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Lawrence of Arabia
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of the Gulag Archipelago
Apr 2001
time: 06:26
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quote:
If you want to subsidize R&D I don't have a problem with that, but that is another issue. |
well i do. dont take my money and give it to a corporation. use markets to determine which product the consuemr buys,
look at that dumbass bush for example. in his state of the union address he said he wants to pump more gas AND subsidize fuel cell cars. i almost broke my tv when i heard that. by pumping more gas, he will decrease price of gas and by subsidizing fuel cell cars, he will also decrease price, meaning that relatively, there is no change. do one or the other, but not both. what a waste of money.
you wanna have a cleaner environment? let the price of gas rise. that way people will switch to cheaper methods of making stuff. now you say that to do that you wanna tax it. lets see. how do we determine how much to tax it. because if we tax it too much, then we will artifically kill the economy which is based on gas, and if we tax it too little, well then we still have a market failure dont we?
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DuncanK
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Evil Empire
Dec 2002
time: 21:26
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quote:
Originally posted by Lawrence of Arabia
lets follow this train of thought. more fiscal spending, which leads to more fiscal deficit, which leads to more government borrowing from private banks to cover the deficit, which means less money in the banks, which means the price of money will increase, which means increased interest rates, which means decreased investement from the pricate sctor, which means that dropping the interest rates from the Fed have less effect which means that the government will crowd out private enterprise which means that resources will no longer be allocated efficiently.
thanks, but no thanks. |
First, I didn't say anything about a deficit. There would be both more taxes and more spending. Second, even if there was a deficit it would not likely cause interest rates to go up, and even it they did go up the Fed would just lower them back down because there isn't much inflation.
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Lawrence of Arabia
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of the Gulag Archipelago
Apr 2001
time: 06:26
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quote:
owering the interest rates won't do any good. They are already low. When they are this low lowering them has very little effect. Look at Japan.
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which is exactly what i said. now we need to cut taxes for the poor so that they will spend more money.
and japan is not a good example because they have deflation, and we dont.
quote:
In your model G is spending minus taxes. If you increase taxes and spending by the same amount there is no injection and no crowding out. |
i guess that we will ignore exogenous and indogenous spending for the sake of this arguement
if you increase your spending and at the same time cover that increased spending with increased taxation, then relatively speaking, nothing has changed. you have increased government expenditure, but decreased consumption and maybe some investment. however, you are now using a lot more resources then before, because the government is not as efficient in using these resources. why would you want to do this? you can acheive the same amount of growth using less resources when you let private enterprise have a free hand.
and then with increased spending, what are you going to spend it on? defense? if you spend it on defense, that will send a signal to the market, and all of a sudden, there will be lots of defense contractors, way more then could have been supported under current expenditures. and when companies move into defense, there will be less production in other sectors of the society. this is how we artificially create a glut in one commoditiy, and a shortage in others.
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DuncanK
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Evil Empire
Dec 2002
time: 21:26
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quote:
Originally posted by Lawrence of Arabia
which is exactly what i said. now we need to cut taxes for the poor so that they will spend more money.
and japan is not a good example because they have deflation, and we dont.
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The poor pay more local taxes than federal taxes. Increasing spending would be more effective.
quote:
Originally posted by Lawrence of Arabia
i guess that we will ignore exogenous and indogenous spending for the sake of this arguement
if you increase your spending and at the same time cover that increased spending with increased taxation, then relatively speaking, nothing has changed. you have increased government expenditure, but decreased consumption and maybe some investment. however, you are now using a lot more resources then before, because the government is not as efficient in using these resources. why would you want to do this? you can acheive the same amount of growth using less resources when you let private enterprise have a free hand.
and then with increased spending, what are you going to spend it on? defense? if you spend it on defense, that will send a signal to the market, and all of a sudden, there will be lots of defense contractors, way more then could have been supported under current expenditures. and when companies move into defense, there will be less production in other sectors of the society. this is how we artificially create a glut in one commoditiy, and a shortage in others. |
The government won't use more resources. The increased spending will be in the form of a transfer payments. So spending and investment wouldn't decrease, and hopefully would increase and take up the slack.
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16-03-2003 12:25
Go study your public finance textbook Imran.
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