I'm seriously worried about my Economic perspective

[degsme]

Well first off Hayek doesn't even actually have any specific policies. Instead he whines AGAINST policies just as Von Mises did. BUT that sort of "lack of any central management" of the economy is precisely how the US Economy was mostly managed for the first 50-75 years of the nation (by Lincoln's time that was changing). And we have pretty solid data on how effective the economy was, what the access to the exercise of liberty was, etc. etc. And basically it is dramatically inferior to what you see after that.

In fact one of the things that originally got Lincoln into politics in the first place was not slavery/abolition (though he quickly became active in that) rather it was that he was a strong advocate of government funding of infrastructure and other public works improvements so as to facilitate the escape from poverty of the vast majority of the population.

So even within the USA we have had Hayek's advocated policies tried - and they did not work as well as what we have done for the last 150+ years. And you can look at other economies like Russia after the fall of the USSR - where contract and property rights were enforced but little else. Or Somalia and various sub-Saharan nations. You have similar track record in various central American nations. etc.

so there is a long track record of "Austrian" economics being tried and simply underperforming Keynesian econ. yes central planning CAN take the road of totalitarianism - but where Hayek was so catastrophically wrong was in his assertion that it will ALWAYS do so and that 'competition ALWAYS' optimizes resource allocation. Nash Equilibrium in and of itself disproves this. So does the work in Behavioural Economics

Basically Hayek's "model" - that central planning is inexorably totalitarian - is simply proven wrong by the vast panoply of history.



As for the example - yes you said the US Tax Code Penalizes success. https://www.politicaljack.com/forums/showthread.php?46764-I-m-seriously-worried-about-my-Economic-perspective&p=626488#post626488 And that is provably wrong as I demonstrated.

As for the notion that the "incentive is reduced" that's been disproven by the fundamental economic concept of the Law of Diminishing Marginal Utility function. Basically above a certain threshold (about $70k in the USA) each additional $1 of takehome contributes PROGRESSIVELY LESS AND LESS perceived benefit. Progressive tax structures in fact specifically recognize this. There is also the Behavioural Econ work on competitive norming. IOW if both you and I pay the same marginal tax rate, then my incentive to earn more than you is NOT reduced. Just as with seeing who can run faster, it doesn't matter that the top runners are 30% faster than the average human - what makes a Hussein Bolt is the 0.5% MARGINAL IMPROVEMENT.

So again - the empirical data shows that YOUR PREDICTION that incentive is reduced - simply does not occur.


Computer models simply provide a fast way to calculate what a model predicts. So what it allows is more detailed and broader sets of predictions and the ability to validate them. And as with your "reduced incentives" - the things that Hayek and the Austrian School PREDICTS - similarly what Supply Side Economics PREDICTS - simply turns out to be refuted by the EMPIRICAL DATA. Whereas the things that modernized Keynesiian econ predicts... TRACKS EMPIRICAL DATA VERY CLOSELY.

That's the difference. Its not a question of "programmer desires" somehow invalidating the predictions. The prediictions are the prediictions... AND THEY FAIL

 

[trapdoor]

Well first off Hayek doesn't even actually have any specific policies. Instead he whines AGAINST policies just as Von Mises did.

Espousing a reduction in controls is itself a policy, Degs.

BUT that sort of "lack of any central management" of the economy is precisely how the US Economy was mostly managed for the first 50-75 years of the nation (by Lincoln's time that was changing). And we have pretty solid data on how effective the economy was, what the access to the exercise of liberty was, etc. etc. And basically it is dramatically inferior to what you see after that.

But it's not a valid comparison because the first 50-75 years of the United States was preindustrial. The economic growth that occurred from the end of the Civil War to the Great Depression wasn't a result of central planning, it was the result of improvement in industry. The stronger economy that resulted provided greater exercise of liberty etc. etc.

In fact one of the things that originally got Lincoln into politics in the first place was not slavery/abolition (though he quickly became active in that) rather it was that he was a strong advocate of government funding of infrastructure and other public works improvements so as to facilitate the escape from poverty of the vast majority of the population.

Well, it's unsurprising you'd support a view of Lincoln's history that favors federal handouts.

