Note that these are annualized numbers, whereas the ones in your link appear not to be. That is, our economy didn't actually grow 2.2% last quarter; it grew about 0.54%, which would be 2.2% if compounded at that rate for a full year.
That said, I also don't think that we should continue subsidizing student loans. If you can't make a college education pay for itself, you probably shouldn't be going.
It's worth noting that STEM programs have much higher attrition rates than most other fields. We have all the students we need going in to STEM fields---they're just not making it through. It's not at all clear to me that there are large numbers of students who actually have the aptitude to get through a STEM program but are instead choosing some other field.
Not quite. I think they try for it, but they don't actually force the scores to fit that curve. By 1995 the mean composite score had drifted down to 900, and they did a renorming to push it back up to 1000. They also greatly lowered the ceiling, changing the number of students scoring 1600 from one in 150,000 to one in 1,500. I kind of benefitted from that, since I got a 1600 two years later, before people realized that it wasn't all that great anymore.
Again with the all or nothing, either all military spending is productive or none of it is., isn’t this a false choice?
Here's what I said: "Government makes productive investments, but that’s a fairly small percentage of its budget, unless you count all military spending as productive investment."
If we count all military spending as productive investment, then we can say that productive investment is a reasonably large chunk of government spending. If we count only a minority of military spending as productive investment, then I would say productive investment is a fairly small percentage of government spending. You need a big chunk of military spending to get from small to big.
And further including things you’ve classified as merely consumption – a healthy, educated populace is a prerequisite for the kind of high value-added niche the US hopes to compete in.
Well, that's the ad copy, anyway. In reality, most government spending is on the retired, who by definition are pretty much done contributing to the economy, and on those who don't have the cognitive ability needed to do high-value-added work.
But I guess we’ll also disagree as to whether the government can build opportunity in sections of society that’re deprived via redistributive policies, and whether we can count that as a kind of investment.
Is there any evidence that that's actually working?
There are lots of goodies that I’d like to pay for, public broadcasting, national endowments for the arts and humanities, basic scientific research, a world class public university system
I don't understand the obsession with having world-class public universities, when our private university system is arguably the best in the world, nor the allure of subsidizing the media consumption of the professional class. But I like research, too. You know what the actual priorities of our government are right now? What it will do if it gets more money? Shore up middle-class entitlements without raising middle-class taxes. So that middle-class people can consume more. That's why we'd be diverting money away from private investment and charity.
As for your final point, getting in the way of the wealthy’s doing good work, I think you’re more sensitive to the consequences of a higher top tax rate than I am.
And you accuse me of all-or-nothing thinking. Look: It's basic math. Let Y be pre-tax income, T be taxes paid, C be personal consumption, D be donations to charity, M be marginal propensity to consume, and I be investment:
I + D = Y - T - C
Now let's increase taxes:
I' + D' = Y - T' - (C - M(T' - T))
When M is zero, this reduces to:
I' + D' = Y - T' - C
Which means:
(I + D) - (I' + D') = T' - T
In other words, raising taxes on someone whose marginal propensity to consume is zero will result in a reduction in his investment and charitable donations exactly equal to the amount by which his taxes were raised. If marginal propensity to consume is merely low rather than zero, then a small amount is redirected from consumption, but the lion's share still comes from a reduction in investment and charitable donations.
It doesn't matter that you're not trying to punish him. It doesn't matter that you're not taking everything. Less pre-tax income means less money available for investment and charitable donations. Unless the government's marginal expenditures---again, this means shoring up middle-class entitlements without middle-class tax hikes---are more important than that, this is bad policy.
Things like social welfare programs are starved, while defense spending explodes.
This comment is grossly ahistorical. Except for a brief blip during the late '90s, defense spending has never been lower as a percentage of total federal spending than it is now.
Government makes productive investments, but that's a fairly small percentage of its budget, unless you count all military spending as productive investment, and even then more than half of governmnet spending goes to subsidize private consumption. And on the margin, the debate is around raising taxes on the rich to enable more spending on private consumption for the middle class, either through shoring up middle-class entitlements, adding new middle-class entitlements, or avoiding middle-class tax increases. Very little of any additional revenue the government gets will be productively invested.
At best, it'll use extra money to pay down debt. Which means that money will be redirected from private investment to private investment. Harmless, but also useless.
Also this, “you can’t really tax the extremely wealthy”, doesn’t really make sense to me.
