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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: tejek who wrote (171027)	6/12/2003 6:19:49 PM
From: TimF	Read Replies (2) \| Respond to of 1583725

The Japanese have the greatest personal savings rate in the world and they have had one of the longest recessions in history. And before that recession they had one of the most spectacular sustained growth in history, partially based off those savings. In any case the advantage "that they let people keep more of their own money", was a moral one not an economic one. (the 2nd advantage I listed was the economic one) When people can keep more of their own money we have more freedom, less forcible confiscation of income, and in many ways more opportunity. What makes you think people will invest with their tax cut monies? They will invest it or they will spend it or they will put it in savings and checking accounts in institutions that lend the money out to others. Few people will put it under mattresses. It isn't a matter of spending our way out of a recession. First of all tax cuts aren't spending but besides that I was listing the long term benefits of reduced taxes, not the short term economic boost. Not only will more money get privately invested if the government takes less of it but that investment will be better targeted because there is less need to invest it in such a way as to reduce the tax burden. "Tax cuts stimulate demand and move us out of a recession" is just another conservative lie Its not a lie but in some cases it is an exaggeration. The effect from very small tax cuts like the $350bil over 10 year cut recently passed is small. But moving us out of a recession is not the main positive effect of tax cuts or even the main positive economic effect. The effect (if the taxes are kept lower) is a small increase in the long term growth rate. The year to year changes for other more transient reasons will be larger then the effect of the tax cut but those year to year changes cancel each other out. Over a number of years or decades lower taxes and less government intrusion in to the economy produce more national wealth. The problem is that politicians who propose tax cuts face election again in a few years. In a few decades they may be retired or dead. They won't get much traction pushing something as an idea that might cause and extra .075% of GDP growth per year when averaged out over the next 30 years, so they look for shorter term benefits and often exaggerate them. Tim