So even within the USA we have had Hayek's advocated policies tried - and they did not work as well as what we have done for the last 150+ years. And you can look at other economies like Russia after the fall of the USSR - where contract and property rights were enforced but little else. Or Somalia and various sub-Saharan nations. You have similar track record in various central American nations. etc.

And that's part of the reason you should be suspect of your viewpoint, as you were in the first entry in this thread. You compare economic policies of others to your favored one, only in either invalid comparisons (pre-Civil War U.S.), or dystopias such as post-USSR Russia and Somalia. That means you're failing to consider them in any realistic way, employed as a matter of policy in a country with a better set of political ideals and a sound rule of law. In such an environment, those policies haven't been tried, and yet you criticize them for failing.

Basically Hayek's "model" - that central planning is inexorably totalitarian - is simply proven wrong by the vast panoply of history.

I'd say it's proven right by the vast panoply of history. It describes all the pre-18th century monarchies, and the financial systems of the various pre-WWI dynasties, and the post WWI totalitarian states. All were totalitarian and all had either strong central planning or reduced economic rights (which amounts to the same thing).

As for the notion that the "incentive is reduced" that's been disproven by the fundamental economic concept of the Law of Diminishing Marginal Utility function. Basically above a certain threshold (about $70k in the USA) each additional $1 of takehome contributes PROGRESSIVELY LESS AND LESS perceived benefit.

I'm on that margin, Degs, and trust me, I'd like to have the ~$10,000 I gave the government last year back in my pocket. But nonetheless, if I were to get a promotion increasing my income by $10,000 next year (which is unlikely to happen thanks the president's hiring freeze on employees in my career field), I'd only get to take home about $8,000 of it. So instead of applying for every open job at that level, I apply only for those that are in convenient or dream locations. Otherwise, I'm disincentivized to make more.

Computer models simply provide a fast way to calculate what a model predicts.

Based on the modeller's view of the inputs. The accuracy of the model is predicated on an accurate pre-model evaluation of the real world. You put a lot of faith in those models, but they're still a product of human design. No matter how accurate their math, they are still a garbage-in, garbage-out program. If the modeller expects to find a given outcome, the model will reflect that.

 

[Woolleybugger]

Hayek and Keynes were great friends that had arguments over economics. Hayek never got his chance to use his ideas to run a major economy. Keynes did. As for Road to Serfdom, it was NOT an economics treatise, it was a political rant which Hayek himself admits. it is similar to Atlas Shrugged or even Das Kapital in that regard. Both were rants not based upon any economic data or science.

 

[Woolleybugger]

Hayek was writing about the economic and political situation in Eastern Europe in the 1930s and 40s. A unique period of time from which he had a front row seat. Saying you are against regulations is one thing, saying you are against all regulations is another thing. I am against some regulations, does that mean I support Hayek or Keynes? Not enough information is there? Trap you need to ask yourself why the world did not follow Hayek and then give credit where credit is due because the end result of ignoring his advice turned out pretty damn good...

 

[degsme]

It is a policy. And Hayek makes two predictions: Reducing controls to only property protection and anti-fraud will result in a more rapidly growing and non corrupt economy, And secondly that a regulated economy will NECESSARILY devolve to totalitarianism. The empirical data is that BOTH PREDICTIONS ARE WRONG. In the 70 years since is Road to Serfdom was published, NO new centrally regulated economy has gone down the road of totalitarianism without being pulled back. (the two pre-existing economies continued in totalitarianism but even one of them has moved towards more freedom)

So Hayek has basically been proven wrong on both his core predictions

That the USA was pre-industrial is irrelevant (nor is it really accurate even though the majority was agrarian). Capital investment was necessary for the trade and the manufacturing that was a strong backbone of the US economy. And arguably one of the reasons we had a North/South schism was precisely because New England states DID engage in some level of public works from fairly early on and that in turn expanded the economy at a much much faster rate than the South could.

And from 1890 onwards (and actually from before the Civil War onwards) government regulation of and intervention IN the economy accelerated those regions quite dramatically. That Keynes came along some 50 years later to quantitatively describe WHY this worked, doesn't change the history of it.

