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Pastimes : Don't Ask Rambi -- Ignore unavailable to you. Want to Upgrade?

To: koan who wrote (69841)	1/11/2009 5:21:20 PM
From: TimF	1 Recommendation Read Replies (1) \| Respond to of 71178

Krugman, Stiglitz and Samuelson all won the nobel prize for economics. So did Friedman and perhaps not as directly relevant, Hayek. Laffer didn't, but he was hardly a comic book character, and his famous "curve" was a quite serious, and true idea. Some distortions of it (by both it supporters and its opponents) are questionable or even false, but his actually idea, is not just true, its obviously true to anyone with even a moderate amount of economic understanding. The idea is that at 0% tax, you get 0 revenue. And that at 100% tax, you get close to zero revenue (either taxes will be avoided, or there is no incentive to be economically productive as you can not make after tax wages or profits). That some point between these two points was where you had maximum revenue, with increases or decreases from that point producing less revenue. That you could graph the revenue on a curve that would go up and then down again. That's basically the Laffer curve, in its basic form. Laffer, and supporters of his ideas would also (correctly) point out that typically as taxes increase you don't get the same size increase in revenue, even if taxes are below the point of maximum revenue. Lets say maximum revenue was at 40%. Well if you increase taxes from 15% to 30%, you've doubled the tax rate but you won't double the revenue. Partially because your providing extra incentive to legally avoid, or illegally evade taxes, and partially because you are disincentivizing investment and productive activity. Because you disincentive productive activity, you create a dead weight loss. The gain to the treasury will be less than the loss to the private economy. And its not just Laffer, and Friedman, and Hayek that would recognize this, so would Krugman, Stiglitz and Samuelson. They might consider it to be a slightly smaller factor, but the would recognize it.

To: koan who wrote (69841)	1/12/2009 12:37:58 AM
From: JF Quinnelly	2 Recommendations Read Replies (1) \| Respond to of 71178

Well, at least I now know where your politics now lie. Krugman, Stiglitz and Samuelson all won the nobel prize for economics. Hardly comic book characters. Arthur Laffer (supplysider's Godfather) was the real comic book character. Laffer as recently as last year (on youtube) is seen laughing hystericaly at the idea we were headed for a recession. He was right it is a depression-lol. I didn't say that Krugman, Stiglitz and Samuelson are comic book characters. I said that you have a comic book idea of Reaganomics, which you do. Limbaugh makes similarly butt-ignorant comments about Reagan's economic program, the difference being that he thinks the comic book version is a good thing. My criticism was about substance, not politics. Art Laffer never worked for Reagan, he had a private practice during the 80s. He was clueless about the credit bubble and the coming recession. And he openly backed Obama. Mainstream economist's dismiss supplyside economics as nonsense And you think supply-side is what, exactly? Do these mainstream economists construct graphs with just demand curves? I suspect that most mainstream economists know that demand-side stimulation during the Carter years fueled inflation. That shifting the supply curve to the right increased the production possibility frontier and allowed demand stimulation to result in economic growth. I was in college when Reagan was governor. He was so brutal and so clueless we liberals were at war with him. When he ran for president he scared us to death....Hayakawa was a clueless madman. As was Reagan. I used to pick up copies of Pravda for the entertainment value. This reminds me of the stuff they used to print. I always suspected the Pravda gang knew what they were saying was crap, which would have differentiated them from American college students.