55:59 AM, imabench wrote:
: : At 9/29/2014 9:43:46 AM, kbub wrote:
: :
: : DDO should discredit support of sexual violence at any time and in every way.
:
: I disagree.
innomen
Posts: 10,052
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10/3/2012 4:25:24 PM
Posted: 4 years ago
At 10/3/2012 4:23:34 PM, socialpinko wrote:
At 10/3/2012 4:19:04 PM, innomen wrote:

Spinko black and white?

This nice man is so kind as to be willing to educate me on the dangers of the conservative-liberal paradigm. The whole idea is so foreign to me I can't wait for him to explain further.

He'll learn you and Ragnar somethin'
innomen
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10/3/2012 4:27:24 PM
Posted: 4 years ago
At 10/3/2012 4:25:24 PM, innomen wrote:
At 10/3/2012 4:23:34 PM, socialpinko wrote:
At 10/3/2012 4:19:04 PM, innomen wrote:

Spinko black and white?

This nice man is so kind as to be willing to educate me on the dangers of the conservative-liberal paradigm. The whole idea is so foreign to me I can't wait for him to explain further.

He'll learn you and Ragnar somethin'

You have to wonder about someone who chooses the name Slo1.
socialpinko
Posts: 10,458
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10/3/2012 4:29:38 PM
Posted: 4 years ago
At 10/3/2012 4:27:24 PM, innomen wrote:
At 10/3/2012 4:25:24 PM, innomen wrote:
At 10/3/2012 4:23:34 PM, socialpinko wrote:
At 10/3/2012 4:19:04 PM, innomen wrote:

Spinko black and white?

This nice man is so kind as to be willing to educate me on the dangers of the conservative-liberal paradigm. The whole idea is so foreign to me I can't wait for him to explain further.

He'll learn you and Ragnar somethin'

You have to wonder about someone who chooses the name Slo1.

Lol just said it aloud and heard the connection.
: At 9/29/2014 10:55:59 AM, imabench wrote:
: : At 9/29/2014 9:43:46 AM, kbub wrote:
: :
: : DDO should discredit support of sexual violence at any time and in every way.
:
: I disagree.
johnnyboy54
Posts: 6,362
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10/3/2012 4:32:39 PM
Posted: 4 years ago
At 10/3/2012 4:27:24 PM, innomen wrote:
At 10/3/2012 4:25:24 PM, innomen wrote:
At 10/3/2012 4:23:34 PM, socialpinko wrote:
At 10/3/2012 4:19:04 PM, innomen wrote:

Spinko black and white?

This nice man is so kind as to be willing to educate me on the dangers of the conservative-liberal paradigm. The whole idea is so foreign to me I can't wait for him to explain further.

He'll learn you and Ragnar somethin'

You have to wonder about someone who chooses the name Slo1.

Lol that was mean.
I didn't order assholes with my whiskey.
Contra
Posts: 3,941
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10/3/2012 4:32:44 PM
Posted: 4 years ago
You could tax the 100% of income for the wealthy (and assuming the income pool would remain the same size, which it would not obviously), and it still wouldn't balance the budget.

We have a spending problem, and we need to let the free market provide many of the services currently ran by gov't so that resources are allocated more efficiently, we can expand economic growth, reduce the debt, and expand economic liberty.

Taxing the wealthy will just also reduce capital for investments. Businesses will have less wealth to expand, and thus business contraction will cause a weaker economy. Investment is extremely important, $2 million in investment is more important than $2 million in demand.

When the wealthy have more income in a good economic climate, they will expand their businesses which will lead to great economic growth and prosperity for all, in fact likely helping the poor more than the wealthy in the end.

"There was considerable income mobility of individuals in the U.S. economy during
the 1996 through 2005 period as over half of taxpayers moved to a different income
quintile over this period."
" Roughly half of taxpayers who began in the bottom income quintile in 1996 moved
up to a higher income group by 2005.
" Among those with the very highest incomes in 1996 " the top 1/100 of 1 percent "
only 25 percent remained in this group in 2005. Moreover, the median real income of
these taxpayers declined over this period.
" The degree of mobility among income groups is unchanged from the prior decade
(1987 through 1996).
" Economic growth resulted in rising incomes for most taxpayers over the period from
1996 to 2005. Median incomes of all taxpayers increased by 24 percent after
adjusting for inflation. The real incomes of two-thirds of all taxpayers increased over
this period. In addition, the median incomes of those initially in the lower income
groups increased more than the median incomes of those initially in the higher
income groups.

