Arthur Laffer predicts double dip recession in 2011

[Phoenix]

I realize I am coming in on the tail end of this one but I read it the other day and then got busy. So...

I never said it was. I was merely pointing out that via military spending was get quite a large amount of civilian related jobs. Contrary to the asinine beliefs of Conservative and Apdst who have repetively argued that government cannot create wealth or jobs.

Lockheed Martin stands as proof they are wrong.

To state that the government can create jobs because they pay lots to military contractors is a very simplified position. It omits the fact that the money spent would be used for other purposes if it were not spent by the government. Using defense spending as an example, if we decided that next year we would not spend money on defense (and imagining that we had a zero bottom line federal budget :lol and gave the money back to the taxpayers, it would be about $5000 per tax payer ($425 a month) These people would do something with the money that would create jobs and it would be minus the expensive of government bureaucracy. And it would be something useful to them specifically (Not to say that military spending isn't useful to everyone but telescopes for Chicago or levees for New Orleans aren't)

But neither is necessarily the market. Look at the millions of dollars wasted on stupid **** like Chia pets. What ideologues fail to recognize is that it is who is in charge. Intelligent consumers would drive a market that would be far more efficient then average government, but a market full of idiots would not utilize resources better then government lead by highly intelligent, highly practical people.

I laughed hysterically when I read this. A government lead by highly intelligent, highly practical people??? :lol::lol::lol::lol: Now that's funny.

 

[Phoenix]

On the NIH I have to admit that I didn't know they did actual research vs funding people that do. If they research a drug and then sell it to a drug company for less than the cost of research (and failed research) doesn't that just amount to another instance of corporate welfare? The people cover the loses while corporations reap the profits?

 

[imagep]

On the NIH I have to admit that I didn't know they did actual research vs funding people that do. If they research a drug and then sell it to a drug company for less than the cost of research (and failed research) doesn't that just amount to another instance of corporate welfare? The people cover the loses while corporations reap the profits?

I have the same concern, but maybe it doesn't have to work like that. If a private company spends a fortune developing a drug, then they most certainly have the right to price the product high, and they most certainly have a right to be the only company offering the drug - which is what makes the cost of new drugs so expensive.

But what if the rights to use the drug were given to all US drug manufactures so that there is not the current monopoly on manufacturing a new drug. Would the competitive element keep drug costs far below what they are now? And would the cost of governement developing the drug be offset by the savings to the public and by even more directly by the gov not having to pay high prices for medicade/medicare/VA/SCHIP patients? I don't know, but possibly this is something worth looking into.

Or maybe the gov could fund the research and sell the rights to manufacture it to multiple companies, dividing the cost between multiple companies instead of just one?

 

[Phoenix]

I have the same concern, but maybe it doesn't have to work like that. If a private company spends a fortune developing a drug, then they most certainly have the right to price the product high, and they most certainly have a right to be the only company offering the drug - which is what makes the cost of new drugs so expensive.

But what if the rights to use the drug were given to all US drug manufactures so that there is not the current monopoly on manufacturing a new drug. Would the competitive element keep drug costs far below what they are now? And would the cost of governement developing the drug be offset by the savings to the public and by even more directly by the gov not having to pay high prices for medicade/medicare/VA/SCHIP patients? I don't know, but possibly this is something worth looking into.

Or maybe the gov could fund the research and sell the rights to manufacture it to multiple companies, dividing the cost between multiple companies instead of just one?

It seems to me that if the people paid for the discovery they should retain the rights to it which would mean not issuing a patent. It would be open and available to everyone.

 

[Lord Tammerlain]

I realize I am coming in on the tail end of this one but I read it the other day and then got busy. So...


To state that the government can create jobs because they pay lots to military contractors is a very simplified position. It omits the fact that the money spent would be used for other purposes if it were not spent by the government. Using defense spending as an example, if we decided that next year we would not spend money on defense (and imagining that we had a zero bottom line federal budget :lol and gave the money back to the taxpayers, it would be about $5000 per tax payer ($425 a month) These people would do something with the money that would create jobs and it would be minus the expensive of government bureaucracy. And it would be something useful to them specifically (Not to say that military spending isn't useful to everyone but telescopes for Chicago or levees for New Orleans aren't)



I laughed hysterically when I read this. A government lead by highly intelligent, highly practical people??? :lol::lol::lol::lol: Now that's funny.

