Millionaires who want to pay higher taxes

[dismal]

But that doesn't require higher marginal rates on some than on others. The tax rate is slope; the amount of money needed to live a reasonable life is intercept. Or to put it differently, we should tax people on their profit, not on their revenue. We all recognize it would be stupid to tax a supermarket that buys its inputs for $1,000,000 and sells food for $1,001,000 on its revenue rather than on its profit -- supermarkets' profit margins are paper thin and taking 21% of revenue would simply shut down the supermarkets. We let businesses write off legitimate business expenses -- the amount of money they have to spend in order to keep the taxable activity going at all. There's no reason but historical accident that we don't apply the same principle to people. So yes, of course people have to be left enough of their income to live on. (And frankly, the rule that your medical expenses have to run over 7.5% of your income before they're deductible is just asinine.)

But to jump from that premise to the conclusion that a guy in the top 0.1% should be paying a higher marginal rate than you in the top 2% pay would be a complete non sequitur. Neither of you is being taxed out of putting food on the table. The fact that it isn't discrimination to tax you more per dollar than an unemployed homeless guy doesn't change the fact that it is discrimination to tax Tom Cruise more per dollar than you and me. Doing a citizen's full share of societal upkeep isn't a hardship for any one of us.


I don't know what earlier post you're referring to; but "growing income and wealth inequality" isn't a real thing, so whether it "damages the economy" is about as substantive a question as whether the virgin-stealing dragon is damaging the economy.

Well does hurt the economy and the reason that it does is easy to understand.

When you make more money, there is only two things that you can do with that money. You can spend it or you can save it. And it doesn't matter how you save it, in a bank account, in the stock market, in T-Bills or sewn into a mattress when you save it that money doesn't have any impact in the economy. It doesn't pay for products or services that will pay someone else's wages, and it doesn't encourage businesses to invest in their own business to make more profits.

Well, no, that reason isn't at all easy to understand. That reason looks for all the world like mush-headed folk-economics, blatantly disconnected from reality. Of course it matters how you save it. When you save money in bank accounts, the banks pay you interest. Think about that for a minute. They're doing you the services of keeping track of your money for you, keeping it safe from thieves for you, and delivering it to anybody you tell them to for you, and they pay you! In any normal world, like the world before modern economies, you'd pay them for all those services. For them to pay you is as nutty as if you shot a guy in the face with a shotgun and he apologized to you.

So why do you think a bank does that? Magnanimity? It's owner feels charitable toward all these people laying off their responsibilities on her? Obviously not. The bank pays you because the owner wants to borrow your money from you, and she wants to give you a reason to lend it to her instead of to someone else, because she's going to make a profit on having your money for a while. How is having your money for a while going to make more money for her? Simple: the banker's going to re-lend your money to someone else, and she's going to charge him a higher interest rate than she'll be paying you.

So let's think about this guy, whoever he is, who's willing to pay the banker a bunch of money in exchange for the privilege of getting to have your money for a while. Why is he willing to do that? What's in it for him? Does he like green, aesthetically? Does he get off on rolling around in a bathtub full of dollars? No, of course not. He wants to borrow that money because, let's all say it together, <drumroll please>

he's going to spend it.​

And when he spends it, it's going to pay for products or services that will pay someone else's wages, and it will encourage businesses to invest in their own business to make more profits. Q.E.D.

This is the paradox of thrift that saving is good for the individual but bad for the overall economy.

No. The paradox of thrift applies to money sewn into a mattress. It demonstrably does not apply to money saved in an interest-bearing bank account. A parallel argument shows it likewise doesn't apply to money saved in the stock market. (Whether it applies to T-Bills is a more complicated question since the feds have the option of printing money.)

And there is a difference in how the rich make this decision whether to spend or to save their income, <rest snipped since it proceeds from a false premise>

While you are correct, the whole “paradox of thrift” is based on flawed economics at its heart. They will tell you in Economics 101 that the purpose of an economy is to allocate finite resources to human wants and needs. Each individual’s wants and needs are personal, subjective and contextual. If an individual’s utlility curves tell him “the best use of my money is to stuff it in my mattress” economics has no capacity to determine he would be better off if we forced him to spend it on a flat screen TV or in an Asian massage parlor. The fact that him spending it in an Asian massage parlor would create more Asian massage parlor jobs does not mean it’s better for the economy. The purpose of the economy is not to create jobs, it’s to allocate resources to wants and needs.

Keynes had the habit of cherry picking those rules of economics that helped make his point and suspending those that did not.

 

[SimpleDon]

A need to reduce the wealth gap should not include the phony demand for higher wages = populism and demagoguery. Preaching to the idiot masses what they want to hear is popular and wins applause, but is not sound economics.



This theory of higher wages to create demand and "fuel" the economy was tried in the 1920s. It wasn't "minimum wage law" yet, but the dogma that wages must be higher in order to increase workers' demand was practiced in the 1920s (for the first time ever in history):

Workers shared in the prosperity of the 1920s, although labor lagged behind business in reaping the benefits of technology. Business supported higher wages as a way to increase workers' buying power. With a shorter workweek (five full days and a half day on Saturday), many workers had more leisure time; large firms such as International Harvester offered employees two weeks of paid vacation a year. But scientific management techniques, first put forth in 1895 by Frederick W. Taylor but only widely implemented in the 1920s, reduced labor's control over the work environment.
-- America's History, Worth Publishers, New York, 1997; p. 745.

There is no theoretical basis for this higher-wage dogma, nor is there any empirical evidence that propping up the wage level to create more demand ever produced any net economic benefit. Rather, the evidence is that this higher-wage dogma helped turn the 1930s recession into the worst depression in history.

In addition to direct higher wages paid to workers, there were two other factors of the 1920s done in order to boost wages above "market" level: protectionism and restriction on immigration.

The increase in protectionism in the 1920s was the greatest or second greatest increase in U.S. tariffs historically, culminating in the Smoot-Hawley tariff increase in the early 30s. This was done to protect U.S. workers against competition from cheap foreign imports, which would put downward pressure on U.S. wages.

