jrrt@hogpd.UUCP (R.MITCHELL) (11/08/84)
In view of the recent allegation that Reaganomics is now considered
a joke by anyone in the know, I offer the following excerpt from a
11/6/84 WALL STREET JOURNAL editorial. Draw your own conclusions --
I make no claims either way so flames at me will be ignored.
****************************************************************
ALL SUPPLY-SIDERS NOW
From an educational standpoint, it's too bad the Reagan recovery
foreclosed any real economic debate in this campaign. For the intellectual
joust would have revealed a truly remarkable shift in thinking since Arthur
Laffer first drew his curve on a restaurant napkin to illustrate that at
some point higher tax rates actually collect less revenue.
...In the backwaters of the Charles River, to be sure, you can find
those who dismiss the Reagan recovery as a "Keynesian" response to
deficits, as if it would have worked as well to have boosted spending
instead of cutting taxes. Yet according to the OECD, deficits and
government spending in Europe have been running even higher than in the
U.S. The recovery did not take place there; it took place here,
following the first net tax cuts in 1983.
A careful reader can find supply-side economics, and even the Laffer
Curve, spreading through the popular press. "With tax rates reduced, the
supply-siders say, the rich will move away from tax shelters and channel
more money into conventional investments," writes Time magazine. It notes
that, following the reduction in the top marginal rate to 50% from 70%,
"the percentage of income tax collected from taxpayers earning $50,000
or more rose from 32.9% to 35.4%. At the same time, the share paid
by those making $20,000 or less fell from 17.1% to 15.5%." Time concluded
that, true to supply-side claims, "the share of taxes paid by the richest
Americans is on the rise."
"Ever since George Bush labeled Ronald Reagan's proposals for massive
tax cuts 'voodoo economics,' Reaganomics has been widely classified as
...a lunatic fringe" writes Newsweek. "Now, economists of many stripes
are factoring in a new variable: the key supply-side tenet that a steadily
growing economy coupled with spending restraint may be able to erase much
of the budget deficit without tax increases. In short, the supply-siders
may be right." It adds that "the strongest argument supply-siders have
is the economy's performance. Defying conventional wisdom, it has achieved
sustained expansion" without renewed inflation. And "budget deficits have
come down."
...the [post-election] debate will not be over whether there is a Laffer
Curve, but over its precise shape. Even while many of the debaters
continue to ridicule Arthur Laffer, they will be arguing over which tax
rate will maximize revenues. A look over the shoulder at Mr. Mondale will
show how far the idea has come, how widely the reality of supply-side
incentives is now accepted. Politically, it is Republicans and Democrats
who have learned this lesson who are likely to do well in today's returns.
And intellectually, it will be the same people who set the economic agenda
for the future.
****************************************************************
Excerpted without permission. The usual disclaimers apply.
Rob Mitchell {allegra,ihnp4}!hogpd!jrrt
Money's not my life, just my living. - Gay Johnsonorb@whuxl.UUCP (SEVENER) (11/09/84)
Response to the Wall Street Journal Editorial on Reaganomics: ************************************************************************* > that, following the reduction in the top marginal rate to 50% from 70%, > "the percentage of income tax collected from taxpayers earning $50,000 > or more rose from 32.9% to 35.4%. At the same time, the share paid > by those making $20,000 or less fell from 17.1% to 15.5%." Time concluded > that, true to supply-side claims, "the share of taxes paid by the richest > Americans is on the rise." This is an impressive statistic. However I also find it more impressive that for the first time in 40 years there has been a major shift in the income distribution from the middle class and poor to the rich. Social scientists had considered the distribution of income something fairly stable no matter what party was in power. Reaganomics has proven that supposition wrong. When the majority of people making under $20,000 are facing a decline in purchasing power or in their share of income relative to the wealthy then they are going to pay less income taxes. > It adds that "the strongest argument supply-siders have > is the economy's performance. Defying conventional wisdom, it has achieved > sustained expansion" without renewed inflation. And "budget deficits have > come down." Where is the evidence for this? Budget deficits have come down? When we have the largest deficits in history? Yes, budget deficits have come down from previous estimates that they would be even higher than they now are due to economic expansion. But we are still facing enormous deficits greater than any in our history. Even with the most optimistic projections of economic growth with no downturn (extremely unlikely) those deficits will not disappear. In fact increases in interest