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> This doesn't have to be an instantaneous effect for it to be real. For the effect to be real business has generate more growth with the money than the govern

> This doesn't have to be an instantaneous effect for it to be real. For the effect to be real business has generate more growth with the money than the government spending the money does. In most cases private enterprise clearly is more efficient that the government in the long term. In other cases, like health, it's clear from the USA example that government can supply better services for cheaper, freeing resources to further fuel to capitalist engine. This is probably true for other stuff we traditionally get our governments to manage like roads, k12 education, and local power and water distribution. If you can lower taxes so much private enterprise takes these functions over, the end result would be the same as you see for USA health - GDP goes backwards rather than forwards. Then there is this reality: most of these tax reductions have been funded by government borrowing. The businesses could have borrowed those funds on the market. The net outcome is you are not reducing the level of government influence on the economy, you're just re-arranging the deck chairs, and doing so in a way that favours the business owners who now effectively get the funds interest free, with citizens (who are also their employees) paying it instead. Given that the House Republicans unveiled blueprint to extend $4.5 trillion in tax cuts and lift the debt ceiling and that their current major backers are these super rich business owners, it's hard not to be a little cynical. [0] https://apnews.com/article/house-republicans-budget-blueprint-trump-tax-cuts-ff2bddf31f4e7cb0928139072392a091 https://apnews.com/article/house-republicans-budget-blueprin...

AnthonyMouse 2y ago
> For the effect to be real business has generate more growth with the money than the government spending the money does. That is correct but it was also taken as a premise in the original claim and seems fairly plausible in general. In particular, government services would expect to have diminishing returns, so there are some threshold level which are worth the candle but as you exhaust the low-hanging fruit, further spending yields less public benefit than for the taxpayers to keep the rest of their money. > In other cases, like health, it's clear from the USA example that government can supply better services for cheaper, freeing resources to further fuel to capitalist engine. This isn't really the best example. The US healthcare system is highly dysfunctional in terms of costs, but basically all other countries have significantly lower costs regardless of whether their system is public or private, so that doesn't appear to be the distinguishing factor causing the dysfunction in the US. But there are things governments could be better suited for, e.g. because they involve pricing major externalities or large fixed investments with a diffuse public benefit. Hardly anybody is suggesting that there shouldn't be one. The question is, are there things the government is currently doing that aren't worth the candle? Because the cost of that compounds over time. > Then there is this reality: most of these tax reductions have been funded by government borrowing. The businesses could have borrowed those funds on the market. This is actually an interesting question of a similar nature, because the government will generally be paying a lower interest rate than the corporate bond rate, and causing the economy to pay less interest to capital on borrowed money is probably an advantage. In theory the interest could then be paid from the increased revenues resulting from a stronger economy, but whether this is worth it depends on the interest rate, which gets a lot more expensive when it isn't zero anymore. > doing so in a way that favours the business owners who now effectively get the funds interest free, with citizens (who are also their employees) paying it instead. The implication here is that the businesses would be the ones to receive the cuts but taxes would then be increased on the employees to pay the interest. There are other things that could be done than that. > Given that the House Republicans unveiled blueprint to extend $4.5 trillion in tax cuts and lift the debt ceiling and that their current major backers are these super rich business owners, it's hard not to be a little cynical. The cynicism is often warranted but there is also a lot of partisanship in the complaints. Saying "$4.5 trillion" is an obvious one; that's the sum total over a period of years rather than the difference in the annual budget and includes a lot of money that goes to W-2 employees rather than billionaires. Meanwhile if you actually want super rich business owners to have less money the biggest thing you can do isn't related to top tax rates (which they generally find ways to avoid regardless), it's to increase the competitiveness of the markets in which they're extracting all of that lucre. It's better to make them give the money to the consumer as lower prices than try to hope the government can both take it from them and then not have it get lost in the pockets of some government official's cronies. But neither of the parties has historically been good at that, which is why we're in a bit of a mess.
- KoolKat23 2y ago
  Take a step back, perhaps there's inefficiency but their current actions are blunt cuts despite selling the efficiency brand. This does nothing but decrease GDP. GDP = C+I+G+(X-Z). Being generous they're trying to increase investment (C) whilst decreasing government spend (G). There's zero guarantee the tax cut will be spent on C and as it concentrates it gets less efficient too anyway. Monopoly doesn't need to invest.
  - pyrale 2y ago
    isn't C household consumption expenditures, and I private investment? Also government expenditures can be a form of investment e.g. schools. So slashing G can also reduce investment.
    - KoolKat23 2y ago
      Sorry yes I shouldve said I not C but the point stands. And yes you're correct.
  - AnthonyMouse 2y ago
    > Take a step back, perhaps there's inefficiency but their current actions are blunt cuts despite selling the efficiency brand. Whether efficiency could be improved and whether any given thing improves efficiency are two different questions. Obviously if you do it poorly then that is worse than doing it well, but that isn't an argument against doing it well. > Being generous they're trying to increase investment (C) whilst decreasing government spend (G). There's zero guarantee the tax cut will be spent on C and as it concentrates it gets less efficient too anyway. Wealth concentrates when you have uncompetitive markets, because then the incumbents have high margins which is what allows them to accumulate wealth at a higher rate than the overall economy. Taxes are only indirectly related to this and if market concentration is happening then that is the problem you should aim to solve directly rather than leaving it to fester and trying to ineffectually or inefficiently compensate with higher tax rates. The actual goal, in competitive markets, is that you could increase investment without increasing concentration of wealth. For example, if rents have to be very high before new construction is profitable, it doesn't happen until rents are very high. New construction happens when it's profitable and tax is a cost that goes into the ROI calculation, so if you lower taxes, construction becomes more profitable, so it happens until it stops being profitable again because rents have fallen to the level that it's no longer profitable even at the lower tax rate. But then people are paying less in rent, which isn't going to investors, it's going to tenants, who then spend it. This is also the sort of thing that can reduce concentration of wealth, because then maybe the tenants don't have to spend all of it and can actually get ahead enough to invest some of it themselves.