Nor does Hayek's economic description apply to Monarchies and similar economic structures. He and Von Mises were in fact arguing AGAINST elected governments engaging in public works and participation in the marketplace. NOT about monarchies. To pretend it is about monarchies is to misrepresent what Hayek claimed.

Nor are you disincentivized I a way that harms the economy. In fact from an economic perspective -- since your skill set and contribution level doesn't really change from one job to the next, you opting to work for less money not only increases net per-capita productivity, but it also frees up that job for someone else to take thereby decreasing unemployment. What you really are saying is that your LIFESTYLE is worth more than an additional $8k/yr. Which is precisely what the Law of Diminishing Marginal Utility of Income predicts. After all, if you did NOT have a job, and someone offered you $8k/yr for 2hrs work per day you would take it. IOW $8k is worth more to you if you are earning very little or nothing, than if you are earning significantly more than that.

So it is your level of earning and your lifestyle that "disincentivizes" you - not the 20% marginal tax rate.

As to modeling - again, Hayek makes certain predictions about capitalist economies. THEY HAVE FAILED TO COME TRUE. Hayek proposed a model of the economy. A model that HAS NOT WORKED because his predictions HAVE FAILED

 

[Woolleybugger]

I think the thing most folks don't realize about Hayek is that after Road to Serfdom, he kind of stopped being an economist and became a philosopher of sorts. He did not do much in the way of using data or mathematics to prove his ideas. Right wingers love Hayek because of his book on Communism (he called it socialism) and the rising Nazi powers but in reality, his best years were done once Keynes wrote his masterpiece on money in 35-36. I read somewhere that the Nobel Prize he got was kind of a fluke since he contributed very little to modern economic thought other than his political rants.

 

[degsme]

And Hayek made predictions in Road that simply have not held up.

 

[trapdoor]

It is a policy. And Hayek makes two predictions: Reducing controls to only property protection and anti-fraud will result in a more rapidly growing and non corrupt economy, And secondly that a regulated economy will NECESSARILY devolve to totalitarianism. The empirical data is that BOTH PREDICTIONS ARE WRONG. In the 70 years since is Road to Serfdom was published, NO new centrally regulated economy has gone down the road of totalitarianism without being pulled back. (the two pre-existing economies continued in totalitarianism but even one of them has moved towards more freedom)

When Hayek wrote the "Road to Serfdom" the centrally regulated economy of the Soviet Union had already gone to totalitarianism. This was followed by the same happening to the centrally controlled economies of every country that fell behind the Iron Curtain following WWII.

My assumption is that you'll say that Hayek was wrong, because these economies were "pulled back" from totalitarianism following the collapse of the Soviet system. But if you read Paul Kennedy's "The Rise and Fall of Great Powers" he predicted the collapse of the Soviet system, in part because its centrally-planned economy was closed, and his prediction was that closed economies were non-viable (the book was published in 1987).

So Hayek has basically been proven wrong on both his core predictions

Only if you ignore the history of the second half of the 20th century.

That the USA was pre-industrial is irrelevant (nor is it really accurate even though the majority was agrarian). Capital investment was necessary for the trade and the manufacturing that was a strong backbone of the US economy. And arguably one of the reasons we had a North/South schism was precisely because New England states DID engage in some level of public works from fairly early on and that in turn expanded the economy at a much much faster rate than the South could.

What complete nonsense. About the only advantage the North had over the South in any area except population was railroads. Those railroads were not public endeavors -- they were private, for profit, enterprises designed to bring in all the profit the market would bear. Comparing the American economy of 1850 with the same country's economy from say, 1910, and saying that Hayek's ideas were reflected in the slower economy of 1850 is making an invalid comparison.

And from 1890 onwards (and actually from before the Civil War onwards) government regulation of and intervention IN the economy accelerated those regions quite dramatically. That Keynes came along some 50 years later to quantitatively describe WHY this worked, doesn't change the history of it.

Provide an example of this stimulatory activity in the 1890s. The only one I can think of, the distribution of land to profiteers in the name of building the continental railroad, was an utter disaster financially, that caused a Wall Street panic.

