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The perplexing durability of conservative economics.

pdog

pdog

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Another member posted a similarly titled article revolving around Keynesian theory. I didn't think about much when I first replied but I then I realized what's even more perplexing is the durability of conservative "economics." I present the following points. Please do not cherry pick (unless you're correcting the platform for me) or spin the topic out with empty rhetoric. Please attack the points and provide your own assertion and support. Keep in mind that I once considered myself independent but have been forced to align myself with more liberal representatives since I can't seem to find any logic in the conservative platform. So here's your chance - my vote is up for the conservative but not unless their economic platform starts making sense.

I do have a lot of points here. If you wish to concentrate on one item, then it might be best to start your own thread, referencing this one. I will even offer a "True Debate" if you're up to the challenge: http://www.debatepolitics.com/true-debates/157206-true-debates-rules-and-guidelines.html.

These are the points of conservative economic policy that I'm aware of.
1) Lower personal tax rates for high income earners - this will spur investment and innovation by providing more capital for the market.

Simple logical flaws:
  • This has ALREADY been occurring for the past 40 years. How much longer do we need to wait? How much more do we need to do before it starts working?
  • IMO, there already seems to be an arms race with the already pooling capital. Rather than innovating, companies are spending excessive amounts on acquisitions.

2) Lower corporate taxes to spur employment.

Simple logical flaws

  • This has ALREADY been occurring for the past 40 years. How much longer do we need to wait. How much more do we need to do before it starts working.
  • Outside of the small start-up (which I support with low or zero corporate taxes), additional cash does NOT equal employment. Employment is an expense, period.
  • Corporate profits and the dow are already at record highs. When exactly will this turn into more employment?

3) Our debt is stifling our economy.

Simple logical flaws:
  • How? You can't apply simple household economics to a nation that creates it's own money.
  • What is a reasonable level of debt? How did you come to that conclusion?

4) Our government is spending too much money and is extracting money from the market that could be used for private innovation.

Simple logical flaws:
  • What is "too" much? As a percentage of our economy, our government has barely changed in 50 years.
  • Again see points above on how additional capital is not turning into real growth or jobs.
  • Some of the greatest innovations came from government expenditure or small start up. It is rare that a large existing company can see beyond the bottom line to innovate.

5) Redistribution thru taxes is theft.

Simple logical flaws:
  • This is flawed from the beginning with the idea that if you take it, it's yours. This ignores that a person extracts their market rate from a market/society they had very little in creating.
  • This ignores the CHANGE that is occurring. Forget what you "taking" from a person at this point in time. Explain the CHANGE in CEO pay from 40x to 400x and how that continued change is sustainable. The market should be able to protect itself from this pooling wealth for the sake of sustainability.
  • The bottom has the highest propensity to consume and we have a demand problem, yet we continue to focus on the supply side (again, see above points on how additional capital is not turning into real growth or jobs).

6) Our debt can never be paid off. It is now to high and out of reach.

Simple logical flaws:


7) High income earners are already paying the bulk of taxes.

Simple logical flaws:
  • This is a meaningless and obvious statistic - nothing more. In fact, it is a counter argument. DESPITE lower and lower tax rates over the last several decades, they are STILL paying the bulk of the taxes. How is this possible? They pay the bulk of the taxes because they take the bulk of the market and are doing so at an increasing rate.

8) "Printing money" is causing inflation.
  • What inflation?
 
pdog said:
Another member posted a similarly titled article revolving around Keynesian theory. I didn't think about much when I first replied but I then I realized what's even more perplexing is the durability of conservative "economics." I present the following points. Please do not cherry pick (unless you're correcting the platform for me) or spin the topic out with empty rhetoric. Please attack the points and provide your own assertion and support. Keep in mind that I once considered myself independent but have been forced to align myself with more liberal representatives since I can't seem to find any logic in the conservative platform. So here's your chance - my vote is up for the conservative but not unless their economic platform starts making sense.

I do have a lot of points here. If you wish to concentrate on one item, then it might be best to start your own thread, referencing this one. I will even offer a "True Debate" if you're up to the challenge: http://www.debatepolitics.com/true-debates/157206-true-debates-rules-and-guidelines.html.

These are the points of conservative economic policy that I'm aware of.
1) Lower personal tax rates for high income earners - this will spur investment and innovation by providing more capital for the market.

Simple logical flaws:
  • This has ALREADY been occurring for the past 40 years. How much longer do we need to wait? How much more do we need to do before it starts working?
  • IMO, there already seems to be an arms race with the already pooling capital. Rather than innovating, companies are spending excessive amounts on acquisitions.

