walton@ametek.UUCP (09/29/86)
Date: Mon, 8 Sep 86 03:01:53 EDT
From: "Keith F. Lynch" <cit-vax!MC.LCS.MIT.EDU!KFL@MX.LCS.MIT.EDU>
From: Steve Walton <ametek!walton@csvax.caltech.edu>
If excessive government spending is the problem, how do the
authors explain the fact that the OECD has just announced that
the Japanese government now spends a larger fraction of Japan's
G.N.P. than American governments (local, state, and Federal)
does of the U.S. G.N.P.?
What's to explain? The reviewer is clearly confusing
productivity GROWTH with productivity itself. The US is still far
more productive than Japan.
It will not be in less than 10 years if current trends continue.
Jorgenson shows that the effective American corporate tax rates
were far higher in the 1950's and 1960's, when productivity was
growing at a rate in excess of 3 percent, than they are now,
when productivity is growing at less than 1 percent per year.
1) The growth rates make it clear that productivity is much higher
now than in the 1950s and 1960s.
2) INDIVIDUAL tax rates have gone way UP since then.
Productivity is much higher in Europe and Japan than it was in those
countries 20 or 30 years ago as well. It grew despite tax rates which
have always been far higher than those in the US.
3) Many individuals and corporations choose to invest in government
bonds rather than in stocks and corporate bonds, thanks to the
guaranteed high rate of return and tax exemption. Government
borrowing is driving out private borrowing, to the great
detriment of capital accumulation. Capital is necessary for
productivity.
Agreed. Beyond "adopt a libertarian system," however, I have heard no
good suggestions from you on how to reduce the national debt. See
below.
To take another example, Thurow shows that during the 6 years
from 1979 to 1985, blue-collar worker productivity ... had an
average productivity INCREASE of 3 percent per year.
Not because they were working harder or longer hours, but because
of increased capitalization.
Keith, the attitude implicit in this statement is, "Owners of
companies take all of the risks by capitalizing business, therefore
they should receive all of the benefits if their business succeeds."
Doesn't a worker also take a risk when he takes a job with a company
which is not guaranteed success? And shouldn't he receive some of the
share of the rewards if it IS successful?
Overall business productivity fell largely because of the
addition of white collar middle managers, who are totally
non-productive.
They are? Then why do businesses hire them?
Good question. Probably because they aren't unionized :-).
However, I think he makes his central point eloquently:
government intervention in the market is not, in and of itself,
bad, and it is certainly not evil.
Even if he were to prove that government interference was a net
benefit, which he certainly has not, it would still be BAD simply
because it is immoral to steal.
Oh, dear. As I have said before, taxation to support the government
of a country in which you freely choose to live cannot possibly be
equated with theft, any more than the fact that I have yet to vote for
a winning President is equivalent to disenfranchising me. Your
burglary analogy is specious.
Not that I am unwilling to debate the point on purely practical
grounds. The facts are all on my side there too.
Oh? Then please pray explain why we are about to be passed in
productivity by Japan, a country which (1) had no functioning economy
in 1945, while ours was quite healthy (2) has a government sector
which is, and has been for some time, a larger fraction of their
economy than ours (3) has no natural resources to speak of, and (4)
has Government regulations on business and intervention in the market
on a level which mainstream American thought would find intolerable.
The national debt: Right now, the Federal budget, in very round
numbers, is roughly: $300 billion for DoD, $350 billion for Social
Security, $150 billion for interest on the pre-existing national debt,
and $150 billion for everything else. The deficit is nearly $250
billion. Now, Social Security does not actually contribute to the debt
level, since the basic retirement fund is balanced within itself. (I
agree that Social Security should be done away with, but that's not
the issue.) In other words, the federal budget would not be balanced
even if EVERYTHING the government does except defense and paying back
the current indebtedness was eliminated. Libertarians seem to believe
that defense would be much cheaper under their system, but I have seen
no plan for adequate defense from the Soviet armed forces which would
cost significantly less than what we are spending now. "Withdraw all
American forces from overseas" is in the official Libertarian party
platform, and is foolhardy in the extreme.
Do you have a plan for payback of the current Government debt in
the event that we do adopt a Libertarian system?
Steve
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