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-- Stimulus package full of pork?
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Lets just say I'm against most interventionism in general. I subscribe to the beliefs of the Austrian school..Mises, Hayek, Rothbard, and other anti Keynesians...and I think nearly every aspect of life would be better off with less government intrusion. I don't take it to an extreme like some folks (who want to privatize highways etc) but the level of meddling today is doing tremendous harm. As for taxes, HELL YES please cut them across the board, along with social spending. Taxes are a penalty on productive activity..and decreasing that penalty for both workers and employers would be the ultimate stimulus. A corporate tax rate of 0% would benefit far more people than extending unemployment benefits a few extra months. We've been trending towards a welfare state for some time now and have very perverse incentives (high penalties for success and generous benefits for remaining idle). I accept the need for a bare minimum safety net but with welfare today it is possible to remain comfortably unemployed for many months..and the general attitude of most Americans is that businessmen are an adversary to be overcome. Our priorities are just ass backwards.

As for the fed, yeah..I'm against practically everything they've done over the past year. I favor a strong currency. It doesn't need to be backed by gold but it does need to be stable so that people can plan for the future..so they can start saving again and make prudent long term investments rather than chasing the latest bubble. The nation's money supply has doubled over the past year and the fed has cut rates to 0%..so people are once again being forced once again to make poor investment decisions in an effort to beat inflation. It's the same thing that led to the 2007/08 bubble in the first place. All of this fed/government action is preventing those bad investments from being liquidated. We won't have a healthy recovery until that happens. We're just throwing another party by maxing out the credit cards. The dollar is going to be destroyed if we keep this up.

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Originally posted by Capitalizt Lets just say I'm against most interventionism in general. I subscribe to the beliefs of the Austrian school..Mises, Hayek, Rothbard, and other anti Keynesians...and I think nearly every aspect of life would be better off with less government intrusion. I don't take it to an extreme like some folks (who want to privatize highways etc) but the level of meddling today is doing tremendous harm. As for taxes, HELL YES please cut them across the board, along with social spending. Taxes are a penalty on productive activity..and decreasing that penalty for both workers and employers would be the ultimate stimulus. A corporate tax rate of 0% would benefit far more people than extending unemployment benefits a few extra months. We've been trending towards a welfare state for some time now and have very perverse incentives (high penalties for success and generous benefits for remaining idle). I accept the need for a bare minimum safety net but with welfare today it is possible to remain comfortably unemployed for many months..and the general attitude of most Americans is that businessmen are an adversary to be overcome. Our priorities are just ass backwards. As for the fed, yeah..I'm against practically everything they've done over the past year. I favor a strong currency. It doesn't need to be backed by gold but it does need to be stable so that people can plan for the future..so they can start saving again and make prudent long term investments rather than chasing the latest bubble. The nation's money supply has doubled over the past year and the fed has cut rates to 0%..so people are once again being forced once again to make poor investment decisions in an effort to beat inflation. It's the same thing that led to the 2007/08 bubble in the first place. All of this fed/government action is preventing those bad investments from being liquidated. We won't have a healthy recovery until that happens. We're just throwing another party by maxing out the credit cards. The dollar is going to be destroyed if we keep this up.

that said almost nothing and didn't even attempt to respond to occrider's post :/

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Originally posted by pkcRAISTLIN that said almost nothing and didn't even attempt to respond to occrider's post :/

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There's really only two components to fiscal stimulus: reduced taxation or increased spending. Increased spending can be subdivided into infrastructure enahancements or social welfare programs (unemployment, welfare, medicaid, etc.). So you've already indicated support for infrastructure stimulus programs, what about reduced taxation or increased spending on social welfare programs?

I said that I preferred fiscal stimulus that focuses on tax relief over expanded welfare programs.

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The next component of your argument is the bailout. What part of the bailout are you opposed to?

I thought I explained my opposition to almost every aspect of the bailout, including everything the fed has done in the past 12 months. All of the programs oc mentioned have done essentially the same thing (drastically increase the money supply). This is only postponing the inevitable. Things need to correct, and the only alternative is temporary prosperity bought by trillions in additional debt and the destruction of the dollar. Let the market correct. It will be ugly, but it is the lesser of two evils.

Only 15% of Bush's 2008 tax refunds actually made their way into the economy through consumer spending. How is that bang for your buck in terms of stimulus? A far greater percentage of this current stimulus package being debated actually gets injected into the economy (which is, after all, the point of a stimulus).