2) Lower corporate taxes to spur employment.

Simple logical flaws

  • This has ALREADY been occurring for the past 40 years. How much longer do we need to wait. How much more do we need to do before it starts working.
  • Outside of the small start-up (which I support with low or zero corporate taxes), additional cash does NOT equal employment. Employment is an expense, period.
  • Corporate profits and the dow are already at record highs. When exactly will this turn into more employment?

3) Our debt is stifling our economy.

Simple logical flaws:
  • How? You can't apply simple household economics to a nation that creates it's own money.
  • What is a reasonable level of debt? How did you come to that conclusion?

4) Our government is spending too much money and is extracting money from the market that could be used for private innovation.

Simple logical flaws:
  • What is "too" much? As a percentage of our economy, our government has barely changed in 50 years.
  • Again see points above on how additional capital is not turning into real growth or jobs.
  • Some of the greatest innovations came from government expenditure or small start up. It is rare that a large existing company can see beyond the bottom line to innovate.

5) Redistribution thru taxes is theft.

Simple logical flaws:
  • This is flawed from the beginning with the idea that if you take it, it's yours. This ignores that a person extracts their market rate from a market/society they had very little in creating.
  • This ignores the CHANGE that is occurring. Forget what you "taking" from a person at this point in time. Explain the CHANGE in CEO pay from 40x to 400x and how that continued change is sustainable. The market should be able to protect itself from this pooling wealth for the sake of sustainability.
  • The bottom has the highest propensity to consume and we have a demand problem, yet we continue to focus on the supply side (again, see above points on how additional capital is not turning into real growth or jobs).

6) Our debt can never be paid off. It is now to high and out of reach.

Simple logical flaws:


7) High income earners are already paying the bulk of taxes.

Simple logical flaws:
  • This is a meaningless and obvious statistic - nothing more. In fact, it is a counter argument. DESPITE lower and lower tax rates over the last several decades, they are STILL paying the bulk of the taxes. How is this possible? They pay the bulk of the taxes because they take the bulk of the market and are doing so at an increasing rate.

8) "Printing money" is causing inflation.
  • What inflation?
Click to expand...

I'll answer the last one....been to the grocery store lately?
 
These policies continue because they keep benefiting the wealthy and powerful, who then use their wealth and power to keep things as they are.
 
WCH said:
I'll answer the last one....been to the grocery store lately?
Click to expand...
Yes, what about it? Prices for some things are up, others down and others about the same.

Taking all items in the basket at once, inflation is low. Oh, you don't believe official numbers? Then how about using MIT's billion price index, that seems to highly correlate to the official CPI.

But to answer the OP's question, the notion that lowering taxes, that are not confiscatory, will pay for themselves has been discredited.
 
Last edited:
WCH said:
I'll answer the last one....been to the grocery store lately?
Click to expand...

- One subset of products does not indicate inflation.
Overall inflation remained tame, as falling gasoline and other energy costs offset the food price increases. The consumer price index ticked up just 0.1% from January and 1.1% in the past year.
Click to expand...

- Food price fluctuations are more likely a result of drought, frost, and other things that affect supply.



Rising food prices bite into household budgets
 
MTAtech said:
Yes, what about it? Prices for some things are up, others down and others about the same.

Taking all items in the basket at once, inflation is low. Oh, you don't believe official numbers? Then how about using MIT's billion price index, that seems to highly correlate to the official CPI.
Click to expand...

I rely on what the cashier wants me to pay each week for the same goods.

I quit smoking several years ago looking forward to the savings....they never appeared.
 
pdog said:
- One subset of products does not indicate inflation.


- Food price fluctuations are more likely a result of drought, frost, and other things that affect supply.



Rising food prices bite into household budgets
Click to expand...

I'll post some recent articles about loominv inflation when I get back to my PC. Be careful with your words...they affect reality.
 
WCH said:
I rely on what the cashier wants me to pay each week for the same goods.

I quit smoking several years ago looking forward to the savings....they never appeared.
Click to expand...

This is what's known as anecdotal evidence.
 
WCH said:
I rely on what the cashier wants me to pay each week for the same goods.

I quit smoking several years ago looking forward to the savings....they never appeared.
Click to expand...
Yeah, why rely on the scientific measure of overall prices when one can just shoot-from-the hip and note the prices that rise while not notice the ones that fall. My housing costs are far more than my food costs. That's why housing is 25% of the CPI. So, if milk triples but my housing costs remain the same, the overall effect on inflation is negligible.
 
WCH said:
I'll post some recent articles about looming inflation when I get back to my PC.
Click to expand...