Nor does Hayek's economic description apply to Monarchies and similar economic structures. He and Von Mises were in fact arguing AGAINST elected governments engaging in public works and participation in the marketplace. NOT about monarchies. To pretend it is about monarchies is to misrepresent what Hayek claimed.

Monarchies, fascist states and states run on the Soviet model all share the same trait of central control and central planning when it came to the economy. Among the various droits d'seignour is the right of "coinage." The king could declare a given amount of gold to be worth X, without reference to its weight and that weight's value compared to other commodities. Monarchies in financial trouble were tinkering with coinage throughout the 17th and 18th centuries, as a means of solving royal debts (it was a form of inflation). This was central planning every bit as much as one of Stalin's five or ten year plans, albeit that it appeared in another name. Hayek and Mises were opposed to the central planning and government expenditure, regardless of whether it came from a king, a dictator or an elected body.

Nor are you disincentivized I a way that harms the economy.

That doesn't matter, although it's wrong. If I'm disincentivized sufficiently that I don't seek other jobs that pay more, I have less money to spend. If I have less money to spend, I have less participation in the economy. Even if that were untrue -- taxation also sends a message and acts as a means of governmental communication as much as a means of revenue enhancement.

Higher tax on tobacco communicates: We want you to use less tobacoo.
Higher tax on alcohol communicates: We want you to use less alcohol.
Higher tax on being successful communicates what?

In fact from an economic perspective -- since your skill set and contribution level doesn't really change from one job to the next, you opting to work for less money not only increases net per-capita productivity, but it also frees up that job for someone else to take thereby decreasing unemployment.

Degs, if my skill set hadn't been improved my current job, and hence mean I would contribute more in another job, I wouldn't be eligible for the other job, would I?

So it is your level of earning and your lifestyle that "disincentivizes" you - not the 20% marginal tax rate.

The higher taxes make moving less to a higher paying job less attractive than it would otherwise be.

 

[trapdoor]

I should add that THIS is the kind of discussion I like, and find too seldom, here at Political Jack. Lately, I've provided fact and instead of having the fact I provided addressed, I've simply been talked through by others.

 

[Woolleybugger]

The problem with most of our discussions here and in the media is that it is almost impossible to defend a position on public policy without dragging your own bias into the debate. Acknowledging this is a key admission none of us really want to make when the discussion gets down to the nitty gritty. In all the various debates the three of us have had over the years, the end result is that both sides have desired outcomes which dominate our cherry picking of the facts and distort history in such a way as to support only our point of view. It is rare indeed that a debate starts with an objective review of pertinent facts that are undisputed that can form the foundation for the subjective conclusions we all end up trying to support. It is even more apparent to me than ever given our recent debates about Heller. The same can be said about Roe. I read an opinion piece by John Howard this week where he made a statement that sounds like heresy to an American. He said that Australia has no bill of rights and that this is the key to them making sound policy and laws. When you think about it, he is right. Did you know that no nation but ours has actually copied our constitution when forming a new government? There is something to be said about letting the people themselves in the times they live in rule themselves as they see fit. If something works, keep at it. If it does not work, change it. But if the possible options are not all on the table due to a constraint then a nation cannot really claim they have pursued every course can they?

 

[Woolleybugger]

Comparing different economies in different eras is difficult in the particular but worthwhile in the aggregate. The bottom line on our economy before say WW2 was that we were guided by Hamiltons Report on Manufactures for most of our first 150 years. You should read it sometime, it is quite a statement. Once the world was basically destroyed in WW2 but for our economy, the forces of capitalism moved from national to international dominance and exploitation on a scale never seen and thus all the previous economic theories had to be tested once again under new circumstances. It is true that unbridled capitalism did more to improve the lot of the common man in the 1800s than any other form of economy but it failed miserably to prevent abuses of power and monopoly by the winners. It is almost impossible to fathom just how rich the Robber Barons were compared to the everyday person. Anyone trying to manage a nation in those circumstances had to admit that if left alone a capitalist society would end up in revolution if left unchecked. Communism was the intellectuals fantasy solution but it failed miserably. What the modern world ended up doing was to create a capitalist economy with regulations, taxes and safety nets that smoothed outcomes just enough to keep faith in the system. The second that faith is gone, we have chaos which is exactly what almost happened in 2008. This is a goldilocks issue, there is no perfect balance. There is only a desire to have systems work for as many as possible just like an ant farm or a beehive does for itself. The world has 8 billion people. I cannot fathom a world where all of us are prosperous and do not want to accept a world where all of us are desperately poor. How to balance it all is the key question and as of today, no one has the right answers.

