The 2% Illusion

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ZeroSum
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Re: The 2% Illusion

Postby ZeroSum » Sat Feb 28, 2009 1:18 am UTC

Hawaii is nothing like most of the US.
Hawaii is nothing like France or Germany.
Things that affect quality of life in most of the US or France and Germany, therefore, are likely to be very different from things that affect quality of life in Hawaii.

Hawaii is a poor example when debating differences between the US and other Western nations.

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Re: The 2% Illusion

Postby Malice » Sat Feb 28, 2009 3:00 am UTC

ZeroSum wrote:And how many major cities and urban areas does Hawaii have? How large of a draw is it to organized crime is there because it's a major hub of traffic or traditional seat of power? How many industrial zones are there and what percentage of Hawaii is reserved or tourist areas and how does that compare to the rest of the US on average? What're the mean and median incomes out there?

Hawaii is far from representative of the rest of the US.


Are you seriously trying to suggest that most of the US is suffused with the Mafia, with the result being that somehow higher taxes would ruin everything? What the fuck kind of moon logic is that?
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Re: The 2% Illusion

Postby Cooley » Sat Feb 28, 2009 3:28 am UTC

From what I've read, the logic of the stimulus works.
From this article, published in the editorial section of the Wall Street Journal, we can't afford to pay for the stimulus in the way that President Obama is proposing.
If income tax increases (and various other minor increases elsewhere) are not enough to pay for the stimulus, how will President Obama make up the difference?
I think he'll print more money, or cook the books in some mystical voodoo way so that the government magically has more money. This seems bad to me.
I don't think he'll want to raise taxes on anybody making less than the quarter mil, because that will ruin his credibility.

Now: I think the progressive tax rate is dumb. It feels to me like the government is punishing the people who make the most money. I think a flat tax would be better.
I don't know if taxes are too high or not, but that question does remind me of the Laffer Curve from high school economics (that is the extent of my knowledge of economics).
I do know that I think the government is spending far too much money, and too much on things I don't think the government should be spending money on.
I know I'm not the only one who feels this way. Also, I know that other people, having different values, want government money spent in ways I don't necessarily approve of.
The solution, it seems to me, is to have the government not spend money on those things, and to let private citizens and groups take care of funding those things (programs, etc...). This way nobody feels like they are being robbed.
What the government should fund is and always has been debatable. Education, defense, health care, the postal service, etc... are all things that people feel strongly about. I don't know what to do about that.

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Re: The 2% Illusion

Postby Malice » Sat Feb 28, 2009 5:27 am UTC

Cooley wrote:From what I've read, the logic of the stimulus works.
From this article, published in the editorial section of the Wall Street Journal, we can't afford to pay for the stimulus in the way that President Obama is proposing.
If income tax increases (and various other minor increases elsewhere) are not enough to pay for the stimulus, how will President Obama make up the difference?
I think he'll print more money, or cook the books in some mystical voodoo way so that the government magically has more money. This seems bad to me.
I don't think he'll want to raise taxes on anybody making less than the quarter mil, because that will ruin his credibility.


Actually, he'll tell the government to borrow money. Obama has already acknowledged (or at least implied) that the stimulus plan will require growing the deficit. Unfortunately right now there's no better option.

Now: I think the progressive tax rate is dumb. It feels to me like the government is punishing the people who make the most money. I think a flat tax would be better.


A flat tax punishes the people who make the least money. Despite the name, a flat tax is regressive, not neutral.

I don't know if taxes are too high or not, but that question does remind me of the Laffer Curve from high school economics (that is the extent of my knowledge of economics).


We're nowhere near Laffer Curve territory. As stated elsewhere in the thread, we have some of the lowest taxes in the industrialized world, and the rest of them are doing fine. If I remember correctly the Laffer Curve doesn't really start to affect revenue until you get up in the 75% range.

I do know that I think the government is spending far too much money, and too much on things I don't think the government should be spending money on.


You and everybody else.

The solution, it seems to me, is to have the government not spend money on those things, and to let private citizens and groups take care of funding those things (programs, etc...). This way nobody feels like they are being robbed.


Some programs only work if everybody pays in, not just the people who care. Take education, for instance--a widely educated populace is to everybody's benefit, and is the goal of some groups, though not all. Those groups, however, don't have enough money to pay for everyone's education. Everybody has to pay in in order for it to work.
And currently, private citizens and groups are having a hard time paying for anything, thanks to the recession.
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Re: The 2% Illusion

Postby william » Sat Feb 28, 2009 5:39 am UTC

Malice wrote:
I don't know if taxes are too high or not, but that question does remind me of the Laffer Curve from high school economics (that is the extent of my knowledge of economics).


We're nowhere near Laffer Curve territory. As stated elsewhere in the thread, we have some of the lowest taxes in the industrialized world, and the rest of them are doing fine. If I remember correctly the Laffer Curve doesn't really start to affect revenue until you get up in the 75% range.

