Under capitalism, man exploits man. Under communism, it's just the opposite. - John Kenneth Galbraith
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There's another catch: Because Mr. Obama's tax credits are phased out as incomes rise, they impose a huge "marginal" tax rate increase on low-income workers. The marginal tax rate refers to the rate on the next dollar of income earned. As the nearby chart illustrates, the marginal rate for millions of low- and middle-income workers would spike as they earn more income.Some families with an income of $40,000 could lose up to 40 cents in vanishing credits for every additional dollar earned from working overtime or taking a new job. As public policy, this is contradictory. The tax credits are sold in the name of "making work pay," but in practice they can be a disincentive to working harder, especially if you're a lower-income couple getting raises of $1,000 or $2,000 a year. One mystery -- among many -- of the McCain campaign is why it has allowed Mr. Obama's 95% illusion to go unanswered.
Do Republican bathtubs have the faucet on the opposite end from the drain, so that the water hits the whole tub before it drains?
Does this mean Democrat bathtubs have the faucet over the drain, so most of the water never reaches the rest of the tub?
The bathtub metaphor is only valid in that particular example, because in real life the water creates more water and the amount of water in any area of the tub is directly commensurate to how much water has been created there.
Wealth is the product of endeavor. To attempt to redistribute wealth by pointing guns at people and shifting currency around is a gross misunderstanding of the generation of wealth.
If you're feeling receptive I can pick this up when I get out of school. EC is blocked on the school proxy.
"Don't want to sound like a fanboy, but I am with you. I'll buy it for sure, it's just a matter of for how long I will be playing it..."
- Silvast, Battle.net forums
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Blindy. had this to say about Reading Rainbow:
Also when you give money to the middle class it simply disappears, where if you give it to rich people it instantly becomes more money (it's INCREDIBLE)
Middle class spends money. It just goes back into the economy.
Rich people not only spend money, they invest it, donate it, and run their businesses with it. This allows the economy to expand.
this would seem to be the way it works unless i'm stupid and am not getting something
From Kinanik's linked article on the WSJ:
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Some families with an income of $40,000 could lose up to 40 cents in vanishing credits for every additional dollar earned from working overtime or taking a new job. As public policy, this is contradictory. The tax credits are sold in the name of "making work pay," but in practice they can be a disincentive to working harder, especially if you're a lower-income couple getting raises of $1,000 or $2,000 a year.
This means that Obama's tax plan will lead to a stagnated employment market. People who earn enough to pay their bills won't want to work towards getting a better job especially if making more means paying more in taxes. That will mean that there are fewer lower skilled jobs available in the marketplace for new workers and therefore a higher unemployment rate.
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Kinanik had this to say about Robocop:
My favorite part was:quote:
Some families with an income of $40,000 could lose up to 40 cents in vanishing credits for every additional dollar earned from working overtime or taking a new job. As public policy, this is contradictory. The tax credits are sold in the name of "making work pay," but in practice they can be a disincentive to working harder, especially if you're a lower-income couple getting raises of $1,000 or $2,000 a year.
I'm confused. Where does this op-ed guy get the idea that a family with an income of 40,000 would lose 40 cents of credit for every additional dollar earned?
Not saying he is wrong, I am just not following the reasoning.
But the Marginal Increase seems to only span a few thousand dollars worth of income, then drops sharply. How would this cause job stagnation? Wouldn't this only affect people who make exactly around 40k a year and increase their income by a small amount (1-2 thousand a year)? That would hardly be a strong disincentive for people to be upwardly mobile.
Plus, I doubt many people who make 40,000 a year are factoring in marginal cents on the dollar decreases in tax credits when deciding whether to go after that second job.
Woudn't job stagnation to any significant degree be pretty unlikely? Zair fucked around with this message on 10-16-2008 at 01:45 AM.
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Zair's account was hax0red to write:
Woudn't job stagnation to any significant degree be pretty unlikely?
Depends on the evolving economic crisis.
Depends on who is the President.
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I wish Willias would say this more often:
Middle class spends money. It just goes back into the economy.Rich people not only spend money, they invest it, donate it, and run their businesses with it. This allows the economy to expand.
this would seem to be the way it works unless i'm stupid and am not getting something
Yes, you're missing the fact that the vast majority of small business owners make less than $250,000 a year.
