3
   

Is the Liberal Political Mind one dimensional?

 
 
okie
 
  1  
Reply Thu 18 Jan, 2007 05:23 pm
Cycloptichorn wrote:
The curve is only a theoretical construct and not really useful in the real world, for there are a host of other factors which affect revenues besides just taxation.

Here's Joefromchicago's excellent response to your point on page 3 of this thread, which you didn't respond to:

Quote:

We don't need to speculate. The highest marginal income tax rate in US history was 92% for incomes over $400,000 in 1952-53, and the rate was above 90% for the period from 1950 to 1963. In that time period, the US GDP rose from $293.8 B (2005 dollars) to $617.7 B, an increase of about 211%. Taking a broader perspective, the top marginal tax rate was above 70% for the period from 1936 to 1980, during which time the GDP rose from $83.8 B (2005 dollars) to $2,789.5 B, an increase of around 3,329% (GDP figures from here -- download with MS Excel).

Now, to be fair, that's just the top marginal tax rate. The effective rates were, at all times, substantially less. If the tax were truly a confiscatory 100% on all wages, then we would expect somewhat different results. But since no one is proposing such a rate, and no such rate has ever been imposed, the most that we can do is look at how people reacted to changes in the marginal rates. And, from the historical evidence, it seems quite clear that economic output, in general, was not adversely affected by high marginal tax rates.


You say that

Quote:
but it would seem that recent tax breaks by Bush bringing higher revenues seem to indicate the rates are still on the high side of optimum.


Yet, we experienced growth far above what we are seeing right now, during a time in which tax rates were far higher. I have a hard time understanding why you would believe that the tax rate is still too high given the body of historical evidence showing that the opposite is true.

Simulateneously, I find it difficult to understand how the tax rate is too high if we are so deep in deficit and debt. Our country is not actually growing when we add an average of 1/2 trillion a year to the debt; we are merely putting off our bills and calling it growth.

Cycloptichorn


Quickly, because I need to do something else, but obviously there is a curve and a relationship. Acknowledging that is a step in the right direction, and that is the primary purpose of this thread. Argument over the configuration of the curve is another subject. Also, I think I mentioned this already, the point of optimum economic growth is not the same as the point of optimum tax revenues. We have to balance one against the other. And I happen to believe that spending is the primary problem, not sufficient tax rates, but I do agree, cyclops, that if we spend an amount, we need to pay for it by taxing ourselves at the rate necessary. I would prefer to look at the problem from the other way, that if we tax ourselves at a certain rate, then we live within the budget. After all, as private citizens, we don't buy what we want first and then decide how to pay for it, or at least we shouldn't. We should first know what we have to spend, and then we decide what we can afford.
0 Replies
 
old europe
 
  1  
Reply Thu 18 Jan, 2007 05:36 pm
okie wrote:
It is better than no evidence at all, oe.


I think that's a false dilemma, okie. You don't either have anecdotal evidence or no evidence at all. You have anecdotal evidence, and then you have facts that you could, but don't want to research.

You rather prefer to believe anecdotal evidence. And I would assume that you prefer to believe the anecdotal evidence because it chimes with the beliefs you already hold.

Let me give you an example: What if someone you knew told you that he had personally known a member of the Communist party in the USSR, and that this guy had been living in a luxurious house, driving a big car and eating excellent meals.

Would you tend to agree with him that Soviet communism must have been fabulous - extrapolating from these facts?
0 Replies
 
joefromchicago
 
  1  
Reply Thu 18 Jan, 2007 07:50 pm
okie wrote:
Now, here we have some common ground, Joe. At least there is an admission of a probable curve.

No there isn't.

okie wrote:
There has to be a curve.

No there doesn't.

okie wrote:
Now, I am sure there is much disagreement as to what the curve is shaped like. However, what I think you are talking about here, optimum tax revenues, is slightly different than optimum economic activity, which are related, but not the same. If taxes are necessary, and I think most everybody agrees that they are, we have to balance one against the other, rather than debating each one separately as often happens. Bottom line, tax rates have to affect economic activity because they are extracted from the same equation.