The Laffer Curve is pretty much voodoo now. Because of the natural motion of the economy it's impossible to tell where the Laffer curve peaks. If I had to guess I would guess 50% out of first principles but I only have an ECON 101 education so I'm not sure.
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Re: The 2% Illusion

Postby oxoiron » Sat Feb 28, 2009 5:52 am UTC

dwalb wrote:I dont argue that there are a few worthwhile things that the government should be collecting taxes on. (education, road construction....) I sincerly doubt that 40 percent of my income is being used in an appropriate way. Its mostly wasted on things that wont ever effect me. As such, it would be much better in my hands, than in the govts.
Apparently, my tax dollars used for your education were wasted, because you haven't yet learned the difference between 'affect' and 'effect'. Since the best efforts of the government couldn't educate even an obviously insightful person such as yourself, I am forced to agree with you that the state can't be trusted with my tax dollars for any reason whatsoever. Please join me in moving to some shithole third-world country where we won't have to pay taxes and the standard of living is so low that the inhabitants are happy when they starve because at least it ends their suffering.
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Re: The 2% Illusion

Postby psyck0 » Sat Feb 28, 2009 2:21 pm UTC

We just had the taxation debate in the stimulus thread and showed pretty conclusively that a) the argument that because every other country that had high taxes wasn't the US means it won't work in the US is complete bullshit put out by people who can't face the fact that their beloved dreams for riches without social responsibility might be WRONG, and b) that even if you ignore all THAT data because you're a close-minded idiot, the US was in its best shape during the period when it also had the highest taxes.

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Re: The 2% Illusion

Postby ZeroSum » Sat Feb 28, 2009 2:46 pm UTC

Malice wrote:Are you seriously trying to suggest that most of the US is suffused with the Mafia, with the result being that somehow higher taxes would ruin everything? What the fuck kind of moon logic is that?

Are you so dense that you can't understand what I'm trying to say there? There are many factors that make Hawaii almost entirely unlike the rest of the US, organized and gang crime being one of them. That list was in no way meant to be complete or in sorted priority order but merely illustrative of a wide range of factors that make Hawaii a poor representative of the US as a whole.

Don't be a fucking asshole and assume everyone not you is a moron please.

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Re: The 2% Illusion

Postby MartianInvader » Sat Feb 28, 2009 3:07 pm UTC

This sort of argument bugs the hell out of me.

Person 1: "Taxes are bad for the economy! I DARE you to prove me wrong!"

Person 2: "In every analogous situation we can find, taxes are good for the economy."

Person 1: "Every one of those situations is different then the situation right here, right now! They don't prove me wrong!"

This argument's been used for years and years. When person 1 won and taxes went down, the economy got worse. When person 2 won and taxes went up, the economy got better. Of course, THIS time the situation really IS different, you'll see! :roll:

Anyone who's playing the role of person 1 right now, I challenge you to come up with some real evidence that lower taxes help the economy. Not just theory, not ridiculous hypotheticals where everyone is taxed 99% of their income, and not just saying that we're in a unique situation different from all the ones where taxes make things better. Show us some actual examples of a time/place where lowering taxes helped things, or raising taxes made them worse.
Let's have a fervent argument, mostly over semantics, where we all claim the burden of proof is on the other side!

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Re: The 2% Illusion

Postby ZeroSum » Sat Feb 28, 2009 3:34 pm UTC

How about this: When we talk about high versus low taxes worldwide what is generally actually being debated is income inequality. The Gini coefficient is happily touted as a common metric for this inequality:

Given a long-term plot of the Gini index what hypothesis do you think we can put forward:
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Over time there have been around four countries with large changes to Gini index:
The US went up by about 7%, France went down by about 15%, China went up by about 10% (since tracking started in 1980) and Mexico went down about 7%. (I don't know much about Norway so I'm skipping them.)

How has standard of living changed in these countries over the years? Except for times of immediate crisis (including the most recent) the US was seen as more or less the gold standard for standard of living for quite some time. France's current day situation, however, includes many more riots and unrest than what we're used to hearing from the 60's-80's. China's standard of living has skyrocketed since the '80s as communism started its decline. Mexico's standard of living hasn't changed all that much in general though it may have trended better before the current crises it's facing.

So what hypothesis do I draw from this all: There's probably some sweet spot around 34-37% for Gini Index which would mean that we're all wrong. That is, US taxes can be too low while European taxes can be too high. But also, we're all right. Some people look at the US and say "How can you survive when the government can do so little?" while others look at Europe and say "How can you survive when the government takes so much?"

And, once again, I find myself in the position I always sit when these debates rage -- why is everyone arguing as if the world is a black-and-white idealization of some socioeconomic theory?

The point of this thread in the beginning was "Obviously Obama will have to tax more than the top 5% in order to reasonably manage his new initiatives" -- which is obvious because borrowing has to be repaid sometime and if the top 5% can't repay it all then the costs will trickle down to the other 95%. Somehow this has translated to "Why worry about higher taxes? Europe has higher taxes and they're doing fine" and yet these people seem to miss that European culture is almost entirely unlike American (and here I mean US but USofAmerican doesn't sound very good) culture and thus there are cultural assumptions among a large portion of the population that make people dislike the idea of higher taxes. All this while the real question should be "Taking all the data into account (which means including the fact that for a very long time the US was the gold standard of high living even if it isn't so today) where should we try to find our income distribution and tax rates to support that?"

