Yo Alan: Economic redistribution Models

Despanan · 04-25-2011, 08:09 PM

So I'm currently arguing against this idiot. My argument is that it is in the best long-term interest of a country, economically, to tax the wealthy heavily and then use that money to provide education, healthcare etc. for the lower classes.

He claims it's best to cut programs to the lower classes and tax everyone equally, and claims that my model flies in the face of prevailing economic theory. He also has started whining that I produce "peer-reviewed enocmomic sources" to back up my model (and yes I've already asked him to provide his own sources, so far he's refused claiming that the burden of proof is on me since I "Want to take people's money and give it to other people". He claims he used to be an economist so many people in the discussion are taking him at his word.

Could you point me in the direction of a few objective sources and/or studies that back up wealth redistribution as an economic stimulus?

Alan · 04-25-2011, 09:08 PM

I'll look it up but for now you have these two things:

Adam Smith himself argued for a progressive tax in the Wealth of Nations. Do a search on me and Adam Smith on this site, I've quoted him on that, maybe as Jillian, I'm not sure.
The idea is that those who benefit the most from a nation's liberal policies also have the most interest in protecting it and thus have a larger responsibility in the form of taxation.

Also, if he wants to see how a flat tax looks, point him south and tell him to look at Mexico. Mexico's GDP is almost exactly that of Canada, but inequality is increasing at a faster rate in here than in the United States. Ask him if that's the future he wants for the United States.

Alan · 04-25-2011, 09:27 PM

Found this article
http://www.springerlink.com/content/h63w311370ptm898/

you can read it for free in here
http://www.entrepreneur.com/tradejou...9928389_1.html

Its findings are that in the United State's 2004 taxation plan the middle class had 42.5% of the tax burden, while on the other two tested tax plans they would have 66.8% and 64.1% of the tax burden.

JCC · 04-26-2011, 06:00 AM

Greater taxes enable greater investment which means a workforce which is better educated and productive. That means more people from the lower classes move into the middle classes and start paying more taxes, as you know a large proportion of people don't pay taxes because of the income brackets. That tax money allows for more investment in government schemes which can create more jobs. More jobs = greater consumption which means lower inflation so US goods do better in the global market and you get a balance surplus in favour of exports. That creates even more jobs. That is very simple economics, just a case of supply for skilled workers meeting demand for skilled workers and enabling the production possibility boundary of your economy to expand. High-school shit really, dude is not an economist.

JCC · 04-26-2011, 08:09 AM

Actually shit I made a mistake there, greater consumption wouldn't lead to a decrease in inflation, it's the added investment from government which increases the supply which decreases inflation. So much for being easy-peasy high-school economics.

Despanan · 04-26-2011, 09:39 AM

Thanks guys, you saved me a great deal of research time (and JCC, you actually put alot of my previous ideas in a very succinct manner in your later post, which I borrowed from).

Here's my post:

Quote:

Originally Posted by Despanan

Quote:

Originally Posted by AdmiralAhab

Desp, saying that "I've provided the logic" when your logic flies in the face of the modern understanding of how economics works isn't good enough for casual conversation. If this was a casual face to face to conversation, I'd say the same thing: "Your plan sounds interesting, but how exactly does it work? How does taking the money from the people that have it and giving it to the people that don't have it actually fix anything?"

So, I've done some digging, and you know what? I'm going back to my original "Ahab is trolling me" idea, because seriously, it was RIDICULOUSLY easy to find sources, and peer-reviewed papers that back up my position (Which also DOESN'T fly in the face of modern economics, just the face of Reaganomics, which as recent years have shown DOESN'T WORK):

For instance, Here

Quote:

Originally Posted by Can Progressive Taxation Contribute to Economic Development?

Financial instability has increased for many economies in the face of greater capital mobility. Eliminating capital flows, especially portfolio investment flows, may reduce volatility, but it could also result in domestic capital constraints. To overcome this dilemma, policymakers may consider alternatives, such as progressive income taxation, that could raise domestic funds. In this paper, the authors combine several macroeconomic data sources to test the link between progressive taxation and economic stability, economic growth, inequality and fiscal policy. Based on data from 1981 to 2002, they find that progressive taxation provides policymakers with the ability to conduct countercyclical fiscal policies, which in turn contributes significantly to economic stability. They find no evidence that progressive taxation adversely affects economic stability by reducing growth.

