Droopy's Myths Debunked

[_Kevin Graham]

If the economy suffers, wealthy financiers will generally suffer too. Perhaps not as much as the majority of Americans, but that doesn't matter.

Wrong. The evidence shows overwhelmingly that when the economy suffers the wealth and power shift towards the richest 1% of Americans while the middle-class shrinks. I mean consider the fact that despite the recession, corporations are sitting on record profits. They're not hiring people because they don't have to, and corporations lobby politicians in ways that help maximize their profits. Holding out and playing political games just to get lower tax rates is just one of many tactics they use.

If the goal is to increase personal wealth, then a strong economy would generally be better. Sure they could bet against the market, but that ends up being a one-time payout since afterwards people will not be willing to buy bets against the market at high value.

Again, how do you explain record profits during a recession? Companies want easy, quick returns and their best investment is in government politicians who vote according to the interests of whatever company they're working for. For example, recently Florida has suggested banning sugar product from school lunchrooms. Suddenly, out of the blue a Republican politician comes along and blocks the effort, arguing some lame ass rationale that only a Mormon apologist could appreciate. Turns out, this politician has received tens of thousands of campaign contributions from the Sugar industry. Coincidence? No. It is a simple matter of companies insuring their profits by buying policy makers. It is the American way. Once you have politicians in your pockets, you don't need to worry about things like equal competition, free enterprise, etc.

Besides, betting against the market also assumes that people will have enough money to pay up. I wonder how far Lehman Brothers would have gone to pay their obligations.

Lately, corporations have learned they don't need to rely strictly on the market to maximize profits. All they have to do is become too big to fail, make ridiculously risky business moves that create a win for them no matter the outcome. If they win, they win. If they lose, they get a bailout. Only the largest corporations can enjoy such financial freedom. They don't promote free enterprise, they're actually against it. They enjoy being the benefactors of unfair competition. The smaller businesses can't expect a bail out because they aren't the ones controlling the politicians. In America, the richest 1% control everything in precisely this way. Do you really think it is just a coincidence that former Big Bank CEOs end up working in the Treasury Dept? Henry Paulsen, the former CEO of Goldman Sachs is the guy who came up with the brilliant idea that we hand over the key to the treasury because the company was too big to fail. This incestuous affair with big bankers and administration officials began when Ronald Reagan became the puppet of Merryl Lynch.

[_asbestosman]

If the economy suffers, wealthy financiers will generally suffer too. Perhaps not as much as the majority of Americans, but that doesn't matter.

Wrong. The evidence shows overwhelmingly that when the economy suffers the wealth and power shift towards the richest 1% of Americans while the middle-class shrinks.

That doesn't contradict what I wrote. The balance of the remaining wealth would indeed shift towards the richest if they suffer less than the majority.

I mean consider the fact that despite the recession, corporations are sitting on record profits.

Not a fact I'm aware of. In fact I'm suspicious. There's probably a lot more to that picture.

They're not hiring people because they don't have to

Yes, and why don't they have to? It's because there's not enough market demand to justify an increase in production and hence increase in expenses. If more workers would generate more money than costs (including risk), they would hire them. It's simple economics.

and corporations lobby politicians in ways that help maximize their profits. Holding out and playing political games just to get lower tax rates is just one of many tactics they use.

I don't disagree there at all.

Lately, corporations have learned they don't need to rely strictly on the market to maximize profits. All they have to do is become too big to fail, make ridiculously risky business moves that create a win for them no matter the outcome. If they win, they win. If they lose, they get a bailout. Only the largest corporations can enjoy such financial freedom. They don't promote free enterprise, they're actually against it. They enjoy being the benefactors of unfair competition.

That does seem to have a ring of truth to it. Yet I also think that this strategy will have to be different going forward. Becoming too big to fail is now seen as a political liability. Popular anger against this is just too great. However, the past tells me that there will be a way to do it again, but it will have to be disguised until it's too late.

I think in part this ugly strategy has also come about because the market is rewarding short term growth instead of long term growth. I wish things were different, but that's the world we live in.

[Guest]

Laffer argues that tax cuts increase revenues under certain circumstances (when taxes are outrageously high) whereas Droopy asserts that they increase revenues under all circumstances. Can Droopy ever admit this?

I've never made any such claim. If you can find such, please post it. Otherwise, stand exposed yet again as the prevaricator and intellectual fraud that you have quite unfortunately demonstrated yourself to be here for years.

Yet again, Red Kevin has not bothered to read, digest, and comprehend my or Laffer's arguments, and appears incapable of absorbing fairly clear graphs showing empirical correlations between phenomena. He scans posts looking for suitable polemical material, and goes to work.