payments were larger than all the cuts in social spending over Reagan's first four years. > ...the [post-election] debate will not be over whether there is a Laffer > Curve, but over its precise shape. Even while many of the debaters > continue to ridicule Arthur Laffer, they will be arguing over which tax > rate will maximize revenues. While I don't believe the Laffer Curve has any validity, I do believe that the current structure of tax deductions skews investments in very bad ways. Instead of looking at tax deductions as some sort of free sop to special interest groups we should recognize they are actually a form of tax expenditure--a form of tax expenditure that heavily favors the rich since they are only ones with the extra money to be able to afford many of the things which gain tax deductions. Tim Sevener whuxl!orb
simard@loral.UUCP (Ray Simard) (11/16/84)
In article <333@whuxl.UUCP> orb@whuxl.UUCP (SEVENER) writes: >>(Wall St. Journal quote showing increased share of tax revenues >> coming from wealthier taxpayers and lowered share from lower-income) >This is an impressive statistic. However I also find it more impressive >that for the first time in 40 years there has been a major shift in the >income distribution from the middle class and poor to the rich. >... When the majority of people making under $20,000 are facing a decline >in purchasing power or in their share of income relative to the wealthy >then they are going to pay less income taxes. The whole point of the discussion is that the belief that the Reagan tax cuts coddle the rich while savaging the poor is just so much crock. The WSJ figures prove that. Liberal have been saying that the rich were getting richer from the cuts while the poor were paying more. The WSJ figures categorically refute that position. The article above seems to concede that while trying (rather inconvincingly) to explain it away. The claim that income distribution has shifted from the poor and middle classes to the rich is a bit shaky. The middle income groups encompassing the overwhelming majority of citizens has benefitted largely in lower taxes, lower inflation preserving their savings and investments, and lower actual interest rates (and indications are that real interest rates are about to decline). The elderly on fixed incomes have also benefitted hugely by the drop in inflation. And programs for the poor, as I and others have said here before, are as high as they have ever been. Why does it bother some people when people who are "rich" continue to prosper? When they do, they employ, they invest, they consume, and they pay taxes, all of which benefit everyone, including the poor. It is provably false to continue to assert that the prosperity of middle and upper income groups subtracts from the poor, in fact, quite the opposite is true. > ...budget deficits have come down >from previous estimates that they would be even higher than they now are >due to economic expansion. But we are still facing enormous deficits greater >than any in our history. ...increases in interest payments >were larger than all the >cuts in social spending over Reagan's first four years. All true. The question remains, what approach works? Back to basic economic truth: the cost to the citizenry of government is the total it SPENDS (plus some), not what it taxes or borrows. Consequently, raising taxes to reduce deficits accomplishes only one thing: shifts the intolerable burden of government from the credit market to the taxpayer directly. Whether taxes are high or deficits are high, the result is the same - pain and cost for the middle American. The point is, reducuing spending is much more likely under pressure from lowered revenues than by waiting for politicians to see the light. > ..., we should recognize (tax deductions) are actually a form of tax >expenditure--a form of tax expenditure that heavily favors the rich since >they are only ones with the extra money to be able to afford many of the >things which gain tax deductions. >Tim Sevener whuxl!orb Some (not all) are just that. And why are they there? Because intolerably high marginal tax rates drove many wealthy people to persuade the government to grant them relief. So what do you have? Tax rates unfair to the rich, coupled with an array of dubious deductions that unfairly benefit them. Hard to say who wins that tug-of-war, but you can bet the middle and lower income groups are the losers. Funny how conservatives have tried to get tax rates lowered to get the rich to pay more and shelter less - and the actual figures which the WSJ printed which testify to the efficacy of that approach (and which prompted the article to which I am responding) prove that it's working exactly that way. -- [ I am not a stranger, but a friend you haven't met yet ] Ray Simard Loral Instrumentation, San Diego {ucbvax, ittvax!dcdwest}!sdcsvax!sdcc6!loral!simard ...Though we may sometimes disagree, You are still a friend to me!
mmt@dciem.UUCP (Martin Taylor) (11/18/84)
================
... Back to
basic economic truth: the cost to the citizenry of government is the
total it SPENDS (plus some), not what it taxes or borrows.