Also, that the businesses that rich people run depend on the middle and working class people to buy their products in order to be successful. It would be meaningless for them to have money to start a business or to invest in expanding their business if there were no liquidity in the middle and working classes with which to consume their product. And then that money is transfered into the owner's pocket, which they can then use to expand their business if they so desire. Blindy. fucked around with this message on 10-16-2008 at 06:28 AM.
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Nobody really understood why Blindy. wrote:
Yes, you're missing the fact that the vast majority of small business owners make less than $250,000 a year.Also, that the businesses that rich people run depend on the middle and working class people to buy their products in order to be successful. It would be meaningless for them to have money to start a business or to invest in expanding their business if there were no liquidity in the middle and working classes with which to consume their product. And then that money is transfered into the owner's pocket, which they can then use to expand their business if they so desire.
The vast majority of small business employers make more then 250 thousand a year. If you are working out of your house selling widgets in your spare time, you are a small business, you mean shit to the economy though. If you are a business of 40 people making software, you are also a small business, only you actually employ people.
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Also, that the businesses that rich people run depend on the middle and working class people to buy their products in order to be successful. It would be meaningless for them to have money to start a business or to invest in expanding their business if there were no liquidity in the middle and working classes with which to consume their product. And then that money is transfered into the owner's pocket, which they can then use to expand their business if they so desire.
You're thinking about this logically and that's commendable, you even seem to have the basics right, but you're bound up by a few misconceptions that are leading you to a fallacious conclusion.
The upper class purchases labor from the middle class. As you'll remember from the fun little animation, when one party buys something from another, both parties necessarily benefit, or they wouldn't do it.
The upper class gains labor needed to produce products and services more valuable than the labor they paid for to create them. The middle class gets currency they can exchange for wealth - less wealth than they created at their job, necessarily, but an amount that they consider to be fair compensation for their time and skills. Again, they wouldn't do it otherwise.
Now, imagine for the sake of discussion that a single company created every product that it's employees would ever want. Let's call it Blindyco.
Scenario:
Blindyco employees produce products. Blindyco pays them fair wages arbitrarily lower in value than the products they created, and the employees in turn buy everything they need from Blindyco. At the end of the day, it's as if Blindyco simply paid the employees with some of the goods that they created. The difference between the goods it pays to it's employees and the goods it sells is Blindyco's profit. It sells the leftover goods as exports or to some larger market and the profits go to shareholders or expanding the business or whatever.
Now, let's do as you say and give the employees of Blindyco more money.
Scenario:
Blindyco employees produce the same amount of products as before. Blindyco pays them the same wages, and employees in turn by everything they need from Blindyco. This time they have more money, and so they buy more. Blindyco would not sell to them if both parties would not benefit, so Blindyco makes the same profit, but because production has not increased, less of it's products are sold to a larger market or exported.
Lesson 1:
The net effect is that no additional wealth is created. Artificially creating larger domestic demand only redirects products from being sold elsewhere, but that's not the whole picture.
Now, let's figure in the fact that Blindyco is paying a steeper income tax rate.
Scenario:
Blindyco employees produce the same amount of products as before. This time, Blindyco is paying a higher income tax rate on all their profit, which we have previously defined as the difference between the goods it pays it's employees and the goods it sells. If Blindyco was previously operating at the most efficient rate of profit for it's industry, it will be in the best interest of the company to regain that same peak efficiency. To do this it is faced with a choice: Increase the profit on goods sold, or decrease the amount of goods it is paying to employees.
Raising prices harms sales, and decreasing wages harms productivity by decreasing the caliber of employee willing to work there. Historically, businesses will do a little of both.
One thing they can not do is simply accept a lower profit margin. If a business is operating at it's most efficient (and it is in the best interest of the business to do so), then it is already charging the lowest prices possible in order to be competitive while maintaining the lowest acceptable profit margin. The forces of competition and self-interest battle each other to arrive at an industry-specific ideal profit margin below which it is not worth the effort to run the business, but above which consumption of the products would decrease due to high prices, which would again harm profit.