I have never heard anyone debate "optimum economic activity," either in conjunction with a debate over optimum tax revenues or not.

okie wrote:
I do not know for sure which side of the optimum we are on, but it would seem that recent tax breaks by Bush bringing higher revenues seem to indicate the rates are still on the high side of optimum.

No, not really. Even if taxes are on the "good" side of the Laffer Curve and rates are cut, tax revenues will still increase from their new, lower level as a consequence of increases in population and other factors. And that's exactly what happened with the Bush tax cuts. Revenues decreased in the wake of the 2001 tax cut, and then increased from the new, lower level, starting in 2004. Supply siders would have us believe that the tax cuts caused the eventual increase, but much of that increase can be explained by factors that would have occurred regardless of the tax cut.

okie wrote:
My goal here on this thread is to point out the obvious, and that tax rates are not independent, and we should all admit there is a relationship, that the debate is not one dimensional, and then perhaps both Democrats (liberals) and Republicans could agree to bring in the best economic minds to study the curve and how it is shaped. That would be far better than denying the existence of a curve.

The Laffer Curve is unproven, and you have certainly done nothing to substantiate it, aside from your bare ipse dixit. I don't know why we can't debate its existence.
0 Replies
 
joefromchicago
 
  1  
Reply Thu 18 Jan, 2007 08:04 pm
Re: Is the Liberal Political Mind one dimensional?
okie wrote:
Well, a relationship is at least indicated. We can argue exactly what and how much at another time.

What are you talking about? You're arguing that now! You can't delay a discussion of the relationship when that's the basis of your entire argument. If there's no relationship, then your argument is bunk.

okie wrote:
Quote:
Anecdotal evidence isn't evidence.

I disagree with that, and further, it may be worth quite alot in some cases, or almost nothing in some cases. It is evidence, sometimes more direct than in other cases, and it varies as to its worth, but that can be debated in each instance.

Anecdotal evidence is evidence that someone told you an anecdote. But, as old europe correctly points out, you are using anecdotes as a kind of statistical sample, and that is logically invalid.

okie wrote:
A valid point, but the key to the equation is what you point out that taxes can reach a threshold where effort expended is simply not worth the comparable increase in return. I beleive this factor is real and does happen, including my anecdotal examples.

Whether increased taxes make additional labor personally unrewarding is a question that each individual must ask of himself or herself, but it's not the question that you asked.

okie wrote:
I was aware of that. Trickle down economics is another term wherein politicians on each side of the fence take potshots at it. Take the terms and names out of the discussion, Joe, and the fact is there is a curve and there is a benefit of job creators higher upon the ladder giving jobs to job seekers a bit lower on the ladder. It isn' rocket science to figure out that hardly any poverty sticken people provide jobs.

Without question employers provide more direct employment than employees. But that doesn't necessarily mean that the government should be granting tax breaks to employers in the hopes that they will, as a result, provide more employment.
0 Replies
 
okie
 
  1  
Reply Thu 18 Jan, 2007 10:08 pm
old europe wrote:
okie wrote:
It is better than no evidence at all, oe.


I think that's a false dilemma, okie. You don't either have anecdotal evidence or no evidence at all. You have anecdotal evidence, and then you have facts that you could, but don't want to research.

You rather prefer to believe anecdotal evidence. And I would assume that you prefer to believe the anecdotal evidence because it chimes with the beliefs you already hold.

Let me give you an example: What if someone you knew told you that he had personally known a member of the Communist party in the USSR, and that this guy had been living in a luxurious house, driving a big car and eating excellent meals.

Would you tend to agree with him that Soviet communism must have been fabulous - extrapolating from these facts?

If someone told me that about living in the USSR, I would have to balance that against whatever else I've heard about life there through other people. If I know enough people, I think I might get a roughly accurate picture of the situation there, not as exact as economic data for all citizens, but if I have a statistically sufficient sample of anecdotal evidence, it is certainly not useless.