And the new crackdown on immigration also was done in order to protect U.S. workers from competition, by restricting increases in the labor supply due to immigrants entering and "stealing" jobs from red-blooded Americans.

So in the 1920s the effort was made to implement this dogma of higher wages, by increasing the wage level artificially above the "market" level, and by protecting workers from foreign imports, and by protecting them from competition from immigrants. So, what was the result of adopting the higher-wages dogma? What should have been a normal stock market crash followed by a typical recession in 1929-30 or -31, what we got was the Great Depression.

In addition to this empirical evidence, there is no logical theory why driving up the wage level should lead to anything but bad consequences. It contradicts the law of supply-and-demand which sets the prices/values at the point where the supply and demand curves intersect, at the lowest level at which workers will offer their labor and the highest level employers must pay in order to attract the needed labor.

Artificially boosting the price of anything, including wages, only leads to higher cost of production and thus higher prices consumers must pay. These higher prices then drive down the demand, thus offsetting any higher demand caused by higher wages.

If there is an inequality of wealth needing to be corrected, the correction is not to artificially drive up the wages, or the labor cost, which only hurts all consumers. Rather, the correction needed is some form of higher taxes on the wealthy and lower taxes on the middle- and lower-income levels.

Restricting competition in any form, including wage competition, can only make the overall economy worse, by the damage it inflicts onto the entire population = all consumers.

You failed to include another cost of production in your discussion and it makes all of the difference and explains the confusion that exists above. That cost of production is the profits that go to the owners of the business. In almost all businesses the profit is the residual left over after all of the other costs of production are accounted for. This means that when the costs go up the profit goes down, and if costs go down, profits go up.

This means that when wages go up, then profits go down.

When wages go down, profits go up.

You must believe that businesses have control over the prices that they charge for their products and when they have costs that go up they are free to increase their prices. Most of the people here believe the opposite that businesses have no control over the prices of their products because the prices are set by competition in the market through the mechanism of supply and demand. This is a precondition for the belief in the fantasy of the self-regulating free market.

Like so many things, in reality, not as straightforward as either of these two choices. The vast majority, 75 to 80%, of businesses do set their prices based on their costs, called cost-plus, markup or administered pricing, and they aren't set by the market and supply and demand, especially for reproducible products, i.e., manufactured goods. Reproducible goods are characterized by constant or even diminishing marginal variable costs resulting in lower per-unit costs or to put it another way, a lower average cost of production. For this reason, most businesses set their prices at a point that keeps their production filled and their production facilities working to generate the return on the investment that they made.

If the price for their products is too high, they will make a higher profit on each that they sell, but they could lose money over the whole year because they didn't sell enough products to cover their fixed costs. If they set their prices too low, they will fill up their factories, but they could be losing money on each one that they sell. What this means is there is an obsession with the sales figures. They always want to increase sales and to maintain the prices that they set. Supply and demand don't set the prices, but the business is still constrained in the price that they set because of their need to provide profits to the owners corresponding to the investment made.

If you are a neoclassical economist you would have been taught that there are indifference curves were consumers faced with higher prices for products that they regularly buy will switch to buying entirely different products that give them the same utility as the switched from product did at the old price but doesn't give at the new higher price. If you think that this is questionable then you value reality over theory and ideology.

Yes, increasing wages does increase effective demand in the economy. The more money that spent into the economy, the more growth there will be in the economy. Higher wages will provide this increase in economic activity because the alternative to higher wages is higher profits, not lower prices. And profits go to already rich who save a much larger percentage of their income. As always you offer a unique view of economics with no arguments support it. You are arguing that the economy is a zero-sum game, incapable of growth and it isn't.

The normal complaint that I hear from people when I advocate for higher wages to reduce profits is that it will increase inflation. This is the exact opposite of what you believe will happen. Inflation will only happen if increased wages increase demand and economic activity and it will only be a bigger problem for our economy if this increase in demand and economic activity from increased wages is greater than the economic activity generated by the profits that are lost to higher wages.

But you are also arguing that higher wages will increase costs over what we see now. This increase in prices is the very definition of inflation. So you are arguing that higher wages won't create higher demand, but increased wages will create inflation. These two are incapable of each other. Please explain.

Yes, if we raise wages, we have the risk of higher inflation because higher wages increase demand and economic activity and growth compared to the same amount of money going to profits. But if we raise wages in a year less than growth and productivity improvements, the same, then we will avoid increasing inflation.

The current strategy of increasing profits has killed gains in productivity. As a result, the inflation that we have now is largely profit inflation. We have made higher profits so easy to obtain that companies don't have to work hard for them.


There is no reason to believe that consumers are benefiting from lower prices for goods and services so much that this effect justifies the loss in wages to the low wage countries. The inflation rate has been positive indicating increases in prices except for the first two years of the Bush II depression. Whatever price relief that consumers have felt from their jobs shipped to Red China have been completely wiped out by just two price increases, in housing and in college for their children. The increase in housing costs is directly attributed to the income inequality as the rich drive up real estate prices and rents to try to generate returns for the vast amount of financial capital they have been provided under neoliberalism, and the costs of a college education have gone up to provide the already rich with tax relief. And the consumers have seen price increases in more than just these two areas, most notably in health care.

I don't know what you are talking about "in the 1920s the effort was made to implement this dogma of higher wages" that turned the Great Depression into a depression rather than a milder recession. The financial sector is inherently unstable, and the crashes that the financial sector produces are much more likely to result in a depression, a deeper and longer recession. This is because a crash from financial sector malfeasance shakes the mechanism of capitalism in its core and completely drys up credit for investment and consumption. What caused the Great Depression, excessive leverage in the stock market that lead to the total collapse of the market when lower stock valuations caused stockholders to have to sell their stocks, resulting in ever lower stock valuation. It had nothing to do with your imagined experiment in raising wages or little to do with Smoot-Hartley tariffs. The latter wasn't a very good idea at the time but it didn't cause the Great Depression and it was a depression before the tariffs were passed. While the US did have a small trade surplus before the passage of the Smoot-Hartley Tariffs the absolute amount of money from trade was a very small part of the nation's total GDP to matter. Hoover did try to talk employers into retaining workers that they didn't need but no one listed to him.