...
================
No it isn't. When the Government spends money, it transfers money from
one group of people to another. There is no NET cost to society, since
each dollar transferred can be used to buy something, whether a civil
servant buys it or whether the worker who built an aircraft buys it.
In the case of a deficit, poor taxpayers transfer wealth to the rich
who loaned the money in the first place, when they pay interest. But
originally, the rich transferred the money to the poor when they loaned
it.
Are forced loans good for those who accept them? Sometimes yes,
sometimes no, but it can hardly be good when most of the interest is
paid by accepting yet more loans ... ask anyone who has used a loan-shark
how that works! Reaganomics has been super-Keynsian in forcing the
depression to stop by incurring extraordinary deficits, and super-damaging
by drawing much of the loaned money from other countries through
unnatural real interest rates. There will indeed be a cost to US
society, and perhaps a greater cost to the rest of the world, but it
isn't due simply to how much the Government SPENDS.
--
Martin Taylor
{allegra,linus,ihnp4,floyd,ubc-vision}!utzoo!dciem!mmt
{uw-beaver,qucis,watmath}!utcsrgv!dciem!mmtorb@whuxl.UUCP (SEVENER) (11/19/84)
> >However I also find it more impressive > >that for the first time in 40 years there has been a major shift in the > >income distribution from the middle class and poor to the rich. > >... When the majority of people making under $20,000 are facing a decline > >in purchasing power or in their share of income relative to the wealthy > >then they are going to pay less income taxes. > > The whole point of the discussion is that the belief that the > Reagan tax cuts coddle the rich while savaging the poor is just so much > crock. The WSJ figures prove that. Liberal have been saying that > the rich were getting richer from the cuts while the poor were paying more. > The WSJ figures categorically refute that position. The article above seems > to concede that while trying (rather inconvincingly) to explain it away. > > The claim that income distribution has shifted from the poor and > middle classes to the rich is a bit shaky. The middle income groups > encompassing the overwhelming majority of citizens has benefitted largely > in lower taxes, lower inflation preserving their savings and investments, > and lower actual interest rates (and indications are that real interest > rates are about to decline). The elderly on fixed incomes have also > benefitted hugely by the drop in inflation. And programs for the poor, > as I and others have said here before, are as high as they have ever been. > Ray Simard If the rich increased their share of income to 90% I am sure they would wind up paying more taxes. The questions are: 1)is it fair for some people to get such a large share of national income in the first place? 2)does that mean that because they are getting more income than they got before that the rich should pay proportionately less taxes? These are the questions involved in this issue. In fact 15 million more Americans have slipped into poverty in the past 4 years. But the middle class has also declined by approximately 15% in the past 6 years. The net result has been an unprecedented shift in the income distribution from the poor and middle class to the rich. This shift is irregardless of inflation, interest rates or anything else. All those factors are held constant in estimates of income distribution. That the rich have benefitted from economic trends in the past few years does not justify their paying less of a burden in taxes. The rich received a major boon with the reduction of the marginal tax rate from 75% to 50%. The middle class received no such whopping cut in their tax rate. This cut in the wealthy's marginal tax rate was not matched by any reduction in the loopholes which already allow them to get away with paying less than the middleclass in actual taxes. As I pointed out previously from 5 millionaries paying absolutely no taxes we have 171 millionaires paying absolutely no taxes. I do not think that is fair. Do you Mr. Simard? tim sevener whuxl!orb
mwm@ea.UUCP (11/24/84)
/***** ea:net.politics / dciem!mmt / 8:22 pm Nov 20, 1984 */
================
... Back to
basic economic truth: the cost to the citizenry of government is the
total it SPENDS (plus some), not what it taxes or borrows.
...
================
No it isn't. When the Government spends money, it transfers money from
one group of people to another. There is no NET cost to society, since
each dollar transferred can be used to buy something, whether a civil
servant buys it or whether the worker who built an aircraft buys it.