If you talk to people all of your life with the subject of jobs, pay, promotions, and taxes being discussed often, and you hear the same thing many times, wouldn't you tend to think tax rates do affect the behavior of people in ways that are often claimed by people? It may be difficult to quantify without exact data, but the relationship certainly would be highly likely. And in the real world with so many factors in the mix, it is often impossible to isolate a factor with all other factors being static, in order to exactly determine the exact effect. For example, lower the tax rate, and economic activity increases, but nothing is proven because invariably there are other factors also in play, so we end up with different theories concerning the same economic events.

There are still probably economists and politicians that believe communism will work as well as capitalism ....next time. Well, I happen to believe anecdotal evidence of human nature is very valid, including the fact that people tend to work harder if they reap the fruits of their own labor, so I think it is a foregone conclusion that communism will not work as well. I don't have a graph to illustrate the exact level of that phenomenon, but most reasonable people now accept the effect as real.
0 Replies
 
okie
 
  1  
Reply Thu 18 Jan, 2007 10:23 pm
joefromchicago wrote:
okie wrote:
Now, here we have some common ground, Joe. At least there is an admission of a probable curve.

No there isn't.

okie wrote:
There has to be a curve.

No there doesn't.


Please answer the following questions, Joe.

If the tax rate was 100% vs 0%, would economic activity be affected?
If it was 99% vs 0%, would it be affected?
If it was 98% vs 0%, would it be affected?
If it was 90% vs 0%, would it be affected?
If it was 75% vs 0%, would it be affected?
If it was 50% vs 0%, would it be affected?
If it was 25% vs 0%, would it be affected?
If it was 10% vs 0%, would it be affected?

Now, if your answer to all the above questions is no, I think you are nuts, but regardless, the graph would be a straight line, not a curve, and your opinions about this would be correct.

If your answer is yes to only the first one, then the graph would not be flat, but a straight line through 99%, then with a precipitous jump or slope to whatever the effect would be at 100%, and there is a curve that results. It would not look like I think it would look because I would answer yes to all questions, however the effect of 10% might be fairly minimal, so my curve as visualized would start out fairly flat or gently sloping with a steeper climb at the higher tax rates, or drop however you plot the numbers.

But the point is, Joe, you have a curve if you answer even one of the questions yes.
0 Replies
 
okie
 
  1  
Reply Thu 18 Jan, 2007 10:43 pm
I addressed the curve issue already in the above, so I think that should be pretty well nailed down, but now for the other points you argue:
Quote:
okie wrote:
Now, I am sure there is much disagreement as to what the curve is shaped like. However, what I think you are talking about here, optimum tax revenues, is slightly different than optimum economic activity, which are related, but not the same. If taxes are necessary, and I think most everybody agrees that they are, we have to balance one against the other, rather than debating each one separately as often happens. Bottom line, tax rates have to affect economic activity because they are extracted from the same equation.

I have never heard anyone debate "optimum economic activity," either in conjunction with a debate over optimum tax revenues or not.

I am not an economist, Joe, so I am debating this issue in plain language, so you may hear terms you haven't heard before. "Optimum economic activity" relative to tax rates would occur at 0% tax rate I would assume. Hopefully, you can agree with a concept that basic. Since we obviously have to tax to run the government, then we have to balance the relationship of optimum tax revenues and rates with the best economic activity attainable. If taxes were 100%, I do not think that offers much potential for either economic activity or tax revenues. So somewhere in the middle, Laffers curve again, is the level of taxation we can both run a reasonable government and thrive economically.

Quote:
okie wrote:
I do not know for sure which side of the optimum we are on, but it would seem that recent tax breaks by Bush bringing higher revenues seem to indicate the rates are still on the high side of optimum.

No, not really. Even if taxes are on the "good" side of the Laffer Curve and rates are cut, tax revenues will still increase from their new, lower level as a consequence of increases in population and other factors. And that's exactly what happened with the Bush tax cuts. Revenues decreased in the wake of the 2001 tax cut, and then increased from the new, lower level, starting in 2004. Supply siders would have us believe that the tax cuts caused the eventual increase, but much of that increase can be explained by factors that would have occurred regardless of the tax cut.
Good observations, Joe, at least there is an acknowledgement of factors working here. I think it is reasonable for there to be a lag time between the driver of economic stimulants and the stimulation itself, don't you think. As I said before, since so many factors are present besides tax rates, I doubt the pundits will ever agree whether Bush's tax cuts were responsible or not, but I think the argument for them is very defendable by what has happened, if you consider the lag time to be reasonable and expected. The economy is a bit like an ocean liner and does not turn on a dime.

