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I'm no supply-side economist, or advocate of Brave New World consumerism, but I believe that taxing the purchase of actual consumer products would not have a po

I'm no supply-side economist, or advocate of Brave New World consumerism, but I believe that taxing the purchase of actual consumer products would not have a positive effect on the economy of the country. I believe a healthy economy is an active one. An incentive to remove money from active circulation (hoarding) could have long-term negative repercussions. And a country where the government encourages the average person to survive on hand-outs (philanthropy) over jobs (consumer spending) is sick morally as well as financially.

deleted 12y ago
[deleted]
judk 12y ago
Paying someone to do worthless work (lavishing luxury on someone) does not help society much. That's just gaming the numbers, like saying "going to war" helps the economy. Paying someone to alleviate basic needs does. Not all consumption is equal.
- brandonmenc 12y ago
  > Paying someone to do worthless work (lavishing luxury on someone) does not help society much. Tell that to the people feeding their families by working at the resort, or in the vineyard, or the tannery. There is a demand for luxury goods, and there always will be. A tax in the consumption of those goods cuts into the wages of the non-wealthy involved in their production.
  - bryondowd 12y ago
    Depends what you do with the taxes. If you use them to decrease the financial burden of just surviving for the non-wealthy population, that frees up their wealth for consumption of more reasonable items, which increases demand for those items, which creates more jobs supplying those items. So really, wouldn't this just be a matter of shifting jobs from supplying exclusive luxury items to supplying more common quality of life improving amenities? Of course, I'm just a tech nerd with zero finance/economy training, so let me know if I'm missing something obvious.
  - TeMPOraL 12y ago
    Don't forget that those people are still going to be automated away from their jobs soon, so it's in everyone's best interest to figure out how to make society work without requiring people to slave away doing increasingly worthless and wasteful things. I.e. how to make those people feed their families without working on things that don't really need to be done.
  - tszyn 12y ago
    Yes, but the tax money goes to the poor, which increases their consumption. So you should end up with fewer jobs in luxury resorts and more jobs in industries which produce necessities. The problem is that luxury goods and services tend to be labor-intensive, so you might end up with a net loss in jobs. Which is better? 10 people serving daiquiris to rich people, or 5 people producing socially beneficial things and 5 people out of a job?
- lmm 12y ago
  But consumption has a tighter feedback loop that ensures money spent on consumption is never truly wasted. If something is useless you stop buying it, and there's a limit to how much one person can waste - you can only eat so many meals, wear so many nice suits, take so many private jet flights. People who lose fortunes don't do so through consumption, they do so through bad investments.
  - TeMPOraL 12y ago
    That would be true in practice were it not for the existence of marketing, job of which is to create random arbitrary needs to keep people buying, and planned obsolescence, which makes sure that needs don't stay fulfilled for long. The market found a way to increase the limit to how much one person can waste to the point that the waste keeps accelerating.
- taejo 12y ago
  > In these days, however, no one will deny that most enterprises fail. That means that a large amount of human labor, which might have been devoted to producing something that could be enjoyed, was expended on producing machines which, when produced, lay idle and did no good to anyone. The man who invests his savings in a concern that goes bankrupt is therefore injuring others as well as himself. If he spent his money, say, in giving parties for his friends, they (we may hope) would get pleasure, and so would all those upon whom he spent money, such as the butcher, the baker, and the bootlegger. But if he spends it (let us say) upon laying down rails for surface cars in some place where surface cars turn out not to be wanted, he has diverted a mass of labor into channels where it gives pleasure to no one. Nevertheless, when he becomes poor through failure of his investment he will be regarded as a victim of undeserved misfortune, whereas the gay spendthrift, who has spent his money philanthropically, will be despised as a fool and a frivolous person. --Bertrand Russell, [In Praise of Idleness](http://www.zpub.com/notes/idle.html http://www.zpub.com/notes/idle.html)
danielweber 12y ago
Why is investment "hoarding"? Money in the bank is moving around, even without the multiplier of partial reserve banking.
- protonfish 12y ago
  Not all of it is hoarding, but some of it is. The effects on the economy between letting your money sit in government bonds vs. purchasing a consumable cannot be even close. The worst is investing in foreign companies - that wealth completely disappears from the domestic economy. Stock options and commodities and currency speculation create no wealth, only move funds from one person to another. Even typical investments are mostly a closed loop where money moves from one wealthy investor to the next, never entering the general economy.
  - danielweber 12y ago
    Our modern society exists because of accumulated wealth. Roads, buildings, computers, cars, refrigerators, factory equipment, power grids: those are accumulated wealth. (There are also intangible things that accumulate as well, but try landing on a desert island with a copy of Wikipedia and then attempting to build a computer.) The American economy is over 70% consumption. This doesn't mean "increase consumption to increase the American economy." We will probably never get under 50% consumption, because we are a mature economy with creature comforts. But the more we invest, the more stuff our children will have. Consumption is the easiest thing to gin up in the short term, so governments that are on rapid election cycles always can choose policies to bump them up. But, although I believe Keynesianism is correct when it says you should pump consumption to get out of a recession, I also believe Keynesianism is correct when it says you should not be encouraging consumption when not in a recession. You need to save when times are good and spend when times are bad.
  - refurb 12y ago
    This doesn't make sense at all. If I buy a gov't bond, my money goes to the gov't to spend (they certainly aren't saving anything). If I send my money to a foreign company, the economy is global. It may or may not benefit my country, but it sure isn't being hoarded.