Martin Taylor
{allegra,linus,ihnp4,floyd,ubc-vision}!utzoo!dciem!mmt
{uw-beaver,qucis,watmath}!utcsrgv!dciem!mmt
/* ---------- */
Sorry, but there *is* a net cost when the government spends money. Much
(all?) of that money goes from people who produce (it just about has to) to
people who *don't* produce, and results in a disincentive to produce *at
both ends*.
Sweden is a nice place to look for an example of this at one end - people
are refusing raises in favor of longer vacations, etc. After all, you can
go from a salary of ~5K to ~25K with no noticeable increase in income, so
why not take more time off?
<mikegjk@talcott.UUCP (Greg J Kuperberg) (11/26/84)
> ================ > ... Back to > basic economic truth: the cost to the citizenry of government is the > total it SPENDS (plus some), not what it taxes or borrows. > ... > ================ > No it isn't. When the Government spends money, it transfers money from > one group of people to another. There is no NET cost to society, since > ... > There will indeed be a cost to US > society, and perhaps a greater cost to the rest of the world, but it > isn't due simply to how much the Government SPENDS. > -- > > Martin Taylor > {allegra,linus,ihnp4,floyd,ubc-vision}!utzoo!dciem!mmt > {uw-beaver,qucis,watmath}!utcsrgv!dciem!mmt The cost of government spending is two-fold: 1) Income tax is a tax on labor. It is in fact an exhorbitant tax on labor. This is one reason that labor is so expensive in the U.S. Such a huge tax on labor is very bad for business. Ask an auto company. 2) Most government money is given to government employees. Thus the U.S. government is a very competetive employer, diverting much labor away from the economy, and making the remaining labor yet more expensive.
mmt@dciem.UUCP (Martin Taylor) (11/27/84)
> Sorry, but there *is* a net cost when the government spends money. Much > (all?) of that money goes from people who produce (it just about has to) to > people who *don't* produce, and results in a disincentive to produce *at > both ends*. > > Sweden is a nice place to look for an example of this at one end - people > are refusing raises in favor of longer vacations, etc. After all, you can > go from a salary of ~5K to ~25K with no noticeable increase in income, so > why not take more time off? > > <mike That's something of a non-sequitur, isn't it? I don't see how you can go from the incentive-nulling effects of a 95+% tax rate to the notion that Government spending is a net cost on the economy. The two ideas are totally unrelated. Do you really believe that only *producers* contribute to the economy? Why does the private sector then include so many people in advertising, management, entertainment (very highly paid, too), restaurants, etc. etc. Why do you pick on the civil service as the only anti-productive group of paid workers? I think that the reason has to be religious, because it sure isn't based in logic. -- Martin Taylor {allegra,linus,ihnp4,floyd,ubc-vision}!utzoo!dciem!mmt {uw-beaver,qucis,watmath}!utcsrgv!dciem!mmt
stewart@ihldt.UUCP (R. J. Stewart) (11/27/84)
>> ... Back to >> basic economic truth: the cost to the citizenry of government is the >> total it SPENDS (plus some), not what it taxes or borrows. > No it isn't. When the Government spends money, it transfers money from > one group of people to another. There is no NET cost to society, since > each dollar transferred can be used to buy something, whether a civil > servant buys it or whether the worker who built an aircraft buys it. Both of these miss the real cost of government. The government is a load on the economy the same way a casino is a load on gambling: some gamblers win and some lose, but the house always gets its cut. As a simple example, let's imagine that we're on an island with only a baker, a fisherman, and a freeloader. Normally the baker makes 2 loaves of bread per day and the fisherman catches 2 fish per day, and they trade loaves and fish so that each has 1 loaf and 1 fish. One day, the fisherman decides that it's wrong to let the freeloader go hungry, and that he's going to force the baker to help feed the freeloader. So now, everyone on the island gets 2/3 loaves of bread, the same total amount as before. But since the fisherman is spending his time distributing the bread, the economy as a whole is poorer. If the cost of administering the system is low, the load on the economy is low. It's easy to see, however, that in our real-life economy, the system is large and inefficient, so there is much being consumed by overhead that would otherwise go into production. Bob Stewart ihldt!stewart
orb@whuxl.UUCP (SEVENER) (11/28/84)