Quote:
okie wrote:
My goal here on this thread is to point out the obvious, and that tax rates are not independent, and we should all admit there is a relationship, that the debate is not one dimensional, and then perhaps both Democrats (liberals) and Republicans could agree to bring in the best economic minds to study the curve and how it is shaped. That would be far better than denying the existence of a curve.

The Laffer Curve is unproven, and you have certainly done nothing to substantiate it, aside from your bare ipse dixit. I don't know why we can't debate its existence.


Well, the curve is unproven in your mind. Laffer did not invent the effect, as it was recognized before he wrote it on a napkin, and really, Joe, it is nothing more than a mathematical equation with proven economic principles plugged in. I believe it is a foregone conclusion long ago, way before Laffer, and I fail to see why it is so difficult for liberals to accept. The curve may not be shaped as Laffer has it, but it has to be a curve nonetheless.
0 Replies
 
old europe
 
  1  
Reply Fri 19 Jan, 2007 05:40 am
okie wrote:
If I know enough people, I think I might get a roughly accurate picture of the situation there, not as exact as economic data for all citizens, but if I have a statistically sufficient sample of anecdotal evidence, it is certainly not useless.


If you have a statistically sufficient sample, it is a statistically sufficient sample and no longer anecdotal evidence.

I wonder what you would regard as a "statistically sufficient sample", though. okie, in your opinion: how many people would you have to ask a specific question to get a statistically sufficient sample out of a total population of 300,000,000 people?
0 Replies
 
parados
 
  1  
Reply Fri 19 Jan, 2007 08:25 am
okie wrote:
joefromchicago wrote:
okie wrote:
Now, here we have some common ground, Joe. At least there is an admission of a probable curve.

No there isn't.

okie wrote:
There has to be a curve.

No there doesn't.


Please answer the following questions, Joe.

If the tax rate was 100% vs 0%, would economic activity be affected?
If it was 99% vs 0%, would it be affected?
If it was 98% vs 0%, would it be affected?
If it was 90% vs 0%, would it be affected?
If it was 75% vs 0%, would it be affected?
If it was 50% vs 0%, would it be affected?
If it was 25% vs 0%, would it be affected?
If it was 10% vs 0%, would it be affected?

Now, if your answer to all the above questions is no, I think you are nuts, but regardless, the graph would be a straight line, not a curve, and your opinions about this would be correct.

If your answer is yes to only the first one, then the graph would not be flat, but a straight line through 99%, then with a precipitous jump or slope to whatever the effect would be at 100%, and there is a curve that results. It would not look like I think it would look because I would answer yes to all questions, however the effect of 10% might be fairly minimal, so my curve as visualized would start out fairly flat or gently sloping with a steeper climb at the higher tax rates, or drop however you plot the numbers.

But the point is, Joe, you have a curve if you answer even one of the questions yes.

Actually, if you only answer one question yes, you would have a straight line, not a curve.

The simple truth is that tax rates during the Clinton years were higher than during the Bush years but economic growth was greater during the Clinton years. Explain this in light of your argument that lower tax rates create for greater growth.

Taxes as % of the economy under Clinton ranged from 18.5-20%
Taxes as % of economy under Bush ranges from 16.5% to 17.9%

GDP growth under Clinton was above 4% for 4 of the 8 years.
GDP growth under Bush has only hit 3.9% once in 6 years.

Of course that is before we factor in the increase in GDP due to deficit spending. Suddenly the argument that lower taxes increase GDP or revenues blows up completely. It might on the extremes but in the range of 17-20% of GDP in taxation it has no effect.
0 Replies
 
DrewDad
 
  1  
Reply Fri 19 Jan, 2007 08:31 am
As Freeduck commented on another thread: We all have little statisticians in our heads, and the sample size is always too small.
0 Replies
 
Baldimo
 
  1  
Reply Fri 19 Jan, 2007 08:57 am
parados wrote:
okie wrote:
joefromchicago wrote:
okie wrote:
Now, here we have some common ground, Joe. At least there is an admission of a probable curve.

