How To Fix The U.S. Economy?

[Dorkandproudofit]

There have been a lot of religion-based threads around here, but not a lot of threads about the economy, which has a lot to do with politics. I think it would be interesting if we gave our opinions on the U.S. economy and how to fix it, how to improve it, what caused the current problems and why, etc.

IMO, One major cause of our current problems with the economy was too many tax cuts in the wrong places (i.e. for the richest) and too many bailouts for failing banks. Those banks also gave interest-free loans out to people who had no way to pay them back. Here's my general summary of how to get out of this mess:

1. Return to Keynesian economics, i.e. focus on getting more money into the hands of consumers, and encouraging consumption.

2. No more bailouts for banks. If a bank starts to fail, let it fail. Big or small. HOWEVER! To keep people from losing everything from such a collapse, inprove the FDIC to ensure that people will have compensation if their bank fails.

3. No more big tax cuts. Our country is broke partially because nobody is putting money into our coffers via taxes. Don't tax small businesses, too heavily, though; instead of income tax increases or sales tax increases, focus on taxes that involve shipping and manufacturing within the U.S. Also, legalize and regulate the sale/purchase of marijuana, as it will not only deal
a blow to organized crime (people will go through legal channels rather than having to deal with people who might kill them if they stop buying), it will be a new source of revenue for taxes.

4. Ban outsourcing of jobs to other countries, i.e. make it absolutely illegal, punishable by heavy fines and potentially prison time for the people who do the outsourcing. As for jobs already outsourced, set a deadline for companies to bring those jobs back here and open them up. This will create more jobs, which in turn will get people more money with which to consume.

5. Bring back regulations that keep an eye on large corporations to make sure they play by the rules. If a corporation breaks the law, don't just fine them--increase the taxes that those responsible have to pay.

6. Encourage businesses that deal in consumer goods to raise salaries and benefits for their employees while increasing brand loyalty among said employees. The first part of this plan might sound risky, but it worked for Henry Ford--it's called "welfare capitalism". The idea is, the more money and benefits your employees have, the more productive they'll be. You can even make your money back if you encourage said employees to buy from the very company they work for. Cutting costs by cutting salaries and benefits only works in the short term; long term plans need to take priority if the economy is going to get any better.

Does anyone else have opinions on the subject, or the ideas listed above? What do you think caused this mess, and what could/should be done about it? Discuss.

[Voodoo]

Excellent thread, Dork. I'd like to respond to some of your points.

1] Agreed.

2] Will the cost of the FDIC distribution be more or less than the cost of keeping the bank afloat while it corrects itself?

3] Focused taxing manufacturing that originates in the US is a mistake. Instead there should be a sizeable tax on goods that are not manufactured within the states. I like your idea about marijuana and would propose that it covers prostitution as well. HOw would you propose to regulate legal marijuana? I'd propose to regulate legal prostitution the same way that massage therapists are state regulated. FUnny thing is, that scene so frequently dips into the prostitution pot.

4] How about job insourcing? As in, bringing foreign workers here to work below legal rates due to their visa status. Insourcing is just as much of a problem as outsourcing. There should be heavy tax driven penalties that are put up companies that practice this above a certain % of their employee workforce.

5] Many businesses (large, small, non-profits) have very bad ethics. To regulate them would require that those performing the duty be uninterested in under-handed deals. Good luck with that. :)

6] The answer is running a business as a co-op. Here in the states, we are governed by a Republic but the vast majority of us work for Monarchies. There are co-op business in the country but they are far and few between, unfortunately.

What do I think caused all this? Credit lines based on credit lines based on credit lines based on credit lines...

[Jason]

4. Ban outsourcing of jobs to other countries, i.e. make it absolutely illegal, punishable by heavy fines and potentially prison time for the people who do the outsourcing. As for jobs already outsourced, set a deadline for companies to bring those jobs back here and open them up. This will create more jobs, which in turn will get people more money with which to consume.


Fantastic idea that will never happen. Some of those companies would most likely just move their corporate headquarters to another country and therefore be able to say that they are not a US based company and are not bound by that law. Even if they did not do that, they would argue and sue the government over interference in how the company was ran and lose of profit.

Of course if a company or bank took money from a bailout, they should not have any say in the government trying to get jobs back over here.

[Khrymsyn]

1. Return to Keynesian economics, i.e. focus on getting more money into the hands of consumers, and encouraging consumption.

I don't know if more consumption is a way to go here... part of the problem of our economy is that there's too much consumption, and not enough income to offset it. i.e. to far extended credit limits to people who shouldn't be spending money.

2. No more bailouts for banks. If a bank starts to fail, let it fail. Big or small. HOWEVER! To keep people from losing everything from such a collapse, inprove the FDIC to ensure that people will have compensation if their bank fails.