That is, short of the spiteful marginal tax rates of the 50s, there's no tax policy that will redirect money from personal consumption of the extremely wealthy. Their personal consumption will remain roughly the same, and the extra tax revenues will come from money that would have gone to investment or charity. That's bad tax policy. You want taxes to redirect money from personal consumption, not from investment and charity. It's not about wanting to punish the rich---it's about getting in the way of their doing good work.
Whoops. I didn't see that DensityDuck pointed that out. But yeah. The law very explicitly says that there must be probable cause to believe that the killing was not justified even to make an arrest. And as a general rule, prosecutors should not file charges unless they have a solid case, as this is unfair to the accused and a waste of taxpayer money.
Statute 776.032. A person who has used deadly force may not be arrested or charged with a crime without probable cause to believe it was not justified.
I've been making this point myself for a while now. A related point, which I may or may not have made here specifically, is that very wealthy people---the ones Buffett is advocating taxing more heavily---have a fairly low marginal propensity to consume. When they get more money, they may spend a little bit of it on personal consumption, but they pretty much have all their material desires covered. When more money comes in, they'll probably just throw it on the pile---which means it gets invested---or donate it to charity.
All of which is to say---you can't really tax the extremely wealthy. You can make them cut checks to the government, but it will have very little impact on their personal consumption. Mostly it will just reduce the amount of money they invest or donate to charity. Now, Buffett in particular has pledged to donate virtually all of his money to charity. Mostly third-world charities. When he says "tax me more," what this means in effect is that we should take money that would have gone to productive investments and/or poor people in the third world, and use it to subsidize middle-class Americans.
I'm loving the way this thread has leftists spouting libertarian talking points. A pity they don't understand that the very same arguments apply to raising taxes.
You're missing the point entirely. If someone routinely gave large sums of money to other for-profit businesses for no reason, but only a penny to Nordstrom's every now and then, and said that we should all be forced to pay more money to Nordstrom's, it would be entirely appropriate to ask, "Hey, what the hell?"
Let's not extend this analogy any further. For the sake of the kittens.
So...basically, if we give the government more money to use at Congress's discretion, it can't be trusted to spend it as wisely as the private sector would. That's the whole point.
That's the big outlier in terms of billionaires per capita. The US is next at about a quarter as many, Russia and Germany at about half of that, and Turkey(!) and the UK lagging just a bit behind. Oddly, Singapore doesn't have many, which is surprising, given that it's one of the richest countries in the world, with policies that generally seem conducive to the accumulation of large sums of wealth. Maybe Murali can shed some light there.
I'm just not seeing the pattern E.C. is alleging, other than Russia and Turkey. Insofar as it's a real thing, I would attribute it to natural resources and/or corruption. Where vast fortunes are earned through making stuff, they're correlated with economic growth. Where they're earned through graft or digging stuff out of the ground, probably not so much. That fits for Russia, but I have no idea why Turkey has so many billionaires.
And while I’m a big fan of R1 research universities, taxpayers can fairly question how much they should be asked to pay for an educational system in which very highly paid people don’t do much educating.
The argument for subsidizing scientific research is actually much stronger than the argument for subsidizing higher education. The benefits of higher education are largely internalized by the student, whereas the benefits of scientific research are much more difficult to externalize. Insofar as higher education is about signalling---and that's a big part of it, especially for non-STEM majors---the externalities can actually be negative, contraindicating subsidy.
Which countries are you talking about? Hong Kong has by far the greatest number of billionaires per capita, and they've been growing like crazy despite being near the top of the heap already.
I’ll take less new drugs over the next twenty years (especially since modern Big Pharma is so focused on basically extending their patents by coming up with slightly different versions of the same drug) if more people have access to the drugs we already have.
I find it amusing that someone can explicitly endorse policies that retard progress and still call himself a progressive.
Oh, and as someone with a 50% chance of needing a new medical innovation to make it past 60: FOAD.
*Comment archive for non-registered commenters assembled by email address as provided.
On “First Quarter 2012 GDP At 2.2%”
Right. The US numbers are annualized, but the New Zealand ones in James' link are not, as far as I can tell.
"
Note that these are annualized numbers, whereas the ones in your link appear not to be. That is, our economy didn't actually grow 2.2% last quarter; it grew about 0.54%, which would be 2.2% if compounded at that rate for a full year.
On “An Andy Rooney Moment”
You complain, but do you really want conttrol over your life's savings made available to anyone who manages to get into your email account?
"
You need a digit and a punctuation symbol in your user name? I've never heard of anything like that before.