No there isn't.

okie wrote:
There has to be a curve.

No there doesn't.


Please answer the following questions, Joe.

If the tax rate was 100% vs 0%, would economic activity be affected?
If it was 99% vs 0%, would it be affected?
If it was 98% vs 0%, would it be affected?
If it was 90% vs 0%, would it be affected?
If it was 75% vs 0%, would it be affected?
If it was 50% vs 0%, would it be affected?
If it was 25% vs 0%, would it be affected?
If it was 10% vs 0%, would it be affected?

Now, if your answer to all the above questions is no, I think you are nuts, but regardless, the graph would be a straight line, not a curve, and your opinions about this would be correct.

If your answer is yes to only the first one, then the graph would not be flat, but a straight line through 99%, then with a precipitous jump or slope to whatever the effect would be at 100%, and there is a curve that results. It would not look like I think it would look because I would answer yes to all questions, however the effect of 10% might be fairly minimal, so my curve as visualized would start out fairly flat or gently sloping with a steeper climb at the higher tax rates, or drop however you plot the numbers.

But the point is, Joe, you have a curve if you answer even one of the questions yes.

Actually, if you only answer one question yes, you would have a straight line, not a curve.

The simple truth is that tax rates during the Clinton years were higher than during the Bush years but economic growth was greater during the Clinton years. Explain this in light of your argument that lower tax rates create for greater growth.

Taxes as % of the economy under Clinton ranged from 18.5-20%
Taxes as % of economy under Bush ranges from 16.5% to 17.9%

GDP growth under Clinton was above 4% for 4 of the 8 years.
GDP growth under Bush has only hit 3.9% once in 6 years.

Of course that is before we factor in the increase in GDP due to deficit spending. Suddenly the argument that lower taxes increase GDP or revenues blows up completely. It might on the extremes but in the range of 17-20% of GDP in taxation it has no effect.


I think we have had larger growth in the last few years then we had before. You have to take into account that Clinton slashed funding of the military greatly and closed down dozens of bases across the US. This all added to his ability to claim surpluses in the US ecenomy which were not a surplus as a whole, but for only a few years.

The economy is in much better shape now then it was when Clinton left (dot com bust, companies cooking the books).
0 Replies
 
joefromchicago
 
  1  
Reply Fri 19 Jan, 2007 09:16 am
okie wrote:
Please answer the following questions, Joe.

If the tax rate was 100% vs 0%, would economic activity be affected?
If it was 99% vs 0%, would it be affected?
If it was 98% vs 0%, would it be affected?
If it was 90% vs 0%, would it be affected?
If it was 75% vs 0%, would it be affected?
If it was 50% vs 0%, would it be affected?
If it was 25% vs 0%, would it be affected?
If it was 10% vs 0%, would it be affected?

Now, if your answer to all the above questions is no, I think you are nuts, but regardless, the graph would be a straight line, not a curve, and your opinions about this would be correct.

First of all, your questions are incomprehensible. 100% vs. 0%? What does that mean? Why are you comparing rates?

Secondly, it is incredibly simplistic (but not surprising) that a supply-sider would speculate on the impact of a 100% tax rate while assuming that all other factors would remain the same. That you would do that, okie, is particularly ironic, given that the entire premise of this thread is that liberals never take the entire picture into consideration. Or, as you put it:
    The liberals so far posting are proving themselves one dimensional, for example they evidently see no relationship whatsoever between minimum wage and employment, and tax rates to economic activity.

Yet you display the same sort of one-dimensional thinking here. Of course a 100% tax rate would change incentive structures, but then it would probably change a whole lot of other things too. Indeed, before a society could adopt a 100% tax rate, it would need to fundamentally alter many of its economic structures. It is, therefore, unthinkable that a society like the US could impose a 100% income tax rate while everything else remained the same.