That's fine - my only request is that such an article comes from some economic study and isn't headline from an investing firm telling you how you should be moving stuff around (thereby making them money) and never telling you how the inflation is going to materialize.
 
Monetarism has been the driving force behind American and U.K. economics since Reagan and Thatcher. Milton Friedman was the guy that they all listened to, and he eventually admitted that he was wrong. That admission was eleven years ago, though, and his policies still live on.

'Lunch With the FT's' world scoop is that Friedman has changed his mind: he admits he was wrong. Having had all that baleful influence on economic policy everywhere from the United Kingdom to Chile, Friedman has recanted.

The economic quote of the month - and probably the decade - is that Milton Friedman now admits: 'The use of quantity of money as a target has not been a success.' He added: 'I'm not sure I would as of today push it as hard as I once did.' (FT, 7 June 2003).
Click to expand...

William Keegan: So now Friedman says he was wrong | Business | The Observer

So did Greenspan:

http://www.nytimes.com/2008/10/24/business/economy/24panel.html?_r=2&hp&oref=slogin&
 
LOL !!

Is this a joke thread ?

Of Course Conservative economic policies work.

Case in point, Texas.

Incentivizing private investment and creating a friendly low tax Bussiness atmosphere creates New jobs and drives up REVENUES.

Texas is creating 1 new job for every 3 of its residents.

The national average is around 1 in 8.

California ? 1 in 11.

Texas leads the Nation in creating High paying jobs, well it leads the Nation in the creation of jobs that cover the entire pay scale.

Lol ! Takes a some serious willful ignorance to try to make the case that Conservative economic policies dont work when the only State in the Union with Substantial job creation is the GOP run Texas.
 
Fenton said:
LOL !!

Is this a joke thread ?

Of Course Conservative economic policies work.

Case in point, Texas.

Incentivizing private investment and creating a friendly low tax Bussiness atmosphere creates New jobs and drives up REVENUES.

Texas is creating 1 new job for every 3 of its residents.

The national average is around 1 in 8.

California ? 1 in 11.

Texas leads the Nation in creating High paying jobs, well it leads the Nation in the creation of jobs that cover the entire pay scale.

Lol ! Takes a some serious willful ignorance to try to make the case that Conservative economic policies dont work when the only State in the Union with Substantial job creation is the GOP run Texas.
Click to expand...

Texas is not a country. Texas is a state. There's a difference.
 
WCH said:
I'll answer the last one....been to the grocery store lately?
Click to expand...

Nothing perplexing about them at all....they endure because they work.

You have had a socialist progressive government since 2008. Canada has had a conservative government since 2005. We have surpassed the US economy for the first time in history.
So have Germany, Britain, and most "conservative" regimes in Europe. Economist forecast the US will remain in a semi recession or stalled growth until 2020 or later.

People revert to what works. Tax cuts, program cuts, elimination of the deficit, and a complete rejection of Clinton's "free money mortgages" is what propelled Canada past you guys while you continue to wallow in that 'let's print as much money as possible" utopian ideal.
 
JohnfrmClevelan said:
Texas is not a country. Texas is a state. There's a difference.
Click to expand...

What ? Because Texas doesn't have control over a FIAT currency ?

How would that have anything to do with Conservative Policies creating economic growth ?

Greece is a Country without a sovereign currency that definitely did NOT use Conservative economic principles.

Read the OP.

Texas incentivizes private investment by creating a low tax low regulatory environment and that that has created growth and a Surplus too boot.

Its using Conservative economic policies to grow a strong economy.
 
MTAtech said:
Yeah, why rely on the scientific measure of overall prices when one can just shoot-from-the hip and note the prices that rise while not notice the ones that fall. My housing costs are far more than my food costs. That's why housing is 25% of the CPI. So, if milk triples but my housing costs remain the same, the overall effect on inflation is negligible.
Click to expand...

No. I think your math is a little faulty. If milk triples and your housing costs go DOWN by the same dollar amount, the overall effect on inflation is negligible. But if milk triples and your housing costs stay the same, and you have to have the milk, you will have a few dollars less to use for other things. Multiply the higher costs across dozens or hundreds of food items that you need or normally buy, and you will have a LOT less dollars to use for other things even if your housing costs remain the same.
 
Fenton said:
What ? Because Texas doesn't have control over a FIAT currency ?
Click to expand...

Yep.

How would that have anything to do with Conservative Policies creating economic growth ?
Click to expand...

It's just a bad comparison. You are looking at one state, whose economic policies cannot translate over into a country's economic policies.

Greece is a Country without a sovereign currency that definitely did NOT use Conservative economic principles.
Click to expand...