The article can be downloaded from the link above. Also:

Quote:

Originally Posted by Christian E. Weller & Manita Rao

The authors do find that the possibility of raising progressivity is constrained by capital mobility and by the level of government spending. And policymakers, who may consider consumption taxes such as the value added taxes (VAT), when tax enforcement is ineffective, would see no additional gains in terms of economic stability from the implementation of a VAT in combination with progressive income taxation.

Without even TRYING I'm finding evidence AGAINST the effectiveness of a consumption tax. So there goes Dex's plan.

On top of that I found this little Gem.

Full article can be read here.

Quote:

Originally Posted by Ramifications of a Flat Tax

While both of the flat tax plans seem as though they would be beneficial to taxpayers, they may actually worsen the federal deficit. Under these plans the United States would not be able to produce the tax revenue at the same level the country currently needs or that the current system provides. The plans are both extremely simplistic, but to reach the same level of tax revenue, the tax rate would have to be much higher or the allowances lower. The taxpayers cannot receive extreme tax cuts and keep the country from increasing the federal deficit unless the federal government can reduce spending...The results shows that both plans would create even less revenue than under the current system. In addition even though both plans claim to relieve the burden on the middle income class, this study shows that each plan will actually increase the amount of the burden that falls on the middle class....

So yeah, Flat tax proposals aren't particularly effective without seriously increasing the flat tax (to around 20%) and seriously reducing the federal budget, which isn't going to happen, even under the Republicans/Tea Party (as my previous thread showed) so Ahab's "5% flat tax + WHOLE MESS OF CUTS" isn't a realistic solution, and would shift the tax burden from Forbes and Donald Trump to...well, Ahab and Dex (I assume they're middle class) while screwing over the countries most vulnerable citizens (both through increased taxes and loss of social programs). Is Bill Gates getting a tax cut REALLY worth you two having to pay significantly MORE taxes?

I also looked up some stuff on economics, as Ahab suggested that my idea of progressive taxation used to benefit the workers and the lower classes through education, guess what: It's NOT new:

Quote:

Originally Posted by Adam Smith

The rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion

Once again the foundational thinker of Capitalism agrees with me.

In fact, in the Wealth of Nations Smith specifically warns against businesses influencing the government and monopolizing capital at the expense of the community:

Quote:

Originally Posted by Wikipedia

Again and again, Smith warned of the collusive nature of business interests, which may form cabals or monopolies, fixing the highest price "which can be squeezed out of the buyers".[73] Smith also warned that a true laissez-faire economy would quickly become a conspiracy of businesses and industry against consumers, with the former scheming to influence politics and legislation. Smith states that the interest of manufacturers and merchants "...in any particular branch of trade or manufactures, is always in some respects different from, and even opposite to, that of the public...The proposal of any new law or regulation of commerce which comes from this order, ought always to be listened to with great precaution, and ought never be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention."

Economic inequality has a negative effect on the countries social cohesion, public health, and economy. The greater the wealth divide, the more likely it is that the population engages in crime and other anti-social behaviors. Once again, this has been my argument the entire time, and the evidence overwhelmingly backs me up.

You want examples? Look no further than Mexico, who's GDP is roughly the same as Canada's Yet we don't have Canadians running over the boarder here to escape poverty. Why? Well ONE (and I do mean ONE) of the reasons is probably Mexico's flat tax, which contributes significantly to a growing wealth divide which contributes to FUCKING BEHEADINGS in Juarez.

Meanwhile last year the FUCKING LOONIE overtook the dollar. Which really shouldn't happen, if Dex's and Ahab's allegations were correct, the socialist CANADIANS shouldn't be doing better than us, they should be crawling around where Mexico is, and the Mexican economy should be on the rise. Yet we observe the opposite. The Canadians are doing awesome as opposed to being MURDERED by drug cartels.

Really, this is embarrassing, this is a matter of American Honor, we're supposed to be the greatest nation in the world and the fucking CHINESE are set to overtake us as global leaders despite their empty cities. This should be completely unacceptable to you guys (I know it's unacceptable to me), yet your answer to this financial crisis is to FURTHER deregulate businesses, and FURTHER increase the wealth divide (through flat taxation and spending cuts) and the deficit (through tax cuts on those who actually can pay for it). It's like your house is on fire and you guys have said, "You know what would solve this fire situation? MORE FIRE!"

