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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 GD

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.
- KoolKat23 2y ago
  You're talking around what they're doing. Yes I agree with all those things you're saying but they're not contrary to what I'm saying. You agree efficiency would be good, but as I say this is not what the government is doing, blunt cuts to everything is not efficiency. Yes competitive markets could be better but this is not the case here. As I say you could rely on some benevolent oligarch to pay the dividend down but that's not guaranteed. The proposed tax cuts are for the richest not the average person, they're also "less competitive", part of government is regulating the market to ensure it remains competitive as it's naturally not. Their actions so far are anti-competitive such as the removal of the CFPB which levels the playing field. The government also funds crucial high risk, low reward activities that are necessary to drive growth elsewhere (economic multipliers), they've made it clear they intend cutting these, such as cutting scientific research funding that wouldn't have been investigated otherwise. Overall they are currently not doing anything that you mention.
  - AnthonyMouse 2y ago
    > You agree efficiency would be good, but as I say this is not what the government is doing, blunt cuts to everything is not efficiency But now you're talking about an entirely different question. The original question was, should wasteful spending be cut in order to lower taxes? Now you're asking if the spending they're cutting is the wasteful spending. Even if the answer to that question is no, the solution would still be to cut the wasteful things instead of the worthwhile things, rather than to not reduce waste. > Yes competitive markets could be better but this is not the case here. Markets become uncompetitive as a result of the regulatory environment, via two primary pathways. First, regulations exist that raise barriers to entry. Then the incumbents don't even have to do anything, they can just be terrible because it's too expensive for anyone else to enter the market to challenge them. Second, a lack of antitrust enforcement. A couple of conglomerates buy the only two suppliers of some important component in the supply chain, are allowed to do this, and then leverage that into a vertically integrated market before someone else can spin up a new competitor, at which point the vertically integrated supply chains act as a barrier to entry and you have the same problem. In the first case you have to get rid of the rules making it too expensive to create new competitors, which is one of the things being proposed. In the second case you have to break up the concentrated markets, which is another thing they're ostensibly doing (e.g. wanting Google to divest Chrome), though it would be more effective if the enforcement actions were more comprehensive, e.g. they should be divesting Android and no company should be running both a mobile OS and an app store. > The proposed tax cuts are for the richest not the average person The proposed tax cuts are approximately across-the-board. If you lower everyone's taxes by the same percentage, that percentage of $400,000 will be more than the same percentage of $40,000, so then people looking for a reason to object will compare the absolute dollar amounts rather than the percentages and feign shock that this is how taxes work. Meanwhile tax incidence is complicated and who is nominally paying a tax and who is actually paying it are two different things, so that kind of comparison doesn't tell you much regardless. > part of government is regulating the market to ensure it remains competitive as it's naturally not. Corporations don't exist in a state of nature. There would be nothing to enforce their contracts or claims to property. Monopolization is always through the use of government rules. The government does need to ensure that its rules don't facilitate monopolization, but that's often best by having fewer of them rather than more. Competitors appear whenever there is nothing inhibiting them. Notice that one of the best anti-trust rules is to make contracts that restrain competition unenforceable, i.e. have the government not do something. > Their actions so far are anti-competitive such as the removal of the CFPB which levels the playing field. CFPB was never an anti-trust agency. Its existence is controversial because it was an attempt to insulate the administrative bureaucracy from the political process. But that tends to do the opposite of an anti-trust agency: Adopt rules that prohibit an unpopular practice without considering why it was happening, e.g. because it was a trade off against the bank not making those loans to begin with. Then fewer banks offer those loans and the people who need those loans end up paying higher interest rates or being forced into some worse situation because they e.g. have to pay $1000 to rent a car for a month because they couldn't get a car loan. > The government also funds crucial high risk, low reward activities that are necessary to drive growth elsewhere (economic multipliers), they've made it clear they intend cutting these, such as cutting scientific research funding that wouldn't have been investigated otherwise. This is a category of research, some of which is worthwhile and some isn't. It's quite plausible that a lot of money currently being spent on "research" is misallocated. > Overall they are currently not doing anything that you mention. What they're doing right now is investigating how the money is being spent, with some level of "stop doing things for a minute until we figure out if we should be doing them". To long-term reallocate it requires the Congressional budget process, which hasn't happened yet, and will ideally be happening with the benefit of more time and information.