The point being people can destroy wealth, so can governments. People and private industry can create wealth so can governments


A person can waste money by digging a ditch then filling it back in just as a government can. Or they both can fill the ditch with water and make a canal for the transportation of goods. The idea that governments can not create wealth is an idiotic idea that has far too much traction in the world (especially the US)

A toll bridge created and operated by private industry represents wealth, the same bridge created and operated by the government also represents wealth

 

[Phoenix]

The point being people can destroy wealth, so can governments. People and private industry can create wealth so can governments


A person can waste money by digging a ditch then filling it back in just as a government can. Or they both can fill the ditch with water and make a canal for the transportation of goods. The idea that governments can not create wealth is an idiotic idea that has far too much traction in the world (especially the US)

It's a popular idea because it's a sound theory. In order for the government to spend the money to "create wealth" the way you define it, they must first take that money out of the economy, then use it on some purpose. Government has no money of it's own. It uses mine and your money instead of us using it. So no matter how the money is used by the government how can you end up with a net gain in wealth from it?

A toll bridge created and operated by private industry represents wealth, the same bridge created and operated by the government also represents wealth

I will grant you a little credence here. The post office is a fairly good example of this. It operates independent of government subsidies. (Mostly) If government would structure their programs where the users of the programs paid for them fully, your point would be valid. That rarely happens.
More often the difference in the toll bridge scenario is that the private person puts his money out to build the bridge, and then charges an amount to cover the expense of building it and the daily operating costs plus some profit.
The government bridge gets built with taxpayer money and then the government charges enough to cover operating expenses (if that)
So no, wealth is not generated this way.

 

[justabubba]

It's a popular idea because it's a sound theory. In order for the government to spend the money to "create wealth" the way you define it, they must first take that money out of the economy, then use it on some purpose. Government has no money of it's own. It uses mine and your money instead of us using it. So no matter how the money is used by the government how can you end up with a net gain in wealth from it?


I will grant you a little credence here. The post office is a fairly good example of this. It operates independent of government subsidies. (Mostly) If government would structure their programs where the users of the programs paid for them fully, your point would be valid. That rarely happens.
More often the difference in the toll bridge scenario is that the private person puts his money out to build the bridge, and then charges an amount to cover the expense of building it and the daily operating costs plus some profit.
The government bridge gets built with taxpayer money and then the government charges enough to cover operating expenses (if that)
So no, wealth is not generated this way.

i don't see it as you do
if the toll bridge eventually paid for itself and was not expected to subsidize other governmental operations then once it covered its own construction and operational costs plus a sinking fund for any subsequent maintenance expenses, the government would withdraw the toll boths and eliminate the fee. at that point, the only ongoing, uncovered cost is the cost to collect the tolls. eliminate the tolls and thereby eliminate the expense of collecting them

 

[Lord Tammerlain]

It's a popular idea because it's a sound theory. In order for the government to spend the money to "create wealth" the way you define it, they must first take that money out of the economy, then use it on some purpose. Government has no money of it's own. It uses mine and your money instead of us using it. So no matter how the money is used by the government how can you end up with a net gain in wealth from it?


I will grant you a little credence here. The post office is a fairly good example of this. It operates independent of government subsidies. (Mostly) If government would structure their programs where the users of the programs paid for them fully, your point would be valid. That rarely happens.
More often the difference in the toll bridge scenario is that the private person puts his money out to build the bridge, and then charges an amount to cover the expense of building it and the daily operating costs plus some profit.
The government bridge gets built with taxpayer money and then the government charges enough to cover operating expenses (if that)
So no, wealth is not generated this way.

Where the money comes from is not important, for wealth to be created, it matters what was done with it

A hole in the ground that is dug by private money then refilled with the dirt that was dug from it did not create any wealth, nor would have wealth been created if a government did the same thing

You create a bridge, a bridge that is economically usefull, the bridge represents wealth, whether private industry built it and operates it or the government did so. As examples look at all the public toll roads and bridges that have been leased to various investment banks in the US over the last few years. The roads and bridges were built years ago by the government. They were not worthless before they were leased to the various investors, only to become worth something when they were leased. They were/are wealth/assets before and still are untill they are no longer usefull (ie to old and unsafe)

 

[imagep]

In order for the government to spend the money to "create wealth" the way you define it, they must first take that money out of the economy, then use it on some purpose.

Just because the money was taxed away from the citizens doesn't mean that the money is taken out of the economy. The government spends every dollar that it recieves from taxes (and then some). Our economy doesn't care whether the money is coming from me or from you or from the government, as long as there are financial transactions taking place which result in products and services being created.

It uses mine and your money instead of us using it. So no matter how the money is used by the government how can you end up with a net gain in wealth from it?

Could it be that it doesn't matter what the source of the money is? A toll bridge is toll brige whether the government just printed up the money or gathered it from taxes - or whether I built it or you built it or the government built it. All that matters is that what needs to be built gets built.

