Timewaster's Guide Archive
General => Everything Else => Topic started by: EUOL on May 29, 2003, 06:36:28 PM
-
All right, so I'm curious. Anyone know any real economic theory? I'm not asking for rightist or leftist arguments--I get plenty of those from television pundits. My father claims that cutting taxes, even bringing a government into a deficit, is the only way to stimulate an economy. He, however, is rather conservative in his political ideals. Anyone know about such things?
-
Yeah. I'm about to do my Economics A levels.
His comment is kinda correct - it is one way to charge the economy. Other ways include mucking with interest rates, increasing government spending and so on.
-
Well, EUOL, you know that my twin graduated in Economics and is currently studying business law and tax law. When I get around to it I could telepathicly contact him to answer your question. Or you could send him an email?
-
Oh, I'm not THAT interested. Just curious, forum-wise, what people think on the topic.
-
The way to stimulate the economy is to get money circulating. That means getting people to buy things, so that companies will give money to other companies so everyone is making things, which requires giving money to raw materials producers. Which means that everyone is getting mroe money and therefore spending more. Cutting taxes helps that because people have more money on hand to spend. Interest rates do the same thing. Government spending obviously starts this cycle so you don't have to rely on thousands/millions of individuals to do it for you.
Essentially, all the ways of doing it usually involve the gov. holding on to less cash in the long run.
-
Essentially, all the ways of doing it usually involve the gov. holding on to less cash in the long run.
Not IR. That is just the government persuading people to spend, not divulging any of its cash.
Probably why its a popular method.
-
I'm no economy expert, in fact I know very little.. but this whole idea of cutting taxes to stimulate the economy just doesn't make sense to me. The way I see it, it'll give big corporations and rich people a break, and make things a tad easier in the short term for families by giving them some temporary relief.
What I DON'T see it doing, is creating jobs or helping small businesses, which are the two things I consider to be the most significant reflections of a healthy economy.
-
The theory is that it does create jobs, or at least prevent the loss of jobs.
Illustration:
Company A has $1,000
Co. normally has to pay $200 in taxes
It costs $500 to get their product to market
Salaries for Company A's employees cost $400
$200 + $500 + 400 = $1100. Where does company A make up the $100? Well, part of it comes from canning employees. If the taxes are reduced by the gov, however, fewer employees must be cut to keep the company viable. Now multiply those numbers by 1000 or a million, and you're talking not just about a lot of money, but about the salaries of a lot of people. Now, proving that it CREATES jobs is beyond my limited econ. knowledge. But it seems like it's effective damage control to a point. It even stimulates spending: when most individuals don't have to give their cash to the gov. they have a tendency to spend it. (for some reason, when humans have spare cash, they don't make major investments, they spend it -- companies invest, but either way, it's cash in use and good). They don't stick it in a sock drawer.
Which is the theory behind Bush's tax rebate. There's a lot of opposition stating that HUGE deficits will result because of it. But what are most people going to do with $100 (essentially free? After all, they thought it was already gone and even people who follow budgets will have created them not counting on the $100, it's essentially extra cash with no plan). Well, they might go pick up that game or DVD they've been wanting. They go out to dinner or buy extra ice cream, or whatever. spending increases company profits, which encourages them to grow, which means more jobs.
-
Posted on: Today at 3:03am
I'm no economy expert, in fact I know very little.. but this whole idea of cutting taxes to stimulate the economy just doesn't make sense to me. The way I see it, it'll give big corporations and rich people a break, and make things a tad easier in the short term for families by giving them some temporary relief.
What I DON'T see it doing, is creating jobs or helping small businesses, which are the two things I consider to be the most significant reflections of a healthy economy.
Hardly. It gives everyone a break. SE's example hit it on the head.
It creates jobs by increasing spending. If a company normally sells... say 6000 products a month, but suddenly they are selling 6500 a month, then they are very likely to hire extra staff to cope - new production staff, overseers for them, etc. It all filters down.
Generally speaking, having lotsa cash moving around is great for growth - say you go out and buy a extra microwave. Think for a moment... how many people's jobs depend upon that microwave? The guy who makes it. The guy whose shop sells it. The truck driver. The guys who make the trucks. The guys who make the machines that make the microwave... A huge chain of people, all of whom benefit in a small way, in both security of job and their salaries, from that extra microwave.
Oh, and your contention that it helps only big businesses (i bet you wanted to use the term "Fat cats") and is therefore bad is rather moronic. Ever thought who developed cookers, who developed electricity, who develop medecine... not small businesses. Big businesses. Ones who had cash (therefore bringing us back to our tax rebate point) to spend on R&D, for teams of scientists to labour on these inventions. Businesses should be encouraged to do this, not punished for offending leftie sensibilities.
-
Wow! entropy bashed lefty sensibilities and it wasn't ME! In fact, he AGREED WITH ME!
*watches moon for signs of blood*
-
By Entropy:
Oh, and your contention that it helps only big businesses (i bet you wanted to use the term "Fat cats") and is therefore bad is rather moronic.
By Spriggan:
Blah blah blah X-box
Can I change my forum title to "Whipping Boy?"
Edit: Never mind, took care of it.
-
Lol.
Brian : good man. I hearby title you "scapegoat". Remember people, it's brians fault.
SE: first time for everything man. ;)
-
Brian : good man. I hearby title you "scapegoat". Remember people, it's brians fault.
Great! Now I can go rob that bank and kill that guy... er...
wait. I'm not s'posed to say that out loud....
-
Actually, the free trial of the Whipping Boy ScapeGoat Lite service only entitles you to defer blame of Innocent Mistakes and Minor Offenses.
Defering Significant Offenses, including those with potentially life-altering consequences, is only available to clients that have subscribed to the advanced WB ScapeGoat Deluxe plan at a low cost of only $229.95 per month.
Anything warranting jail time, however, will require an upgrade to the ScapeGoat Xtreme service. One-time pricing packages start at $3995, depending on the potential jail term that could be sentenced. Financing is available with a 16.5% APR for qualified first-time buyers.
Whipping Boy has terminated signing for our death sentence proxy package, RedScape, due to overwhelming response. Please contact your friendly local Whipping Boy agent for more information.
-
terminated the death sentence service. Heh.
-
One of my friends likes the following comment:
If someone attempts suicide but fails, do you impose a death sentence in response?
-
I'm going to have to scan that comic I have about the terminally ill prisoners on death row... when i get a scanner that works.