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.

KoolKat23 2y ago
You're talking around what they're doing. Yes I agree with all those things you're saying but they're not contrary to what I'm saying. You agree efficiency would be good, but as I say this is not what the government is doing, blunt cuts to everything is not efficiency. Yes competitive markets could be better but this is not the case here. As I say you could rely on some benevolent oligarch to pay the dividend down but that's not guaranteed. The proposed tax cuts are for the richest not the average person, they're also "less competitive", part of government is regulating the market to ensure it remains competitive as it's naturally not. Their actions so far are anti-competitive such as the removal of the CFPB which levels the playing field. The government also funds crucial high risk, low reward activities that are necessary to drive growth elsewhere (economic multipliers), they've made it clear they intend cutting these, such as cutting scientific research funding that wouldn't have been investigated otherwise. Overall they are currently not doing anything that you mention.
- AnthonyMouse 2y ago
  > You agree efficiency would be good, but as I say this is not what the government is doing, blunt cuts to everything is not efficiency But now you're talking about an entirely different question. The original question was, should wasteful spending be cut in order to lower taxes? Now you're asking if the spending they're cutting is the wasteful spending. Even if the answer to that question is no, the solution would still be to cut the wasteful things instead of the worthwhile things, rather than to not reduce waste. > Yes competitive markets could be better but this is not the case here. Markets become uncompetitive as a result of the regulatory environment, via two primary pathways. First, regulations exist that raise barriers to entry. Then the incumbents don't even have to do anything, they can just be terrible because it's too expensive for anyone else to enter the market to challenge them. Second, a lack of antitrust enforcement. A couple of conglomerates buy the only two suppliers of some important component in the supply chain, are allowed to do this, and then leverage that into a vertically integrated market before someone else can spin up a new competitor, at which point the vertically integrated supply chains act as a barrier to entry and you have the same problem. In the first case you have to get rid of the rules making it too expensive to create new competitors, which is one of the things being proposed. In the second case you have to break up the concentrated markets, which is another thing they're ostensibly doing (e.g. wanting Google to divest Chrome), though it would be more effective if the enforcement actions were more comprehensive, e.g. they should be divesting Android and no company should be running both a mobile OS and an app store. > The proposed tax cuts are for the richest not the average person The proposed tax cuts are approximately across-the-board. If you lower everyone's taxes by the same percentage, that percentage of $400,000 will be more than the same percentage of $40,000, so then people looking for a reason to object will compare the absolute dollar amounts rather than the percentages and feign shock that this is how taxes work. Meanwhile tax incidence is complicated and who is nominally paying a tax and who is actually paying it are two different things, so that kind of comparison doesn't tell you much regardless. > part of government is regulating the market to ensure it remains competitive as it's naturally not. Corporations don't exist in a state of nature. There would be nothing to enforce their contracts or claims to property. Monopolization is always through the use of government rules. The government does need to ensure that its rules don't facilitate monopolization, but that's often best by having fewer of them rather than more. Competitors appear whenever there is nothing inhibiting them. Notice that one of the best anti-trust rules is to make contracts that restrain competition unenforceable, i.e. have the government not do something. > Their actions so far are anti-competitive such as the removal of the CFPB which levels the playing field. CFPB was never an anti-trust agency. Its existence is controversial because it was an attempt to insulate the administrative bureaucracy from the political process. But that tends to do the opposite of an anti-trust agency: Adopt rules that prohibit an unpopular practice without considering why it was happening, e.g. because it was a trade off against the bank not making those loans to begin with. Then fewer banks offer those loans and the people who need those loans end up paying higher interest rates or being forced into some worse situation because they e.g. have to pay $1000 to rent a car for a month because they couldn't get a car loan. > The government also funds crucial high risk, low reward activities that are necessary to drive growth elsewhere (economic multipliers), they've made it clear they intend cutting these, such as cutting scientific research funding that wouldn't have been investigated otherwise. This is a category of research, some of which is worthwhile and some isn't. It's quite plausible that a lot of money currently being spent on "research" is misallocated. > Overall they are currently not doing anything that you mention. What they're doing right now is investigating how the money is being spent, with some level of "stop doing things for a minute until we figure out if we should be doing them". To long-term reallocate it requires the Congressional budget process, which hasn't happened yet, and will ideally be happening with the benefit of more time and information.