I was under the impression your dollar was losing value largely because of debt. Debt that has been created because productivity growth has outstripped wage growth.

Because, large corporations have rallied for low wage conditions to meet their own need to make even more short term profits to boost the salaries of the CEO's in control.

If you look at change in real GDP per capita the numbers between 1950 and 1959 the average rate is 2.39% only slightly above average rate between 1900 and 2000 of 2.12%. (In fact the average from 1951 - 1960 and 1952 - 1961 are 1.74 and 1.17% respectively). This suggests that population growth may play a role in the high growth numbers from this period. If I recall correctly this time period also had a push towards science and engineering due to cold war mentality.

The Bush tax cuts were ill advised because it shifts that tax burden to future generations in a time of deficit spending.

What base year(s) are you using for your calculations?

The tax cuts also increase distribution of wealth from middle class to the elite class, which, with the debt, is why US fiscal responsibility is being questioned as reflected by our currency in a service economy driven by consumer spending.

goober somewhere on the economic thread is a chart with data I posted regards who has taxed "the rich" at higher rates in the last 20 years........you might want to take a look at it...

__________________
No individual can plan his own existence in their view.

So the state planners must arrogate to themselves the right to manipulate any sector of the economic system if the good of “society” or the “general welfare” is paramount.

Ipso- if the rights of the individual get in the way, the rights of the individual must be sublimated.

The Road to Serfdom
FA Hayek (interpretation)


Mortgage Backed Security survivor

Anyone cheap like me doesn't have the search feature and it's the past 60-years that really show the US tax picture with deficit spending periods. In 1987 the Reagan Administration had already reduced taxes for the upper income levels.

The site I used.

Sorry I had intended to include the link and simply forgot.

Unless you believe that the results of Ricardian equivalence apply to American (to a reasonable extent) then it is transferring money from future generations to those who are currently well off. If I recall correctly tax breaks reached more then just the top earners. Whether it is a transfer from right to poor depends primarily on the tax system in place when the debt is paid back.

Agreed, but not much of the populace has income taxed at capital gain rate and the no gain on residence sale tax (the crumb to the middle class) served its purpose to help fuel the housing boom. I do feel cheap dollars to service past debt is one of the many rationalizations normally used by economists preferring to ignore the time value of money regarding tax system changes.

On a current basis, the statement of lower taxes means more investment is factual, but the tax savings aren't being invested in the US.

What are the long term gains? You assume that consumer spending will increase but it is not even clear that total wages would increase. Even if they did corporate revenue would fall causing corporate taxes and investment income to fall. Any spending related to returns on investment would fall. This is without considering the dynamic issues relating to investment.

Social capital, as Simon characterizes it can be taken to be a combination of institutions and infrastructure. This does not preclude the tax system and government spending. Arbitrarily increasing or decreasing the tax rate and spending levels may increases or decrease social capital. The role that health plays in the situation is somewhat complicated.

I believe that other factors play a significant role in the difference in life span. In particular Europeans generally eat a substantial amount less food. I would imagine that europeans exercise more. Other factors such as stress or levels of pollution would also play some role. Even if poor health care was the primary issue, making the health system public may not be the ideal solution to the problem. If it is the poor that generally drive this low statistic then policies that make health care accessible to them are the primary concern.

Take food for example. Most everybody who supports public health care believes that food should be available to everyone. Food is essential for life yet the provision of it is private and few object. Food readily available at an affordable price and when people cannot afford it it is provided. The same should be the focus of health care policy. Policy should be designed so that people have access to health care at a reasonable price. The distinction between private and public is inconsequential except for the benefits and costs associated with it.

The question of whether a higher tax rate is appropriate relies heavily on the costs and benefits of taxing at a high rate. Taxing at a high rate will have a number of effects it will reduce the benefits of decisions to take risks and invest in education, it will cause effort devoted to making money to fall, and it may send the high wage earner to another country.

