Randydeluxe wrote:MrJonno wrote:The only people who vote republican who arent racist, sexist, religious wingnuts are those who think tax cuts are more important than whether you are racist,sexist or a religious wingnut.
This is generally correct, but the economic side isn't based as much in faith as you might think.
(The racist, sexist, religious stuff is all faith-based, and all of the right wing in the U.S. is aiding and abetting that.)
There are two reasons that tea baggers in the U.S. love to refer to themselves as "libertarians". One is that they can't stand how their party, the republicans, are forced by the arrangement of the republic to occasionally move toward the middle and compromise. In a universe with a god, there is right and there is wrong, and compromise assigning points in the grand scoresheet to that which is wrong. Therefore, rather than even admit the name of the party that they uniformly vote for in the privacy of a ballot, they call themselves something else. "I'm not a republican; I'm a
conservative." The sad thing is, the set of issues on which conservatives agree with libertarians are issues of economics: the discrete set of issues on which republicans, conservatives, libertarians, and tea baggers have been uniformly and consistently wrong every single election cycle for decades.
In that awful Venn diagram, there is one section of people who are generally correct on social issues, such as how we should treat people of different races, sexes, religions, orientations, etc.: the libertarians. On those issues, they overlap with the left wing in the U.S.
Unfortunately, what really matters is economics. People don't care about equal standing if they're starving, they don't care about improving the world if they aren't educated, and there's no point in putting some jam on the bottom shelf where the little man can reach it if the little man's arms don't work because he has no access to health care. When we get the economics right, we create a platform on which the social issues can stand.
Back in February, there was an interesting poll of of economists regarding the effectiveness and value of the American Recovery and Reinvestment Act of 2009. You should read it:
http://www.igmchicago.org/igm-economic- ... LNJL1oz4Xi
In the United States for the last 30 years, there has been a natural experiment that is testing the two major macroeconomic theories - Neo-Keynesianism and Real Business Cycle. At any given time, there have been a *lot* of economists on the RBC side. However, the facts are kicking their asses. The RBC models have been predicting rampant inflation and skyrocketing Federal bond rates for four years now, and the trends keep going in the directions predicted by the Neo-Keynesians.
On these very discussion forums, you can look back a couple of years and find certain individuals guaranteeing inflation in 2010, then again in 2011. That happen.
The question of whether there are stimulus effects from tax cuts is not a Laffer question, but a Keynes question, and the distribution of answers is unsurprising and uncontroversial. Income tax cuts would impact demand and thereby stimulate a demand-depressed economy. However, they aren't very efficient at it. The rich have a much higher marginal propensity to save, and much of the tax cut would likely be banked. Demand-focused stimulus is best focused on those who have high propensity to spend, or on activities that unlock other spending (mortgage relief).
The empirical research on the Laffer Curve is that you don't actually get a net-positive fiscal result from tax cuts unless effective tax rates are north of 70%. Few governments have ever tried that, and the only example I know of comes from a short-lived taxation experiment in Sweden.
That said, inefficiencies and incentive problems in tax policies are real, and thus any government program funded by them needs to have a sufficiently high payout to be worth the economic burden of taxation, on top of the cost of the actual program itself. Since the high wealth of the rich lowers the marginal benefit of income to them (a dollar to Bill Gates is worth much less than a dollar to a homeless man), mild redistribution and well-designed safety net policies are usually easy to justify on the basis of economic analysis.
Keynesian economics is really, really hard to understand. It's extremely counterintuitive, flying in the face of what everyone "knows" from how to manage a household. Just remember:
[*]Households can't print money.
[*]Households can't borrow money at a rate lower than the rate of inflation.
[*]When households cut the budget, that doesn't result in household income dropping because half the household had to be laid off, as they were household employees, or worked for household employees, or sold stuff to household employees, or had contracts with the household.
The U.S. doesn't need Bill Clinton. It
definitely doesn't need any
more republicans in congress. The entire economic situation would improve dramatically if the Fed just bought every underwater mortgage, re-issued it at 95% of actual value, and monetized (printed money to cover) the loss. Logistically, that is a difficult task (identifying, purchasing, and pricing) but the economic impact would be vast.
