5 ms·

He's loose with his wording, but he makes a clear distinction between "borrow and invest in infrastructure" vs "borrow and refund wealthy people" > Now, govern

by gpawl 10y ago

He's loose with his wording, but he makes a clear distinction between "borrow and invest in infrastructure" vs "borrow and refund wealthy people" > Now, government borrowing can still be justified if it serves an important purpose: Interest rates are still very low, and borrowing at those low rates to invest in much-needed infrastructure is still a very good idea, both because it would raise productivity and because it would provide a bit of insurance against future downturns.

leereeves 10y ago
While I agree that we should spend more on infrastructure, that too is a political argument (deciding what's "an important purpose"). Krugman has every right to express his political views, but it should be clear that he's doing so.
- jdietrich 10y ago
  We know to a high degree of confidence that investments in infrastructure give a good return on investment. The trickle-down theory has remarkably little evidence to support it. It's a perfectly reasonable economic argument that deficit spending on infrastructure is sensible, while running a deficit to fund tax cuts is a bad idea.
  - leereeves 10y ago
    Every time a factory moves to a new location with lower taxes, or a wealthy person transfers assets to a tax haven, or a company refuses to repatriate earnings because of taxes, we see evidence that lower taxes have economic benefits.
    - croon 10y ago
      I honestly have never seen that evidence. I've heard it used as an excuse the last 40 years to lower high income taxes though. Any sources/links/examples?
      - leereeves 10y ago
        You haven't heard about the hundreds of billions of dollars companies like Apple and IBM are holding overseas, or the number of companies that have invested in operations in (for example) Ireland? https://www.theguardian.com/world/2015/mar/05/ireland-attracts-soaring-level-of-us-investment https://www.theguardian.com/world/2015/mar/05/ireland-attrac... > A major draw for US firms is Ireland’s low 12.5% corporation tax rate and numerous controversial tax breaks. The government has promised to phase out the latter. > The corporate tax rate, which remains a sacrosanct part of Irish industrial policy, has been so successful in wooing US investment that the country’s neighbours across the border want it too. The Northern Ireland assembly passed legislation this week allowing for corporation tax powers to be devolved, with politicians at Stormont aiming for a similar rate.
        croon 10y ago
        Oh, I have. I have however not seen any proof that it benefits the country other than employment (how are the salaries?). If you look at tax revenue as percent of GDP it's almost had a freefall [1], which could be okay if the GDP is high enough. In direct numbers however Ireland as of 2014 was not even back to 2007 levels in tax revenue (pre economic crisis) [2], and ignoring inflation. And only counting corporation tax, not even back to 2002 levels. [1] http://data.worldbank.org/indicator/GC.TAX.TOTL.GD.ZS?locations=IE http://data.worldbank.org/indicator/GC.TAX.TOTL.GD.ZS?locati... [2] https://en.wikipedia.org/wiki/Corporation_tax_in_the_Republic_of_Ireland#Yearly_returns https://en.wikipedia.org/wiki/Corporation_tax_in_the_Republi...
        leereeves 10y ago
        We should separate the arguments "lower taxes benefit the economy" from "lower taxes increase tax revenue". Both of your observations address the latter, while I made the former.
        croon 10y ago
        You're right, they're two different arguments. But I don't think it's a far leap looking between different countries to say that good infrastructure, healthcare, welfare and through sensible regulations an empowered workforce is also good for the economy. Looking straight at GDP (even if it's a blunt instrument), Ireland hasn't reaped a lot of rewards there either [1]. [1] http://www.tradingeconomics.com/ireland/gdp http://www.tradingeconomics.com/ireland/gdp
    - Firadeoclus 10y ago
      Locally and short term that is the case, but looking at the bigger picture a race to the bottom can lead to worse outcomes overall. Not saying that is definitely the case at any particular tax level, but it's not as easy as looking at the individual cases.
  - AnimalMuppet 10y ago
    > We know to a high degree of confidence that investments in infrastructure give a good return on investment. No, we know that some investments in infrastructure give a good return on investment. Some don't (bridge to nowhere, for example). The problem is that Congress can take useless make-work pork-barrel trash, and label it "investment in infrastructure". Don't automatically believe the labels that Congress applies to bills; they often are political smoke screens. Note well: There is real infrastructure investment that is needed, and will give a good return. All the more reason to reject the waste - we need the money for real things; don't waste it on pork.
- deleted 10y ago
  [deleted]

by gpawl 10y ago

leereeves 10y ago

While I agree that we should spend more on infrastructure, that too is a political argument (deciding what's "an important purpose"). Krugman has every right to express his political views, but it should be clear that he's doing so.