 

[Phoenix]

Where the money comes from is not important, for wealth to be created, it matters what was done with it

A hole in the ground that is dug by private money then refilled with the dirt that was dug from it did not create any wealth, nor would have wealth been created if a government did the same thing

You create a bridge, a bridge that is economically usefull, the bridge represents wealth, whether private industry built it and operates it or the government did so. As examples look at all the public toll roads and bridges that have been leased to various investment banks in the US over the last few years. The roads and bridges were built years ago by the government. They were not worthless before they were leased to the various investors, only to become worth something when they were leased. They were/are wealth/assets before and still are untill they are no longer usefull (ie to old and unsafe)

Wealth = Profits
Government doesn't profit from it's endeavors. That is in a general and old school sense the reason we ask government to do certain things.
Leasing roads to companies is not a profitable endeaver, it is in fact a scheme to borrow money and duping people into not knowing it.
The government "leases" a road (that is paid for already) to a private company that in turn is going to charge the very people that paid for the road to be built to drive on it.
The government gets 3.8 billion upfront to spend on whatever it wants and the people get to pay that money back with interest over 75 years or what via tolls paid to the private company.

 

[Phoenix]

Just because the money was taxed away from the citizens doesn't mean that the money is taken out of the economy. The government spends every dollar that it recieves from taxes (and then some). Our economy doesn't care whether the money is coming from me or from you or from the government, as long as there are financial transactions taking place which result in products and services being created.

Out of the econmy was an incorrect statement, but take it from someone is correct. However the products and services must create profit in order to create wealth. The government lacks in this area. So taking money from profitable endeavors to use on non profitable ones (government programs) is a loser for the overall economy.

Could it be that it doesn't matter what the source of the money is? A toll bridge is toll brige whether the government just printed up the money or gathered it from taxes - or whether I built it or you built it or the government built it. All that matters is that what needs to be built gets built.

This sounds like you are pointing out that some things are necessary. That is true. Few complain about the military spending because it's a neccessary program to maintain over freedom. That is completely different than creating wealth.

 

[Lord Tammerlain]

Wealth = Profits
Government doesn't profit from it's endeavors. That is in a general and old school sense the reason we ask government to do certain things.
Leasing roads to companies is not a profitable endeaver, it is in fact a scheme to borrow money and duping people into not knowing it.
The government "leases" a road (that is paid for already) to a private company that in turn is going to charge the very people that paid for the road to be built to drive on it.
The government gets 3.8 billion upfront to spend on whatever it wants and the people get to pay that money back with interest over 75 years or what via tolls paid to the private company.

Wealth does not equal profits

It generally equals potential profits, but it does not have to equal profits. If you have 100 tons of gold hidden in your basement that you do not intend to sell ever you still have that gold as a form of wealth, but no profit from it

A bridge that is economically usefull is wealth no matter who owns or operates it


The Hoover dam is the perfect example of the government creating wealth. Not only in the form of income for the government created from the dam but from spin off economic activity from it. The tourism to the lake, to the water supplied for irrigation, and to Las Vegas. Without the Hoover Dam a large amount of wealth would not have been created in the US south west

 

[Phoenix]

Wealth does not equal profits

Wealth must come from profits. That is the surplus of resources (or cash) after operating expenses (or living expenses) Otherwise you are either broke or in debt.

It generally equals potential profits, but it does not have to equal profits. If you have 100 tons of gold hidden in your basement that you do not intend to sell ever you still have that gold as a form of wealth, but no profit from it

In this case you HAVE wealth. Where did it come from? You profitted greatly from some endeavor.

The Hoover dam is the perfect example of the government creating wealth. Not only in the form of income for the government created from the dam but from spin off economic activity from it. The tourism to the lake, to the water supplied for irrigation, and to Las Vegas. Without the Hoover Dam a large amount of wealth would not have been created in the US south west

I like how this has gone.
1st the military creates wealth via defense contractors. No ....
Then Toll roads....No.....
Now we get around to one of the few government programs that actually does create wealth! It was built by the government and then paid for by the people that use it. Now it generates a PROFIT. That profit represents wealth that has been created.
However programs where the people that use it are the only ones that pay for it are few and far between. Several instances of success do not represent the government's blanket ability to create wealth.

 

[imagep]

Wealth must come from profits. That is the surplus of resources (or cash) after operating expenses (or living expenses) Otherwise you are either broke or in debt.


In this case you HAVE wealth. Where did it come from? You profitted greatly from some endeavor.

Wealth can be acquired by a variety of methods, including inheritance, theft, or just simply finding it. Just because someone is wealthY, does not necessarily mean that they have been productive or own anything that creates profits. I do agree though that wealth can be created though.