It is a bad idea to set absolute wage levels. It is a much worse idea to do everything possible to suppress wages to increase profits and the incomes of the already rich, what we have been doing since the 1980s. Profits are a needed part of the mechanism of capitalism because profits provide money for investments. But profits aren't the reason that the economy exists. Wages are the way that people survive and the way that children are raised and the way that they are educated. This is why the economy exists.

 

[Bomb#20]

While you are correct, the whole “paradox of thrift” is based on flawed economics at its heart. They will tell you in Economics 101 that the purpose of an economy is to allocate finite resources to human wants and needs.

When I took Econ 101, they didn't tell me that. The prof mostly stuck to observables. "The purpose of an economy" isn't an observable. And, since I've seen no evidence for the existence of disembodied purposes, when people tell me something is "the purpose of an economy", I'm left wondering which animal's brain "the purpose of an economy" is supposed to be a purpose in.

(Of course, each individual little action in an economy has a purpose: whatever purpose the economic actor who does it chooses to do it for. But to jump from "each action has a purpose" to "the economy has a purpose" is the infamous Fallacy of Composition.)

Each individual’s wants and needs are personal, subjective and contextual. If an individual’s utlility curves tell him “the best use of my money is to stuff it in my mattress” economics has no capacity to determine he would be better off if we forced him to spend it on a flat screen TV or in an Asian massage parlor. The fact that him spending it in an Asian massage parlor would create more Asian massage parlor jobs does not mean it’s better for the economy. The purpose of the economy is not to create jobs, it’s to allocate resources to wants and needs.

I don't think the people going on about the "paradox of thrift" are claiming he would be better off if we forced him to spend it on a flat screen TV or in an Asian massage parlor. I think the concept is that the rest of us would be better off if we forced (or persuaded, or incentivized) him to spend it on a flat screen TV or in an Asian massage parlor. If someone's purpose for allowing other people to have an economy is to allocate resources to wants and needs, it probably makes a difference to her which people's wants and needs are getting resources allocated to them.

 

[Lumpenproletariat]

"the purpose of an economy"

While you are correct, the whole “paradox of thrift” is based on flawed economics at its heart. They will tell you in Economics 101 that the purpose of an economy is to allocate finite resources to human wants and needs.

When I took Econ 101, they didn't tell me that.

Yes they did, in words similar to the above.

Samuelson, e.g., says:

Economics is the study of how societies use scarce resources to produce valuable commodities and distribute them among different people. . . .

In economics, we say that an economy is producing efficiently when it cannot make anyone economically better off without making someone else worse off.

The essence of economics is to acknowledge the reality of scarcity and then figure out how to organize society in a way which produces the most efficient use of resources. That is where economics makes its unique contribution.

Economics 18th edition, p 4.

This is essentially the same as allocating "finite resources to human wants and needs."

"Economics" does include value judgments, or statements of what is good or right, to make people "better off" rather than worse off.

The prof mostly stuck to observables. "The purpose of an economy" isn't an observable.

But the allocating of resources is an observable, and human wants and needs are observables, and there is a purpose in trying to better meet the wants and needs, even if "purpose" itself is not a physical object having color or measurable length or width. Your Economics 101 class did emphasize the "purpose" or benefit to society, or to all of us, in figuring out "how to organize society in a way" as to improve the meeting of the needs and wants.

And, since I've seen no evidence for the existence of disembodied purposes, when people tell me something is "the purpose of an economy", I'm left wondering which animal's brain "the purpose of an economy" is supposed to be a purpose in.

You need to be able to make your point without being so obsessed with the phrase "the purpose of an economy." Anyone with more than half a brain knows that this is a short-cut phrase referring to something like the above Samuelson quote about why we need economics and the answers it offers for improving the distribution and production to serve the needs and wants, or to make people "better off."

Not allowing an occasional short-cut phrase in order to save on verbiage is one reason we sometimes end up with long WALLS OF TEXT, trying to explain each point in precise language.

 

[laughing dog]

Yes they did, in words similar to the above.

Samuelson, e.g., says:

Economics is the study of how societies use scarce resources to produce valuable commodities and distribute them among different people. . . .

In economics, we say that an economy is producing efficiently when it cannot make anyone economically better off without making someone else worse off.

The essence of economics is to acknowledge the reality of scarcity and then figure out how to organize society in a way which produces the most efficient use of resources. That is where economics makes its unique contribution.

Economics 18th edition, p 4.

This is essentially the same as allocating "finite resources to human wants and needs."

"Economics" does include value judgments, or statements of what is good or right, to make people "better off" rather than worse off.

The prof mostly stuck to observables. "The purpose of an economy" isn't an observable.

But the allocating of resources is an observable, and human wants and needs are observables, and there is a purpose in trying to better meet the wants and needs, even if "purpose" itself is not a physical object having color or measurable length or width. Your Economics 101 class did emphasize the "purpose" or benefit to society, or to all of us, in figuring out "how to organize society in a way" as to improve the meeting of the needs and wants.

And, since I've seen no evidence for the existence of disembodied purposes, when people tell me something is "the purpose of an economy", I'm left wondering which animal's brain "the purpose of an economy" is supposed to be a purpose in.

You need to be able to make your point without being so obsessed with the phrase "the purpose of an economy." Anyone with more than half a brain knows that this is a short-cut phrase referring to something like the above Samuelson quote about why we need economics and the answers it offers for improving the distribution and production to serve the needs and wants, or to make people "better off."

Not allowing an occasional short-cut phrase in order to save on verbiage is one reason we sometimes end up with long WALLS OF TEXT, trying to explain each point in precise language.

There is a world of difference between achieving economic efficiency and making people better off. Economic efficiency in the sense that Samuelson uses does not make everyone better off - it has the potential to make everyone better off. Anyone with a brain who paid attention in Economics 101 knows that basic economics tells us nothing about the preferred distribution of income among individuals because it focuses on the functional distribution (i.e. income produced by factors of production).

Your response confuses an explanation why economics and economic theory are useful with the purpose of an economy.