So how about we stop assuming everyone's an idiot and start acknowledging that being 100% right in any case is almost impossible?

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Re: The 2% Illusion

Postby Malice » Sat Feb 28, 2009 6:04 pm UTC

ZeroSum wrote:How has standard of living changed in these countries over the years? Except for times of immediate crisis (including the most recent) the US was seen as more or less the gold standard for standard of living for quite some time. France's current day situation, however, includes many more riots and unrest than what we're used to hearing from the 60's-80's. China's standard of living has skyrocketed since the '80s as communism started its decline. Mexico's standard of living hasn't changed all that much in general though it may have trended better before the current crises it's facing.


Aww, you were doing so good until you stopped using numbers. It's not like "standard of living" is something we just have to guess at. And you are guessing, and guessing incorrectly. Saying "US was seen as the gold standard" doesn't tell me how many poor people they had or what it was like or what the infant mortality rate was or what percentage of families had homes, cars, jobs, and color televisions. The French unrest you're talking about is a result of immigration and shitty integration policies, has nothing to do with taxes, and is not quantitatively different from the normal French state of affairs in the previous 50 years where they'd riot at the drop of a hat. China's standard of living has gone up for some but again, for how many? There are still massive amounts of poverty there.

I reject your hypothesis as unfounded because you're missing half your data. Give hard numbers connecting standard of living changes to changes in tax rates and then I'll take notice.

The point of this thread in the beginning was "Obviously Obama will have to tax more than the top 5% in order to reasonably manage his new initiatives" -- which is obvious because borrowing has to be repaid sometime and if the top 5% can't repay it all then the costs will trickle down to the other 95%.


Which is idiotic. The top 5% can repay it over time; the article's point was that we can't afford to pay it all right now, hence borrowing, just like Obama said.
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Re: The 2% Illusion

Postby Grave » Sat Feb 28, 2009 6:12 pm UTC

ZeroSum wrote:How about this: When we talk about high versus low taxes worldwide what is generally actually being debated is income inequality. The Gini coefficient is happily touted as a common metric for this inequality:
...
How has standard of living changed in these countries over the years? ...
So what hypothesis do I draw from this all: There's probably some sweet spot around 34-37% for Gini Index which would mean that we're all wrong. That is, US taxes can be too low while European taxes can be too high. But also, we're all right. Some people look at the US and say "How can you survive when the government can do so little?" while others look at Europe and say "How can you survive when the government takes so much?"


So lets pick a metric to measure standard of living with - I'll go with the HDI (Human Development Index), which measures life expectancy, literacy, education, and GDP per capita. A list of countries ranked by HDI can be found here - you'll note that the United States is ranked 15th, behind almost all of those wonderful high taxation European nations. Looking at the map of countries by Gini coefficient, you have to notice that every single nation higher on the HDI list than the US has a lower Gini Coefficient (ranging from <.25 [Japan and Denmark] to .34).

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Re: The 2% Illusion

Postby dwalb » Sat Feb 28, 2009 9:51 pm UTC

I say this data is inconclusive because it has no control. It doesn't even have an opposing side! We have countries with degrees of high taxes. And all of them are in ordered in a incremental status of 'perfection'.

If there were a decient sampling of countries that had extremely low taxes, or conclusive data showing that % tax = happiness in nation then it would be believable. But there's not. There are thousands of factors to take into consideration. Pointing out those considerations means closing our minds to your obvious logic? Get real.

As is, its all circumstance.

I note again, aside from calling me immature, stupid, a right wing consipiritor and a homophobe, no one has been able to point out why 40% of my money is better off in govt hands. You really expect me to believe that if i gave 60% i'd be less poor, have better health care, less job stress and fewer gallstones?

There is an appropriate amount of taxation. We are way past it.

(btw, my real ploy here is that I want the economy to implode, job loss is so severe that we end up in the dark ages again and the catholic church will then be truely restored to its rightful place of power in society...)

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Re: The 2% Illusion

Postby roc314 » Sat Feb 28, 2009 10:52 pm UTC

dwalb wrote:I say this data is inconclusive because it has no control. It doesn't even have an opposing side! We have countries with degrees of high taxes. And all of them are in ordered in a incremental status of 'perfection'.