> Greg Kuperberg writes: > The cost of government spending is two-fold: > > 1) Income tax is a tax on labor. It is in fact an exhorbitant tax on > labor. This is one reason that labor is so expensive in the U.S. Such a > huge tax on labor is very bad for business. Ask an auto company. > > 2) Most government money is given to government employees. Thus the U.S. > government is a very competetive employer, diverting much labor away from > the economy, and making the remaining labor yet more expensive. Rebuttal 1)other Western nations pay a greater percentage of their income in taxes. How come they do well? Also: a just income tax taxes income from capital as much as income from labor. While it is unfortunately true that our own tax system favors the wealthy, they do pay some income taxes on their capital gains and interest income. Rebuttal 2)This great diversion of labor would be a surprise to the 7.5% of the American population unemployed. If government is employing everyone in sight, why do we have any unemployment? What would happen to unemployment if all government workers were laid off tomorrow? Do you suppose it would follow the dreamworld scenario of the free enterprise advocates who imagine that all miracles can be achieved by the "invisible hand"? Or would it follow the reality of our present economy in which the top 500 corporations control 2/3's of the economy and steadily control more year by year? Such a situation of oligpolistic control hardly seems to match the assumptions of free market efficiency. Why? How did this come about? Was it only "government interference" or a natural cycle in which the free market leads to its own demise with economies of scale, bureacratization, and so forth? tim sevener whuxl!orb
nrh@inmet.UUCP (11/29/84)
>***** inmet:net.politics / dciem!watmath / 12:34 pm Nov 22, 1984 >================ >... Back to >basic economic truth: the cost to the citizenry of government is the >total it SPENDS (plus some), not what it taxes or borrows. >... >================ >No it isn't. When the Government spends money, it transfers money from >one group of people to another. There is no NET cost to society, since >each dollar transferred can be used to buy something, whether a civil >servant buys it or whether the worker who built an aircraft buys it. Think about it for a moment -- if there were no net cost to society by any transfer, we could (at no net cost to society) divert ALL the money in everybody's bank account to an attempt to build a giant cabbage patch doll the size of the Dakotas. Or better yet, we could spend it all on trying to drill a hole through to China. Of course, all other industry would stop -- there'd be no capital to support it, and we'd all starve. The "opportunity cost" of diverting money from private hands to government hands is the value of what would have been done with that money in the private hands. The net cost to society of such a transfer is thus more accurately described in terms of (what benefits WOULD have accrued) - (what benefits DID accrue). MEASURING what benefits would have accrued is tough, but it's pretty obvious in extreme cases (such as taking everybody's money in order to build a hole to China) that the benefits that accrue (the hole to China) are worth less than the benefits of what would have happened (farms produce, industry hums, people work at things other than digging). >In the case of a deficit, poor taxpayers transfer wealth to the rich >who loaned the money in the first place, when they pay interest. But >originally, the rich transferred the money to the poor when they loaned >it. I think you may be a little confused here. An lot of the poor own US savings bonds. They also participate in this boondoggle. (In a particularly cruel way, given that a lot of the bonds they owe were, during the Carter years, paying interest below inflation). > Are forced loans good for those who accept them? Sometimes yes, >sometimes no, but it can hardly be good when most of the interest is >paid by accepting yet more loans ... ask anyone who has used a loan-shark >how that works! Better yet, ask the ex-king of France what happened when the interest on the national debt began to approach the national income. Hint: "Bastille Day". >Reaganomics has been super-Keynsian in forcing the >depression to stop by incurring extraordinary deficits, That's a remarkable assertion, given that Keynes did not predict (and his followers could not explain) high inflation during a recession, and that Ronnie's major GOOD accomplishment has been to lower inflation. >and super-damaging >by drawing much of the loaned money from other countries through >unnatural real interest rates. There will indeed be a cost to US >society, and perhaps a greater cost to the rest of the world, but it >isn't due simply to how much the Government SPENDS. People assert that it is what the government spends, not any balance between what it spends and what it earns, that is the problem. I think that they are incorrect in economic-only terms (clearly, the deficit is due to a difference between income and spending) but correct in the following broader sense: If we were to increase government income, government would then increase its spending by a similar amount, so that the deficit would grow no more slowly.