 

[dismal]

While you are correct, the whole “paradox of thrift” is based on flawed economics at its heart. They will tell you in Economics 101 that the purpose of an economy is to allocate finite resources to human wants and needs.

When I took Econ 101, they didn't tell me that. The prof mostly stuck to observables. "The purpose of an economy" isn't an observable. And, since I've seen no evidence for the existence of disembodied purposes, when people tell me something is "the purpose of an economy", I'm left wondering which animal's brain "the purpose of an economy" is supposed to be a purpose in.

(Of course, each individual little action in an economy has a purpose: whatever purpose the economic actor who does it chooses to do it for. But to jump from "each action has a purpose" to "the economy has a purpose" is the infamous Fallacy of Composition.)

Each individual’s wants and needs are personal, subjective and contextual. If an individual’s utlility curves tell him “the best use of my money is to stuff it in my mattress” economics has no capacity to determine he would be better off if we forced him to spend it on a flat screen TV or in an Asian massage parlor. The fact that him spending it in an Asian massage parlor would create more Asian massage parlor jobs does not mean it’s better for the economy. The purpose of the economy is not to create jobs, it’s to allocate resources to wants and needs.

I don't think the people going on about the "paradox of thrift" are claiming he would be better off if we forced him to spend it on a flat screen TV or in an Asian massage parlor. I think the concept is that the rest of us would be better off if we forced (or persuaded, or incentivized) him to spend it on a flat screen TV or in an Asian massage parlor. If someone's purpose for allowing other people to have an economy is to allocate resources to wants and needs, it probably makes a difference to her which people's wants and needs are getting resources allocated to them.

Well, at some point in economics they also usually provide some cautionary statements about the danger of central authorities deciding what everyone wants and needs.

An individual's preferences can be observed. They are revealed by the choices people make when they allocate their own scarce resources. We can observe some people like listening to Ariana Grande music and getting pedicures, but if I were the czar of what people need they wouldn't be on my list.

Whatever we allocate scarce resource to, there are an infinite number of things we didn't allocate them to. There are an infinite number of people who didn't get to provide those things we might have allocated them to. The generally accepted view is those people have no right to be allocated my resources. They must compete to provide me enough value to get my resources. This has beneficial effects throughout society and makes it more efficient at allocating resources. Without my ability to spend my resources freely in a market (i.e., a place where I can seek to allocate my scarce resources to my wants and needs and discover the prices of the various options) how do we even decide how good a job society is doing allocating resources to wants and needs?

 

[SimpleDon]

I would probably be happy if stocks, capital gains, transactions, etc... were taxed in a way that it made better economic sense to invest in production, R&D, and such rather than chasing paper and accumulating more paper. I know my wage income is hammered compared to my capital gains and such.

I look at the huge corporations that come here and pay no property tax or have other fees waves by the city/county/state to locate here. The growth they bring never pays for loss of that revenue when it comes to making the roads, sewer, stormwater, etc... infrastructure keep up with the increased demand created by the development. The city comes knocking on my door wanting to raise my property tax and/or sales tax to make up the gap. But all those jobs corporation X brought to down, those are great. And magically we end up with horrendous traffic and lagoon destroying algae blooms. I'd be happy if the FOXCONs and AMAZONs of the world couldn't go around extorting local governments.

I don't know the complete answer for this, but I believe that from my experience a solution would probably contain many of the following ideas,

1. I would do away with the corporate income tax and tax the corporate profits as the income of the individual shareholders.
2. This would reduce the soft bribery of corporate campaign contributions to the politicians and move them closer to representing the people as they are supposed to be doing. It would minimize corporate lobbying to Congress by at least half. Which will reduce the soft bribery of the revolving door between Congress and highly paid lobbyists.
3. Currently corporations have trillions of dollars in profits that they have illegally deposited offshore to avoid US corporate taxes.
4. You can't encourage investment by offering a capital gains tax incentive for it because you are suffering a sizeable dead-weight loss on the capital gains that would have occurred anyway without any new investment.
5. This is especially true of stock price capital gains which looking at the whole market have more to do with how much money that the investor class has to put into savings.
6. And anyway corporations won't invest unless they can sell the extra product produced by the investment or unless the investment results in higher productivity.
7. I would do away with the lower capital gains tax compared to the income tax rate, it is nothing but a tax cut for the rich.
8. I would cancel the SEC rule that holds harmless corporations' buyback of its stock.
9. The practice is used to convert corporate profits into stock capital gains for the sole purpose of allowing the shareholders a lower tax rate on the corporation's profits.
10. I would clarify the popular misconception that a corporation's sole responsibility is to make profits for the shareholders, that the corporation and its executives have at least an equal responsibility to their customers, their employees, their communities and to the nation as they do to the shareholders.
11. I would allow the practice of lowering local property taxes to attract new business to a local area but only if they offer the same tax cuts to the existing businesses in the local area.

Eliminating the corporate income tax would turn the US into the largest corporate tax haven in the world. I suspect that it would be opposed by most of our major corporations because they feel that their efforts of lobbying and bribing Congress have resulted not only in reduced taxes for themselves but also a competitive advantage for them over other businesses, especially over small businesses and startups.

 

[Bomb#20]

They will tell you in Economics 101 that the purpose of an economy is to allocate finite resources to human wants and needs.

When I took Econ 101, they didn't tell me that.

Yes they did, in words similar to the above.

What on earth has deluded you into thinking you know better than I do what was and wasn't said at the school I attended? You weren't there. (Unless by dumb luck you went to the same college as me; and you don't even know what college I went to.)

Samuelson, e.g., says:

We didn't use Samuelson. Do you feel if one textbook made an unscientific unverifiable metaphysical claim then it follows that every textbook must have done the same?

Economics is the study of how societies use scarce resources to produce valuable commodities and distribute them among different people. . . .

In economics, we say that an economy is producing efficiently when it cannot make anyone economically better off without making someone else worse off.

The essence of economics is to acknowledge the reality of scarcity and then figure out how to organize society in a way which produces the most efficient use of resources. That is where economics makes its unique contribution.

Economics 18th edition, p 4.

This is essentially the same as allocating "finite resources to human wants and needs."