If there were a decent sampling of countries that had extremely low taxes, or conclusive data showing that % tax = happiness in nation then it would be believable. But there's not. There are thousands of factors to take into consideration. Pointing out those considerations means closing our minds to your obvious logic? Get real.
I don't see how what you are saying implies that high taxes are bad. So it may be the case that the positive qualities in countries with high taxes are not completely due to their higher taxation rate. That still doesn't imply that those taxes are bad or harmful.
I note again, aside from calling me immature, stupid, a right wing consipiritor and a homophobe, no one has been able to point out why 40% of my money is better off in govt hands. You really expect me to believe that if i gave 60% i'd be less poor, have better health care, less job stress and fewer gallstones?
The way you say that, you make it sound like the government does nothing with taxes. That they just sit on that 40%, as opposed to spending it on infrastructure, education, health care, national defense, welfare, and all these other things that raise the standard of living.
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Re: The 2% Illusion

Postby Garm » Sat Feb 28, 2009 11:44 pm UTC

To add to what Roc said, Government also spends on the common good. That is things like the Volcano Monitoring that Bobby Jindal pointed out. No private industry is going to spend money making sure that people are safe from lava unless someone pays them to do it. And folks don't care enough to pay to have volcano monitoring done by some company.
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Re: The 2% Illusion

Postby Diadem » Sat Feb 28, 2009 11:53 pm UTC

Comparing countries on tax rate vs. standard of living is somewhat bullshit, because 99% of a country's current wealth is based on historic patterns, not on current policy. If Switzerland were to abolish all taxes, they'd still be the richest country in the world - at least for a while. If they suddenly increased all taxes for 100%, same story.

Hence it's better to compare tax rates and growth. The question is thus: Do countries with higher tax rates grow faster or slower.

I remember seeing some quite convincing data once that high taxes indeed slow down economic growth, but I can't find them anymore. Only data I find now using google suggests the opposite. Very confusing. Will keep looking.

[edit]
Actually if you really want convincing data you should probably compare *changes* to income tax with *changes* to economic growth rate in the subsequent years. I have never seen such data, but if we manage to find accurate data of tax vs. growth rate we should be able to calculate time derivatives ourselves :)

[edit]
Using wikipedia I found some data
http://en.wikipedia.org/wiki/List_of_co ... age_of_GDP
http://en.wikipedia.org/wiki/List_of_co ... GDP_growth
http://en.wikipedia.org/wiki/List_of_co ... _GDP_(real)_growth_rate

Let's compare the top countries with the bottom ones. I'm only taking western nations to make the comparison a bit fairer. I'm just collecting the data myself at the moment. I'm not biased in my data selection, I don't know what I'm going to find yet either. The data the tax rate was measured is in the list, most seem to be 2007. The year for growth is 2008 for all countries.

Code: Select all

Country       Tax%GDP   Year   Growth
HIGH INCOME TAX COUNTRIES
Denmark         48.9    2007   0.3%
Sweden          48.2    2007   0.9%
Belgium         44.4    2007   1.5%
France          43.6    2007   0.9%
Norway          43.4    2007   2.8%
Italy           43.3    2007   0.0%
Finland         43.0    2007   2.4%
Austria         41.9    2007   2.1%
Iceland         41.4    2007   2.0%
Slovenia        39.1    2006   4.5%
Hungary         39.3    2007   2.0%
Netherlands     38.0    2007   2.1%
Spain           37.2    2007   1.3%
Luxembourg      36.9    2007   4.0%
United Kingdom  36.6    2007   1.1%

LOW INCOME TAX COUNTRIES
Canada          33.3    2007   0.7%
Ireland         32,2    2007  -0.7%
Greece          31.3    2006   2.8%
Estonia         31.0    2006  -1.5%
Australia       30.6    2006   2.5%
Slovakia        29.8    2007   7.0%
Switzerland     29.7    2007   2.0%
Latvia          30.1    2006  -0.4%
Lithuania       29.7    2006   5.1%
USA             28.3    2007   1.4%
Japan           27.9    2006   0.7%
Romania         28.6    2006   8.0%


Well... The data seems pretty inconclusive! Some of the low tax countries are clearly doing better, some are clearly worse. In all there seems no clear difference. Though based on this one might argue that high taxes make a country more stable. All in all more data is clearly needed. Perhaps it would be nice to see the data from before the economic collapse. And of course a many-year average.
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Re: The 2% Illusion

Postby Comic JK » Sun Mar 01, 2009 2:01 am UTC

Garm wrote:To add to what Roc said, Government also spends on the common good. That is things like the Volcano Monitoring that Bobby Jindal pointed out. No private industry is going to spend money making sure that people are safe from lava unless someone pays them to do it. And folks don't care enough to pay to have volcano monitoring done by some company.


I think the case for government intervention is stronger than you're saying (and you're saying it's pretty strong). Volcano monitoring is an externality--it helps everyone, no matter who pays for it. That means in general that no one will pay for it, because the few who did, out of a sense of duty, would be supporting thousands of free riders who didn't. The only good solution is to force everyone to pay their share by law--that's the tax system. There are lots of externalities--military defense, crime control, poverty relief, environmental protection--and the government is 100% right to spend our money on them. You can say the government does it wastefully, if you have numbers to back that up, but you can't say it shouldn't do it.
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Re: The 2% Illusion

Postby gmalivuk » Sun Mar 01, 2009 2:09 am UTC

Diadem wrote:Comparing countries on tax rate vs. standard of living is somewhat bullshit, because 99% of a country's current wealth is based on historic patterns, not on current policy.

But it's quality of life that we care about, more than growth. If any comparison is unhelpful, it's the one you were trying to make with growth. If all of one country's 2% total growth is concentrated among a few already very rich people, while all of another country's 1% growth is spread out among everyone more equally, I'd argue that the second country is doing better overall.