Get the facts:
http://www.treasury.gov...
"The solution [for Republicans] is to admit that Bush was a bad president, stop this racist homophobic stuff, stop trying to give most of the tax cuts to the rich, propose a real alternative to Obamacare that actually works, and propose smart free market solutions to our economic problems." - Distraff

"Americans are better off in a dynamic, free-enterprise-based economy that fosters economic growth, opportunity and upward mobility." - Paul Ryan
slo1
Posts: 4,346
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10/3/2012 7:35:00 PM
Posted: 4 years ago
At 10/3/2012 4:27:24 PM, innomen wrote:
At 10/3/2012 4:25:24 PM, innomen wrote:
At 10/3/2012 4:23:34 PM, socialpinko wrote:
At 10/3/2012 4:19:04 PM, innomen wrote:

Spinko black and white?

This nice man is so kind as to be willing to educate me on the dangers of the conservative-liberal paradigm. The whole idea is so foreign to me I can't wait for him to explain further.

He'll learn you and Ragnar somethin'

You have to wonder about someone who chooses the name Slo1.

How cute. You are the first to notice. Just goes to show what you pay attention to. Get with the plan man. You don't think I didn't set you up from a mile away? lol
slo1
Posts: 4,346
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10/3/2012 7:41:18 PM
Posted: 4 years ago
At 10/3/2012 4:32:44 PM, Contra wrote:
You could tax the 100% of income for the wealthy (and assuming the income pool would remain the same size, which it would not obviously), and it still wouldn't balance the budget.

We have a spending problem, and we need to let the free market provide many of the services currently ran by gov't so that resources are allocated more efficiently, we can expand economic growth, reduce the debt, and expand economic liberty.

Taxing the wealthy will just also reduce capital for investments. Businesses will have less wealth to expand, and thus business contraction will cause a weaker economy. Investment is extremely important, $2 million in investment is more important than $2 million in demand.

When the wealthy have more income in a good economic climate, they will expand their businesses which will lead to great economic growth and prosperity for all, in fact likely helping the poor more than the wealthy in the end.

"There was considerable income mobility of individuals in the U.S. economy during
the 1996 through 2005 period as over half of taxpayers moved to a different income
quintile over this period."
" Roughly half of taxpayers who began in the bottom income quintile in 1996 moved
up to a higher income group by 2005.
" Among those with the very highest incomes in 1996 " the top 1/100 of 1 percent "
only 25 percent remained in this group in 2005. Moreover, the median real income of
these taxpayers declined over this period.
" The degree of mobility among income groups is unchanged from the prior decade
(1987 through 1996).
" Economic growth resulted in rising incomes for most taxpayers over the period from
1996 to 2005. Median incomes of all taxpayers increased by 24 percent after
adjusting for inflation. The real incomes of two-thirds of all taxpayers increased over
this period. In addition, the median incomes of those initially in the lower income
groups increased more than the median incomes of those initially in the higher
income groups.

Get the facts:
http://www.treasury.gov...

All boats rise when the tide rises. What happens when the tide is falling?

Top 1% Got 93% of Income Growth as Rich-Poor Gap Widened
http://www.bloomberg.com...

Where is all that income growth getting invested to? Why are fortune 500 companies sitting on record levels of cash in the $ trillions? Putting cash in the hands of a few to invest does not equal economic growth nor does extreme deficit spending.
slo1
Posts: 4,346
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10/3/2012 7:43:07 PM
Posted: 4 years ago
Notice that I have yet to give any solutions as to what would be good policy to get the economy going, but ever j.a. comes out of the wood work and expresses they know the colors you run with. Grow up kids.
darkkermit
Posts: 11,204
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10/3/2012 7:45:20 PM
Posted: 4 years ago
I'm actually a believer that income inequality is damaging to the US but too lazy to really explain my thought process.