On “Debt and Career Choices”
Imagine the effect of dumping a majority of college kids in to the labor market in terms of unemployment and wages.
We could counteract it by breaking a bunch of windows.
"
That said, I also don't think that we should continue subsidizing student loans. If you can't make a college education pay for itself, you probably shouldn't be going.
"
It's worth noting that STEM programs have much higher attrition rates than most other fields. We have all the students we need going in to STEM fields---they're just not making it through. It's not at all clear to me that there are large numbers of students who actually have the aptitude to get through a STEM program but are instead choosing some other field.
"
Not quite. I think they try for it, but they don't actually force the scores to fit that curve. By 1995 the mean composite score had drifted down to 900, and they did a renorming to push it back up to 1000. They also greatly lowered the ceiling, changing the number of students scoring 1600 from one in 150,000 to one in 1,500. I kind of benefitted from that, since I got a 1600 two years later, before people realized that it wasn't all that great anymore.
"
Ah...Folk Keynesianism!
On “Why I Read Bryan Caplan”
Correction: Less after-tax income means less money available for investment and charitable donations
"
Again with the all or nothing, either all military spending is productive or none of it is., isn’t this a false choice?
Here's what I said: "Government makes productive investments, but that’s a fairly small percentage of its budget, unless you count all military spending as productive investment."
If we count all military spending as productive investment, then we can say that productive investment is a reasonably large chunk of government spending. If we count only a minority of military spending as productive investment, then I would say productive investment is a fairly small percentage of government spending. You need a big chunk of military spending to get from small to big.
And further including things you’ve classified as merely consumption – a healthy, educated populace is a prerequisite for the kind of high value-added niche the US hopes to compete in.
Well, that's the ad copy, anyway. In reality, most government spending is on the retired, who by definition are pretty much done contributing to the economy, and on those who don't have the cognitive ability needed to do high-value-added work.
But I guess we’ll also disagree as to whether the government can build opportunity in sections of society that’re deprived via redistributive policies, and whether we can count that as a kind of investment.
Is there any evidence that that's actually working?
There are lots of goodies that I’d like to pay for, public broadcasting, national endowments for the arts and humanities, basic scientific research, a world class public university system
I don't understand the obsession with having world-class public universities, when our private university system is arguably the best in the world, nor the allure of subsidizing the media consumption of the professional class. But I like research, too. You know what the actual priorities of our government are right now? What it will do if it gets more money? Shore up middle-class entitlements without raising middle-class taxes. So that middle-class people can consume more. That's why we'd be diverting money away from private investment and charity.
As for your final point, getting in the way of the wealthy’s doing good work, I think you’re more sensitive to the consequences of a higher top tax rate than I am.
And you accuse me of all-or-nothing thinking. Look: It's basic math. Let Y be pre-tax income, T be taxes paid, C be personal consumption, D be donations to charity, M be marginal propensity to consume, and I be investment:
I + D = Y - T - C
Now let's increase taxes:
I' + D' = Y - T' - (C - M(T' - T))
When M is zero, this reduces to:
I' + D' = Y - T' - C
Which means:
(I + D) - (I' + D') = T' - T
In other words, raising taxes on someone whose marginal propensity to consume is zero will result in a reduction in his investment and charitable donations exactly equal to the amount by which his taxes were raised. If marginal propensity to consume is merely low rather than zero, then a small amount is redirected from consumption, but the lion's share still comes from a reduction in investment and charitable donations.
It doesn't matter that you're not trying to punish him. It doesn't matter that you're not taking everything. Less pre-tax income means less money available for investment and charitable donations. Unless the government's marginal expenditures---again, this means shoring up middle-class entitlements without middle-class tax hikes---are more important than that, this is bad policy.
On “Testing ideology”
In any business, there is a power structure; there is an ownership, investors, partners, then contract employees, then at-will employees.
I worked at a big-name software company, and the at-will positions were definitely higher-status and more desired than the contract positions.
On “Addressing Income Inequality”
Things like social welfare programs are starved, while defense spending explodes.
This comment is grossly ahistorical. Except for a brief blip during the late '90s, defense spending has never been lower as a percentage of total federal spending than it is now.
On “Why I Read Bryan Caplan”
Government makes productive investments, but that's a fairly small percentage of its budget, unless you count all military spending as productive investment, and even then more than half of governmnet spending goes to subsidize private consumption. And on the margin, the debate is around raising taxes on the rich to enable more spending on private consumption for the middle class, either through shoring up middle-class entitlements, adding new middle-class entitlements, or avoiding middle-class tax increases. Very little of any additional revenue the government gets will be productively invested.