The economic effects of tax cuts are empirical and historical facts. Theoretically, as to the realm of human action, they are self evident. The deep economic weakness of the economy of the late seventies and its marginal government revenues compared with the vibrant booming economy of the 1983 - 1990 period, and almost a doubling of government revenue during that time are empirical facts.

Utter, relentless, jaw dropping personal stupefaction of the kind exhibited here by Mr. Graham takes time, care, and persistence to cultivate, and the Trailerpark is an exotic reptile house for the observation of a rare collection of such specimens.

Kevin quotes someone whom he believes to be a "conservative" (this is one of his favorite tricks):

"It's logically possible" that a tax cut could spur sufficient economic growth to pay for itself, Viard said. "But there's no evidence that these tax cuts would come anywhere close to that."

The first thing one notices here is the inside-the-beltway politicianspeak about tax cuts "paying for themselves". This is the lawyerly doublespeak of the Ruling Class protecting its interests, and nothing more. It is not serious intellectual discourse regarding economics, political economy, or anything else other than the political class talking through both sides of its mouth.

Tax cuts need not have to "pay for themselves" for the simple reason that there is no reason to believe that anything approaching the present size, scope and responsibilities of government need to be funded at anywhere near present levels.

There is equally no reason to believe or assume that any particular level of government spending (the present level at any given time) needs to, or must be preserved.

Instead of asking for tax cuts to "pay for themselves", why not demand that any number of government programs or agencies justify their existence on rational and constitutional grounds?

There is absolutely no sound economic reason for arguing that an extension of the Bush Tax cuts would increase revenues

Except that, under most circumstances, they incentivize and increase savings, risk, entrepreneurship, investment, and work. That Graham does not appear to comprehend self evident logical, psychological, and behavioral facts of this kind leads one to believe there is a problem here well beyond simple intellectual shallowness.

and thereby make a dent in the exploding deficit.

The deficit has nothing, in any core sense whatsoever to do with tax cuts and everything to do with out of control, runaway government spending.

The deficit is a government spending problem, not a tax problem.

In deficit times, higher taxes is what works to reduce the deficit.

Anyone - anyone - with an intellectual capacity above that of a spatula and not utterly imbued with the worship and adoration of the state as his Lord, God, and Savior, would immediately -immediately - upon observing that massive deficits were being created by the state (Congress), prescribe as a remedy for continually spiraling deficits, spending cuts; decreases in the amount of money government spent, ensuring that government spent no more money than it took in in taxes, and thereby avoiding the debt altogether, while allowing the government to pay off existing debt obligations while not incurring more.

Were he to be a believer in limited government, the rule of law, property rights, and the unalienable rights of the individual, he would not prescribe ever increasing rates of taxation to service the debt created by profligate, irresponsible spending, but he would seek to limit that spending and avoid creation of such debt.

Realizing as well that as tax rates rise, economic activity affected by such rising of taxes decreases and the tax base shrinks, he sees that ever increasing tax rates to service ever increasing debt created by ever increasing runaway spending by the state is a viscous cycle that has no rational end.

Others, like socialists, communists, fascists, and Nazis (all the same people really, in many ways. Just call them progressives) see things differently.

Its not money, per se, that drives politicians to a frenzy of arrogant greed regarding the fruits of the labor of the citizenry, but power; not the amount, but the control over the revenue that flows into their coffers.

Graham's vulgar, simple minded populist Marxism wouldn't intellectually impress anyone beyond the intellectually and morally castrated dilettantes like himself at Media Matters and the Huffington post he crawls to for source material because he has no idea where else to look for it.

This house, is clean...

[_Droopy]

The fact is Droopy still doesn't understand the Laffer curve. In a nutshell, Laffer argues that tax cuts increase revenues under certain circumstances (when taxes are outrageously high) whereas Droopy asserts that they increase revenues under all circumstances. Can Droopy ever admit this?

Here's the first initial statement I can find that I made on this subject:

However, when tax cutting is done properly and for the right reasons (to stimulate private economic activity), the inevitable outcome is a broadening of the tax base.

viewtopic.php?f=1&t=15997&st=0&sk=t&sd=a&start=84

[_Kevin Graham]

Asbestosman...

The balance of the remaining wealth would indeed shift towards the richest if they suffer less than the majority.

But they're not suffering less. They're not suffering at all, as evidenced by record profits.

Not a fact I'm aware of. In fact I'm suspicious. There's probably a lot more to that picture

Really? It made the headlines last month in virtually every news outlet. Here is the piece done by the New York Times, another by the Harvard Business Review, another by the Wall Street Journal and another from Daily Finance.

Yes, and why don't they have to? It's because there's not enough market demand to justify an increase in production and hence increase in expenses.