I like how this has gone.
1st the military creates wealth via defense contractors. No ....
Then Toll roads....No.....
Now we get around to one of the few government programs that actually does create wealth! It was built by the government and then paid for by the people that use it. Now it generates a PROFIT. That profit represents wealth that has been created. However programs where the people that use it are the only ones that pay for it are few and far between. Several instances of success do not represent the government's blanket ability to create wealth.

Phoenix, I have to agree with Lord on this also. The creation of wealth and profits are two different things. Profit is just a method of distributing wealth, sometimes without actually creating wealth.

If anyone builds a highway, that is obviously creation of wealth because highways are valuable, functional, and provide utility to those who use them. It doesn't matter if it is privately financed or publicly financed, or who built it. It is useful and thus it is of value. The highway is also part of our infrastructure - meaning that is not only wealth in the sense that is has value to the owner, it's existence and utility leads to the creation of wealth for others.

You said "products and services must create profit in order to create wealth". Public infrastructure and services also create profit - we just might not be able to easily quantify it in terms of $$$. We profit from our military, from our roads, from police and fire protection. It does not matter if those things are provided privately or publicly, they are still of value, are part of the wealth which we have access to, and they all have a cost. The value received by the taxpayer for any public infrastructure or service is essentially the taxpayer's "profit". So yes, government spending can create profit exactly like private spending can.

At one time, money only existed in the form of items that could be bartered, such as gold, silver, and copper coins, and money had intrinsic value in itself. But these days the value of money is not in it's physical form (which is frequently just "vapor" in like in an account). Modern money is generally not very nutritious, you can't live in it, you can't power your car or clean your house with it - at least until it is exchanged for goods and services. Modern money is not truly wealth, it's just a representation of wealth and a store of value used to make transactions with.

Profit is something totally different than wealth or the creation of wealth. Profit is the process of acquiring additional wealth - in the form of a transfer of wealth, not necessarily in the form of creation of wealth. If I scam you out of a million bucks by selling you a 10¢ pencil for a million dollars, I just made nearly a million dollars in profit, but I did not necessarily create any significant wealth because all that I did was to convince you to give me ownership of your money - any value or wealth created by the sale of the 10¢ pencil was negligible.

It always "gets under my skin" when people try to justify the huge amount of personal wealth that many mega-rich people have. Some people will claim that the rich guy is automatically deserving of the wealth because he is extremely productive. That's frequently not true. I print stuff for a living. Now if I am printing stuff for half the price that my competitor does, I am very likely to produce more goods and services (wealth) than my competitor because I am likely to have more customers and each customer is likely to purchase lots printing from me. Yet I may never be as wealthy as my competitor because I do not make as much profit as my competitor despite the fact that I am more productive.

Wall Street "hedge fund" managers who get paid as much as a half a billion dollars a year are acquiring money without necessarily creating any wealth. They are not necessarily providing any capital to businesses in need of capital, they are not designing anything, they are not building anything, they are not cleaning, maintaining or repairing anything. They do offer a service that has some value, but that same service could be rendered and purchased at a much lower cost if customers did not perceive such great value in their service. They have a certain "power" to attract customers who pay them an unusually high rate for their services. Any claims that they can manage money better than the next guy is quite dubious, and from time to time such claims are found to be fraudulent. So although they may facilitate the transference of wealth, they create virtually nothing, provide a service that may be of insignificant or even no value, but yet they make quite a hefty "profit". Profit and the creation of wealth do not always go hand in hand.

By the way, I used to "buy it" that "government can't create wealth" and that "being wealthy signifies being productive". That stuff is standard propaganda of quasi-anarchists, libertarians, populist tea-baggers, and even the Republican party. But it's just wrong. It is various members of this forum who have through reasoning and logic and explanation have changed my understanding and beliefs. I hope that you can see the light also. Don't hang on to old beliefs just because it hurts to admit to being wrong.

With all that being said, I still don't think that government is the best vehicle for creating wealth, but I can no longer ignore the fact that it does create wealth. I can also no longer ignore the fact that any money that government taxes away does not just vanish and does not necessarily harm our economy. I will still likely seek out libertarian or tea party candidates in the upcoming elections.

 

[imagep]

Wow, you guy's have really effected my thinking. I just looked at post 48 on this tread, what a change! I was totally buying into right wing propaganda and didn't even realize it.

I feel like a total arsehole for making post 48, but then again, if I didn't, and if I would have never kept up with this tread, I would have never come to my new "enlightenment".