Conclusions:
The economic principle you are stating here is called "Priming the Pump." It was first knowingly applied during FDR's "first hundred days", and it at best did absolutely nothing to improve the great depression, given that it lasted nine more years. It would again fail under Jimmy Carter in the 60's, and George W. Bush in 2000*. Most recently, the economic stimulus package in 2007 failed yet again to spur on any lasting, meaningful productivity.
It has never worked.
Arbitrarily giving more currency to consumers will, at best, only redirect production away from external markets. Currency is meaningless, only wealth has value, and when you prime the pump, no new wealth is created. Consumption has no value in itself. Anyone can consume and everybody does. Producers are in no way dependent upon the consumption of the middle class, they can just sell to other people, and if they really can't find anyone else to sell to, they can just make something else.
When I'm feeling better I'll let you know what does work. Maradon! fucked around with this message on 10-16-2008 at 07:56 PM.
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x--KegwenO-('-'Q) :
Whoever you agree with, it seems to me that the apparently shrinking middle class should be a concern to everyone
That depends on where the middle class is going. If they're getting rich, then it's a very good thing.
And in fact, that's what was happening: The share of prime-age adults in households with real incomes above $100,000 rose by 13.1 percentage points from 1979 to 2004. The share of households making less than $75,000 dropped by 14 percent.
The trend continued through 2006, after which point I have no data, but it probably hasn't abated much. Maradon! fucked around with this message on 10-16-2008 at 07:58 PM.
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Naimah stopped lurking long enough to say:
The vast majority of small business employers make more then 250 thousand a year. If you are working out of your house selling widgets in your spare time, you are a small business, you mean shit to the economy though. If you are a business of 40 people making software, you are also a small business, only you actually employ people.
If you are a business of 40 people making software, then you aren't paying personal income taxes and this discussion has absolutely nothing to do with you.
Also understand that while usually transactions are beneficial to people, any transaction is not the best transaction. For example, if a job that exists pays 20 dollars a week, it is true that it is beneficial to for you to have that job over no job. That being said, it is far more beneficial to take a job that pays 800 a week.
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There was much rejoicing when Blindy. said this:
If you are a business of 40 people making software, then you aren't paying personal income taxes and this discussion has absolutely nothing to do with you.
Except for they do? Anecdotal: The company I work for, 40 people making and supporting software will hire six less people next year if Obama is president simply because of his proposed tax plan.
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Naimah's got nothing.Except for they do? Anecdotal: The company I work for, 40 people making and supporting software will hire six less people next year if Obama is president simply because of his proposed tax plan.
Your boss needs to get a new tax accountant. He's a retard.
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x--KegwenO-('-'Q) :
People buying things doesn't cause people to make things for them to buy?
It does, but people buying things is not something that has any value. It's a baseline. It's omnipresent. Doing things to encourage demand is masturbation, it produces nothing.
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Over the mountain, in between the ups and downs, I ran into Blindy. who doth quote:
Maradon, consumption drives demand, which drives production, which drives the creation of wealth. To deny this is to deny the very basic concepts of economics. What you've got here is a very fancy way to attempt to dance around this by assuming that companies will produce the same amount of inventory regardless of how many people want to buy it.
Think about this a little deeper.
It doesn't matter where you put the currency in the economic cycle. Currency doesn't matter, only products matter. Demand does not facilitate the creation of products, it doesn't make it any easier or cheaper or faster to produce anything, it only creates a sink for those products to go into, and we already have an infinite sink. If the market for one type of product dries up a company can simply scale back investment in that market and invest in another.
Demand for specific products is limited, but that is meaningless in the present context. Demand in general is infinite, it has no value in itself.
The state of people needing things does not create anything. Producers create things, and they create things in accordance with their own self-interest. Taking money from them and giving it to people not only divorces their self-interest from the demand of their market, but makes it much harder for them to meet what demand they care to.
I don't know how many other ways I can phrase this.
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Over the mountain, in between the ups and downs, I ran into Noxhil who doth quote:
While you are correct that the a small few holding the vast majority of the wealth does lead to marginally higher long term growth (barring a revolution due to poor living conditions)...