I can, for instance, imagine a society where a 100% tax rate would work just fine, but it wouldn't look like our society. To give a prosaic example, service staff in restaurants frequently split tips on a pre-determined basis. In effect, they impose a 100% tax on tips, and then divide the money among themselves afterwards. Could this type of system work on a nationwide scale? Perhaps. Could it work without massive changes to the current system. No, not at all.

To ask, then, if economic activity would be affected if the state imposed a 100% income tax rate is a bit like asking if pigs had wings would the price of bacon remain the same.

okie wrote:
If your answer is yes to only the first one, then the graph would not be flat, but a straight line through 99%, then with a precipitous jump or slope to whatever the effect would be at 100%, and there is a curve that results. It would not look like I think it would look because I would answer yes to all questions, however the effect of 10% might be fairly minimal, so my curve as visualized would start out fairly flat or gently sloping with a steeper climb at the higher tax rates, or drop however you plot the numbers.

But the point is, Joe, you have a curve if you answer even one of the questions yes.

Well, as parados notes, if you answer "yes" to one of the questions, the graph would probably look more like a straight line than a curve. But I can't understand your questions anyway, so I don't know what the graph would look like.
0 Replies
 
joefromchicago
 
  1  
Reply Fri 19 Jan, 2007 09:34 am
okie wrote:
I addressed the curve issue already in the above, so I think that should be pretty well nailed down...

Your optimism is unwarranted.

okie wrote:
I am not an economist, Joe, so I am debating this issue in plain language, so you may hear terms you haven't heard before. "Optimum economic activity" relative to tax rates would occur at 0% tax rate I would assume. Hopefully, you can agree with a concept that basic.

No, I can't. If taxes pay for some of the mechanisms that make the market operate more efficiently, then a 0% tax rate wouldn't lead to an optimum level of economic activity.

okie wrote:
Since we obviously have to tax to run the government, then we have to balance the relationship of optimum tax revenues and rates with the best economic activity attainable. If taxes were 100%, I do not think that offers much potential for either economic activity or tax revenues. So somewhere in the middle, Laffers curve again, is the level of taxation we can both run a reasonable government and thrive economically.

That's true only if the Laffer Curve works, and there's no evidence that it does.

okie wrote:
Good observations, Joe, at least there is an acknowledgement of factors working here. I think it is reasonable for there to be a lag time between the driver of economic stimulants and the stimulation itself, don't you think.

Depends on the stimulant.

okie wrote:
As I said before, since so many factors are present besides tax rates, I doubt the pundits will ever agree whether Bush's tax cuts were responsible or not, but I think the argument for them is very defendable by what has happened, if you consider the lag time to be reasonable and expected. The economy is a bit like an ocean liner and does not turn on a dime.

As I said, we should have expected revenues to drop after the tax cuts, and then increase from the new, lower level. Furthermore, because the first round of Bush tax cuts coincided with a recession, we should have expected that result regardless of whether tax cuts were implemented or not. The Joint Committee on Taxation (.pdf), directed by congress in 2003 to estimate the effects of the Bush tax cuts, came up with these results:

http://angrybear.blogspot.com/dynamic_scoring1.jpg

In short, the Bush tax cuts had little effect on the rate of the subsequent revenue increase, although it had a profound effect on the amount of revenues collected. Moreover, the JCT noted that any positive effects of the cuts on the economy would be temporary, and would ultimately be outweighed by the negative effects of the additional debt that the federal government accumulated due to the loss of revenues.

okie wrote:
Well, the curve is unproven in your mind. Laffer did not invent the effect, as it was recognized before he wrote it on a napkin, and really, Joe, it is nothing more than a mathematical equation with proven economic principles plugged in. I believe it is a foregone conclusion long ago, way before Laffer, and I fail to see why it is so difficult for liberals to accept. The curve may not be shaped as Laffer has it, but it has to be a curve nonetheless.

If the curve is not shaped the way Laffer has it, then his theory is bunk.
0 Replies
 
Thomas
 
  1  
Reply Fri 19 Jan, 2007 09:47 am
Baldimo wrote:
I think we have had larger growth in the last few years then we had before.

Why resort to "I think" when actual numbers are just a web search away at the Bureau of Economic Analysis (BEA)?

