Just the Facts, Ma'am: A Compendium of Liberal Fiction Message Board

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Politics : Just the Facts, Ma'am: A Compendium of Liberal Fiction

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To: Lazarus_Long who wrote (48871)	6/8/2006 9:48:59 PM
From: TimF	of 90947

If you can't show that small tax cuts in already low tax rates lead to increases in GDP, then the Laffer Curve is wrong. It's that simple. No because that's not what the Laffer curve says. It just says that the revenue maximizing tax rate is less than 100% (probably a lot less but it isn't specific) and that the revenue generated would be a curve declining if the tax rate is above or below a certain point (the certain point being both unspecified and variable). Surely you aren't arguing that the outbreak of WW2 and the US entry into it ended the Great Depression? I'm not asserting that it didn't definitely didn't happen that way, I am asserting that it should be taken as given, and that any stimulus effect would probably be short term only. Roosevelt had tried to spend his way out before; he just couldn't get enough spending authorized. I don't think it would have helped much. The depression lasted so long because of too much government involvement in certain parts of the economy not too little. OK. so you're paying men to dig holes, then fill them again. In some sense that's what war is. But you pay the men to dig and fill those holes and they then spend their pay. And the shopkeepers they give that money to give it to others for provisions who .... Increasing the nominal GDP but also causing more dollars to pursue the same or fewer assets, causing higher prices, and likely no increase in real GDP or at best a short run increase. You can get the same effect with less effort by just running the printing presses. Once again perhaps a short term stimulus but long term no increase in economic growth (and in fact likely a decrease when you consider all the effects of inflation).

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