 

[cpwill]

The Hoover dam is the perfect example of the government creating wealth. Not only in the form of income for the government created from the dam but from spin off economic activity from it. The tourism to the lake, to the water supplied for irrigation, and to Las Vegas. Without the Hoover Dam a large amount of wealth would not have been created in the US south west

May I suggest you read Amity Shlaes history of the time period The Forgotten Man; Shlaes does an excellent job of pointing out the oft-forgotten fact that projects such as the Hoover Dam and the TVA actually replaced private sector initiatives that were already rising to meet that demand.

here's where i think you are faltering here, you are arguing that when government comes in and grants itself the power to provide a service, that it has created wealth; forgeting that if there was an actual need for that service (outside of issues of the commons), then someone would provide it in order to recieve the profits they can gain by doing so. government does not 'create wealth' by replacing a free market solution with a government one, any more than i would 'increase employment' if i took your job and you got fired.

 

[cpwill]

Wealth can be acquired by a variety of methods, including inheritance, theft, or just simply finding it. Just because someone is wealthY, does not necessarily mean that they have been productive or own anything that creates profits. I do agree though that wealth can be created though.

around 85% of America's millionaires are first generation. as far as wealth is concerned, people 'deserve' what they have, outside of actually being stolen from. there is no "oh everyone deserves 40K a year" standard that you can apply. those who rant on about inherited wealth (which again, is a distinct minority of the wealthy) forget that they themselves are the beneficiary of a huge inheritance, to include their education, their health, a modern society, an economy that can give the average worker a higher standard of living than any previously enjoyed in history... all things that they didn't 'earn', but were passed on to them by previous generations. when the people who decry inheritance and "people having money that they didn't earn" are willing to go back to living in caves and invent everything from the ground up, i'll start taking the claim more seriously.

Phoenix, I have to agree with Lord on this also. The creation of wealth and profits are two different things. Profit is just a method of distributing wealth, sometimes without actually creating wealth.

incorrect; profit is nearly an absolute measure of the increase in relative wealth that has been created, that's the beauty of mutually beneficial trade.

If anyone builds a highway, that is obviously creation of wealth because highways are valuable, functional, and provide utility to those who use them. It doesn't matter if it is privately financed or publicly financed, or who built it. It is useful and thus it is of value. The highway is also part of our infrastructure - meaning that is not only wealth in the sense that is has value to the owner, it's existence and utility leads to the creation of wealth for others.

highways are automatically an addition of wealth? hmm, questionable. remember that wealth (profit, if you will ) is created when resources are moved towards more productive ends. If I tax the community an amount of money that causes three businesses to never have capital to open (or to shut down) in order to build a highway that brings in enough folks to build one small business of equal size to each of the three i destroyed, i haven't 'created wealth'. that's the broken window fallacy. have i moved those resources to a higher end? why not tax everyone at 100% and just build nothing but roads so we can all be rich?

You said "products and services must create profit in order to create wealth". Public infrastructure and services also create profit - we just might not be able to easily quantify it in terms of $$$. We profit from our military, from our roads, from police and fire protection

incorrect. these things create the conditions that allow wealth to be created. like (for example) language, they are a precursor to wealth creation, not wealth itself.

It does not matter if those things are provided privately or publicly, they are still of value, are part of the wealth which we have access to, and they all have a cost. The value received by the taxpayer for any public infrastructure or service is essentially the taxpayer's "profit". So yes, government spending can create profit exactly like private spending can.

hmm, no, the value recieved by the taxpayer for any public infrastructure above the value that would have been recieved from the alternate use that that taxpayer might have put those taxes to is his 'profit'. And I would like to see some statistics on that; because now we are talking about about whether government bureacrats spending taxpayer money or individuals spending their own money are going to be more effecient allocators of resources.

At one time, money only existed in the form of items that could be bartered, such as gold, silver, and copper coins, and money had intrinsic value in itself. But these days the value of money is not in it's physical form (which is frequently just "vapor" in like in an account). Modern money is generally not very nutritious, you can't live in it, you can't power your car or clean your house with it - at least until it is exchanged for goods and services. Modern money is not truly wealth, it's just a representation of wealth and a store of value used to make transactions with.

the same with gold, copper, and silver, which in and of themselves aren't particularly valuable minerals, except for copper, which has always been the cheapest of the lot. the value of the gold was never in its' physical nature, but always in it's theoretical nature as a storage of value. that's the thing that the goldbugs always miss; fiat currency has no more or less intrinsic value than gold in a gold standard economy does; they are both theoretical storages of future consumption. you can't clean your house with silver or eat copper, nor does gold power your car.

It always "gets under my skin" when people try to justify the huge amount of personal wealth that many mega-rich people have. Some people will claim that the rich guy is automatically deserving of the wealth because he is extremely productive. That's frequently not true. I print stuff for a living. Now if I am printing stuff for half the price that my competitor does, I am very likely to produce more goods and services (wealth) than my competitor because I am likely to have more customers and each customer is likely to purchase lots printing from me. Yet I may never be as wealthy as my competitor because I do not make as much profit as my competitor despite the fact that I am more productive.

exactly. that's why Walmart and McDonalds are doing so poorly.
actually were you able to sell printing for half the price that your competitor does and still capable of making a profit, you would either rapidly drive him out of business, or he would lower his price to compete with you. that's the beauty of the free market; it automatically pushes resources towards higher productivity through use of the profit/loss mechanism.