 

[trapdoor]

The problem with most of our discussions here and in the media is that it is almost impossible to defend a position on public policy without dragging your own bias into the debate. Acknowledging this is a key admission none of us really want to make when the discussion gets down to the nitty gritty. In all the various debates the three of us have had over the years, the end result is that both sides have desired outcomes which dominate our cherry picking of the facts and distort history in such a way as to support only our point of view. It is rare indeed that a debate starts with an objective review of pertinent facts that are undisputed that can form the foundation for the subjective conclusions we all end up trying to support. It is even more apparent to me than ever given our recent debates about Heller. The same can be said about Roe. I read an opinion piece by John Howard this week where he made a statement that sounds like heresy to an American. He said that Australia has no bill of rights and that this is the key to them making sound policy and laws. When you think about it, he is right. Did you know that no nation but ours has actually copied our constitution when forming a new government? There is something to be said about letting the people themselves in the times they live in rule themselves as they see fit. If something works, keep at it. If it does not work, change it. But if the possible options are not all on the table due to a constraint then a nation cannot really claim they have pursued every course can they?

Well, I think Ho Chi Minh copied some of our Constitution when forming the government of North Vietnam, but that's from memory and it could be in error.

There is something to be said about letting the people themselves in the times they live in rule themselves as they see fit. If something works, keep at it. If it does not work, change it.

There's the ability to do that built into our system, alongside a stability to keep government from becoming too invasive. At the end of the day, that is where most of the liberal/conservative divide takes place, IMHO. Liberals want the government to be empowered to "do good" and seem to miss the idea that a government with more power may not use it to do good. Conservatives want to limit government power, and seem to miss the idea that not everything the government does is bad.

I'd rather have a government limited by a Constitution and a Bill of Rights than one that lacks such limits.

 

[trapdoor]

Comparing different economies in different eras is difficult in the particular but worthwhile in the aggregate. The bottom line on our economy before say WW2 was that we were guided by Hamiltons Report on Manufactures for most of our first 150 years. You should read it sometime, it is quite a statement

.

I've read it.

Once the world was basically destroyed in WW2 but for our economy, the forces of capitalism moved from national to international dominance and exploitation on a scale never seen and thus all the previous economic theories had to be tested once again under new circumstances. It is true that unbridled capitalism did more to improve the lot of the common man in the 1800s than any other form of economy but it failed miserably to prevent abuses of power and monopoly by the winners

.

No economic system can provent such abuses of powers by "the winners." In anthropology, they speak of the "iron rule of oligarchy." What happens, usually, is that the oligarchs usurp the power of government either via corruption or by becoming a part of the government. In both cases, a more empowered government acts as no check on the oligarchs, who operate the empowered government so as to benefit themselves.

What the modern world ended up doing was to create a capitalist economy with regulations, taxes and safety nets that smoothed outcomes just enough to keep faith in the system. The second that faith is gone, we have chaos which is exactly what almost happened in 2008. This is a goldilocks issue, there is no perfect balance. There is only a desire to have systems work for as many as possible just like an ant farm or a beehive does for itself. The world has 8 billion people. I cannot fathom a world where all of us are prosperous and do not want to accept a world where all of us are desperately poor. How to balance it all is the key question and as of today, no one has the right answers.

I've heard so often from liberals criticizing neo-cons that America can't run the world that I must now accept it. So I'm not focusing on the world -- America has problems of its own. Those Keynesian models have broken down for most of Europe. For the one success story, Germany, we have three (England, France, Spain) experiencing moderate to severe difficulties. One, Italy, teetering on the brink of financial collapse, and one, Greece, that has actually experienced the collapse. Those welfare states could only exist in a world where there was a growing market, a reasonable amount of international stability, at least among first-world nations, and the post WWII coalition that respected individuals.