Basically you need consumption to drive an economy, since that's how businesses get profit. Rich people can increase the consumption of middle class and lower class people through supplying them with loans, but this is a short-term solution because eventually the bills come due and these people can't afford their consumption. Rich people could theoretically make up the consumption levels, but they have such low marginal propensity for consumption that they won't consume enough.
Open borders debate:
http://www.debate.org...
Contra
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10/3/2012 8:18:49 PM
Posted: 4 years ago
At 10/3/2012 7:45:20 PM, darkkermit wrote:
I'm actually a believer that income inequality is damaging to the US but too lazy to really explain my thought process.

Basically you need consumption to drive an economy, since that's how businesses get profit. Rich people can increase the consumption of middle class and lower class people through supplying them with loans, but this is a short-term solution because eventually the bills come due and these people can't afford their consumption. Rich people could theoretically make up the consumption levels, but they have such low marginal propensity for consumption that they won't consume enough.

If you ever explain this thought process (say, this weekend of something) I wouldn't like to see it.
"The solution [for Republicans] is to admit that Bush was a bad president, stop this racist homophobic stuff, stop trying to give most of the tax cuts to the rich, propose a real alternative to Obamacare that actually works, and propose smart free market solutions to our economic problems." - Distraff

"Americans are better off in a dynamic, free-enterprise-based economy that fosters economic growth, opportunity and upward mobility." - Paul Ryan
Contra
Posts: 3,941
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10/3/2012 8:28:11 PM
Posted: 4 years ago
At 10/3/2012 7:41:18 PM, slo1 wrote:
At 10/3/2012 4:32:44 PM, Contra wrote:
You could tax the 100% of income for the wealthy (and assuming the income pool would remain the same size, which it would not obviously), and it still wouldn't balance the budget.

We have a spending problem, and we need to let the free market provide many of the services currently ran by gov't so that resources are allocated more efficiently, we can expand economic growth, reduce the debt, and expand economic liberty.

Taxing the wealthy will just also reduce capital for investments. Businesses will have less wealth to expand, and thus business contraction will cause a weaker economy. Investment is extremely important, $2 million in investment is more important than $2 million in demand.

When the wealthy have more income in a good economic climate, they will expand their businesses which will lead to great economic growth and prosperity for all, in fact likely helping the poor more than the wealthy in the end.

"There was considerable income mobility of individuals in the U.S. economy during
the 1996 through 2005 period as over half of taxpayers moved to a different income
quintile over this period."
" Roughly half of taxpayers who began in the bottom income quintile in 1996 moved
up to a higher income group by 2005.
" Among those with the very highest incomes in 1996 " the top 1/100 of 1 percent "
only 25 percent remained in this group in 2005. Moreover, the median real income of
these taxpayers declined over this period.
" The degree of mobility among income groups is unchanged from the prior decade
(1987 through 1996).
" Economic growth resulted in rising incomes for most taxpayers over the period from
1996 to 2005. Median incomes of all taxpayers increased by 24 percent after
adjusting for inflation. The real incomes of two-thirds of all taxpayers increased over
this period. In addition, the median incomes of those initially in the lower income
groups increased more than the median incomes of those initially in the higher
income groups.

Get the facts:
http://www.treasury.gov...

All boats rise when the tide rises.

Exactly.

What happens when the tide is falling?

Top 1% Got 93% of Income Growth as Rich-Poor Gap Widened
http://www.bloomberg.com...

Where is all that income growth getting invested to? Why are fortune 500 companies sitting on record levels of cash in the $ trillions? Putting cash in the hands of a few to invest does not equal economic growth nor does extreme deficit spending.

False. Putting cash in the hands of the few is redistribution and in nearly all cases is something I oppose. Those folks earned it. Letting people keep more of their income (in this case the wealthy), they will use it for future uses (savings) or use it for expanding their businesses through investing in their own company and growing the community around it indirectly and helping all of us with economic growth.

