Lower taxes leading to job growth: Myth?
I found this interesting article having to do with gas taxes today. It is basically a bunch of cars pictured with their associated gas taxes. Check it out.
Now, according to the powers-that-be that tells us of the infinite wisdom of the private sector and the awfulness of the public sector, they insist that lower taxes sparks business.
The Middle East is one of the most socialist places in the world; the oil they sell to the world is shared in many places. In the more fundamentalist states, it is hoarded among the royalty; in other places (like the UAE), almost everything is shared (as far as I understand it).
Venezuela pays the least amount for gasoline anywhere. And in Europe, according to the 'common-sense' economic paradigm, travel should be practically impossible with places boasting 4-6$/gal taxes on gasoline. Yet it isn't. Instead, they have a vast array of energy-efficient technologies, fantastic train infrastructure, a greenhouse gas marketplace, and lower per-capita energy use.
And I don't see any massive economic opportunities in Venezuela, even though their taxes are low. Same goes for Saudi Arabia. In the UAE, that [sarcasm]socialist hell-hole with hardly any taxes [/sarcasm](the Republican credo, really: take but don't give), they've had an economic boom and then a bust. Because the world is paying their taxes for them in the form of oil sales, they can get away with this paradigm. But the US doesn't have that luxury.
I find this quote extremely interesting:
"A gallon of gas in Venezuela is said to be cheaper than water, thanks to a longtime subsidy that drains billions of dollars from public coffers that could otherwise go to infrastructure and transportation to benefit the country's poorest citizens."
I hear arguments all the time from Republicans as to why we're subsidising big industry and the rich (Bush tax cuts... Reagan tax cuts) that these tax cuts spur growth. But it isn't that simple, is it. Because there is also an opportunity cost associated with those tax cuts--that money could be put into areas that directly, rather than indirectly, spur growth. Giving money to the poor increases a dollar's velocity at a higher multiplier than the rich, in general, because they have pent-up demand. After a certain point, it is hard to spend money (Anyone see Brewster's Millions?). But when you're broke, up to about 30-40,000/year can easily be spent 100%. That pipe can get fixed, that house can be insulated, your always-breaking car can be replaced or fixed, that broken window can be repaired, your kids can finally get new shoes. Fixing the roads in LA (as I recently heard a complaint about) will solve a lot of problems and produce jobs.
These are problems the rich don't have.
What I'm saying is that the Republican panacea is small government and low taxes. But the one-to-one evidence does not support that. People work whether they have incentive to or not. China runs a socialistic/capitalist hybrid. Newly-capitalistic nations aren't always doing all that great because monopolies, monopsonies, and market distortions develop. There is no panacea. Economics is a social science, and that means that government, culture, society, mobiilty, access to water or natural resources, environment, context, timing, ephochs, and zeitgeist all are variables in the equation. Taxes are too, but I really don't think they're driving the equation. Because if my taxes go up tomorrow, I'm not going to quit my job and move overseas... I'm going to do that if I have to fucking deal with these for-profit healthcare corporations and if Palin becomes president.
We all have our triggers. I think economists need to realise that they're simplifying the equations to the point of being laughable.