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womens_hoops



Joined: 20 Nov 2004
Posts: 2831



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PostPosted: 11/15/05 5:11 pm    ::: Reply Reply with quote

vanyogan wrote:

If you are going to say the data is wrong, then prove it.


did you read Blinder's paper? If you are going to say that the data in his studies are wrong, then prove it.

Top tax rates, incidentally, aren't really the relevant metric for the Laffer Curve because most people don't pay the top rate (nor could they no matter how much they worked), and so the top rate has no effect on their behavior. Average tax rate is probably closer. But to do it right, you have to segment it into the various marginals (and determine whether the labor elasticities are different at different income levels (which they probably are)).

As to the historical data points... correlation, sadly, doesn't prove causation. The economy experienced a substantial boom, in both GDP and tax revenues, after the Clinton tax hikes. That single data point, however, really tells us nothing at all about the Laffer Curve.

It tells us even less about whether EGTRRA pushed us up or down the Laffer hill.


vanyogan



Joined: 09 Aug 2005
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PostPosted: 11/15/05 6:14 pm    ::: Reply Reply with quote

womens_hoops wrote:
vanyogan wrote:

If you are going to say the data is wrong, then prove it.


did you read Blinder's paper? If you are going to say that the data in his studies are wrong, then prove it.

Top tax rates, incidentally, aren't really the relevant metric for the Laffer Curve because most people don't pay the top rate (nor could they no matter how much they worked), and so the top rate has no effect on their behavior. Average tax rate is probably closer. But to do it right, you have to segment it into the various marginals (and determine whether the labor elasticities are different at different income levels (which they probably are)).

As to the historical data points... correlation, sadly, doesn't prove causation. The economy experienced a substantial boom, in both GDP and tax revenues, after the Clinton tax hikes. That single data point, however, really tells us nothing at all about the Laffer Curve.

It tells us even less about whether EGTRRA pushed us up or down the Laffer hill.


Oh I'm not really talking about the Clinton tax hikes, Hell G. H. Bush hiked em too. I think the 1990's boom isn't a good indicator one way or the other necessarily. There were huge productivity gains that were very difficult to explain. My own view is it was the internet but even more so main streaming usage of basic office computer systems as well as telecommunications up grades and lower costs, etc. So the 90's boom had the dot com boom, real productivity gains, and shrinking descretionary spending forced by exploding entitlement spending. The one thing Clinton did was convert long term debt to risky but cheaper short term debt. It really helped cut interest costs in the short term. But his tax rate increase may have taken a percentage point off the next years growth. I don't really think it was significant one way or the other. But you had a lot of structural changes going on that really helped the economy including the peace dividend, and lower energy costs.

I didn't say the data in his papers were wrong. I didn't look at it. I was pretty attentive to the economy in the 1990's, I have my own opinion which is tax cuts do spur growth but not much more after you have created adequate investment incentive, whatever that may be. In the 1990's the biggest concern was interest rates and the deficit. The economy itself was generatingit's own incentives with productivity gains and technological gains. When the deficit became an issue plus stable enrgy costs, investors were satisfied and interest rates also came down.

When Clinton restructured debt that is a pretty strong signal that debt is coming under control. To not do it would have been a fucking disaster. The other change is a republican congress that were serious about cutting the debt, at least they sounded like it.Shocked

If I want to look at economic data and tax rates I just look at the rates and the associated economy allowing some time lag. Like I said, I agree with you, if you look at tax rates and the deficit in the 1970's it totally misses the economic hardship. You had hyper inflation, high energy costs, and an industrial base in a state of severe decline by lack of investment in productivity. It was a difficult economic environment. In the 70's you had the lowest debt to GDP ratio and the worst economy since the depression.

Nixon took an inflationary environment caused by the Arab Oil Embargo and spiraled it out of control with wage and price freezes. It's not always about taxes and deficits.

I think the significance of the 1920's tax cuts is that only 5% OF THE PEOPLE EVEN PAID TAXES. So it's a look at what investors will do with their money when you lower tax rates and what that will do to the revenue. The number of income tax payers under Roosevelt went from 4 million to 40 million and the deficit exploded while the economy staggered along.



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jammerbirdi



Joined: 23 Sep 2004
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PostPosted: 11/15/05 7:07 pm    ::: Reply Reply with quote

LOVED the thread. Thanks for starting it, vanyogan!

(Hope you didn't mind the high colonic. Shocked)

womens_hoops, you rule.



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vanyogan



Joined: 09 Aug 2005
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PostPosted: 11/15/05 7:15 pm    ::: Reply Reply with quote

jammerbirdi wrote:
LOVED the thread. Thanks for starting it, vanyogan!

(Hope you didn't mind the high colonic. Shocked)

womens_hoops, you rule.


You're welcome Jammer, I enjoyed it as well, albeit Hoops has had me Googling today. Imagine that, she won't take my word for it! Shocked



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womens_hoops



Joined: 20 Nov 2004
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PostPosted: 11/15/05 8:07 pm    ::: Reply Reply with quote

thanks jammer.... it's been fun. Beats reading trial transcripts or preparing lectures.