And while a country's current wealth may be based on historical patterns, you said yourself that 0% or 100% tax rates would be felt before very long. So simply compare a moving average of the tax rate with a moving average of something like HDI, perhaps offset by a few years. In other words, do high taxes for several years running generally correspond with high HDI then and later, or do higher taxes tend to decrease HDI? It's really not a difficult thing to look for if you have the data.
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Re: The 2% Illusion

Postby Bubbles McCoy » Sun Mar 01, 2009 2:34 am UTC

HDI does not really indicate anything except wealthy countries have high standards of living. Despite Denmark's near doubling of expenses as a percent of GDP as America's, they only rank some .2% higher on the scale, and are beaten by Japan which has even lower taxation then the United States (not to mention Ireland and Australia, which have similar tax rates to America).

However, even if there was some sort of detailed correlation you could set up, it does not necessarily have any meaning. There are about thirty developed countries out there, which is no where near enough to form a statistically relevant sample for the sake of such simplistic analysis. Comparisons and analysis are incredibly useful for the sake of determing governmental policy and yes, at times correlation's between such a small sample could be useful, but it seems that too many people in both this and associated threads seem to think the argument ends at "Europe has higher taxes and higher standards of living, ergo the United States should have higher taxes."

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Re: The 2% Illusion

Postby gmalivuk » Sun Mar 01, 2009 2:54 am UTC

Bubbles McCoy wrote:it seems that too many people in both this and associated threads seem to think the argument ends at "Europe has higher taxes and higher standards of living, ergo the United States should have higher taxes."

No, that's really really not it at all. Rather, we're arguing in multiple threads that it's really stupid and simplistic for other people to claim the US already has way too much taxation when pretty much every European government levies higher taxes without decreased standard of living.
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Re: The 2% Illusion

Postby Bubbles McCoy » Sun Mar 01, 2009 3:11 am UTC

Don't get me wrong, I know this debate goes much deeper than that - but some statements from psych0 and Grave in this thread run fairly close to that line of thinking. It also seems somewhat backwards to suggest that you can levy taxes without decreasing standards of living; isn't the goal of higher taxes to raise net standards in the first place?

On a bit of a sidenote, once you factor in state expenses I think America is fairly middle-of-the pack when it comes to government spending. I'm not sure if other countries have significant provincial taxation, but I'm under the impression that can only really happen with federalist systems.

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Re: The 2% Illusion

Postby EsotericWombat » Sun Mar 01, 2009 7:50 am UTC

dwalb wrote:Come on get real. Stop the name calling and point out how the govt can handle my money better than I can.


I'll fulfil the second request.

Unless you're planning on investing your money in bridges, roads, high-speed rails, food stamps, universal healthcare, or broadband/power infrastructure, the Government has SEVERAL ways of handling your money in ways that help the economy (and thus, you) more than you can.

Prick.
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Re: The 2% Illusion

Postby Diadem » Sun Mar 01, 2009 2:48 pm UTC

gmalivuk wrote:
Diadem wrote:Comparing countries on tax rate vs. standard of living is somewhat bullshit, because 99% of a country's current wealth is based on historic patterns, not on current policy.

But it's quality of life that we care about, more than growth.

I thought the question was "Does lowering taxes increase economic growth?". The subsequent question "do we want this? Is economic growth a good indicator of whatever it is we actually desire? (high standards of living, or maybe more accurately happiness)", is of course very important. But I think we need to answer the first question first, right?

If any comparison is unhelpful, it's the one you were trying to make with growth. If all of one country's 2% total growth is concentrated among a few already very rich people, while all of another country's 1% growth is spread out among everyone more equally, I'd argue that the second country is doing better overall.

I'd agree with you there. But that does not mean that growthrate is not relevant. It just means that it is not the only relevant factor. What's better, 1% growthrate spread evenly, or 2% growthrate spread evenly? What's better, 2% growthrate for only the rich, or 4% growthrate for only the rich? Clearly, ceteris paribus, higher growthrates are always better. Thus the comparison with growthrate is important. We just should be mindful that it's not the only relevant factor in our equation. But that is, to be honest, an open door.

And while a country's current wealth may be based on historical patterns, you said yourself that 0% or 100% tax rates would be felt before very long. So simply compare a moving average of the tax rate with a moving average of something like HDI, perhaps offset by a few years. In other words, do high taxes for several years running generally correspond with high HDI then and later, or do higher taxes tend to decrease HDI? It's really not a difficult thing to look for if you have the data.

Wait, first you argue that you shouldn't look at the rate of change because it's actual standards of living that we're interested in, and now you tell me we should? Make up your mind!
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Re: The 2% Illusion

Postby gmalivuk » Sun Mar 01, 2009 3:31 pm UTC

Diadem wrote:Wait, first you argue that you shouldn't look at the rate of change because it's actual standards of living that we're interested in, and now you tell me we should? Make up your mind!

Learn to read!