First I have some issue with the tendency to look at CEO salaries. Even looking purely at equality this does not give a good indication of the situation. When you factor in the fact that high CEO salaries may be productivity enhancing (incentive contracts) looking at CEO wages is a bad idea.

There is a graph a that I saw a while ago that looked at the wages of different portions of the working population over time. The real income of the bottom group of workers has not grown over time. The middle group grew at a positive rate. The top income group has seen the most substantial growth in income. This strikes me as the more troubling situation. Not because the top group is growing the fastest but because a low income worker is not better off then a low income worker 20 years ago in spite of substantial growth over that time period.

I don't believe that the tax an transfer methods are the best way to improve the standard of living of this group. Resources have to be devoted to giving these people the tools to succeed when they get out into the real world. In particular education and support institutions need to be improved. Even within the current taxation setup resources can be found to deal with these problems. Solving these issues would be more beneficial then making people more equal for a short period of time through transfers.

IMO if everyone had the same amout of education and the tools you speak of the resulting economic conditions may well be the same as they are now.

1. Resourcefulness, opportunity drive and good luck play the major roll in success.

2. However; The right schools,right connections and a good inheritance can trump the above attributes (Why for example do you think large corporations are moving production to low income countries?)

Those in group 2 would be less inclined to contribute to solving the problems you outline and more interested in maintaining the status Quo.

Taxation to support the basic needs of our society levied on the basis of ability to pay seems the ONLY solution in sight.

Stating existing resources are adequate to improve standard of living for the lower income tier is a sign of badly skewed resource allocation, indicating incompetent government management of available resources.

I don't think there's any argument regarding that fact. Given the US spoils system of government I don't foresee any future changes in resource allocation benefiting the lower tier, which IMO has already widened the standard of living between upper and lower income tiers to a point of no return from using conventional tools to manage available resources. The wide disparity in income distribution points to an established, uneducated, non-supported lower tier where the perpetual lower standard of living will not be remedied by tax reform alone.

Adjusting taxation still doesn't offer a solution to the problem of incompetent, corrupt government or reposition an acceptable number of the expanding lower income tier to improve their standard of living.

I disagree that the situation would be much the same as it is now. While the institutional framework in place plays a significant role in economic outcomes, the choices that people make also greatly affect outcomes. By giving everybody access to the environment necessary to develop, many of the problems that are inherited from parents can be addressed. Part of good policy would be to reduce behaviors that lead to undesirable outcomes.

On the other hand I would say that when real choice exists some degree of inequality is desirable. Certain jobs are undesirable. They may require harder work, require longer hours, be physically damaging or be unappealing for other reasons. A CEO would be an example of a position which is generally undesirable beyond the massive paycheck and other perks. Heavy labour, trucking and mining are examples that generate average wages. The amount of education a job requires and the desire to put effort in are also factors that ought to affect wages. To the extent that people make choices that affect these, wage differentials are not issues.

Much of the problem that supposedly exists with outsourcing is manufactured. A changing business environment and technology have always lead to the displacement of workers. Outsourcing is just a variation of the same theme low communication and transportation costs are driving the changes. If outsourcing had not lowered costs then other technology would have likely done a similar thing. Much of the problems with outsourcing is also due to the government's inability to see the obvious implications of trade liberalization. Many of the problems could be dealt with by anticipating and responding to the trends.

Those in group 2 would be much more inclined to solve the problems through productive means rather then resorting to transfers. Institutional changes, especially those shown to be beneficial would be much easier to maintain over the long term. Tax rates are changed almost arbitrarily over time depending on the political party in power. If the taxes are raised now it will only be so long before someone reverses the process.

The tax and transfer method is also unpopular with the vast majority of Americans. A stance of providing people the opportunity to better their situation is easier to sell politically.

I am comfortable making such a statement. The amount of money spent on defense is ridiculous. The money saved through using a little bit of diplomacy would could be better spent on almost everything.

I would be just as inclined to blame the problem on the American voter. Both the voter and the system play a role in the outcome.