And? What on earth has deluded you into thinking that this passage of Samuelson is backing up what dismal wrote? Samuelson is evidently expressing his view of the purpose of economics, not the purpose of an economy.

"Economics" does include value judgments, or statements of what is good or right, to make people "better off" rather than worse off.

As typically practiced, yes, that's true. Unselfconscious presumption of Utilitarianism is rampant in the field. But Samuelson was clearly wrong to say "The essence of economics is to acknowledge the reality of scarcity and then figure out how to organize society in a way which produces the most efficient use of resources.". If somebody were to study how societies use scarce resources to produce valuable commodities and distribute them among different people because she wants to figure out how to, for example, put her favorite Jim Jones clone in power even though that will massively reduce efficiency, then the mere fact that she has the wrong goals doesn't magically mean she isn't doing economics. Samuelson was expressing his own personal preference for efficiency maximization and improperly projecting his preference onto his field of study.

The prof mostly stuck to observables. "The purpose of an economy" isn't an observable.

But the allocating of resources is an observable, and human wants and needs are observables, and there is a purpose in trying to better meet the wants and needs, even if "purpose" itself is not a physical object having color or measurable length or width. Your Economics 101 class did emphasize the "purpose" or benefit to society, or to all of us, in figuring out "how to organize society in a way" as to improve the meeting of the needs and wants.

What would we do with that information, but use it to decide whether to reorganize society? So now you're talking about the purpose of an intervention in the economy. Not the same thing at all as the purpose of an economy. There's nothing mystically disembodied about a purpose of an intervention -- there's a specific identifiable brain that it's a purpose in, a specific person who is intervening on purpose. But the economy doesn't exist because there was somebody who decided we'll have an economy.

And, since I've seen no evidence for the existence of disembodied purposes, when people tell me something is "the purpose of an economy", I'm left wondering which animal's brain "the purpose of an economy" is supposed to be a purpose in.

You need to be able to make your point without being so obsessed with the phrase "the purpose of an economy." Anyone with more than half a brain knows that this is a short-cut phrase referring to something like the above Samuelson quote about why we need economics and the answers it offers for improving the distribution and production to serve the needs and wants, or to make people "better off."

I disagree.

I get that you're a Christian and that it's typically hard for Christians to distinguish between teleological and nonteleological claims. For instance, an atheist says animals having sex causes them to make babies which causes their species to survive, and a Christian imagines he heard her say the purpose of sex is for survival of the species. But that's not what she said, and it makes a difference. When people impute purpose where it doesn't exist, people draw unreasonable conclusions. Here are a couple of typical examples:

(1) The purpose of sex is survival of the species. Gay sex doesn't make babies so it doesn't help cause the species to survive. Therefore gay sex is wrong.

(2) The purpose of an economy is to allocate finite resources to human wants and needs. Nobody needs or even has a reason to want $100m. Therefore a $100m salary is wrong.

But there is no "teleological suspension of the ethical." God having a purpose for Isaac's death would not make it moral for Abraham to sacrifice him. God or Herbert Spencer having a purpose for evolution would not make it moral to ban people from making love to their lovers. God or Paul Samuelson having a purpose for an economy would not make it moral to ban people from paying $100m salaries. The gay lovers and the extreme-salary-paying shareholders are consenting adults. Isaac was not a consenting adult.

 

[dismal]

Yes they did, in words similar to the above.

What on earth has deluded you into thinking you know better than I do what was and wasn't said at the school I attended? You weren't there. (Unless by dumb luck you went to the same college as me; and you don't even know what college I went to.)

Samuelson, e.g., says:

We didn't use Samuelson. Do you feel if one textbook made an unscientific unverifiable metaphysical claim then it follows that every textbook must have done the same?

Economics is the study of how societies use scarce resources to produce valuable commodities and distribute them among different people. . . .

In economics, we say that an economy is producing efficiently when it cannot make anyone economically better off without making someone else worse off.

The essence of economics is to acknowledge the reality of scarcity and then figure out how to organize society in a way which produces the most efficient use of resources. That is where economics makes its unique contribution.

Economics 18th edition, p 4.

This is essentially the same as allocating "finite resources to human wants and needs."

And? What on earth has deluded you into thinking that this passage of Samuelson is backing up what dismal wrote? Samuelson is evidently expressing his view of the purpose of economics, not the purpose of an economy.

"Economics" does include value judgments, or statements of what is good or right, to make people "better off" rather than worse off.

As typically practiced, yes, that's true. Unselfconscious presumption of Utilitarianism is rampant in the field. But Samuelson was clearly wrong to say "The essence of economics is to acknowledge the reality of scarcity and then figure out how to organize society in a way which produces the most efficient use of resources.". If somebody were to study how societies use scarce resources to produce valuable commodities and distribute them among different people because she wants to figure out how to, for example, put her favorite Jim Jones clone in power even though that will massively reduce efficiency, then the mere fact that she has the wrong goals doesn't magically mean she isn't doing economics. Samuelson was expressing his own personal preference for efficiency maximization and improperly projecting his preference onto his field of study.

The prof mostly stuck to observables. "The purpose of an economy" isn't an observable.

But the allocating of resources is an observable, and human wants and needs are observables, and there is a purpose in trying to better meet the wants and needs, even if "purpose" itself is not a physical object having color or measurable length or width. Your Economics 101 class did emphasize the "purpose" or benefit to society, or to all of us, in figuring out "how to organize society in a way" as to improve the meeting of the needs and wants.

What would we do with that information, but use it to decide whether to reorganize society? So now you're talking about the purpose of an intervention in the economy. Not the same thing at all as the purpose of an economy. There's nothing mystically disembodied about a purpose of an intervention -- there's a specific identifiable brain that it's a purpose in, a specific person who is intervening on purpose. But the economy doesn't exist because there was somebody who decided we'll have an economy.

And, since I've seen no evidence for the existence of disembodied purposes, when people tell me something is "the purpose of an economy", I'm left wondering which animal's brain "the purpose of an economy" is supposed to be a purpose in.