I said something as coarse as the rate of change of GDP wasn't informative because actual standards across the board may not correlate very well with that, and actual standards are what we're interested in, so we should look at those.
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Re: The 2% Illusion

Postby Diadem » Sun Mar 01, 2009 5:09 pm UTC

gmalivuk wrote:
Diadem wrote:Wait, first you argue that you shouldn't look at the rate of change because it's actual standards of living that we're interested in, and now you tell me we should? Make up your mind!

Learn to read!

I said something as coarse as the rate of change of GDP wasn't informative because actual standards across the board may not correlate very well with that, and actual standards are what we're interested in, so we should look at those.

Look, there is a difference between a quantity and its rate of change. There is a difference between GDP and rate of change of GDP. There is a difference between HDI and rate of change of HDI. Allright?

People here were comparing tax rates with GDP. I pointed out that this is a flawed comparison, and that if you want to make a comparison, then you should compare tax rates with the change in GDP. Can you see the difference between those two? Please tell me if this is too complex, I don't want to strain you.

You responded to this "But it's quality of life that we care about, more than growth", you then continued with some bad arguments why growth rate would not be a good measure, and finally you ended with: "In other words, do high taxes for several years running generally correspond with high HDI then and later, or do higher taxes tend to decrease HDI?". In the first line you say one shouldn't look at rate of change, and in the last line you say one should. So you're contradicting yourself.


No doubt you are now going to respond to this post by saying "Yes, but you were talking about GDP and I'm talking about HDI", so let me preemptively answer that: I was only using GDP as an example. My point was that one should look at rate of change of the index, not the actual index. This is true for GDP, HDI, or any other scale you want to use (PPP perhaps, or SWL). GDP was just an example.
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Re: The 2% Illusion

Postby psyck0 » Sun Mar 01, 2009 6:55 pm UTC

Bubbles McCoy wrote:Don't get me wrong, I know this debate goes much deeper than that - but some statements from psych0 and Grave in this thread run fairly close to that line of thinking. It also seems somewhat backwards to suggest that you can levy taxes without decreasing standards of living; isn't the goal of higher taxes to raise net standards in the first place?
I am saying nearly what you think I am saying. There is a qualifier: "Europe has higher taxes and higher standards of living, ergo the United States should try having higher taxes because clearly the current approach isn't working as well, and increasing taxes is one approach that hasn't been tried in the US and is also one difference between the US and Europe." The argument that Europe and other countries are different from the US and so their approach won't work is fucking retarded. Firstly, "high taxation" countries are a very heterogenous group which have many things in common with the US. Secondly, we don't KNOW that it won't work; all we know is that things are going better there and it is one thing we could TRY to see if it works, instead of dismissing it out of hand. All these fucking neocons will just plug their ears and shout SOCIALISM, though, as they have been doing for decades.
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Re: The 2% Illusion

Postby JPA » Mon Mar 02, 2009 6:05 am UTC

Comic JK wrote:I think the case for government intervention is stronger than you're saying (and you're saying it's pretty strong). Volcano monitoring is an externality--it helps everyone, no matter who pays for it.


How does volcano monitoring help me if I don't live near volcano's or fault lines? Does this really meet the criteria of an externality if it is not helping everyone equally?

Shouldn't the people who live near a volcano pay for the monitoring of said volcano as a cost of living expense for living next to a volcano? (I bet they got their land cheaper than me, because you know...they live next to a volcano!)

Would you help me pay to subsidize my home insurance because I live in a flood plain or a region that gets hit by hurricanes frequently? What if I keep rebuilding my home in that area, and it keeps getting destroyed?

What about research into space colonization, teleportation, faster than light travel, nanomachines, new theories of mathematics? No one wants to pay for them, but they will help everyone (therefor meet criteria for externality). Let's use taxes to pay for them!

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Re: The 2% Illusion

Postby ConMan » Mon Mar 02, 2009 6:26 am UTC

JPA wrote:What about research into space colonization, teleportation, faster than light travel, nanomachines, new theories of mathematics? No one wants to pay for them, but they will help everyone (therefor meet criteria for externality). Let's use taxes to pay for them!

Sounds like a good idea to me.

(Of course, none of these organisations specifically invests in anything you mention, but all are government-run, -funded or -sanctioned organisations whose sole purpose is to fund research. Not to mention the research that goes on in public universities all over the world.)
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Re: The 2% Illusion

Postby netcrusher88 » Mon Mar 02, 2009 8:04 am UTC

JPA wrote:How does volcano monitoring help me if I don't live near volcano's or fault lines? Does this really meet the criteria of an externality if it is not helping everyone equally?
If "it saves lives, so who cares if it helps me" isn't good enough for you, it can reduce the chance of property damage, health issues... it translates into a healthier, happier populace, which translates into a more productive populace, and that's better for everyone.