At best, it'll use extra money to pay down debt. Which means that money will be redirected from private investment to private investment. Harmless, but also useless.
Also this, “you can’t really tax the extremely wealthy”, doesn’t really make sense to me.
That is, short of the spiteful marginal tax rates of the 50s, there's no tax policy that will redirect money from personal consumption of the extremely wealthy. Their personal consumption will remain roughly the same, and the extra tax revenues will come from money that would have gone to investment or charity. That's bad tax policy. You want taxes to redirect money from personal consumption, not from investment and charity. It's not about wanting to punish the rich---it's about getting in the way of their doing good work.
On “Florida’s Stand Your Ground Law, Again”
Whoops. I didn't see that DensityDuck pointed that out. But yeah. The law very explicitly says that there must be probable cause to believe that the killing was not justified even to make an arrest. And as a general rule, prosecutors should not file charges unless they have a solid case, as this is unfair to the accused and a waste of taxpayer money.
"
Statute 776.032. A person who has used deadly force may not be arrested or charged with a crime without probable cause to believe it was not justified.
On “Why I Read Bryan Caplan”
I've been making this point myself for a while now. A related point, which I may or may not have made here specifically, is that very wealthy people---the ones Buffett is advocating taxing more heavily---have a fairly low marginal propensity to consume. When they get more money, they may spend a little bit of it on personal consumption, but they pretty much have all their material desires covered. When more money comes in, they'll probably just throw it on the pile---which means it gets invested---or donate it to charity.
All of which is to say---you can't really tax the extremely wealthy. You can make them cut checks to the government, but it will have very little impact on their personal consumption. Mostly it will just reduce the amount of money they invest or donate to charity. Now, Buffett in particular has pledged to donate virtually all of his money to charity. Mostly third-world charities. When he says "tax me more," what this means in effect is that we should take money that would have gone to productive investments and/or poor people in the third world, and use it to subsidize middle-class Americans.
"
I'm loving the way this thread has leftists spouting libertarian talking points. A pity they don't understand that the very same arguments apply to raising taxes.
"
We have crowdsourcing of policy decisions. It's called democracy. Your people hate us because we criticize it.
"
You're missing the point entirely. If someone routinely gave large sums of money to other for-profit businesses for no reason, but only a penny to Nordstrom's every now and then, and said that we should all be forced to pay more money to Nordstrom's, it would be entirely appropriate to ask, "Hey, what the hell?"
Let's not extend this analogy any further. For the sake of the kittens.
"
So...basically, if we give the government more money to use at Congress's discretion, it can't be trusted to spend it as wisely as the private sector would. That's the whole point.
On “Addressing Income Inequality”
That's the big outlier in terms of billionaires per capita. The US is next at about a quarter as many, Russia and Germany at about half of that, and Turkey(!) and the UK lagging just a bit behind. Oddly, Singapore doesn't have many, which is surprising, given that it's one of the richest countries in the world, with policies that generally seem conducive to the accumulation of large sums of wealth. Maybe Murali can shed some light there.
I'm just not seeing the pattern E.C. is alleging, other than Russia and Turkey. Insofar as it's a real thing, I would attribute it to natural resources and/or corruption. Where vast fortunes are earned through making stuff, they're correlated with economic growth. Where they're earned through graft or digging stuff out of the ground, probably not so much. That fits for Russia, but I have no idea why Turkey has so many billionaires.
"
And while I’m a big fan of R1 research universities, taxpayers can fairly question how much they should be asked to pay for an educational system in which very highly paid people don’t do much educating.
The argument for subsidizing scientific research is actually much stronger than the argument for subsidizing higher education. The benefits of higher education are largely internalized by the student, whereas the benefits of scientific research are much more difficult to externalize. Insofar as higher education is about signalling---and that's a big part of it, especially for non-STEM majors---the externalities can actually be negative, contraindicating subsidy.
"
Which countries are you talking about? Hong Kong has by far the greatest number of billionaires per capita, and they've been growing like crazy despite being near the top of the heap already.
"
I’ll take less new drugs over the next twenty years (especially since modern Big Pharma is so focused on basically extending their patents by coming up with slightly different versions of the same drug) if more people have access to the drugs we already have.
I find it amusing that someone can explicitly endorse policies that retard progress and still call himself a progressive.
Oh, and as someone with a 50% chance of needing a new medical innovation to make it past 60: FOAD.
*Comment archive for non-registered commenters assembled by email address as provided.