And the reason demand is down is because consumer spending is down, and the reason consumer spending is down is due to high unemployment.

If more workers would generate more money than costs (including risk), they would hire them. It's simple economics.

And more workers equals more employment, and this is where Corporate America is failing us. They aren't pulling their own weight. They aren't doing their fair share of the work by using those profits to increase employment. Instead, they're sitting on those profits and relying on tax cuts and employment cuts to meet their quarterly goals. Thanks to globalization coupled with the Bush Tax cuts, corporations have little incentive to hire more workers since they're making record profits without more American-based workers.

The economic cycle is fueled by consumer spending. The way it is supposed to work in a free market economy is businesses hire workers to produce goods/services. Consumers can only buy those goods/services if they have income to spend, which means they have to have jobs first. So it goes, Jobs --> personal income --> Consumer Spending ---> Corporate profits. At this point the cycle continues as corporate profits spurn further investment in the workforce to produce more goods/services, which ultimately lead to more profit. So the idea is corporations use their profits to create more jobs --> which creates more income --> which creates more consumer spending ---> which creates more corporate profits ---> which spurns even more employment --> which creates even more income --> which creates even more consumer spending, and so on and so forth. This is the gist of a healthy economy, but corporations have betrayed us. They took hundreds of billions in bailout funds, paid for by the tax payers and how do the banks respond after we saved their asses? Do they use that money to help the economy by creating jobs or providing more loans? No, they sit on it while using a good chunk of it to lobby for Republican politicians who promise them lower taxes, unfair competition, government subsidies, etc. It is the Republican way.

Droops is still trying to save himself:

I've never made any such claim. If you can find such, please post it.

I already posted it, in the first post in this thread. Myth #3 you said:

The higher marginal tax rates go, the less government revenue is generated, and the lower tax rates go, the more revenue flows to the treasury.

So not only do you not read your own websites, you don't even read your own comments. You made no qualification then as you're now desperately trying to do in order to separate yourself from your own ignorant statements. You were clearly following the idiotic theory that "tax cuts pay for themselves" as George Bush and other have falsely claimed, and now you want to pretend you've been misunderstood. You have not understood what Laffer has argued, otherwise you would accept the fact that tax increases frequently increase federal revenues. History proves this (although there are a few exceptions) and I have provided numerous examples for which you have no response other than to cut and paste an entire website that does nothing but further my point.

[_Tarski]

Plus Kevin also doesn't understand the truism that poor people don't create jobs or wealth.

Perhaps they don't create jobs but in a sense it looks like they create wealth but not for themselves.
Who is it I see shopping at Walmart? They look poor and they look like they are making someone wealthy. They seem to be helping out also by actually working hard at Walmart for barely enough to shop at Walmart so the little money they do get goes right back up the shoot to Walmart CEOs.

[_Kevin Graham]

Plus Kevin also doesn't understand the truism that poor people don't create jobs or wealth.

A truism according to whom? Rush Limbaugh? Because you're only going to hear this nonsense from idiots like him. This is a popular Right Wing myth that goes along with the like-minded myth that "government cannot create wealth." Both have been disproved. I already asked you to provide me with some examples where wealth is created without the poor, and you couldn't provide any. The fact is virtually all wealth today is created by the poor. The Rich generally don't do work. They just reap the benefits in a Capitalistic system that is designed to funnel the bulk of the profits to a very small minority. Anyone who excludes the working class while pretending the economy can sustain itself by the richest 1% "working" on their own, has a very Glenn Beckish understanding of the economy.

Perhaps they don't create jobs but in a sense it looks like they create wealth but not for themselves. Who is it I see shopping at Walmart?

Oh but Tarski, they're actually "rich" compared to people living in Madagascar, didn't ya know?

They look poor and they look like they are making someone wealthy.

Walmart is an evil corporation doing precisely what it is designed to do because it is a corporation whose main goal is to keep profits increasing while the owners have limited liability. The sweatshops it operates abroad for the sake of maximizing profits, are deplorable. They'll pay someone in India 75 cents to sew a Liz Claiborne sweater that they'll turn around and sell for $125.

They seem to be helping out also by actually working hard at Walmart for barely enough to shop at Walmart so the little money they do get goes right back up the shoot to Walmart CEOs.

What's worse, Walmart considers 28 hrs/week full time and they pay extremely low wages while overworking their employees. There is a record number of lawsuits against Walmart for refusing to pay employees time they've worked. They also encourage their employees to get on government assistance programs so they don't have to pay them a decent living wage. And even though Walmart is the largest employer in the country and one of the most profitable companies in the world, it is subsidized by the taxpayer.