Honestly Ahab, either you're trolling me, or I can see why you left economics, you're bad at it. This is pretty simple stuff dude. My ideas are not uncommon, nor are they revolutionary. More taxes enable a greater degree investment which means a workforce which is more educated and productive. Thus more people from the lower classes move into the middle classes and begin to pay more taxes, as opposed to paying NO taxes, or receiving money. That tax money allows for more investment in government schemes which can create more jobs. Added investment from government which increases the supply also decreases inflation. As a result US goods do better in the global market and you get a balance surplus in favor of exports (as opposed to our current system which is increasingly import based and ships millions of jobs overseas). That creates even more jobs.

The "capitalism" that you and Dex are following ISN'T really capitalism, it's a lie concocted by the rich, and the industry leaders (exactly as Adam Smith predicted) to gain wealth for themselves at the expense of everyone else. The fact that Dex is suddenly talking about North Korea just enforces the fact that you guys base your economic ideas, not on reason or data, but on outdated red-scare paranoia and corporatist republican propaganda.

So is that good enough for you HabHabberton? Or do you want this is MLA format?

Annihilation · 04-26-2011, 09:41 AM

Despanan is correct. /endthread

Alan · 04-26-2011, 10:14 AM

No one disagreed with him, dipshit.

Ben Lahnger · 04-26-2011, 11:55 AM

Quote:

Originally Posted by Annihilation

Despanan is correct. /endthread

Despanan is debating a fool on another site, and started this thread here (as reading the original post thoroughly and absorbing it's meaning completely would have informed you) as a place to gather resources for that debate. There is nobody here disagreeing with him ... only helping him.

Since he is still debating said fool, this thread will stay open until such a time as Despanan says, "I kicked his ass."

YOU ARE AN IDIOT.

Despanan · 04-26-2011, 01:52 PM

Hey JCC. What was the name of that anarcho-syndicalist video about the workers in latin america that you showed me that one time?

Alan · 04-26-2011, 02:42 PM

I'm pretty sure it was The Take, by Naomi Klein. If it was another one, The Take still documents the same phenomenon.

CptSternn · 04-26-2011, 03:18 PM

The Take is brilliant. Its the one about the automotive plant.

JCC · 04-26-2011, 03:29 PM

Yeah it was the Take. Awesome film.

HumanePain · 04-26-2011, 04:44 PM

I also admire the elegant way JCC expressed his answer. In the technical circles I move about in, most of us techies agree that an intelligent person should be able to explain complex concepts to anyone so they may understand it. But Alan's way is good too for those who can survive the learning process: Alan's answers sometime seem dodgy but he is making you think. His answers will make the shallow piss off, but for those earnestly trying to communicate and understand they will see his responses as "go back and RE-read what was just said...idiot." then one sees it the second time and the light goes on. Well that and Alan is ubergoth.

Despanan · 04-26-2011, 11:55 PM

So I've pretty much crushed him. I was honestly surprised that he brought no sources to bear whatsoever, just tried to dismiss my arguments based up his "having done economic projections" at some point in the past and asked for more and more sources from me while providing none of his own. I pressed the dude for sources time and time again, until he finally broke down and agreed that "socialism can work" but he "will never support socialism or anything progressive" because it goes against his "morals".

Pretty much the whole thing has devolved into idiocy at this point. I'm not sure if I've convinced anyone (there is ONE guy participating who at least SEEMS reasonable, but has bought into the libertarian/tea-party rhetoric hook line and sinker during the last two years). But at least I embarrassed the other dude and got him to admit his objections to socialism and progressive taxation aren't logical so much as "moral".

Anyway, thanks for the help.

Also, Jillian, JCC, I've decided that you guys are total Bros. I'm not too proud to admit that I've done some growing over the past few years, and honestly, you two have helped me to understand allot.

So yeah, if I ever see you two IRL, I will TOTALLY buy you beers.

Catch · 05-09-2011, 02:50 PM

If there is a tax raise it should apply to everyone, including, the wealthy. It is that simple.

It won't fix the underlying problem to over-supplying demand. There are many issue associated in order to bring that back into focus, but raising taxes for everyone is just fair.