One last note. Vany said earlier: "Bush did two things, both proven methods, to get out of recession. He increased spending and cut taxes."

There's a certain irony in that.

20th century economic thought was dominated by two schools: Keynesian and monetarist. (Of course, there were many off-shoots and variations within them.)

The Keynesian school advocated the use of fiscal policy -- i.e., increased govt spending and, to a lesser extent, lower taxes -- to pull out of recessions.

The monetarist school disagreed, and said either that the government should do nothing to pull out of recessions, or that the government should use only monetary policy -- i.e., lowered interest rates via Federal Reserve action.

The Keynesian school was the left/liberal school. It relied largely on the Depression and New Deal experience as its primary historical narrative. The monetarist school was the right/conservative school of Friedman and others. It relied largely on the 70s "stagflation" experience as its primary historical narrative.

There is, of course, still lots of debate about this, and neither side has "won." But my sense is that the consensus among academic economists is that the monetarists were more right than the Keynesians, at least in that the consensus is probably that monetary policy works better.

Hence the irony. The conservative economists may have gotten the better of the academic debate... but as they did, the conservative political party abandoned the theory and adopted the Keynesian view that fiscal policy is the best tool. They learned, as the Dems did 70 years ago, that fiscal policy wins votes.

For more:

http://www.bized.ac.uk/learn/economics/macrocont/debate/
http://www.econlib.org/library/Enc/FiscalPolicy.html
http://www.econlib.org/library/Enc/MonetaryPolicy.html
http://www.econedlink.org/lessons/index.cfm?lesson=EM352&page=teacher


vanyogan



Joined: 09 Aug 2005
Posts: 9673



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PostPosted: 11/15/05 8:20 pm    ::: Reply Reply with quote

womens_hoops wrote:
thanks jammer.... it's been fun. Beats reading trial transcripts or preparing lectures.

One last note. Vany said earlier: "Bush did two things, both proven methods, to get out of recession. He increased spending and cut taxes."

There's a certain irony in that.

20th century economic thought was dominated by two schools: Keynesian and monetarist. (Of course, there were many off-shoots and variations within them.)

The Keynesian school advocated the use of fiscal policy -- i.e., increased govt spending and, to a lesser extent, lower taxes -- to pull out of recessions.

The monetarist school disagreed, and said either that the government should do nothing to pull out of recessions, or that the government should use only monetary policy -- i.e., lowered interest rates via Federal Reserve action.

The Keynesian school was the left/liberal school. It relied largely on the Depression and New Deal experience as its primary historical narrative. The monetarist school was the right/conservative school of Friedman and others. It relied largely on the 70s "stagflation" experience as its primary historical narrative.

There is, of course, still lots of debate about this, and neither side has "won." But my sense is that the consensus among academic economists is that the monetarists were more right than the Keynesians, at least in that the consensus is probably that monetary policy works better.

Hence the irony. The conservative economists may have gotten the better of the academic debate... but as they did, the conservative political party abandoned the theory and adopted the Keynesian view that fiscal policy is the best tool. They learned, as the Dems did 70 years ago, that fiscal policy wins votes.

For more:

http://www.bized.ac.uk/learn/economics/macrocont/debate/
http://www.econlib.org/library/Enc/FiscalPolicy.html
http://www.econlib.org/library/Enc/MonetaryPolicy.html
http://www.econedlink.org/lessons/index.cfm?lesson=EM352&page=teacher


Thanks Hoops! I tend to go with Freidman, yet I don't think either is ideal. I think Tax cuts was partially structural as I indicated earlier with Kennedy and Reagan. After 9/11, increased government spending was inevitable, add in the obvious political necessity of both and there ya go.



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pilight



Joined: 23 Sep 2004
Posts: 66773
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PostPosted: 05/18/22 9:16 pm    ::: Reply Reply with quote

https://twitter.com/sahilkapur/status/1527092111195226114

Quote:
Former President George W. Bush: “The decision of one man to launch a wholly unjustified and brutal invasion of Iraq. I mean of Ukraine.”



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Howee



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PostPosted: 05/18/22 9:28 pm    ::: Reply Reply with quote

pilight wrote:
https://twitter.com/sahilkapur/status/1527092111195226114

Quote:
Former President George W. Bush: “The decision of one man to launch a wholly unjustified and brutal invasion of Iraq. I mean of Ukraine.”

I'm sorry....I think he's just insufferably cute, despite the reality behind his *flub*. Razz Laughing



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Ex-Ref



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PostPosted: 05/19/22 7:21 am    ::: Reply Reply with quote

pilight wrote:
https://twitter.com/sahilkapur/status/1527092111195226114

Quote:
Former President George W. Bush: “The decision of one man to launch a wholly unjustified and brutal invasion of Iraq. I mean of Ukraine.”


OMG! You remembered a thread from 17 YEARS ago???? Do you have a database of thread topics or something??



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