Code:Annual growth of real GDP, x years into presidency

"0 years into presidency" means 1993 for Clinton, 2001 for Bush


Year Clinton Bush
0 2.7 0.8
1 4.0 1.6
2 2.5 2.5
3 2.9 3.9
4 3.7 3.2
5 4.5 2.5
6 4.2 2.2*
7 4.5 n/a
8 3.7 n/a

source: Bureau of Economic Analysis (www.bea.gov)
* prediction by The Economist magazine.

Average 4.1 3.0

I'll give you that economic growth hasn't been bad under Bush. But compared to Clinton, Bush's results are mediocre. I don't understand what all the conservative hype is about.

Baldimo wrote:
The economy is in much better shape now then it was when Clinton left (dot com bust, companies cooking the books).

Please define "in much better shape". And please tell me how you know that companies are not cooking the books anymore.
0 Replies
 
parados
 
  1  
Reply Fri 19 Jan, 2007 09:47 am
What you think doesn't match up with reality Baldimo.

The economy grew more under Clinton. The dotcom bubble and the cooking the books are already in the economic growth numbers.

Tax as % of GDP in table 1.3 here

GDP growth is in table 1.1.1 here

If you start to break the numbers down it gets even worse for Bush. The only reason Bush's numbers look as good as they do is because the boost to GDP growth by deficit spending. Clinton's economic numbers are good in spite of the reduced government spending. That is what I find interesting.
0 Replies
 
okie
 
  1  
Reply Fri 19 Jan, 2007 09:58 am
old europe wrote:
okie wrote:
If I know enough people, I think I might get a roughly accurate picture of the situation there, not as exact as economic data for all citizens, but if I have a statistically sufficient sample of anecdotal evidence, it is certainly not useless.


If you have a statistically sufficient sample, it is a statistically sufficient sample and no longer anecdotal evidence.

I wonder what you would regard as a "statistically sufficient sample", though. okie, in your opinion: how many people would you have to ask a specific question to get a statistically sufficient sample out of a total population of 300,000,000 people?


You will need to ask statisticians about that, oe. How do you suppose the pollsters take a sample of a very, very small segment of the voters and claim to know what the election results will be? And are often very, very close to correct. I could research for you what a statistically significant sample might be in terms of percentage, but then you also have factors of whether they are unbiased in terms of a good cross section of people, and whether the people lie to the pollsters.

If a significant number of my acquaintances tell me their tax behavior is a certain way, I don't think the information is useless. How much stock I can put into it is how many people told me similar things, whether it is accurate, and whether my acquaintances are close to typical of a cross section of the population.

One good example is peoples opinions of local restaurants. When I hear 3 or 4 friends out of maybe 8 or 10 tell me a certain restaurant is not much good, lo and behold, even though there are thousands living around here, the parking lot of the restaurant will be fairly empty, and before long it usually goes out of business. oe, if a couple of your friends tell you a restaurant is unsanitary, it is no good, and they got sick after going there, would that worry you just a little about going there? Or do you totally ignore it because it is just anecdotal evidence?

Another point, in my example of seeing trees blow down, I used one event to conclude I probably had less trees than before. I am not claiming to use the anecdotal evidence to make an estimate of percentage of trees. In the case of taxes, an observation of some peoples behavior toward a tax policy merely makes a logical observation that the policy is affecting some peoples habits, and is not attempting to quantify the effect. It is only arguing that a relationship does in fact exist. I think it is very valid information to consider.
0 Replies
 
Thomas
 
  1  
Reply Fri 19 Jan, 2007 10:04 am
Sorry, I made a mistake in the Bush column. Here is the correction. The correction doesn't substantially affect the bottom line, though.
Code:Annual growth of real GDP, x years into presidency

"0 years into presidency" means 1993 for Clinton, 2001 for Bush


Year Clinton Bush
0 2.7 0.8
1 4.0 1.6
2 2.5 2.5
3 2.9 3.9
4 3.7 3.2
5 4.5 2.5
6 4.2 3.3*
7 4.5 2.2*
8 3.7 n/a
Average 4.1 3.0

source: Bureau of Economic Analysis (www.bea.gov)
* prediction by The Economist magazine.
0 Replies
 
okie
 
  1  
Reply Fri 19 Jan, 2007 10:09 am
parados wrote:
okie wrote:
joefromchicago wrote:
okie wrote:
Now, here we have some common ground, Joe. At least there is an admission of a probable curve.