There is a lack of confidence in this current environment. With the tens of thousands of new regulations under Obama, the high corporate tax rates, the fiscal cliff fear, the high debt and deficits, the unfunded entitlements close to ravaging America's economy, and the onslaught of the new possible regulations and taxes to deal with the deficit, all of this erodes confidence. A business will not be likely to hire if this tidal wave can come over and destroy their business at any moment. Restore confidence with a good regulatory and tax climate, and you will see (in combination with fiscal responsibility and lower taxes, less government) a growing economy, and this will immensely help the poor and middle class. Taxing the groups that create the wealth in the first place seems a little counter intuitive right?
"The solution [for Republicans] is to admit that Bush was a bad president, stop this racist homophobic stuff, stop trying to give most of the tax cuts to the rich, propose a real alternative to Obamacare that actually works, and propose smart free market solutions to our economic problems." - Distraff

"Americans are better off in a dynamic, free-enterprise-based economy that fosters economic growth, opportunity and upward mobility." - Paul Ryan
Greyparrot
Posts: 14,282
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10/3/2012 8:58:33 PM
Posted: 4 years ago
At 10/3/2012 3:59:48 PM, slo1 wrote:
It sounds like you agree then. When capital is removed from the economy by giving the top 1% of folks tax breaks rather than the middle class, you are removing more money because a larger percentage of it sits in idle positions rather than getting spent on goods and services.


So capital is then created by raising taxes on the rich... wow.
Ragnar_Rahl
Posts: 19,297
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10/3/2012 9:11:27 PM
Posted: 4 years ago
At 10/3/2012 4:08:33 PM, slo1 wrote:
At 10/3/2012 3:27:42 PM, Ragnar_Rahl wrote:
If you read further, it does seem like they understand the concept.

"But does that imply a cause-and-effect relationship? It looks that way,
Hurr durr, really shows they understand the concept that correlation DOESNT mean causality amirite?

The fundamental problem in economies is "There's not enough stuff." It's not "We don't want enough stuff." There's never enough stuff, we need more stuff. Therefore we need supply, not demand. Economists not understanding that correlation doesn't mean causation? Pfft, economists don't even understand scarcity.

Also, how would one "Damage the US?" What would that mean?

Everyone in Econ 101 learns the supply and demand curves.
That determines the exchange value of a particular object in terms of other objects, not the sort of general utility you're going for here. I hope your teacher wasn't stupid enough to teach you otherwise.

When your supply greatly exceeds demand, you can't price to make a profit.
Supply of a particular good. Supply in general has never exceeded demand, and in any world where it did, no one would even need profit. Such a world would not even be recognizable economically.

It will kill you as a business
Businesses are measures for adapting to and reducing scarcity. They have no importance in your mythical world where supply exceeds demand.

Let me put it this way. When you create supply you are making real purchases in the economy.
When you create supply you are making products. You are neither purchasing nor selling.

The action of creating inventory creates purchases in the economy, but you will never turned unlimited supply into unlimited demand
You don't have to, unlimited demand is the human condition.
It came to be at its height. It was commanded to command. It was a capital before its first stone was laid. It was a monument to the spirit of man.
darkkermit
Posts: 11,204
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10/3/2012 9:37:27 PM
Posted: 4 years ago
At 10/3/2012 8:18:49 PM, Contra wrote:
At 10/3/2012 7:45:20 PM, darkkermit wrote:
I'm actually a believer that income inequality is damaging to the US but too lazy to really explain my thought process.

Basically you need consumption to drive an economy, since that's how businesses get profit. Rich people can increase the consumption of middle class and lower class people through supplying them with loans, but this is a short-term solution because eventually the bills come due and these people can't afford their consumption. Rich people could theoretically make up the consumption levels, but they have such low marginal propensity for consumption that they won't consume enough.

If you ever explain this thought process (say, this weekend of something) I wouldn't like to see it.

Was this a typo or an attack on me?
Open borders debate:
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Contra
Posts: 3,941
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10/3/2012 9:54:40 PM
Posted: 4 years ago
At 10/3/2012 9:37:27 PM, darkkermit wrote:
At 10/3/2012 8:18:49 PM, Contra wrote:
At 10/3/2012 7:45:20 PM, darkkermit wrote:
I'm actually a believer that income inequality is damaging to the US but too lazy to really explain my thought process.

Basically you need consumption to drive an economy, since that's how businesses get profit. Rich people can increase the consumption of middle class and lower class people through supplying them with loans, but this is a short-term solution because eventually the bills come due and these people can't afford their consumption. Rich people could theoretically make up the consumption levels, but they have such low marginal propensity for consumption that they won't consume enough.

If you ever explain this thought process (say, this weekend of something) I wouldn't like to see it.

Was this a typo or an attack on me?