I agree that one time refunds/rebates aren't going to do anything. Investors and businesses need long term visibility, which means PERMANENT tax rate reductions. Gimmicky short term rebates aren't going to make a difference. You need to improve the long term incentives of working and hiring.

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Originally posted by Capitalizt I agree that one time refunds/rebates aren't going to do anything. Investors and businesses need long term visibility, which means PERMANENT tax rate reductions. Gimmicky short term rebates aren't going to make a difference. You need to improve the long term incentives of working and hiring.

Not financially solvent in this kind of economy. Decreasing government revenue isn't going to solve anything unless you decrease costs as well - and we both know what you're going to target for budget cuts. Medicare, public education expenditures, unemployment benefits, subsidies, etc.

Those things may not be vital in times of largesse, but they sure are today.

And please don't tell me you're one of those "let's privatize social security" folks... cause that's just ludicrous - especially given the state of the stock market.

For every dollar that a rich person saves, how much of it goes toward a new Learjet and how much toward employing one additional person? The focus has always been on maximization of profit - never on the welfare of employees. Why do you think off-shoring has become so popular?

I've yet to see anything to convince me that capital gains tax relief genuinely stimulates the economy on anywhere near the sort of magnitude that infrastructure projects do.

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Originally posted by Lebezniatnikov Why do you think off-shoring has become so popular?

Unions.

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Originally posted by Lebezniatnikov I've yet to see anything to convince me that capital gains tax relief genuinely stimulates the economy on anywhere near the sort of magnitude that infrastructure projects do.

the common misconception among people is that high capital gains taxes prevents investment. This idea is ridiculous because people would rather have their money earn 70% (assuming a 30% tax rate) of their gain, than 0% of no gain. The impediment caused by a high capital gains rate is that sometimes people with gains that would be taxed at the capital gains rate may not move their investments because they don't want to pay taxes on that gain. However, there is only a taxing preference if the capital asset is held for a long term (> 1 year), which means assets with rate preferences can't be flipped, and must be held for a period over which that person will likely recapture the lost taxes by a higher return (which is the entire purpose for making a new investment). Admittedly, there is a small impediment to the movement of capital by higher rates, however, it also means new investments will be more highly scrutinizes, which means the money likely will be invested in the most economically efficient manner.

Example:

(1) asset currently appreciates 5% annually, and you have a 100 gain recognized on the sale of the asset

(2) 15% tax on gain is $15, and at 30% is $30.

(3) new asset appreciates 10% annually. It would only take 3 years to recover that difference with the excess return on appreciation (the extra 5% return on asset).

The entire point of preferential rates is that the asset is held for a long period (thus the incentive are actually in line with congressional purpose), and it furthers the most efficient use of capital.

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Originally posted by Lebezniatnikov I've yet to see anything to convince me that capital gains tax relief genuinely stimulates the economy on anywhere near the sort of magnitude that infrastructure projects do.

This is the problem with government spending...It always has thousands of visible beneficiaries and millions of invisible victims. You can always point to the "success" of some spending program or another by the number of people it has directly benefited..but you never see the jobs that were lost or those never created in the first place because the necessary capital wasn't available. By definition, the only way government gets tax revenue is by taxing people and businesses that were ALREADY BEING PRODUCTIVE.. Government can only siphon wealth away from those who were succeeding in satisfying the demands of the market. But because it does this on such a large scale and over such a long time horizon, it's very difficult to pinpoint exactly who loses because of it. Taxes always have an effect incentives. They can stifle normal behavior...prevent investments from being made..and prevent some businesses and jobs from ever being created.

Those who favor lower taxes (like me) can't point to these victims of high taxation and say "See? The capital gains tax prevented $1.8 trillion from flowing into U.S. stocks last year! or "The corporate tax cost us 2.5 million jobs!" It's impossible to demonstrate the damage done by taxation because it's negative effects are widespread and invisible...while the benefits of spending tax money are tightly focused and obvious.

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Originally posted by Capitalizt I said that I preferred fiscal stimulus that focuses on tax relief over expanded welfare programs. I thought I explained my opposition to almost every aspect of the bailout, including everything the fed has done in the past 12 months. All of the programs oc mentioned have done essentially the same thing (drastically increase the money supply). This is only postponing the inevitable. Things need to correct, and the only alternative is temporary prosperity bought by trillions in additional debt and the destruction of the dollar. Let the market correct. It will be ugly, but it is the lesser of two evils.

see, all i saw was more of your tired tired rhetoric (devoid of any detail) in response to very specific economic questions.