AnthonyMouse 2y ago

> For the effect to be real business has generate more growth with the money than the government spending the money does. That is correct but it was also taken as a premise in the original claim and seems fairly plausible in general. In particular, government services would expect to have diminishing returns, so there are some threshold level which are worth the candle but as you exhaust the low-hanging fruit, further spending yields less public benefit than for the taxpayers to keep the rest of their money. > In other cases, like health, it's clear from the USA example that government can supply better services for cheaper, freeing resources to further fuel to capitalist engine. This isn't really the best example. The US healthcare system is highly dysfunctional in terms of costs, but basically all other countries have significantly lower costs regardless of whether their system is public or private, so that doesn't appear to be the distinguishing factor causing the dysfunction in the US. But there are things governments could be better suited for, e.g. because they involve pricing major externalities or large fixed investments with a diffuse public benefit. Hardly anybody is suggesting that there shouldn't be one. The question is, are there things the government is currently doing that aren't worth the candle? Because the cost of that compounds over time. > Then there is this reality: most of these tax reductions have been funded by government borrowing. The businesses could have borrowed those funds on the market. This is actually an interesting question of a similar nature, because the government will generally be paying a lower interest rate than the corporate bond rate, and causing the economy to pay less interest to capital on borrowed money is probably an advantage. In theory the interest could then be paid from the increased revenues resulting from a stronger economy, but whether this is worth it depends on the interest rate, which gets a lot more expensive when it isn't zero anymore. > doing so in a way that favours the business owners who now effectively get the funds interest free, with citizens (who are also their employees) paying it instead. The implication here is that the businesses would be the ones to receive the cuts but taxes would then be increased on the employees to pay the interest. There are other things that could be done than that. > Given that the House Republicans unveiled blueprint to extend $4.5 trillion in tax cuts and lift the debt ceiling and that their current major backers are these super rich business owners, it's hard not to be a little cynical. The cynicism is often warranted but there is also a lot of partisanship in the complaints. Saying "$4.5 trillion" is an obvious one; that's the sum total over a period of years rather than the difference in the annual budget and includes a lot of money that goes to W-2 employees rather than billionaires. Meanwhile if you actually want super rich business owners to have less money the biggest thing you can do isn't related to top tax rates (which they generally find ways to avoid regardless), it's to increase the competitiveness of the markets in which they're extracting all of that lucre. It's better to make them give the money to the consumer as lower prices than try to hope the government can both take it from them and then not have it get lost in the pockets of some government official's cronies. But neither of the parties has historically been good at that, which is why we're in a bit of a mess.

KoolKat23 2y ago
Take a step back, perhaps there's inefficiency but their current actions are blunt cuts despite selling the efficiency brand. This does nothing but decrease GDP. GDP = C+I+G+(X-Z). Being generous they're trying to increase investment (C) whilst decreasing government spend (G). There's zero guarantee the tax cut will be spent on C and as it concentrates it gets less efficient too anyway. Monopoly doesn't need to invest.
- pyrale 2y ago
  isn't C household consumption expenditures, and I private investment? Also government expenditures can be a form of investment e.g. schools. So slashing G can also reduce investment.
  - KoolKat23 2y ago
    Sorry yes I shouldve said I not C but the point stands. And yes you're correct.
- AnthonyMouse 2y ago
  > Take a step back, perhaps there's inefficiency but their current actions are blunt cuts despite selling the efficiency brand. Whether efficiency could be improved and whether any given thing improves efficiency are two different questions. Obviously if you do it poorly then that is worse than doing it well, but that isn't an argument against doing it well. > Being generous they're trying to increase investment (C) whilst decreasing government spend (G). There's zero guarantee the tax cut will be spent on C and as it concentrates it gets less efficient too anyway. Wealth concentrates when you have uncompetitive markets, because then the incumbents have high margins which is what allows them to accumulate wealth at a higher rate than the overall economy. Taxes are only indirectly related to this and if market concentration is happening then that is the problem you should aim to solve directly rather than leaving it to fester and trying to ineffectually or inefficiently compensate with higher tax rates. The actual goal, in competitive markets, is that you could increase investment without increasing concentration of wealth. For example, if rents have to be very high before new construction is profitable, it doesn't happen until rents are very high. New construction happens when it's profitable and tax is a cost that goes into the ROI calculation, so if you lower taxes, construction becomes more profitable, so it happens until it stops being profitable again because rents have fallen to the level that it's no longer profitable even at the lower tax rate. But then people are paying less in rent, which isn't going to investors, it's going to tenants, who then spend it. This is also the sort of thing that can reduce concentration of wealth, because then maybe the tenants don't have to spend all of it and can actually get ahead enough to invest some of it themselves.