This is an incorrect statement. There is no such thing as a "majority of the wealth". Wealth is not finite, it is the result of human endeavor. People who have more have endeavored more, people who have not, haven't.
People who choose to create wealth do so at the benefit of others, not their detriment, because that wealth would not have been created otherwise.
They are making new wealth, not taking it. Only governments and thieves do that.
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...you ignore the fact that the middle and lower class get far more utility from wealth than an oligarchy.
In addition to hysterical hyperbole, this is also completely incorrect. Wealth is used to produce as well as consume. The middle class is the middle class because it has a lower production to consumption ratio than the "upper" class, and so they produce relatively little. The more an individual produces, the more benefit they bring to everybody, and so people with a larger production-to-consumption ratio will get vastly more utility from their wealth.
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Also understand that while usually transactions are beneficial to people, any transaction is not the best transaction. For example, if a job that exists pays 20 dollars a week, it is true that it is beneficial to for you to have that job over no job. That being said, it is far more beneficial to take a job that pays 800 a week.
This is a truism and I don't know what you imply by saying it.
If that person would like to make more than $20 a week and the $800 a week job is available, then they're free to change jobs. There are a myriad of mitigating factors in choosing a job besides pay, though, and only the individual concerned is equipped to make that choice.
This is the case with every transaction. No source other than the participants can know what the value of the entities being exchanged is to the exchanger. Nobody is equipped to judge the wisdom of any transaction with any degree of accuracy, and so nobody is equipped to interfere with any transaction.
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Zair thought about the meaning of life:
... Wouldn't this only affect people who make exactly around 40k a year and increase their income by a small amount...
Now are you thinking Of it as one person makeing 40k a year, or a couple filing jointly that make say about 18-20k Each?
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Peter had this to say about Robocop:
Now are you thinking Of it as one person makeing 40k a year, or a couple filing jointly that make say about 18-20k Each?
I guess I was thinking of one person.
How would a couple filing jointly make a difference?
Specifically in regards to creating a "stagnated employment market"?
FTA:
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Less wealth creation means less wealth in the long run. You wind up with an economy with fewer jobs, fewer choices for workers, and even more dependence upon government for everybody.
Yes, I realize that is being simplistic and the transportation costs have skyrocketed for goods, which also eats into profits, but food prices are the only commodity that is globally increasing, manufactured goods for the most part have absorbed the cost increase.
The fact of the matter is, the United States STILL is the worlds largest consumer. And even if we don't produce the goods here, people are employed because we sell the goods here. And service the companies that sell the goods. And finance the goods. And service the companies that finance the goods. And build the homes. And fill the homes with merchandise. And we still have an absolutely HUGE manufactoring sector, which for some reason everyone likes to discount simply because we've been told that we're a service economy. It's true that that's where we're headed, but we're not there yet.
Anyway, read this if you want to understand what kind of buying crunch we're looking at. http://www.reuters.com/article/reutersEdge/idUSTRE4916YP20081002
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When the babel fish was in place, it was apparent I dun got banned said:
With global supply chains, there is pretty much no such thing as 'domestic production' anymore.
Steps in production can either be either be done home or abroad. Reducing disincentives to do those steps at home will cause more to be done at home.
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Kegwen needs to learn to type:
All those tax breaks we've had going sure are doing a good job of keeping manufacturing here thus far
Well it's alternatively good that their leaving because we're becoming a service economy and a fault of globalization, and we should accept that low skilled jobs are just going to move to the area of the world where labor is the cheapest or a bad thing that they're leaving because having our goods manufactured oversees means a loss of local jobs and poses a national security risk because of our increased reliance on a foreign power, and is caused entirely by high taxes and unions depending on which person you talk to. Blindy. fucked around with this message on 10-17-2008 at 02:11 PM.
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Cool Hand Luke had this to say about Cuba:
My job only pays me 19K a year and I don't claim my approximately 37K I make in tips because I'm a rebel and am clearly going to go to jail someday. Who should I vote for.
You will get more money under Obama, and Democrats are weak on crime so you will get a shorter prison sentence and weekend passes.
Obama/Biden 08
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Cool Hand Luke had this to say about Optimus Prime:
Sold!
No conjugal visits though
