Re: Laffer Curve

From: The Trucker (mikcob_at_verizon.net)
Date: 07/03/04 

Date: Fri, 02 Jul 2004 18:42:50 -0700

Johnny Marcos wrote:

> The Trucker <mikcob@verizon.net> wrote in
> news:cc402t02t06@news2.newsguy.com:
>
>> "government is the enemy" mind set is caused by the fact that the
>> people of the USA are not represented in the government of the USA.
>
> There are more lawyers holding congressional seats than any other
> profession - why aren't we voting in more common people? The voters can
> change that if they want too - obviously they don't.

The voters have a very difficult time changing any of this because the
TwoParty holds a virtual monopoly on information. I do not mean that
people cannot find the facts if they really work at it, (although under
the Bush regime this is becoming more and more difficult) but the
information most people receive is from the tube and that information
is almost always slanted in favor of those who are in control and
want to stay in control.

It is virtually impossible to run a successful campaign for a seat in
the US House of Representatives without first securing major funding
from special interests. That might be OK for the senate, but the House
was to represent the common people and the number of persons represented
by each member of the House was to be on the order of 30 thousand. If
constituency sizes were held at 30 thousand instead of being allowed
to swell to 600 thousand (about 426 thousand voters), then an honest and
forthright individual truly representative of the people in his district
might be able to run a successful campaign WITHOUT special interest money.

>> This seems to say that war and other Republican crap causes inflation
>
> War can cause a rise in prices where you have both the public and
> military competing for the same goods.

Well, uh, I was thinking more about where the money might come from
so as to conduct a fake war. If the banks create it and give it to
Bush then there is no taxation and the people will not hold him
accountable for his imperialistic prancing.

>> and that it would be better to tax than to just create money.
>
> Yes, taxing makes the publics demand for the goods go down - the
> military does not have to compete with the public - prices remain stable
> and inflation does not hit the country.

More importantly, taxing will make the public's demand for someone
with common sense go way up real fast.

>> That is precisely what has been going on with each and every
>> Republican administration and the latest one is the worst. It will be
>> seen that the inflation (to the extent that it actually exists) will
>> have been caused by this "back door" monetization and the blasting of
>> the proceeds into the economy by military expenditures.
>
> Ok. How do you as an individual investor suggest a citizen allocate 10K
> in cash to keep from being hurt? Right now the holders of money are
> getting NEGATIVE real interest rates - isn't this robbing the rich?

(snicker) I would be interested in seeing how YOU calculate "real"
interest rates. But to answer the question without agreement or
disagreement on your assertion about interest rates, let us divide
the pie into land, bonds, and real capital, and collectables and
ones own education and knowledge, where
land is all that exists naturally (includes the hard dry stuff under
the feet), bonds are all forms of money (includes your bank accounts
and your T-Bills, and your series a-z bonds, etc.), real capital
is the stuff that is the result of actual investment (includes
stocks, office buildings, machinery, etc.), and collectables is
the produced stuff that is supposedly valuable due to scarcity
(includes gold, silver, art, jewels, etc). Looking back over the
last 25 years land is the best, gold etc, comes in second, bonds
is third, real capital is forth, and one's own education is dead
last. Will this continue? It will depend on whether or not
we can get rid of the Republicans.

>> It would be the same if the money was given to Willie the Wino. But
>> at present inflation is being held in check by stomping all over wages
>> and by moving the tax burden more and more onto wages and off of rent.
>
> From Krugmans new book:
>
> Our analysis already tells us that when the price elasticity of demand
> is much
> higher than the price elasticity of supply, the burden of an excise tax
> falls mainly on
> the suppliers. So the FICA falls mainly on the suppliers of laborthat
> is, workers
> even though on paper half the tax is paid by employers.
> This conclusion tells us something important about our tax system:
> namely, that
> the FICA, rather than the much-hated income tax, is the main tax on most
> families.
> The FICA is 15.3 percent of all wages and salaries up to more than
> $80,000 per year;
> that is, the great majority of workers in the United States pay 15.3
> percent of their
> wages in FICA. Meanwhile, only about 20 percent of American families pay
> more
> than 15 percent of their income in income tax. So for about 80 percent
> of families,
> the FICA is Uncle Sams main bite out of their income
>
> Krugman said the fica is the biggest tax burden on people then the
> income tax - agreed.

Just don't get ahead of the game and infer that I am against Social
Security because that is NOT the case. I agree with Krugman on this.
But Social Security should not be funded with FICA taxes. It should
be funded by excise taxes or land taxes and failing that it should be
funded out of the same bag as defense and everything else.

>> This, of course, is where I and Von Missus will part company. He
>> wants to paint inflation as Satan incarnate because that is what the
>> wealthy and the powerful paid him to do. Most pointedly "Inflation
>> hurts people that have or who rely on a fixed sum of money".
>
> My mother is on social security - I don't want her to be hurt - does
> this make me an EVIL person?

Nope. But in the early seventies (I think it was the early seventies),
SS benefits were indexed to the CPI and still are (as far as I know).
The benefits certainly SHOULD be indexed to CPI. Inflation (other
than moderate inflation) is not, therefore, an assult on the elderly
poor.

>> Inflation does not hurt those who have no money but as a secondary
>> effect. If rent is controlled with a heavy tax then all productive
>> persons will be winners in a climate of moderate inflation.
>
> From a
>> Georgist standpoint if the price of land is held constant with a heavy
>> tax on value, then all productive people will gain from inflation.
>
> My mother is old, my grandmother even older - what do they gain?

If they are not "productive" then they will not gain. That does
not mean that they must lose and it does not mean that you, as
a producer, will not gain sufficiently to care for these people.

>> I am not a proponent of high inflation, but the amount of effort spent
>> on demonizing inflation is just one more example of an economics
>> profession dedicated to the benefit of the rich.
>
> My mother lives in florida, and so does my grandmother - my grandmother
> is currently in an old folks home - I have visited her and found she
> lays in her piss for 2 or 3 days at a time - does inflation help her?

If SS benefits are indexed it is difficult to see how it hurts her.
Do not run off into posture land here and screech about horrendous
inflation being a problem. I acknowledge that. We are speaking of
moderate (say 2%) inflation.

> My mother needs energy to keep her AC going, her bill is going up, her
> phone bill is going up, her tv cable bill is going up - how does
> inflation help her?

But how much of that is due to inflation (a monetary problem caused
by the creation and injection of money into the economy that does
not produce any real capital development)

http://GreaterVoice.org/econ/glossary/Real_Capital.php

And how much is due to economic rent:

http://GreaterVoice.org/econ/glossary/Economic_Rent.php

> It seems to me inflation is going to hurt the people LEAST able to do
> anything about it - a young guy can go work harder or take on another
> job perhaps - but my grandmother and mother - nope.

You have been brainwashed (as was the objective) by the economics
proffession. If inflation (defined by the masters of misdirection
as an overall price increase) should be cured by monetary policy
then it would seem we are assuming that monetary policy is the
_cause_ of the problem. Because if that is not the case then the
root cause should be found and that is what should be "adjusted"
so as to cure the "inflation".

http://GreaterVoice.org/econ/glossary/inflation.php 

-- 
http://GreaterVoice.org (a work in progress)

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