gjk@talcott.UUCP (Greg J Kuperberg) (11/30/84)
Tim Sevener <369@whuxl.UUCP> writes: > Rebuttal 1)other Western nations pay a greater percentage of their > income in taxes. How come they do well? > Also: a just income tax taxes income from capital as much as > income from labor. While it is unfortunately true that our > own tax system favors the wealthy, they do pay some income > taxes on their capital gains and interest income. I get confused when I start think about economics in terms of "just" and "unjust." What if the "just" thing to do wrecks the economy? Putting that aside, most of the other Western nations are in about the same economic state as the U.S. If you're thinking of unemployment, West Germany's, for example, is pretty high. The two major exceptions in terms of unemployment are Japan and Sweden. Japan's government is proportionately smaller than ours, while in Sweden, the government has put in laws to keep employment up (I think). > Rebuttal 2)This great diversion of labor would be a surprise to the > 7.5% of the American population unemployed. If government > is employing everyone in sight, why do we have any unemployment? There are three factors that increase the cost of labor: 1) The "labor tax" which we call income tax. 2) Unions 3) Government employment The first two increase the unemployment rate, while the third decreases it. I think that the first two factors outweigh the third. --- Greg Kuperberg harvard!talcott!gjk "Eureka!" -Archimedes
marks@Cascade.ARPA (12/01/84)
> There are three factors that increase the cost of labor: > > 1) The "labor tax" which we call income tax. > 2) Unions > 3) Government employment > > The first two increase the unemployment rate, while the third decreases it. > I think that the first two factors outweigh the third. > --- > Greg Kuperberg > harvard!talcott!gjk It's not clear that (3) above decreases unemployment, either. Government employees are hired and paid using taxpayers' dollars, dollars that might conceivably have gone to hire someone from the private sector. Money is taken from potential employers, run through the bureaucratic meat-grinder, and then is used to hire government employees with automatic cost-of-living allowances and generous pensions. The amount of employment created in the public sector is probably offset by the amount of unemployment created in the private sector. ---------- Stuart Marks, Computer Systems Lab, Stanford University {ucbvax,decvax}!decwrl!glacier!marks, marks@su-cascade.ARPA "You can't fight in here; this is the War Room!" -- President Muffley
mwm@ea.UUCP (12/02/84)
/***** ea:net.politics / dciem!mmt / 11:38 am Nov 27, 1984 */ > That's something of a non-sequitur, isn't it? I don't see how you can > go from the incentive-nulling effects of a 95+% tax rate to the notion > that Government spending is a net cost on the economy. The two ideas > are totally unrelated. Oops, you're right. It isn't a cost. However, the government spending in question (transfer payments) causes the incentive nulling, which means that there is less produce in the economy later. > Do you really believe that only *producers* contribute to the economy? > Why does the private sector then include so many people in advertising, > management, entertainment (very highly paid, too), restaurants, etc. etc. Lets see, if somebody doesn't produce, then they can't be adding wealth to the economy, so yeah, I do believe that only producers contribute to the economy. Entertainment *is* wealth, so entertainers are productive. Similarly for restaurants. I can't explain advertisers :-). > Why do you pick on the civil service as the only anti-productive group > of paid workers? I think that the reason has to be religious, because > it sure isn't based in logic. I was picking on civil servants because that was the topic under discussion. Any large bureaucracy has such parasites. Civil servants are particularly vile because they are paid money that was taken from others at gunpoint, and generally can't be fired. Besides which, there are a *lot* of them. <mike
nrh@inmet.UUCP (12/03/84)
>***** inmet:net.politics / whuxl!orb / 3:31 pm Nov 30, 1984 >> Greg Kuperberg writes: >> The cost of government spending is two-fold: >> >> 1) Income tax is a tax on labor. It is in fact an exhorbitant tax on >> labor. This is one reason that labor is so expensive in the U.S. Such a >> huge tax on labor is very bad for business. Ask an auto company. >> >> 2) Most government money is given to government employees. Thus the U.S. >> government is a very competetive employer, diverting much labor away from >> the economy, and making the remaining labor yet more expensive. > >Rebuttal 1)other Western nations pay a greater percentage of their > income in taxes. How come they do well? That's being rather mealymouthed, isn't it? They could do well because they're prosperous or efficient enough to make mistakes and do well anyhow. The comparison Kuperberg's logic suggests is between two otherwise identical nations, one of which has, and the other of which does not have an income tax. Not possible