So now you see the difference between the euro and the dollar, eh? Good. I'll take some of the credit for that.

By being a member of the Eurozone, Greece is competing for euros within the zone. And they cannot create any of their own, so they must borrow or tax, just like an American state. Germany, by exporting goods to other eurozone countries, is importing euros from those countries. And since they can't just create more currency and let values float, they continue to get pounded in that game.

Texas is merely importing dollars from other states. That is their big success. But the U.S. cannot import dollars.
 
MTAtech said:
1996?

The Reagan Non-Miracles
Click to expand...

Yeah well Krugman who has met precious few conservative concepts that he liked has taken on CATO more than once. But he cannot dispute the statistics CATO presents. CATO does not presume that everything was perfect under Reagan or everything that was tried succeeded. But Reagan is just one example of many they have researched to assess the net results of economic initiatives and policy. And I trust them a hell of a lot more than I trust Krugman.
 
JohnfrmClevelan said:
Yep.



It's just a bad comparison. You are looking at one state, whose economic policies cannot translate over into a country's economic policies.



So now you see the difference between the euro and the dollar, eh? Good. I'll take some of the credit for that.

By being a member of the Eurozone, Greece is competing for euros within the zone. And they cannot create any of their own, so they must borrow or tax, just like an American state. Germany, by exporting goods to other eurozone countries, is importing euros from those countries. And since they can't just create more currency and let values float, they continue to get pounded in that game.

Texas is merely importing dollars from other states. That is their big success. But the U.S. cannot import dollars.
Click to expand...
The big difference also is that even if a state is doing poorly economically, their people still get Medicare and Social Security from the feds.
 
MTAtech said:
Yeah, why rely on the scientific measure of overall prices when one can just shoot-from-the hip and note the prices that rise while not notice the ones that fall. My housing costs are far more than my food costs. That's why housing is 25% of the CPI. So, if milk triples but my housing costs remain the same, the overall effect on inflation is negligible.
Click to expand...

For normal middle class folks, food, gas, and other personal expenses weigh heavily on their budget. I don't know about you but, my property taxes, electric, water and other home expenses have gone up as well.

And our cost of living is 7% less than the national average.
 
Fearandloathing said:
Nothing perplexing about them at all....they endure because they work.

You have had a socialist progressive government since 2008. Canada has had a conservative government since 2005. We have surpassed the US economy for the first time in history.
So have Germany, Britain, and most "conservative" regimes in Europe. Economist forecast the US will remain in a semi recession or stalled growth until 2020 or later.

People revert to what works. Tax cuts, program cuts, elimination of the deficit, and a complete rejection of Clinton's "free money mortgages" is what propelled Canada past you guys while you continue to wallow in that 'let's print as much money as possible" utopian ideal.
Click to expand...

Tell me about it.
 
Fenton said:
LOL !!

Is this a joke thread ?

Of Course Conservative economic policies work.

Case in point, Texas.

Incentivizing private investment and creating a friendly low tax Bussiness atmosphere creates New jobs and drives up REVENUES.

Texas is creating 1 new job for every 3 of its residents.

The national average is around 1 in 8.

California ? 1 in 11.

Texas leads the Nation in creating High paying jobs, well it leads the Nation in the creation of jobs that cover the entire pay scale.

Lol ! Takes a some serious willful ignorance to try to make the case that Conservative economic policies dont work when the only State in the Union with Substantial job creation is the GOP run Texas.
Click to expand...

My intention was at the federal level. I still vote republican at the state level but the economics are very different at the state level: debt has a an entirely definition, flight is a real risk, etc. I suppose we can discuss the first two points at the state level, but all the rest are exclusively federal issues.

That said, fierce competition between states is just a race to the bottom when talking about deregulation. Texas is also far from being nothing but roses:

http://www.nytimes.com/2012/12/03/us/winners-and-losers-in-texas.html?pagewanted=all&_r=0 said:
Yet the raw numbers mask a more complicated reality behind the flood of incentives, the examination shows, and raise questions about who benefits more, the businesses or the people of Texas.

Along with the huge job growth, the state has the third-highest proportion of hourly jobs paying at or below minimum wage. And despite its low level of unemployment, Texas has the 11th-highest poverty rate among states.
Click to expand...
 
MTAtech said:
1996?

The Reagan Non-Miracles
Click to expand...

Not to mention the reagan era had a pretty healthy does of military Keynesianism backing up all that talk of low taxes and low regulation.

The killer of the supply side argument though is that WE'RE STILL IN IT. We've been waiting for these messed up tax policies to work for 40 years, how much deeper do we need to go before it starts working?
 
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