What has brought that to ruin has been the rise of the Pacific rim, specifically China, and the fact that the Asian cultures have never put great emphasis on individual righits. Our western manufactures cannot compete with slave labor in a culture that has no problem with slavery in fact, if not in name.

I don't know the solution to that problem, either, but I can't find the solution to lie in putting ever more taxation on the few of us who are still able to make money, in order to give their wealth to those who can't.

 

[Woolleybugger]

I cannot defend parts of the constitution that ended up creating insurmountable barriers to solving problems. The amendment process is one such barrier that no one really foresaw in 1790 when there were only 13 states. The electoral college is a travesty upon any democracy and the will of the people. Lifetime appointments to the courts is another one, it gives absolute power with no real checks and balances given the difficulty of impeachment and the entrenched political power of one side or the other in protecting their favored jurist. The BOR and it's vagueness is both a strength and a weakness so it will always be a source for political hanky panky in difficult decisions. The SCOTUS does not take up the easy cases, they dwell in the gray areas where the law is not clear and where the subjective interpretation of five people can control the lives of 320 million. Have you read anything by Sandy Levinson? You should check him out, he is on Balkinization a lot, you would enjoy that site.

 

[Woolleybugger]

We spend more than we take in. We take in less than any era in the last say, 75 years we have in terms of GNP due to our lumpy income distributions and low taxes. Tax rates at the top are not punitive at these rates. If only I could be so persecuted as to pay higher marginal rates before deductions on income over 400 grand. I can only hope to have such problems in the future. I don't know if you have ever had a big income event. I have more than once and it was a wonderful thing. My tax bill was immaterial to my attaining it and enjoying it.

 

[degsme]

Yes Trap - that was my point. That Hayek drew his predictions from looking at the USSR. And he was as wrong as Marx. Because the only economy that followed Hayek's predictions after he made them was the PRC. No other centrally managed economy did. What Marx and Hayek both got wrong, was the ability of DEMOCRATIC processes to actually EXPAND access to liberty through economic regulation without totalitarianism or socialism. In fact this is what one of his contemporary critics Wootton pointed out he got wrong. And that's a criticism that has not been able to be refuted.

Now if you are going to argue that Monarchies are similar to what the USSR was - you will find me in agreement. Russia has not change her form of government in about 500 years. Its been an autocratic oligarchy since about 1570. So Hayeks claims that Centrally planned DEMOCRACIES will invariably lead to totalitarianism applies neither to Monarchies nor the USSR.


Again, my point stands... NONE of Hayeks PREDICTIONS about both the necessity of a transition to totalitarianism, nor his predictions about the efficacy of unregulated markets CAME TRUE. NEITHER ONE. And that's not ignoring the latter part of the 20th century. Every one of the markets that went to laissez faire economies, began running the exact same sort of short cycling Boom/Bust cycles the USA ran prior to beginning to intervene in market crashes.

And all but one major economy that managed its economy with significant central fiscal, monetary and economic policy - INCREASED access to liberty rather than decreasing it. So again, Hayek's prediction that NECESSARILY such markets devolve to totalitarianism is simply wrong.

Now as to your tax analysis, it is fundamentally so far wrong that I'm not sure where to being. Taxing a product RELATIVE TO OTHER PRODUCTS makes you change your value balance BETWEEN these products. However taxing your BENEFITS at a higher rate only appears as a disincentive when the 90% marginal tax rate is reached. That's simply empirical data and behavioral econ. Its not about 'sending messages' it is about the behavioural aspects of how individuals make economic choices.

As you pointed out yourself - you are not disincentivized by the tax. You are instead disincented by the Law of Diminishing Marginal Utility function applied to income. Its not that your skill set has not improved. Rather it is that you CHOSE to deliver that improved skill set (QED improved productivity - good for the economy) at a lower price point because YOUR Quality of Life (Diminished Marginal Utlity of Income) is more important than the cash. That reduces the competition someone else faces. It also reduces the pool of applicants for the employer and thus causes the employer to raise prices to reach an equilibrium (higher income for the person who does take the less convenient job) thereby improving GDP ON TWO VECTORS.