And there's also the whole "it saves lives" thing.
Shouldn't the people who live near a volcano pay for the monitoring of said volcano as a cost of living expense for living next to a volcano? (I bet they got their land cheaper than me, because you know...they live next to a volcano!)
I doubt it. Active volcanoes in many areas are tourist attractions and/or scenic - land that merely has a good view of (for example) Mount Ranier or Mount St. Helens in Washington commands a high price. And if it was a cost of living expense, who then would do the monitoring? How would you make sure that every one in that area has access to that data, at a reasonable or nonexistent cost? What about companies that do business in the area and their employees, people who inherited property and can't afford monitoring, or the government, which may own extensive property (national/state parks/monuments/forests) in the area? Government funding really is the best option here.
Would you help me pay to subsidize my home insurance because I live in a flood plain or a region that gets hit by hurricanes frequently? What if I keep rebuilding my home in that area, and it keeps getting destroyed?

My income taxes help pay to support thousands of people in the areas affected by hurricanes and floods, and to build and maintain levies and other infrastructure to prevent floods and minimize damage caused by water-based events. It went to help feed and house people who were displaced by Katrina and Rita.

And I wouldn't have it any other way.

So, yes. I would. The point you were trying to make with that paragraph was invalidated by the fact that it's based on the premise that that's not already something we do - which it is, although not in that exact way.
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Re: The 2% Illusion

Postby Dhes » Mon Mar 02, 2009 8:16 am UTC

JPA wrote:Shouldn't the people who live near a volcano pay for the monitoring of said volcano as a cost of living expense for living next to a volcano? (I bet they got their land cheaper than me, because you know...they live next to a volcano!)

Sounds good, let the people that live on the west coats pay for it. That extra 140 million will help a lot.
Maybe they can give everyone in the US .50 cents. What are you going to do with all that money, put down a down payment on a candy bar?
There are a lot of projects like this where the US could save a lot of money.
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Re: The 2% Illusion

Postby JPA » Mon Mar 02, 2009 5:15 pm UTC

So we have the moral responsibility to give up our wealth for anything that might save lives? (or more specifically, have wealth taken from you in form of taxes to prevent the loss of life)

Where do we draw the line? Is it just lives in the nation I live? Is it every preventable death in the world? Or just ones from scary deaths like volcano's?

I don't understand how you guys have money for a computer and an internet connection to post on this forum. There are millions of preventable deaths happening in the US and the world. Shouldn't you be giving up all your money to prevent these deaths? Or are you just greedy capitalist pigs?

BTW, if people did not live near flood plains and other natural hazards, we would all be wealthier as a society (less capital spent on rebuilding beach front houses). Think about the moral hazard you create by subsidizing settlements in risky areas and what could have done with that wealth instead (wiped out hunger, poverty, or homelessness?) Are we really that short on land that we need to settle these areas? Or are we just subsidizing the vain and ignorant at the expense of the truly impoverished.

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Re: The 2% Illusion

Postby william » Mon Mar 02, 2009 5:24 pm UTC

By the way, there is no part of the world that is not privy to some natural disaster.
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Re: The 2% Illusion

Postby Malice » Mon Mar 02, 2009 5:31 pm UTC

JPA wrote:So we have the moral responsibility to give up our wealth for anything that might save lives? (or more specifically, have wealth taken from you in form of taxes to prevent the loss of life)


Do we have a moral responsibility? No. But is it smart, up to a certain point? Yes. Helping others helps you in the long run. Just like investing in stocks can help you in the long run. But that doesn't make it a moral imperative; nor does it mean that you should invest all of your money in those stocks. Because there is a median point between "fuck you, I've got mine" and "Fuck, I can't even afford a computer because I gave all money to the poor". Nobody is suggesting you become Mother fucking Teresa; they're talking about basic human compassion and living intelligently within a society.

BTW, if people did not live near flood plains and other natural hazards, we would all be wealthier as a society (less capital spent on rebuilding beach front houses).


Are you sure? Because if people didn't live there, they'd have to live somewhere else, and assuming you can actually find someplace that isn't subject to natural hazards, the population density in that area is going to skyrocket. Which means it'll bring with it a lot of costs on its own, like disease, crime, economic strife, and homelessness. Can you prove we'd be better off? I doubt it, but you're welcome to try.
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Re: The 2% Illusion

Postby Indon » Mon Mar 02, 2009 5:39 pm UTC

Vaniver wrote:
ZeroSum wrote:Can everyone not use the concept of defibrillation incorrectly here. It's analogies like that that turn debates into crocodiles.
Well, but the analogy is apt- there are the people who think that the economy needs to be shocked into moving again, and the people that think that shocks prevent the economy from moving again.* It's the argument of "we need to take control and change things and get money flowing!" against "if the government takes an active role, they'll paralyze business decision-making since they can't predict what the government will do, and what the government will do is important to their future."

*I wish I could say they were Democrats and Republicans, but as is their wont many Republicans have failed at being fiscally conservative recently.


Agreed. The disagreement here is how 'alive' the economy is. I see that argument, for instance, and I think, "Oh, yeah, let's just let the decision-making process that basically completely destroyed our economy keep operating without restriction. Or how about no, because I like having a market in the first place, and at this rate we're going to get tanked back to the barter system for the self-interest of private individuals who have disproportionate control over the system."

While no doubt a(n actual) conservative's thought process leans more towards, "Well, yes, of course businessmen are going to destroy the economy if government makes it in their interest to do so - that's why we need to remove the incentive to do so."