to make, this comparison, as there's a shortage of synthetic nations available for lab testing. The best one can do is compare (say) two nations that started off as one nation (North & South Korea, for example) and compare their per-capita income or some such. I did this comparison about three months ago, and the socialist nations all lost. This doesn't prove the point (socialism implies centralized control of industry as well as high taxes) but is more suggestive than comparisons between relatively unrelated countries. > Also: a just income tax taxes income from capital as much as > income from labor. While it is unfortunately true that our > own tax system favors the wealthy, they do pay some income > taxes on their capital gains and interest income. > So? I invite you to find an example anywhere in history of a "just" income tax. Be sure and publish it here so that we know such a thing is possible. >Rebuttal 2)This great diversion of labor would be a surprise to the > 7.5% of the American population unemployed. If government > is employing everyone in sight, why do we have any unemployment? (Gag!) Look, Tim: you do yourself no credit here. He didn't argue that government employed EVERYBODY. Tsk. > What would happen to unemployment if all government workers > were laid off tomorrow? Do you suppose it would follow the > dreamworld scenario of the free enterprise advocates who imagine > that all miracles can be achieved by the "invisible hand"? I don't know of anyone who maintains this. The "invisible hand" is starkly limited to accomplishing outcomes that result from private self-interest. I do know LOTS of people who believe that government can screw things up badly, and that things would get better if government stopped doing that. As for what would happen if all government workers were laid off tomorrow, I suspect a sort of roiling chaos, punctuated by rioting and destruction, possibly by a foreign invasion or threat by the Russkis. On the other hand, if this were done in a more orderly fashion, the transition would be greatly to our benefit. Of course, with no minimum wage, we'd see unemployment drop and productivity rise. With no "voluntary import quotas", we'd begin to see really fuel-efficient cheap cars come out of Detroit (or else!), and with all those IRS auditors running around unemployed, we'd have a plentiful supply of people to work in the Salt mines. (Actually, their skills would probably get them places in private collection agencies and accountancy firms). We'd also see free immigration, again, and a renewal of chances for the *REALLY* poor to make it to the top (or don't poor people count unless they've made it past our immigration quotas?). > Or would it follow the reality of our present economy in which > the top 500 corporations control 2/3's of the economy and > steadily control more year by year? Source please (hopefully including what you mean by "control"). Or a retraction. Even if they could, so what? For all I know, the "Fortune 1,000,000,000" would control a free economy, but it wouldn't bother me, much. Just being part of a listing in "Fortune" doesn't give them the ability to fix prices, or some common intent. > Such a situation of oligpolistic control hardly seems to match > the assumptions of free market efficiency. Why? Remember the "voluntary" quotas on the Japanese? Farm price supports? A host of other governmental interferences in the market for the benefit of the big players already there? > How did this come about? Was it only "government interference" > or a natural cycle in which the free market leads to its own > demise with economies of scale, bureacratization, and so forth? Suppose YOU answer that question. In a free market, "bureacratization" not outweighed by economies of scale means destruction by being nibbled to death by smaller, less bureaucratic firms. Economies of scale exist, but there's some evidence that the scale is normally limited. If you really think that the free market destroys itself this way, I invite you to come up with a list of monopolies that a) were stable b) charged unduly high prices (higher than startup firms). c) (most important) were regulated, shielded, controlled, backed, or formed by government. I'm still waiting for Wayne Christopher's response to this one -- he asserted that these monopolies would spring up a lot if not prevented. And now a quote for you, Tim. I know it sums up my feelings about what I've read of your articles, and I suspect some others on the net feel the same way. The quote is from Walter E. Williams, and occurs in "The State Against Blacks", Pg. 49: These labor market myths have maintained their popularity down through the ages primarily because they have served particular interest groups and because many other people are decent and have legitimate concern for their fellowman. However, truly compassionate policy requireds dispassionate analysis. Therefore the debunking of these and other labor market myths is an important ingredient toward that end. Oh yes. The chapter is entitled "Minimum Wage, Maximum Folly".