deleted 12y ago

[deleted]

judk 12y ago

Paying someone to do worthless work (lavishing luxury on someone) does not help society much. That's just gaming the numbers, like saying "going to war" helps the economy. Paying someone to alleviate basic needs does. Not all consumption is equal.

brandonmenc 12y ago
> Paying someone to do worthless work (lavishing luxury on someone) does not help society much. Tell that to the people feeding their families by working at the resort, or in the vineyard, or the tannery. There is a demand for luxury goods, and there always will be. A tax in the consumption of those goods cuts into the wages of the non-wealthy involved in their production.
- bryondowd 12y ago
  Depends what you do with the taxes. If you use them to decrease the financial burden of just surviving for the non-wealthy population, that frees up their wealth for consumption of more reasonable items, which increases demand for those items, which creates more jobs supplying those items. So really, wouldn't this just be a matter of shifting jobs from supplying exclusive luxury items to supplying more common quality of life improving amenities? Of course, I'm just a tech nerd with zero finance/economy training, so let me know if I'm missing something obvious.
- TeMPOraL 12y ago
  Don't forget that those people are still going to be automated away from their jobs soon, so it's in everyone's best interest to figure out how to make society work without requiring people to slave away doing increasingly worthless and wasteful things. I.e. how to make those people feed their families without working on things that don't really need to be done.
- tszyn 12y ago
  Yes, but the tax money goes to the poor, which increases their consumption. So you should end up with fewer jobs in luxury resorts and more jobs in industries which produce necessities. The problem is that luxury goods and services tend to be labor-intensive, so you might end up with a net loss in jobs. Which is better? 10 people serving daiquiris to rich people, or 5 people producing socially beneficial things and 5 people out of a job?
lmm 12y ago
But consumption has a tighter feedback loop that ensures money spent on consumption is never truly wasted. If something is useless you stop buying it, and there's a limit to how much one person can waste - you can only eat so many meals, wear so many nice suits, take so many private jet flights. People who lose fortunes don't do so through consumption, they do so through bad investments.
- TeMPOraL 12y ago
  That would be true in practice were it not for the existence of marketing, job of which is to create random arbitrary needs to keep people buying, and planned obsolescence, which makes sure that needs don't stay fulfilled for long. The market found a way to increase the limit to how much one person can waste to the point that the waste keeps accelerating.
taejo 12y ago
> In these days, however, no one will deny that most enterprises fail. That means that a large amount of human labor, which might have been devoted to producing something that could be enjoyed, was expended on producing machines which, when produced, lay idle and did no good to anyone. The man who invests his savings in a concern that goes bankrupt is therefore injuring others as well as himself. If he spent his money, say, in giving parties for his friends, they (we may hope) would get pleasure, and so would all those upon whom he spent money, such as the butcher, the baker, and the bootlegger. But if he spends it (let us say) upon laying down rails for surface cars in some place where surface cars turn out not to be wanted, he has diverted a mass of labor into channels where it gives pleasure to no one. Nevertheless, when he becomes poor through failure of his investment he will be regarded as a victim of undeserved misfortune, whereas the gay spendthrift, who has spent his money philanthropically, will be despised as a fool and a frivolous person. --Bertrand Russell, [In Praise of Idleness](http://www.zpub.com/notes/idle.html http://www.zpub.com/notes/idle.html)

danielweber 12y ago

Why is investment "hoarding"? Money in the bank is moving around, even without the multiplier of partial reserve banking.

protonfish 12y ago
Not all of it is hoarding, but some of it is. The effects on the economy between letting your money sit in government bonds vs. purchasing a consumable cannot be even close. The worst is investing in foreign companies - that wealth completely disappears from the domestic economy. Stock options and commodities and currency speculation create no wealth, only move funds from one person to another. Even typical investments are mostly a closed loop where money moves from one wealthy investor to the next, never entering the general economy.
- danielweber 12y ago
  Our modern society exists because of accumulated wealth. Roads, buildings, computers, cars, refrigerators, factory equipment, power grids: those are accumulated wealth. (There are also intangible things that accumulate as well, but try landing on a desert island with a copy of Wikipedia and then attempting to build a computer.) The American economy is over 70% consumption. This doesn't mean "increase consumption to increase the American economy." We will probably never get under 50% consumption, because we are a mature economy with creature comforts. But the more we invest, the more stuff our children will have. Consumption is the easiest thing to gin up in the short term, so governments that are on rapid election cycles always can choose policies to bump them up. But, although I believe Keynesianism is correct when it says you should pump consumption to get out of a recession, I also believe Keynesianism is correct when it says you should not be encouraging consumption when not in a recession. You need to save when times are good and spend when times are bad.
- refurb 12y ago
  This doesn't make sense at all. If I buy a gov't bond, my money goes to the gov't to spend (they certainly aren't saving anything). If I send my money to a foreign company, the economy is global. It may or may not benefit my country, but it sure isn't being hoarded.