Wall Street "hedge fund" managers who get paid as much as a half a billion dollars a year are acquiring money without necessarily creating any wealth. They are not necessarily providing any capital to businesses in need of capital, they are not designing anything, they are not building anything, they are not cleaning, maintaining or repairing anything.

those guys are typically paid two ways; a (relatively) smaller salary, and a bonus; now, the bonus (which is what typically has people up in arms) is usually a percentage of the profits they bring in for the fund. now, consider what that means. it means that they have taken resources (in the form of money) and transferred it from less efficient production, to more effecient production. people deride it as "moving numbers on a computer", forgetting first that investment bankers put in hours, labor, and stress usually reserved for military deployments and second what those numbers mean.

 

[imagep]

around 85% of America's millionaires are first generation. as far as wealth is concerned, people 'deserve' what they have, outside of actually being stolen from. there is no "oh everyone deserves 40K a year" standard that you can apply. those who rant on about inherited wealth (which again, is a distinct minority of the wealthy) forget that they themselves are the beneficiary of a huge inheritance, to include their education, their health, a modern society, an economy that can give the average worker a higher standard of living than any previously enjoyed in history... all things that they didn't 'earn', but were passed on to them by previous generations. when the people who decry inheritance and "people having money that they didn't earn" are willing to go back to living in caves and invent everything from the ground up, I'll start taking the claim more seriously.

I agree with your sentiment that many people who have a significant net worth did indeed earn their money. I keep running into this issue where I must not be doing a good just of defining the group of people that I am ranting about. Most people who are millionaires are not rich by any means. I did not intent to suggest that a most millionaires didn't earn their money. What I am suggesting that just the fact that someone is rich does not necessarily mean that they earned their money. I recently read a study of the Forbes 400. Something like 35-40% of them were in the top 400 richest the day they were born. Another 30% or so were born into very well-to-do families and this group includes people who had financial backgrounds similar to "The Donald" who was a millionaire before he graduated college (supposedly he "earned" his money working part time for his dad). So when we are talking about the extremely rich, the majority of them are not exactly "self made zillionairs".

incorrect; profit is nearly an absolute measure of the increase in relative wealth that has been created, that's the beauty of mutually beneficial trade.

People frequently make a profit without doing anything to increase something's value. We will just have to disagree about that.

highways are automatically an addition of wealth? hmm, questionable. remember that wealth (profit, if you will ) is created when resources are moved towards more productive ends. If I tax the community an amount of money that causes three businesses to never have capital to open (or to shut down) in order to build a highway that brings in enough folks to build one small business of equal size to each of the three i destroyed, i haven't 'created wealth'. that's the broken window fallacy. have i moved those resources to a higher end? why not tax everyone at 100% and just build nothing but roads so we can all be rich?

No, not automatically. But highways certainly can be an addition of wealth. You do make a good point though about the allocation of resources. I think that I actually stated that I felt that the private sector generally makes better allocation of resources decisions so I am with you on that point.

incorrect. these things create the conditions that allow wealth to be created. like (for example) language, they are a precursor to wealth creation, not wealth itself.

But they have value, and anything that has value is part of our wealth. Do you honestly think that our economy would today be better if our public road system was never built?

hmm, no, the value received by the taxpayer for any public infrastructure above the value that would have been received from the alternate use that that taxpayer might have put those taxes to is his 'profit'. And I would like to see some statistics on that; because now we are talking about whether government bureaucrats spending taxpayer money or individuals spending their own money are going to be more efficient allocators of resources.

You are probably correct that more often than not the private sector can better allocate resources than the public sector. But then again, the reason that most of us pay our taxes and don't rebel against the government is because we recognize the fact that there are certain projects that can be handled more efficiently by the government. Business people who happen to hold public office frequently approve of government projects even if that means an increase in taxes because the value of the government project exceeds the cost of the tax increase.

the same with gold, copper, and silver, which in and of themselves aren't particularly valuable minerals, except for copper, which has always been the cheapest of the lot. the value of the gold was never in its' physical nature, but always in it's theoretical nature as a storage of value. that's the thing that the goldbugs always miss; fiat currency has no more or less intrinsic value than gold in a gold standard economy does; they are both theoretical storages of future consumption. you can't clean your house with silver or eat copper, nor does gold power your car.