I notice you ignored the difference between $8k increase on earning nothing or earning $8k vs the same $8k increase at your current salary rate. That's DIMINISHED MARGINAL UTILITY OF INCOME - not a taxation disincentive. In fact I suspect the "lifestyle premium" of an additional hour of commuting per day is closer to $8,000 all by itself rather than the $2k you pay in taxes. Here's why: you work roughly 48 weeks/yr x 5 =240 days. So that's an extra 240 hours you would spend "working" (commuting is psychologically part of working). Figuring you see your time value at around $30-$40/hr, that's between $7200-$9600 in added salary you would need just for that hour. Then since it is a more responsible and prestigious job, you want an additional salary bump associated with that. So net net, you should not be looking at longer distance jobs that are anything less than a $15k improvement over your current salary.

And I'll lay odds that if you were offered $15k extra you would take it regardless of the tax rate.



So clearly the DRIVING factor is the MARGINAL UTILITY of the income vs. your lifestyle... NOT THE TAXATION RATE.

 

[degsme]

Anthropology is hardly a science. There simply isn't a coherent enough record of history.

And you are wrong about the Keynesian models breaking down in Europe. That simply is factually FALSE. What the Eurozone faces is the same problem that the USA faced under the Articles of Confederation: namely a disconnect between the organization of the monetary and fiscal policies, and the organization of the political policies. In fact the Supply Side theory is what has caused the UKs current double dip problems. The major problems Germany and France face are the same problems that states like MA, NY and VA faced in being saddled wth the majority of the Revolutionary War debt incurred by ALL the states. It caused the Shay rebellion as well as other unrest.

Yes France also has a growth rate problem - which has less to do with Keynesian policies and more to do with the Napoleonic Code and the ossified regulatory framework (something the northern EU nations do not suffer from as much since their legal codes typically go back to shortly before WWI.)

So your analysis of the EU's fiscal issues is basically ignoring most of the relevant data - simply because its inconvenient for your theory. Nor is the issue one of Asian cultures not emphasizing individual rights. You make the same mistake that many others make lumping China in with other nations. Yes Japan is very much about "The group" but Korea is about hierarchy and what the individual DESERVES as part of their station in the hierarchy. And china is very much about individuals making the best they can of it and ignoring the government as much as possible. Three VERY distinct cultures. Add in India with its Caste system (which differs from Korea's hierarchy in that caste is about your spiritual ranking rather than your societal ranking) and you have 4 cultures. And you are being more than a touch racist equating them. I've done business with all 4 of them. And your notion of the cultural approach is simply about as wrong as it gets.

Your analysis is based out of either an ignorance or dismissal of the facts.

 

[Woolleybugger]

One thing I learned from my years in International Business was that each nation was indeed a very different place and within each nation there were many voices. As for China, I still think of Patttens book when he left office..East v West. I recommend you pick it up. Trap makes the error most folks make about economics. He equates Keynes with all government deficits when in fact, most of the modern deficits were supply side phenomenon as you accurately described. The problem with Europe is that you cannot have a common currency without being a single nation.

 

[Woolleybugger]

I liken the diminishing attractiveness of money this way. Say you have a billion dollars and in order to make a million dollars a year, you have to work like a slave every day and give up everything else to do it. There is only one type of person that would continue working for that extra million bucks and that person is not driven by money. Most of us would sit on that billion dollars and live the life of Riley on the interest alone. Real money, inherited money that is, does not work as hard as new money folks. I know plenty of heirs out here in Santa Barbara. None of them work anywhere near as hard as the person who made the original fortune. They prefer to live a good life doing whatever they please. The ones that keep working do it for the love of the task not the money.

 

[Woolleybugger]

Give me one chance to say something nice about Ronnie. I hated his guts from his days as Governor and vowed to leave the country if he got elected POTUS. I did leave for a year in 81-82. Came back because I was almost dead in Dar es Salaam and had enough of Africa....