You need to be able to make your point without being so obsessed with the phrase "the purpose of an economy." Anyone with more than half a brain knows that this is a short-cut phrase referring to something like the above Samuelson quote about why we need economics and the answers it offers for improving the distribution and production to serve the needs and wants, or to make people "better off."

I disagree.

I get that you're a Christian and that it's typically hard for Christians to distinguish between teleological and nonteleological claims. For instance, an atheist says animals having sex causes them to make babies which causes their species to survive, and a Christian imagines he heard her say the purpose of sex is for survival of the species. But that's not what she said, and it makes a difference. When people impute purpose where it doesn't exist, people draw unreasonable conclusions. Here are a couple of typical examples:

(1) The purpose of sex is survival of the species. Gay sex doesn't make babies so it doesn't help cause the species to survive. Therefore gay sex is wrong.

(2) The purpose of an economy is to allocate finite resources to human wants and needs. Nobody needs or even has a reason to want $100m. Therefore a $100m salary is wrong.

But there is no "teleological suspension of the ethical." God having a purpose for Isaac's death would not make it moral for Abraham to sacrifice him. God or Herbert Spencer having a purpose for evolution would not make it moral to ban people from making love to their lovers. God or Paul Samuelson having a purpose for an economy would not make it moral to ban people from paying $100m salaries. The gay lovers and the extreme-salary-paying shareholders are consenting adults. Isaac was not a consenting adult.

You may very well have gotten a really shitty economics education. In his defense, Samuelson was the standard for many years.

 

[laughing dog]

In his defense, Samuelson was the standard for many years.

Yes, it was. It helped to popularize of the years, among many ideas, the paradox of thrift , the spending multiplier, the power of fiscal policy, and the efficacy of the Phillips curve.
Samueslon's text was one of the first of its kind, and it had the glamor of a Nobel Prize winner. But anyone who thinks that every sentence in that text was taken as gospel by the profession has a very shitty understanding of economics and college education. No professor takes a text and uses it verbatim.

BTW, Samuelson (as do most mainstream economists) understand that economics can play a role in helping people or a society reach its goals in the least cost manner but that economic efficiency as an overriding goal runs against human nature.

 

[Bomb#20]

Oh joy, more disingenuous semantic games, the hallmark of someone with no intellectual substance.

Are you okay? You used to be one of the most rational posters on the board, but lately you've gone off the deep end. You've taken up throwing insults around and acting like people disagreeing with you is grounds for character assassination. Has something happened in your life to put you off arguing issues on their merits?

And the standard general meaning of "gather" is simply "Bring together and take in from scattered places or sources."

Really? How does that support your cause that the only legitimate literal use of "concentration" is in reference to uranium enrichment and that any other use is merely metaphorical?

Huh? Where did I say metaphorical use is illegitimate? And uranium was just an example -- chemists have been concentrating chemicals for centuries.

And nothing about the definition of gather implies that things were gathered from within a closed system. They can be gathered from anywhere, and can be created then gathered together.

True enough; what I wrote was an overgeneralization. My bad. I should have written "Do you agree that wealth concentration in this nation is a problem?" comes with the built-in premise that the economic processes by which people become rich are a zero-sum game. Of course in a left-wing world-view, labor itself isn't a zero-sum game; the zero-sum-ness kicks in after labor has supposedly created the wealth, when the "fruits of labor" are supposedly "then gathered together".

But my point remains, even though I expressed it imprecisely. When people talk about "wealth concentration", they are proposing, in effect, that enriching people is a process that moves wealth around without creating new wealth, analogous to gathering atoms or birds or any other gatherable thing that the gatherer did not make. There is an implicit accusation of unproductiveness in the choice of the term "concentration". This is deliberate in some cases, but it's simply habitual in other cases -- the opinion that capitalists are a parasitic class who don't contribute to production is one of the most characteristic fixtures of leftist ideology. Leftists live and breathe that blood libel; it permeates their worldviews and their thought patterns; it tends to leak out into their arguments whether they mean it to or not; and even among those leftists who know intellectually that it isn't true, it typically still feels so emotionally "truthy" to them that it infects their unguarded reasoning steps.

And the actual word was the noun "gathering", not the verb "gather" which you swapped in b/c an verb implies some intentional actor who brought each the objects together. Gatherings/concentrations of objects can occur via any type of process and can be an unintended epiphenomena, such as birds who independently fly themselves to the same island and incidentally produce a gathering/concentration of birds (the example given right in OEDs definition of "concentration).

Dude! Don't you fact-check your own posts any more? You wrote:

"Therefore, if any type of units of wealth are gathered in large numbers under the possession of a person, that is an accurate and literal application of the term concentration"​

I didn't swap the verb in. You used it as a verb first. I just ran with your usage. You got a problem with the verb form, take it up with you.

(And no, units of wealth do not under their own volition independently fly themselves into a millionaire's pocket and incidentally produce a gathering/concentration. And no, when leftists prattle about "concentration of wealth" they are not hypothesizing that that's what happens.)

In fact, objects can be concentrated without ever coming from anywhere, but rather simply coming into existence within close proximity of each other, resulting in a gathering/concentration of trees, stars, dark matter, etc..

Um, ever heard of conservation laws? There's no basis for supposing that galaxies contain high concentrations of dark matter for any reason other than that their gravity sucked it in from a great distance. Stars are made on the spot, but they're made from clouds of hydrogen that were gathered, not made, by galaxies.

IOW, nothing about concentration or gathering implies merely that that the objects are in proximity of each other, with no implication that ever even came from anywhere, let alone your magical thinking assumption that they must always have been brought together by some sentient mind who took them from somewhere.

Where did I assume sentience? Two billion years ago trickling rainwater in Africa concentrated enough uranium to assemble a natural nuclear reactor.

... taking ... taking ... taking ...

That makes four times you've proven my point. People who complain about "concentration" of wealth are implying that wealthy people took it and didn't cause it to exist in the first place.

Gee, now why would you delete the 161 other words I wrote that provided the context for the otherwise meaningless 3 words thatyou kept?
Well, there is only 1 possible reason, to lie about the meaning of those words. Do have any other form of rhetoric that isn't intellectually dishonest?