A agree 100%, the reason that I brought up gold copper and silver was because I knew if I didn't some yahoo would. I sometimes forget that the people on this forum are rarely yahoos.

exactly. that's why Walmart and McDonalds are doing so poorly.
actually were you able to sell printing for half the price that your competitor does and still capable of making a profit, you would either rapidly drive him out of business, or he would lower his price to compete with you. that's the beauty of the free market; it automatically pushes resources towards higher productivity through use of the profit/loss mechanism.

I would like to think that was the case. In a perfect capitalistic economy that would be the case. But in reality, there are lots of reasons why the lowest bidder doesn't get all the business. If the lowest bidder always got all the business, then we would only have one company in each market sector, obviously we have lots of competitors in most industries. Some have more advantages than others, like location, personal contacts, a attractive sounding business name, a hot looking salesperson, the first listing in the phone book, or reputation due to longevity of the business.

those guys are typically paid two ways; a (relatively) smaller salary, and a bonus; now, the bonus (which is what typically has people up in arms) is usually a percentage of the profits they bring in for the fund. now, consider what that means. it means that they have taken resources (in the form of money) and transferred it from less efficient production, to more effecient production. people deride it as "moving numbers on a computer", forgetting first that investment bankers put in hours, labor, and stress usually reserved for military deployments and second what those numbers mean.

So are you suggesting that our military people all be paid a half billion a year also? Believe me, lots of people who don't make anything near as much as investment bankers do deal with just as many hours, labor and stress. When I first graduated from college I sought to be an investment banker. It didn't take me long to realize that obtaining one of those jobs really had a lot less to do with ability or education and a lot more to do with who you happened to know. For every hot shot who happens to become a member of the Wall Street Club, there is probably 10,000 other people who would kill to have the job, who would work just as hard, who would perform just as well, and who are just as well qualified.

It's weird, a week ago I would have totally agreed with you about most of those details. But the thing is, most of the statements like "government cant create wealth" may be correct if take in a very general way, but are not by any means always correct if we look at case by case examples. Just because I have taken a certain dislike for right wing rhetoric does not by any means mean that I am in favor of big government. I recognize the need for government when it is more efficient for the government to provide a particular service, but I also recognize that in the vast majority of situations, the need for products and services can most efficiently be met by the private sector and the private sector typically allocates resources in the most efficient manner.

 

[obvious Child]

To state that the government can create jobs because they pay lots to military contractors is a very simplified position. It omits the fact that the money spent would be used for other purposes if it were not spent by the government.

Not necessarily. The problem with opportunity cost arguments is that the assumption that the money would have been spent. That's a big assumption and as we've seen in this recession, people literally took money out of the market and put it under their beds. Assuming that money will be spent is not a good foundation for any argument.

Using defense spending as an example, if we decided that next year we would not spend money on defense (and imagining that we had a zero bottom line federal budget :lol and gave the money back to the taxpayers, it would be about $5000 per tax payer ($425 a month) These people would do something with the money that would create jobs and it would be minus the expensive of government bureaucracy.

See paragraph above. Your assumption is faulty and as we've seen in the recession, some times completely wrong.

I laughed hysterically when I read this. A government lead by highly intelligent, highly practical people??? Now that's funny.

So Nixon was an idiot? :2wave: I'll admit he was an idiot when it came to price controls though.

On the NIH I have to admit that I didn't know they did actual research vs funding people that do. If they research a drug and then sell it to a drug company for less than the cost of research (and failed research) doesn't that just amount to another instance of corporate welfare? The people cover the loses while corporations reap the profits?

Basically. But without the research, there wouldn't have been the drug for drug companies to make money off of.

 

[obvious Child]

Out of the econmy was an incorrect statement, but take it from someone is correct. However the products and services must create profit in order to create wealth. The government lacks in this area. So taking money from profitable endeavors to use on non profitable ones (government programs) is a loser for the overall economy.

Not necessarily. Taking $5 from every person to fund NASA which has produced countless material advances, many of which power today's private sector does not suggest your position is correct. The military has pioneered many new technologies in medicine that are huge booms to the overall economy. In some ways, government spending on research is pooling resources to achieve greater outcomes then individuals spending their tiny amounts on whatever they spend it on. In the same way that venture capitalists get together and invest $50 million and get a return substantially higher then if 10 of them individual lent $5 million, government spending on research can produce higher gains then individual spending. Now, I'm not saying government always does this, frankly it doesn't, but it does happen.

Few complain about the military spending because it's a neccessary program to maintain over freedom. That is completely different than creating wealth.

Excessive military spending does not maintain freedom. Do we need 10,000 nukes? No.

 

[obvious Child]

Wow, you guy's have really effected my thinking. I just looked at post 48 on this tread, what a change! I was totally buying into right wing propaganda and didn't even realize it.

