Re: LVT dustup over at AngryBear

On 8 Aug 2005 13:36:21 -0700, "Negloid" <negloid@xxxxxxxxxxx> wrote:

>
>William F Hummel wrote:
>> On 8 Aug 2005 10:07:31 -0700, "Negloid" <negloid@xxxxxxxxxxx> wrote:
>> >
>> >William F Hummel wrote:
>> >> On 5 Aug 2005 09:41:19 -0700, "Negloid" <negloid@xxxxxxxxxxx> wrote:
>> >> >
>> >> >William F Hummel wrote:
>> >> >> On Sun, 31 Jul 2005 19:27:16 GMT, Folsom Inmate <nomail@xxxxxxxx>
>> >> >> wrote:
>> >
>> >> >> I thoroughly agree. Supply side theory is based on the false belief
>> >> >> that economic growth is dependent on the investments of the wealthy.
>> >> >> Accordingly, taxes should not bear too heavily on those in high income
>> >> >> group. In truth there is an enormous pool of funds comprising the
>> >> >> savings of the broad middle class -- pension funds, mutual funds,
>> >> >> insurance companies, finance companies, and so forth. They are all
>> >> >> seeking good investment opportunities. Furthermore, banks can issue
>> >> >> credit money limited only by a multiple of their own capital. No
>> >> >> recessions since WW2 can be traced to a shortage of investment funds.
>> >> >
>> >> >How did you arrive at this conclusion?
>> >>
>> >> Which conclusion? There are several statements in the paragraph.
>> >
>> >In the last sentence.
>>
>> I think you are conflating a lack of funds to invest on the one hand
>> with not investing on the other.
>
>Let me approach this from a different perspective. Do you believe that
>recessions since WW2 can be traced to a shortage of demand? Or are you
>saying that neither have an effect and neither supply-side nor
>"demand-side" policy would improve economic performance?

Recessions are best explained by business cycle theory. I believe
recessions can be exacerbated by a shortage of effective demand which
can arise in various ways, especially a reduction in disposable
(after-tax) income on the broad middle income sector. I definitely do
not believe that providing more after-tax income to the wealthy and
the upper income bracket would improve economic performance, if that
is what you mean by supply-side.
>
>> >But you are ignoring the cause of the recessions in the '70s and
>> >instead looking at the causes of the inflation in the '70s. During an
>> >inflationay period, you would be hard pressed to prove that a recession
>> >was caused by a lack of demand, no? So if it wasn't a lack of capital
>> >investment that caused the economic slowdown, what did cause the
>> >economic slowdowns?
>>
>> I think I just answered your question.
>
>Well not quite. See my previous question for clarification.
>
>> A lack of capital investment
>> does not automatically imply the lack of investable funds.
>
>So recessions can be traced to dropping capital investment, but they
>cannot be traced to dropping investible funds?

No, dropping capital investment is a result, not a cause of
recessions. Further, I doubt that there has been a shortage of
investable funds since WW2. Remember that banks are also a source of
investable funds, and they can create deposits limited only by the
capital adequacy requirement.
>
>> >> >> The maximum rate should never again be set as high as it once was, but
>> >> >> I think the tax burden should be shifted towards the upper income end.
>> >> >> For the past couple of decades, there has been little or no growth in
>> >> >> real purchasing power in the lower 4 quintiles
>> >> >
>> >> >How do you arrive at this conclusion?
>> >> >
>> >> >2003 real incomes (latest figure I found on Census.gov):
>> >> >Bottom Q.: $17,984
>> >> >Second Q.: $34,000
>> >> >Third Q.: $54,453
>> >> >Fourth Q.:$86,867
>> >> >
>> >> >...versus 1983 incomes (2 decades previous):
>> >> >Bottom Q.: $15,769
>> >> >Second Q.: $29,388
>> >> >Third Q.: $45,061
>> >> >Fourth Q.: $68,154
>> >> >
>> >> >That's a 14% increase over 2 decades in real incomes for the bottom
>> >> >quintile. For the third quintile, (the ever important middle class?),
>> >> >the increase was 20%.
>> >> >
>> >> >http://www.census.gov/hhes/income/histinc/h01ar.html
>> >>
>> >> It depends on whose figures you want to believe. Here is what Prof.
>> >> Robert H Frank of Cornell presents at
>> >> http://www.inequality.org/franknov2.html
>> >>
>> >> Quintile 1978 1988 1998
>> >> Bottom 20 percent $13,103 $12,256 $12,526
>> >> Second 20 percent 28,415 28,541 29,482
>> >> Middle 20 percent 42,667 44,414 46,662
>> >> Fourth 20 percent 58,786 63,785 68,430
>> >> Top 20 percent 99,754 117,035 140,846
>> >>
>> >> I think these numbers are pretty consistent with my statement about
>> >> little or no growth in real purchasing power, at least for the lowest
>> >> three quintiles.
>> >
>> >I got mine from the Census--he claims he did as well. You can go look
>> >mine up if you want though, that's the difference. He just links
>> >census.gov and I cannot find the data he presented anywhere in there.
>> >Here is the exact page I got mine from:
>> >
>> >http://www.census.gov/hhes/income/histinc/h01ar.html
>> >
>> >Even if you take his date periods, using these data, you will still
>> >note that incomes in the bottom quintiles increased over the time
>> >period. If he is supposedly adjusting for inflation understatment by
>> >the CPI, that would be quite interesting since your other source
>> >indicates that inflation, if anything, is overstated.
>>
>> The real income of the lowest quintile actually decreased over that
>> 20-year period.
>
>Only by his data, which I am questioning. The data I presented show
>positive growth in all quintiles over both the 83-03 period I presented
>as well as the 78-98 period he chose. My data are linked and easily
>verified. I was unable to verify his data. I checked around the
>Census site and I just don't see where he is getting the numbers. I
>don't know what the difference is between what he presented and what I
>presented and I would like to know what it is before I accept it as
>truth. Until then, it appears to me that real income for the lowest
>quintile has done just fine in the past few decades.
>
>Perhaps his data are based on mean or median income for each quintile
>and mine are based on the limits of each quintile. Perhaps his data
>exclude certain groups of people. Perhaps he used his own inflation
>rate to deflate the incomes. Perhaps he is a bald-faced liar. Perhaps
>he made a mistake. Perhaps *I* made a mistake.
>
>The problem is that I have no way to tell because all this guy did was
>link census.gov. Can you verify his claims on census.gov?

I really don't care that much. The important point is that the wealth
gap has been skewed badly and needs to be corrected by a more
progressive income tax structure.
.

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