No there isn't.

okie wrote:
There has to be a curve.

No there doesn't.


Please answer the following questions, Joe.

If the tax rate was 100% vs 0%, would economic activity be affected?
If it was 99% vs 0%, would it be affected?
If it was 98% vs 0%, would it be affected?
If it was 90% vs 0%, would it be affected?
If it was 75% vs 0%, would it be affected?
If it was 50% vs 0%, would it be affected?
If it was 25% vs 0%, would it be affected?
If it was 10% vs 0%, would it be affected?

Now, if your answer to all the above questions is no, I think you are nuts, but regardless, the graph would be a straight line, not a curve, and your opinions about this would be correct.

If your answer is yes to only the first one, then the graph would not be flat, but a straight line through 99%, then with a precipitous jump or slope to whatever the effect would be at 100%, and there is a curve that results. It would not look like I think it would look because I would answer yes to all questions, however the effect of 10% might be fairly minimal, so my curve as visualized would start out fairly flat or gently sloping with a steeper climb at the higher tax rates, or drop however you plot the numbers.

But the point is, Joe, you have a curve if you answer even one of the questions yes.

Actually, if you only answer one question yes, you would have a straight line, not a curve.

The simple truth is that tax rates during the Clinton years were higher than during the Bush years but economic growth was greater during the Clinton years. Explain this in light of your argument that lower tax rates create for greater growth.

Taxes as % of the economy under Clinton ranged from 18.5-20%
Taxes as % of economy under Bush ranges from 16.5% to 17.9%

GDP growth under Clinton was above 4% for 4 of the 8 years.
GDP growth under Bush has only hit 3.9% once in 6 years.

Of course that is before we factor in the increase in GDP due to deficit spending. Suddenly the argument that lower taxes increase GDP or revenues blows up completely. It might on the extremes but in the range of 17-20% of GDP in taxation it has no effect.


Parados, I do not agree that if you answer one question yes, it is a straight line. It would go flat to 99%, then jump to whatever the effect is at 100%. You could draw it as a bar graph I suppose, or a straight line between the 99% and 100%, but only a fool would believe that if there is an effect at 100%, the the effect would not be something at 99.5% or 99.99% or even 99.9999%, so mathematically, you will end up with a curve. Under your analysis, the curve does not start occurring until just below the 100% tax figure.

Now that we have established the existence of a curve, you can argue about its shape all day.

As to your figures of economic growth under Clinton and Bush, as Joe has already pointed out, there are lots of other things in the mix besides tax rates, so it is foolhardy to say your graphs prove anything.
0 Replies
 
McGentrix
 
  1  
Reply Fri 19 Jan, 2007 10:12 am
Thomas wrote:
Sorry, I made a mistake in the Bush column. Here is the correction. The correction doesn't substantially affect the bottom line, though.
Code:Annual growth of real GDP, x years into presidency

"0 years into presidency" means 1993 for Clinton, 2001 for Bush


Year Clinton Bush
0 2.7 0.8
1 4.0 1.6
2 2.5 2.5
3 2.9 3.9
4 3.7 3.2
5 4.5 2.5
6 4.2 3.3*
7 4.5 2.2*
8 3.7 n/a
Average 4.1 3.0

source: Bureau of Economic Analysis (www.bea.gov)
* prediction by The Economist magazine.


Considering the events that have happened during Bush's Presidency; 9/11, 2 major wars, I think the economy is doing pretty well for itself. Comparing Bush and Clinton doesn't really show much does it? I mean I know it's fun and all to demonstrate that the real GDP numbers don't match up, but Clinton really didn't have the problems Bush has had.
0 Replies
 
gustavratzenhofer
 
  1  
Reply Fri 19 Jan, 2007 10:14 am
What two major wars do you speak of, McGentrix?
0 Replies
 
 

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