I feel like a total arsehole for making post 48, but then again, if I didn't, and if I would have never kept up with this tread, I would have never come to my new "enlightenment".

Eh, nothing is wrong with factual notions. Neither part of the spectrum has a monopoly on good ideas just like neither side has a monopoly on stupid. Look at this forum. We have total whackjobs on both sides.

 

[Lord Tammerlain]

May I suggest you read Amity Shlaes history of the time period The Forgotten Man; Shlaes does an excellent job of pointing out the oft-forgotten fact that projects such as the Hoover Dam and the TVA actually replaced private sector initiatives that were already rising to meet that demand.

here's where i think you are faltering here, you are arguing that when government comes in and grants itself the power to provide a service, that it has created wealth; forgeting that if there was an actual need for that service (outside of issues of the commons), then someone would provide it in order to recieve the profits they can gain by doing so. government does not 'create wealth' by replacing a free market solution with a government one, any more than i would 'increase employment' if i took your job and you got fired.

You will notice that I was not argueing that private industry would not have built the Hoover Dam, or the interstate freeway system.

I was in fact pointing out that the Hoover Dam represents wealth created. That does not matter if it was done by private industry or the government. I dont think any one can argue that the Hoover dam has been a great benifit for the US economy, or that it is worthless.

In other words, the government took steel, cement, labour and capital and created extra wealth for the nation in the same manner as private industry would have

 

[I'm Supposn]

May I suggest you read Amity Shlaes history of the time period The Forgotten Man; Shlaes does an excellent job of pointing out the oft-forgotten fact that projects such as the Hoover Dam and the TVA actually replaced private sector initiatives that were already rising to meet that demand.

C.P. Will, Patrick Moynihan, (a U.S. senator from NY) said “You are entitled to your own opinion” but not to your own facts”. That any creditable corporation presidents actually considered forming a syndicate for the purpose of financing a TVA or Hoover Dam is absolute nonsense.

Respectfully, Supposn

 

[I'm Supposn]

Here's where I think you are faltering, you are arguing that when government comes in and grants itself the power to provide a service, that it has created wealth; forgeting that if there was an actual need for that service (outside of issues of the commons), then someone would provide it in order to recieve the profits they can gain by doing so. government does not 'create wealth' by replacing a free market solution with a government one, any more than i would 'increase employment' if i took your job and you got fired.

C.P. Will, I argue that only the government would or could have built the TVA system or the Hoover Dam at that time. Only the government would or could undertake the creation of the Atom bomb, the Marshall Plan, our national defense system or the space programs. Individual or syndicates of corporations lacked the financing or the will to undertake these projects.

The Defense Department often wrote specifications to suit favored contractors and/or contracted on a cost plus additional percentage of profit (similar to the manner that many interior decorators are compensated). Such contracts were generally not completed at reasonable cost and the delivered results were too often unsatisfactory. It’s not all simply due to greed or incompetence or lack of diligence.

[The profit motive works best when the tasks and the delivered results can all be objectively and monetarily evaluated. When there are nuances that cannot be readily considered within a commercial contract but can significantly affect the net results due to methods and diligence, then the contract is less suitable for one or all participants. Despite a “buyer’ market”, the government and the taxpayers rather than the contractors are generally at greater disadvantage].

Behavioral economics considers situations and conditions where monetary rewards do not induce satisfactory results and in some cases are contra productive.

Respectfully, Supposn

 

[Lord Tammerlain]

C.P. Will, I argue that only the government would or could have built the TVA system or the Hoover Dam at that time. Only the government would or could undertake the creation of the Atom bomb, the Marshall Plan, our national defense system or the space programs. Individual or syndicates of corporations lacked the financing or the will to undertake these projects.

The Defense Department often wrote specifications to suit favored contractors and/or contracted on a cost plus additional percentage of profit (similar to the manner that many interior decorators are compensated). Such contracts were generally not completed at reasonable cost and the delivered results were too often unsatisfactory. It’s not all simply due to greed or incompetence or lack of diligence.

[The profit motive works best when the tasks and the delivered results can all be objectively and monetarily evaluated. When there are nuances that cannot be readily considered within a commercial contract but can significantly affect the net results due to methods and diligence, then the contract is less suitable for one or all participants. Despite a “buyer’ market”, the government and the taxpayers rather than the contractors are generally at greater disadvantage].

Behavioral economics considers situations and conditions where monetary rewards do not induce satisfactory results and in some cases are contra productive.

Respectfully, Supposn

The profit motive is meaning less without effective competition.

Without compitition that puts pressure on your profit, the pressure to inovate, cut costs etc is far lower. This is why private industry tends to be more efficient then governments. Private industry tends to have effective competition.