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Originally posted by Capitalizt Those who favor lower taxes (like me) can't point to these victims of high taxation and say "See? The capital gains tax prevented $1.8 trillion from flowing into U.S. stocks last year! or "The corporate tax cost us 2.5 million jobs!" It's impossible to demonstrate the damage done by taxation because it's negative effects are widespread and invisible...while the benefits of spending tax money are tightly focused and obvious.

investing in stock does not help produce economic activity. Once stock is outstanding, purchasing the stock doesn't add to the corporate earnings or ability to produce goods (except to the extent the corporation can use its own stock to borrow (and market purchases increased the value of the stock)).

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Originally posted by pkcRAISTLIN see, all i saw was more of your tired tired rhetoric (devoid of any detail) in response to very specific economic questions.

It's not my fault you can't comprehend basic economic truths pk.

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Originally posted by jerZ07002 investing in stock does not help produce economic activity. Once stock is outstanding, purchasing the stock doesn't add to the corporate earnings or ability to produce goods

Correct..but as you said, it does have a huge effect on liquidity and other things. Rising stocks allow companies to expand and branch out in different areas..using equity to make deals and acquisitions etc. Stock prices also have an effect on consumer spending via the wealth effect. When people feel richer they spend more, which naturally leads to improved profits. A rising tide lifts all boats..and the capital gains tax is an unnecessary anchor.

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Originally posted by Capitalizt It's not my fault you can't comprehend basic economic truths pk.

hahahahahaahaha. yeah, sorry im like the rest of the world and consider the so-called austrian school a bunch of horseshit.

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Originally posted by pkcRAISTLIN hahahahahaahaha. yeah, sorry im like the rest of the world and consider the so-called austrian school a bunch of horseshit.

Considering the rest of the world is in the middle of a Keynesian shitstorm, you might want to reconsider.

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Originally posted by Capitalizt Considering the rest of the world is in the middle of a Keynesian shitstorm, you might want to reconsider.

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The main criticism of modern Austrian economics is that it lacks scientific precision. Austrian theories are not formulated in formal mathematical form, but using verbal logic. Mainstream economists believe that this makes Austrian theories too imprecisely defined to be clearly used to explain or predict real world events. Economist Bryan Caplan noted that, "what prevents Austrian economists from getting more publications in mainstream journals is that their papers rarely use mathematics or econometrics."[2] This criticism of the Austrian school is related to its rejection of the use of the scientific method and empirical testing in social sciences in favor of self-evident axioms and logical reasoning. -wiki

yeah, we should definitely cast off empirical evidence and understanding in favour of empty rhetoric and ideological blindness!

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Originally posted by pkcRAISTLIN yeah, we should definitely cast off empirical evidence and understanding in favour of empty rhetoric and ideological blindness!

I think you misread. It said in favor of self-evident axioms and deductive reasoning.

Wikipedia explains better than I can..

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Austrian economics emphasizes the spontaneous organizing power of the price mechanism, holds that the complexity of subjective human choices makes mathematical modelling of the evolving market extremely difficult (or impossible) and therefore advocates a laissez faire approach to the economy. Austrian School economists advocate the strict enforcement of voluntary contractual agreements between economic agents, the smallest possible imposition of coercive (especially government-imposed) commercial transactions and the maximum openness to individual choice (including free choice as to the voluntary means of exchange) Austrians reject empirical, statistical methods and artificially constructed experiments as tools applicable to economics, saying that while it is appropriate in the natural sciences where factors can be isolated in laboratory conditions, the actions of human beings are too complex for this treatment. Instead one should isolate the logical processes of human action.

It's not a popular philosophy among modern politicians because it doesn't involve testing, tinkering, and constantly increasing government power. If a society were to embrace the austrian philosophy of anti-coercion, it would greatly limit the influence that government holds over anyone else..so naturally the existing power structure doesn't like the idea.

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Originally posted by Capitalizt It's not a popular philosophy among modern politicians because it doesn't involve testing, tinkering, and constantly increasing government power. If a society were to embrace the austrian philosophy of anti-coercion, it would greatly limit the influence that government holds over anyone else..so naturally the existing power structure doesn't like the idea.

more random rhetoric. i couldnt give a shit about its influence amongst politicians, who's talking about politicians? im talking about economists.

explain to me how the evil status quo has co-opted the entire world's economic experts away from the austrian school? Do you have anything of substance to say or will it be more government-bashing and thinly-veiled conspiracy theory?