Chill out, man. Quit assuming villainy just because you encounter someone who doesn't think quite like you, and try to have a civil conversation. As far as I can tell I didn't misrepresent your meaning in any way, shape or form. I just focused on the parts of what you said that I thought were illuminating, and left out the parts that appeared to be missing my point and quibbling about a side issue. If you think I got it wrong, by all means draw my attention to the significance of what I left out.

What I said in those other words you clipped made two things clear:
1) The issue of whether "concentration" inherently implies a closed system where wealth is taken form the poor (your assertion that I soundly falsified), is separate from the issue of what I think are the sources of increasing wealth disparities (note that increasing disparities isn't even the same thing and doesn't have the same cause as there being some amount of disparity at a given timepoint).

That's a quibble about a side issue. It's my fault, for overgeneralizing; but you're still quibbling about a side issue. Whether it's a closed system isn't the essential point. You zeroed in on my poor word choice, "economics is a zero-sum game", and ignored the context in which it appeared: "They are proposing, in effect, that enriching people is a process that moves wealth around without creating new wealth". That's why I was making a stink about the zero-sum-game assumption. It's not just that people choosing that terminology make a false assumption, but that they make an unsupported accusation.

You wrote "Some of the increasing disparity is due to the wealthiest taking a vast majority of any net added wealth, and some is due to them taking more from and reducing the wealth of other Americans". That still makes the unsupported accusation. You simply dismiss without mention the possibility that the disparity is due to the wealthy people not taking anything, but rather creating a vast majority of the net added wealth. And you simply dismiss without mention the possibility that the disparity is due to wealthy people and poor people jointly creating the net added wealth, splitting the proceeds without either group getting the vast majority, and then the poor people consuming most of their portion.

2) That I explicitly agreed with the idea of wealth being added/created, and that the "taking" in that context merely implies that someone claiming a larger portion of the created wealth. There is zero logical implication there that those taking that created wealth did not contribute to its creation. The wealth is added by someone and my comments thus far have been agnostic on who added it.

Really? It didn't look that way. You wrote:

"The number of Americans with negative wealth has increased and the average amount of debt has doubled, yet Americans are working about the same number of hours and productivity/hour is up due to tech. So where is the wealth going created by this labor? The top 5% are taking it."​

That does not look agnostic about who added it. That looks like you're endorsing the theory that labor creates wealth and the rich take it from the laborers.

The number of Americans with negative wealth has increased and the average amount of debt has doubled, yet Americans are working about the same number of hours and productivity/hour is up due to tech. So where is the wealth going created by this labor?

Do you have evidence that what created the wealth was the labor of the people with negative wealth?

Ah, so now you admit that I explicitly acknowledge the reality of wealth creation, yet just a second ago you were stripping 98% of my words to pretend that I think wealth cannot be created and can only be taken from one place to another. If you're gonna grossly misrepresent my words, at least try to be consistent.

But I didn't strip them to represent you as thinking wealth can't be created by labor. Only in your own mind was that the critical disagreement. I stripped them to represent you as accusing the rich of being takers rather than makers. I represented you accusing them of that because that's exactly what your words sounded like -- what all your words sounded like, not just the three "taking"s. If you said something indicating that you were agnostic on that point, to counterbalance everything you said that made it appear you weren't agnostic, please point it out.

Barring magical forces (<insult snipped>), wealth is not created from nothing nor can it be created merely from ideas which have no direct impact on the world. Physical actions (aka labor) is what creates wealth by causally manipulating the physical environment and thus adding the wealth of the labor to the existing wealth of what is already in the environment.
The vast majority of people with increased negative wealth work for people who only employ other’s who add wealth. Given that, and given that these laborers have worked the same amount and there is evidence that the types of labor they do produce more efficiently, it would quite extraordinary (downright magical), if their labor was somehow producing less wealth.

You're really not sounding agnostic. You appear to be claiming labor is the source of wealth and you appear to be accusing capitalists of being unproductive.

If your theory requires that extraordinary assumption then you need extraordinary evidence for it. Otherwise, the most parsimonious account is simply that the division of the wealth their labor is creating has changed in favor of the more wealthy, who not coincidently have gotten wealthier during that same period (a fact that your theory that laborers are producing less of value cannot explain).

Where the heck did I offer the theory that laborers are producing less of value? For a guy who's having a conniption fit over feeling misrepresented, you sure aren't being at all careful not to misrepresent others.

Now, if you want to debate the merits of the "Physical actions (aka labor) is what creates wealth" theory, we can do that. We could even start a thread on that topic. But for our present spat, it's beside the point. We can agree to disagree. For our present spat, what matters is that so many leftists keep talking in a way that takes it for granted. It has not been granted. I get that you think it's true, but how the heck is that a reason for people who don't think it's true to just politely go along with you guys framing the debate in a way that makes believe you already won the debate over that issue?

If you guys refuse to use neutral language, then you guys have no grounds to claim "evasion" when those of us who reject your premises refuse to cooperate with you in constructing a pointless "discussion" that presupposes that you're right.

As already well established, you equating of “taken” with “concentration” is based upon your magical thinking and anthropomorphizing of the Universe and has nothing to do with standard meanings and used of the word.

You made that up. I didn't think magically and I didn't anthropomorphize the Universe. I just a claimed a word has connotations -- a word you refuse to give up, a word you have no apparent reason to refuse to give up other than that you like those connotations. So if you aren't trying to make "capitalists are unproductive" an implicit precondition for discussion, then what do you have against saying "inequality" instead of "concentration"?

My work here is done.

If by “work” you mean your success is showing that you have no grasp of how language works and that your only form of argument is semantic games and deliberate misrepresentation, then yes, you are done.

Whatever it is you're going through that's making you behave this way, I hope you resolve it satisfactorily. I'd like us to get along. You have so many smart insights about so many subjects that I'd hate to have to write you off as yet another jerk.

 

[Bomb#20]

You may very well have gotten a really <expletive deleted> economics education. In his defense, Samuelson was the standard for many years.