And then we get into a ginormous debate scope about regulation and government systems and economics and human nature and rights, etc, etc, etc. Kind of like what's going on in the thread right now, except without the condescention (okay, maybe not).
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Re: The 2% Illusion

Postby JPA » Mon Mar 02, 2009 6:12 pm UTC

All I asked was where do you draw the line?
Taxes destroy personal wealth, so it's a very tricky argument to say that "taxes should be spent to prevent deaths" because on the consequence of following that decree to it's logical end. I agree with the intent of the statement, and limited application of it. I don't agree that volcano death and property damage makes the cut where I would draw the line. Hunger and other truly universal preventable deaths would make the cut if I was the decider.

Speaking US centric for a moment: Have you driven through the country? We have so much land that can be inhabited. There is no way we would have overcrowding if people moved away from disaster prone areas. I'd much rather pay for one time assistance of moving someone out of a flood region, then to pay every 30 years for them to rebuild their house in the same dumb spot.

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Re: The 2% Illusion

Postby cypherspace » Mon Mar 02, 2009 6:22 pm UTC

First off, flood plains are inhabited heavily because they are next to rivers. Rivers provide water (fairly essential for life), trade and transportation. Volcanos also produce highly fertile soil. You can move into the middle of the desert if you want to, since there's so much space, but you won't do very well at farming there, will you?

I find it amazing that so many Americans find it so difficult to think that helping other people is a bad thing. Heaven forbid someone might care about people other than themselves.
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Re: The 2% Illusion

Postby Garm » Mon Mar 02, 2009 6:25 pm UTC

JPA wrote:All I asked was where do you draw the line?
Taxes destroy personal wealth, so it's a very tricky argument to say that "taxes should be spent to prevent deaths" because on the consequence of following that decree to it's logical end. I agree with the intent of the statement, and limited application of it. I don't agree that volcano death and property damage makes the cut where I would draw the line. Hunger and other truly universal preventable deaths would make the cut if I was the decider.

Speaking US centric for a moment: Have you driven through the country? We have so much land that can be inhabited. There is no way we would have overcrowding if people moved away from disaster prone areas. I'd much rather pay for one time assistance of moving someone out of a flood region, then to pay every 30 years for them to rebuild their house in the same dumb spot.


But not all the land that can be inhabited can be farmed very well. Sure, everyone could go live up in Wyoming and Montana but good luck feeding everyone with a growing season of about 2 months. Alluvial flood plains are great places to grow crops and for centuries, rivers have been vital to commerce. Likewise volcanic rock helps enrich the soil. From Wikipedia:

Volcanic eruptions also provide the benefit of adding nutrients to soil through the weathering process of volcanic rocks. These fertile soils assist the growth of plants and various crops.


So there's a good argument to be made for the necessity of living in these places. I think that one might argue that things like volcano monitoring helps keep insurance rates down, so you might say that the government spends for the common good so that you can eat food and not pay through the nose for insurance. Among other benefits of course, those are just some specific examples.

edit: Vaguely ninja'd but posting anyway.
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Re: The 2% Illusion

Postby JPA » Mon Mar 02, 2009 6:42 pm UTC

Your choices of river, volcano, or desert is incomplete and misleading. There are millions of sq km of plains to populate here.

And I was speaking of living on the land, not farming it. If someone wants to go into business farming these lands, that is a risk they take among many others. They (and their investors) take on the responsibility of those risks, and they benefit from the fruits of their investment. I see no argument why we need to subsidize farming on disaster prone land. Unless you are talking about subsidizing food production in general, in which I would prefer giving money to the people who need money for food instead of giving it to the farmers to keep price low. Free market works well on its own to keep prices down.

American's don't think helping other people is a bad thing, we actually give more than any other country. The difference is (most of us) prefer free will in our choice of charity, instead of your system of giving money and the decisions to the power elite via taxes.

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Re: The 2% Illusion

Postby Garm » Mon Mar 02, 2009 7:11 pm UTC

JPA wrote:Unless you are talking about subsidizing food production in general, in which I would prefer giving money to the people who need money for food instead of giving it to the farmers to keep price low. Free market works well on its own to keep prices down.


It's not exactly a free market if the Government is giving money to people in order to buy food and so there's really no reason to keep prices down.

I was using volcanoes and rivers analogously. My point is that ignoring the externalities that create a larger context that necessitates spending for the common good reduces your arguments to absurdity.
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Re: The 2% Illusion

Postby JPA » Mon Mar 02, 2009 7:24 pm UTC

I did not ignore the externalities. I stated that *all* externalities do not necessitate spending for the common good. I also stated that if a society spends tax revenue on all externalities that prevent the loss of life, that society will have a very low standard of living (lots of unhappy people vs. fewer happier people).

The decision for what is needed for the common good is not an all or nothing decision. There is a spectrum of decisions and therefor room for debate on whether volcano monitoring is a common good worth spending tax revenues on.

Do we spend every available resource preventing every possible loss of life for the common good? If not, (repeated) where do you draw the line?


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