jdietrich 10y ago
We know to a high degree of confidence that investments in infrastructure give a good return on investment. The trickle-down theory has remarkably little evidence to support it. It's a perfectly reasonable economic argument that deficit spending on infrastructure is sensible, while running a deficit to fund tax cuts is a bad idea.
- leereeves 10y ago
  Every time a factory moves to a new location with lower taxes, or a wealthy person transfers assets to a tax haven, or a company refuses to repatriate earnings because of taxes, we see evidence that lower taxes have economic benefits.
  - croon 10y ago
    I honestly have never seen that evidence. I've heard it used as an excuse the last 40 years to lower high income taxes though. Any sources/links/examples?
    - leereeves 10y ago
      You haven't heard about the hundreds of billions of dollars companies like Apple and IBM are holding overseas, or the number of companies that have invested in operations in (for example) Ireland? https://www.theguardian.com/world/2015/mar/05/ireland-attracts-soaring-level-of-us-investment https://www.theguardian.com/world/2015/mar/05/ireland-attrac... > A major draw for US firms is Ireland’s low 12.5% corporation tax rate and numerous controversial tax breaks. The government has promised to phase out the latter. > The corporate tax rate, which remains a sacrosanct part of Irish industrial policy, has been so successful in wooing US investment that the country’s neighbours across the border want it too. The Northern Ireland assembly passed legislation this week allowing for corporation tax powers to be devolved, with politicians at Stormont aiming for a similar rate.
      - croon 10y ago
        Oh, I have. I have however not seen any proof that it benefits the country other than employment (how are the salaries?). If you look at tax revenue as percent of GDP it's almost had a freefall [1], which could be okay if the GDP is high enough. In direct numbers however Ireland as of 2014 was not even back to 2007 levels in tax revenue (pre economic crisis) [2], and ignoring inflation. And only counting corporation tax, not even back to 2002 levels. [1] http://data.worldbank.org/indicator/GC.TAX.TOTL.GD.ZS?locations=IE http://data.worldbank.org/indicator/GC.TAX.TOTL.GD.ZS?locati... [2] https://en.wikipedia.org/wiki/Corporation_tax_in_the_Republic_of_Ireland#Yearly_returns https://en.wikipedia.org/wiki/Corporation_tax_in_the_Republi...
        leereeves 10y ago
        We should separate the arguments "lower taxes benefit the economy" from "lower taxes increase tax revenue". Both of your observations address the latter, while I made the former.
        croon 10y ago
        You're right, they're two different arguments. But I don't think it's a far leap looking between different countries to say that good infrastructure, healthcare, welfare and through sensible regulations an empowered workforce is also good for the economy. Looking straight at GDP (even if it's a blunt instrument), Ireland hasn't reaped a lot of rewards there either [1]. [1] http://www.tradingeconomics.com/ireland/gdp http://www.tradingeconomics.com/ireland/gdp
  - Firadeoclus 10y ago
    Locally and short term that is the case, but looking at the bigger picture a race to the bottom can lead to worse outcomes overall. Not saying that is definitely the case at any particular tax level, but it's not as easy as looking at the individual cases.
- AnimalMuppet 10y ago
  > We know to a high degree of confidence that investments in infrastructure give a good return on investment. No, we know that some investments in infrastructure give a good return on investment. Some don't (bridge to nowhere, for example). The problem is that Congress can take useless make-work pork-barrel trash, and label it "investment in infrastructure". Don't automatically believe the labels that Congress applies to bills; they often are political smoke screens. Note well: There is real infrastructure investment that is needed, and will give a good return. All the more reason to reject the waste - we need the money for real things; don't waste it on pork.
deleted 10y ago
[deleted]