Well, since ld has edited his post so it no longer says I'm correct, I guess I'll have to do it myself. In pointing out one unjustifiable sentence in an entire textbook, I am in no way claiming Samuelson wasn't a fine economist or a fine textbook author. I'm sure he was both. But nobody's perfect. As to the quality of my own education, I have to admit that shortly after he taught me Econ 101 my professor stopped teaching economics to college students. He went off to join the President's Council of Economic Advisers.

But to quote Samuelson, "Economics is the study of how societies use scarce resources to produce valuable commodities and distribute them among different people." Assuming he's correct on that point, that means economics is a descriptive science. But in order for "The essence of economics is to acknowledge the reality of scarcity and then figure out how to organize society in a way which produces the most efficient use of resources. That is where economics makes its unique contribution." to be correct, economics would have to be a prescriptive science. So I don't need to have gotten a good economics education to refute his unjustifiable sentence -- he refutes it himself.

 

[Worldtraveller]

All taxes are income taxes and all forms of income are treated the same? News to me.

The mismatch is highly meaningful, especially when considering how taxes are assessed.

Do you not understand that wealth is not the same thing as income? It's quite possible to have one with little of the other.

- - - Updated - - -

The problem here is that you don't understand the difference between working hard and working smart.

You earn those vast sums by doing something better and extracting a portion of the value you thus create.

Loren Pechtel, a cliche for all seasons

In other word, you have no rebuttal.

The correct translation is: Your response is too stoopid to bother with an actual rebuttal.

Glad I could help.

 

[PyramidHead]

 

[laughing dog]

You may very well have gotten a really <expletive deleted> economics education. In his defense, Samuelson was the standard for many years.

Well, since ld has edited his post so it no longer says I'm correct,

That was an unintended sloppy oversight on my part. I do apologize.

 

[dismal]

You may very well have gotten a really <expletive deleted> economics education. In his defense, Samuelson was the standard for many years.

Well, since ld has edited his post so it no longer says I'm correct, I guess I'll have to do it myself. In pointing out one unjustifiable sentence in an entire textbook, I am in no way claiming Samuelson wasn't a fine economist or a fine textbook author. I'm sure he was both. But nobody's perfect. As to the quality of my own education, I have to admit that shortly after he taught me Econ 101 my professor stopped teaching economics to college students. He went off to join the President's Council of Economic Advisers.

But to quote Samuelson, "Economics is the study of how societies use scarce resources to produce valuable commodities and distribute them among different people." Assuming he's correct on that point, that means economics is a descriptive science. But in order for "The essence of economics is to acknowledge the reality of scarcity and then figure out how to organize society in a way which produces the most efficient use of resources. That is where economics makes its unique contribution." to be correct, economics would have to be a prescriptive science. So I don't need to have gotten a good economics education to refute his unjustifiable sentence -- he refutes it himself.

The point here is not to have a discussion about Samuelson. The definition of economics as the study of the allocation of scarce resources predated him by decades.

It is the standard definition. It is not controversial.

You can try googling it:

https://www.google.com/search?rlz=1...s&oq=economics+allocation+of+scarce+resources

 

[Bomb#20]

...So I don't need to have gotten a good economics education to refute his unjustifiable sentence -- he refutes it himself.

The point here is not to have a discussion about Samuelson. The definition of economics as the study of the allocation of scarce resources predated him by decades.

It is the standard definition. It is not controversial.

You can try googling it:

https://www.google.com/search?rlz=1...s&oq=economics+allocation+of+scarce+resources

Are you seriously under the impression that the sentences "Economics is the study of the allocation of scarce resources." and "The purpose of an economy is to allocate finite resources to human wants and needs." both mean the same thing in English?

 

[Canard DuJour]

The allocation of resources is an engineering problem. The allocation of reources via the distribution of money is a political problem. Money isn't a scarce resource.

Economics is increasingly about the allocation of surpluses with an artificial scarcity of money.

 

[Bomb#20]

When you make more money, there is only two things that you can do with that money. You can spend it or you can save it. ... when you save it that money doesn't have any impact in the economy. It doesn't pay for products or services that will pay someone else's wages, and it doesn't encourage businesses to invest in their own business to make more profits. This is the paradox of thrift that saving is good for the individual but bad for the overall economy.

I should add, there are a couple other problems with the "saving is bad for the overall economy" theory besides those already noted upthread. In the first place, you're overstating the case. When Keynes stated the paradox of thrift, he wrote:

For although the amount of his own saving is unlikely to have any significant influence on his own income, the reactions of the amount of his consumption on the incomes of others makes it impossible for all individuals simultaneously to save any given sums.​

But this doesn't imply "Saving is bad for the overall economy"; it only implies "Saving can be bad for the overall economy". "What if everyone did that?" is an argument form with serious limitations. After all, not everyone is doing that. It's commonplace for the optimum amount of something to be an intermediate amount, rather than an extreme all or nothing. The question is not "Is saving good or bad?", but rather "Is the current level of saving too low, too high, or just right?". So you can't show it would better for the rich to have less money just by a general argument that they save more and saving is bad. You'd need data showing that the current overall saving level is too high.

And in the second place, Keynes not only presented the paradox of thrift as a problem; he also presented a solution. If the public is saving too much and spending too little and that's driving the economy into recession, the government can compensate with deficit spending. And, governments being what they are, we can generally count on them to do that. So it isn't "Saving is bad for the overall economy". It's "Saving would be bad for the overall economy if we had a comparably thrifty government." Whoop de do. Bicycle-making would be bad for the economy if we were all rainbow-barfing unicorns.

 

[untermensche]

The ultra-rich are the only people really enjoying the full fruits of modern America. The only people not falling behind.

The vast majority are sinking in quicksand. The cost of living rises continually. The cost of rent and child care and food rises continually.

The cost of college has skyrocketed over the last decades.

And wages have been stagnant for most since the 1970's.

There was the golden age of American capitalism, in the 1950's and 60's when a general level of wealth was created by union activity, but most today are sinking lower and lower from that peak every generation.

It makes sense to tax heavily the only people gaining in the system and tax less all the people sinking.

Unfortunately the system is oligarchy and the ultra-rich fully control the system.

The defenders of modern capitalism support a system where a tiny few are winning and everyone else is losing. A rat race.