It's just human nature pk...People in power like power and they like doing things to expand and maintain that power. That makes them inherently hostile to the laissez faire philosophy. No, I'm afraid there are no PDF studies on the topic I can post to satisfy your curiosity. It's just an observation. Why have the ideas of Keynes and other inteventionists been embraced? Because most people in the world LIKE the idea of government management and meddling to soften the blows of the market. The elected governments of the world prove this. Most people in the world like the idea of big daddy government looking out for them, but are very ignorant of the costs involved.

The second reason many shun the Austrian school is as you rightly said, it doesn't make scientific predictions about what specific spending programs will accomplish. It makes general observations on human nature and human behavior, and from those observations it concludes that the greatest welfare for the greatest number will be achieved by a hands off policy. Hands off = no employment for all of these government "experts" in positions of power.

You know...It boggles my mind pk that you denounce the Austrian theory which is the only theory that predicted the current financial mess..and you still have endless faith in Keynesian "experts" to fix the current crisis when it was their ideas that created it in the first place. We had a bubble was caused by cheap money and foolish government policies...so how do they propose we fix it? CHEAPER MONEY and even more foolish government policies! Yay for the economic "experts"!

You need to be deprogrammed buddy.

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Originally posted by Capitalizt Why have the ideas of Keynes and other inteventionists been embraced? Because most people in the world LIKE the idea of government management and meddling to soften the blows of the market. The elected governments of the world prove this. Most people in the world like the idea of big daddy government looking out for them, but are very ignorant of the costs involved.

by "most people" i assume you are including those who actually study the economy?

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Originally posted by Capitalizt It makes general observations on human nature and human behavior, and from those observations it concludes that the greatest welfare for the greatest number will be achieved by a hands off policy. Hands off = no employment for all of these government "experts" in positions of power.

lol. and such observations have been shown time and time again to be wrong.

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Originally posted by Capitalizt You know...It boggles my mind pk that you denounce the Austrian theory which is the only theory that predicted the current financial mess..and you still have endless faith in Keynesian "experts" to fix the current crisis when it was their ideas that created it in the first place. We had a bubble was caused by cheap money and foolish government policies...so how do they propose we fix it? CHEAPER MONEY and even more foolish government policies! Yay for the economic "experts"!

Lol, marx predicted the financial crisis, should we all turn to communism? More disingenuous nonsense from you

I have faith in keynesian economics to a point because its actual ECONOMICS, rather than antiquated social science of the austrian school. Its funny to see people like yourself attempt to argue that even more market freedom is the answer to collossal market failure brought about by free choices in that market. Your repeated fallacy that the crisis is the fault of the fed's low interest rates isn't convincing anyone.

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Originally posted by Capitalizt You need to be deprogrammed buddy.

i was reading hayek before you reached highschool mate, it was BS then and its BS now. you're the one that clings to notions and ideologies that have absolutely no merit in practical terms and are often demonstrably incorrect. im the one that needs to be de-programmed? lol.

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Originally posted by pkcRAISTLIN Your repeated fallacy that the crisis is the fault of the fed's low interest rates isn't convincing anyone.

It's not a fallacy. The fed is the elephant in the room buddy. Their policies were the overriding cause of the "market failure". If you choose to ignore it, there is no hope for you.

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Originally posted by Capitalizt It's not a fallacy. It's the elephant in the room, and was the overriding cause of the "market failure". If you choose to ignore it, there is no hope for you.

we've been through this before.

I get last word.

Hey, pkc, if you think Austrian/University of Chicago economics is a bad idea, just ask Pinochet - I'm sure he'll be able to straighten you out.

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Originally posted by pkcRAISTLIN Lol, marx predicted the financial crisis, should we all turn to communism? More disingenuous nonsense from you

This is actually so true, and so random that you mention this. I was reading a piece on the theoretical underpinnings of dependency theory today, and Marx's critique of capitalism was discussed. Basically, he predicted that the increasing focus on capital and technological investment at the expense of the welfare of the workforce would lead to the absurd accumulation of capital among the rich, creating a vertical hierarchy wherein the rich didn't give two shits about the poor. This in turn would lead to rising unemployment and an eventual slowdown (and decline) of economic growth.

I actually circled the paragraph and wrote "sounds familiar" in the margin.

So yeah the fed is a cartel of bankers...

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