I typed that? Holy sh*t, totally a typo. I would be really interested in seeing your thought process in this area.
"The solution [for Republicans] is to admit that Bush was a bad president, stop this racist homophobic stuff, stop trying to give most of the tax cuts to the rich, propose a real alternative to Obamacare that actually works, and propose smart free market solutions to our economic problems." - Distraff

"Americans are better off in a dynamic, free-enterprise-based economy that fosters economic growth, opportunity and upward mobility." - Paul Ryan
slo1
Posts: 4,346
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10/4/2012 8:36:37 AM
Posted: 4 years ago
At 10/3/2012 8:28:11 PM, Contra wrote:
At 10/3/2012 7:41:18 PM, slo1 wrote:
At 10/3/2012 4:32:44 PM, Contra wrote:
You could tax the 100% of income for the wealthy (and assuming the income pool would remain the same size, which it would not obviously), and it still wouldn't balance the budget.

We have a spending problem, and we need to let the free market provide many of the services currently ran by gov't so that resources are allocated more efficiently, we can expand economic growth, reduce the debt, and expand economic liberty.

Taxing the wealthy will just also reduce capital for investments. Businesses will have less wealth to expand, and thus business contraction will cause a weaker economy. Investment is extremely important, $2 million in investment is more important than $2 million in demand.

When the wealthy have more income in a good economic climate, they will expand their businesses which will lead to great economic growth and prosperity for all, in fact likely helping the poor more than the wealthy in the end.

"There was considerable income mobility of individuals in the U.S. economy during
the 1996 through 2005 period as over half of taxpayers moved to a different income
quintile over this period."
" Roughly half of taxpayers who began in the bottom income quintile in 1996 moved
up to a higher income group by 2005.
" Among those with the very highest incomes in 1996 " the top 1/100 of 1 percent "
only 25 percent remained in this group in 2005. Moreover, the median real income of
these taxpayers declined over this period.
" The degree of mobility among income groups is unchanged from the prior decade
(1987 through 1996).
" Economic growth resulted in rising incomes for most taxpayers over the period from
1996 to 2005. Median incomes of all taxpayers increased by 24 percent after
adjusting for inflation. The real incomes of two-thirds of all taxpayers increased over
this period. In addition, the median incomes of those initially in the lower income
groups increased more than the median incomes of those initially in the higher
income groups.

Get the facts:
http://www.treasury.gov...

All boats rise when the tide rises.

Exactly.

What happens when the tide is falling?

Top 1% Got 93% of Income Growth as Rich-Poor Gap Widened
http://www.bloomberg.com...

Where is all that income growth getting invested to? Why are fortune 500 companies sitting on record levels of cash in the $ trillions? Putting cash in the hands of a few to invest does not equal economic growth nor does extreme deficit spending.

False. Putting cash in the hands of the few is redistribution and in nearly all cases is something I oppose. Those folks earned it. Letting people keep more of their income (in this case the wealthy), they will use it for future uses (savings) or use it for expanding their businesses through investing in their own company and growing the community around it indirectly and helping all of us with economic growth.

What? Do you know that the top 1%'s income is comprised overwhelming of capital gains, which is taxed at 15%. Versus a working person who has a job for his income pays 25% for the money earned between $35,000 to $85,000.

Who exactly is redistributing to who? It amazes me how rhetoric can get in the way of facts.

There is a lack of confidence in this current environment. With the tens of thousands of new regulations under Obama, the high corporate tax rates, the fiscal cliff fear, the high debt and deficits, the unfunded entitlements close to ravaging America's economy, and the onslaught of the new possible regulations and taxes to deal with the deficit, all of this erodes confidence. A business will not be likely to hire if this tidal wave can come over and destroy their business at any moment. Restore confidence with a good regulatory and tax climate, and you will see (in combination with fiscal responsibility and lower taxes, less government) a growing economy, and this will immensely help the poor and middle class. Taxing the groups that create the wealth in the first place seems a little counter intuitive right?

Bingo, the environment has to be proper so investment is productive and does not sit idle. Even in the definition of Supply Side economics it recognizes that tax cuts have to be coupled with a strong dollar policy to have a positive effect. We have not had a strong dollar policy since Clinton. Giving tax cuts without tending to all the other structural problems will not amount to meaningful growth.