Government spending is not a zero-sum game
Libertarians Conservatives often argue that the economy government spending is a zero-sum game, and that government spending it necessarily decreases everyone's standard of living.
I strongly disagree; the economy is most definitely NOT a zero sum game. The big variable is productivity. This number drops quite a bit when lots of people are out of ( Read more... )
I strongly disagree; the economy is most definitely NOT a zero sum game. The big variable is productivity. This number drops quite a bit when lots of people are out of ( Read more... )
1) First of all, to assume that those WHO HAVE are those who MAKE is not accurate. Paris Hilton is quite wealthy, but I don't think anyone would argue that she's more productive and a wiser investor of money.
2) Trickle down economics is not a magic bullet. We've had eight years of low taxes under Bush. The wealthiest part of our population saw their assets grow dramatically, but the middle class did not. One of the presuppositions of Trickle Down is that the money we're not taxing is going to be invested back into our economy creating work, but in a global economy, the wealthy are just as likely to invest that money half-way across the globe in some third-world, but rapidly growing economy. Good for them, good for that world's economy, not so good for us - at least not for a long, long time. Furthermore, the idea that the wealthy are going to go around creating all of these brilliant investments... where exactly are they going to find the time and incentive to make all of these decisions? Most of them have full time jobs as it is. The extent of most of their financial decision-making is whom to give the money to and hope they invest it well. (And many of these "geniuses" picked Bernie Madoff.) But lets look at some of the giant companies around us - Google, Kinko's, Apple, Microsoft, etc. These were created by people who had NOTHING. The core cause of their success wasn't some guy with money who said, hey, let's make Google. It was a kid who was young, and hungry, and focused, who made it happen.
3) A recent nobel winning economist did research in India. He watched the effect micro loans, or very small loans to families who wanted to make investments in things like vegetable gardens, etc. He came back years later, and found that those small loans had had a much greater effect than originally anticipated. These micro-loans had helped them to get them ABOVE subsistence level, and because they now had (for the first time in their lives) discretionary funds, they were able to take this additional capital, and continue to invest it. Over the long term, there were huge changes in their financial situation. Some might argue (with validity) that this is precisely trickle down economics at work. The problem becomes that (as we've said) how many wealthy people (or even banks) have time to make this type of small investment? It becomes a question of how best to deliver this type of aid? For the wealthy, maybe a couple of "drops" may trickle down in the form of investment loans, but for every one deserving person who's found, there are probably hundreds who are not. At the same time, redistributing this aid in the form of taxes and tax relief to the poor (at the expense of the rich) means that for every deserving person who is now able to break the "subsistence barrier" and is able to start the journey into economic mobility, there are probably a hundred who who aren't deserving, and who will not make that investment.
The question becomes, then, what balance of tax distribution will best serve to create the right mixture of "fertilizer," or broad based investment over a large area, and also having targeted investments on promising individuals?
I'm running out of time here, so I'll just sum up by saying that the core principles I'm talking about here are made clearer when you look at our current and last president. Which world do you want to live in:
1) The one where the son of an ex-president who basically flunked his way through life becomes president predominantly because of his father's political connections?
2) The one where the kid who had virtually nothing, and who had to have a scholarship and loan to go to college became president through hard work and resolve?
Just some thoughts. Looking forward to other people's thoughts and criticisms.
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I don't think you meant me; I wrote the base story, and I basically agree with you. I think you're referring to the anonymous guy who responded to me, and to whom you're responding.
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1) Paris Hilton is the exception - not the rule. Aside, do you really know how her wealth trickles down, or do you just love to hate a pop-culture celebrity like her. The VAST MAJORITY of wealthy people do create a trickle down effect.
2) I love your comment about the founders of Google being hungry and focused. They weren't entitled, they were young and hungry, and they worked very hard to make Google happen. If they were fat dumb and happy, we would be paying for their food stamps. Tell me that the trickle down effect doesn't work with Google - how many jobs have they created, thousands or tens or thousands?
3) Micro investments - another excellent example. BTW, who makes micro investments? NOT the government - wealthy private individuals.
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