To a point I agree with this. I think (please correct me if I'm wrong) a lot of the problem with what's recently happened is the laws were changed so that banks no longer had to back up their "customer" equity with hard funds. That allowed banks to gamble with money that dipped farther into money that wasn't theirs than they would have otherwise been able to do so. But I could be misunderstanding something I read about that.

3. No more big tax cuts. Our country is broke partially because nobody is putting money into our coffers via taxes. Don't tax small businesses, too heavily, though; instead of income tax increases or sales tax increases, focus on taxes that involve shipping and manufacturing within the U.S. Also, legalize and regulate the sale/purchase of marijuana, as it will not only deal
a blow to organized crime (people will go through legal channels rather than having to deal with people who might kill them if they stop buying), it will be a new source of revenue for taxes.

My tax idea is more along the lines of... instead of taxing income, tax purchases. That way you get tax money from illegal immigrants and tourists and everyone else who spends a dime in the country. You get more taxes from people who spend more, and less from those more frugal. It awards those who invest with their money instead of spending it.

I am not a big believer in eliminating tax breaks solely from the stand point that our tax system currently punishes those who earn more. While a lot of people view rich folks as people sitting on cushy pillows demanding prostrations of the masses, the reality is, the tax money that the rich is paying COULD be going towards more spending and more jobs. Plus, Tax breaks for things like a HOUSE is a good way of rewarding good financial practices (such as purchasing vs. renting).

Instead of eliminating tax breaks, they need to close loopholes and fix the system so that you don't wind up not paying anything close to your fair share.


4. Ban outsourcing of jobs to other countries, i.e. make it absolutely illegal, punishable by heavy fines and potentially prison time for the people who do the outsourcing. As for jobs already outsourced, set a deadline for companies to bring those jobs back here and open them up. This will create more jobs, which in turn will get people more money with which to consume.

Can't do it. The companies will just relocate HQs to outside the company (which many do already to avoid tax payments), and use the laws of the other country and avoid this altogether. This will actually lower jobs, not raise them.

5. Bring back regulations that keep an eye on large corporations to make sure they play by the rules. If a corporation breaks the law, don't just fine them--increase the taxes that those responsible have to pay.

I disagree. I say REMOVE many regulations and simplify the laws pertaining to corporations big and small. PENALIZING large corporations does nothing but reduce available jobs. Right now we've got so many regulations that large corporations need to hire a team of lawyers to figure out where the loopholes are to jump through, and to make it even crazier, if they fail, they've been applying for bailouts and such. Right now our economic system almost punishes honest earnings, and rewards shady practices because of all of the regulations with big gaping legal holes in them. With regulations simplified, if a company's gonna fail, they're gonna fail, and the economy has the ability to right itself again. We're regulated so far the economy can't regulate itself in small "depressions" so attempted to do so in a large crash.

6. Encourage businesses that deal in consumer goods to raise salaries and benefits for their employees while increasing brand loyalty among said employees. The first part of this plan might sound risky, but it worked for Henry Ford--it's called "welfare capitalism". The idea is, the more money and benefits your employees have, the more productive they'll be. You can even make your money back if you encourage said employees to buy from the very company they work for. Cutting costs by cutting salaries and benefits only works in the short term; long term plans need to take priority if the economy is going to get any better.

How would you encourage businesses?

Does anyone else have opinions on the subject, or the ideas listed above? What do you think caused this mess, and what could/should be done about it? Discuss.

I really think a lot of the current mess was caused by the amount of legal "wrangling" that has been done with the economy for DECADES. We've tried to legislate economic cycles to constantly give us "boom" periods, but in reality, a proper economic system SHOULD mostly balance itself out, and unfortunately that DOES mean downtimes with the good. Those downtimes would be way more common, but there wouldn't be as big of a crash when the economy has to correct itself.

I really think to fix the economy, we need the government to take a critical eye at itself, clean itself up, and start cleaning up the mess we've made of all of the laws that control our economic industries. Simplify, straighten, and we should be a-ok (BTW, this includes things like looking at the minimum wage... you know, there's a REASON there's a ton of jobs available for illegal immigrants). I just wonder if we've gotten so convoluted if there IS a way back to a proper balanced market driven system.

[Vigil80]

2] Will the cost of the FDIC distribution be more or less than the cost of keeping the bank afloat while it corrects itself?
While this is certainly a valid point, I think the example such a bank would serve is perhaps as important. If letting a big firm implode sends a message, and makes just one other firm think twice about rolling the dice and counting on a bailout, it might very well be worth it.

[Voodoo]

While this is certainly a valid point, I think the example such a bank would serve is perhaps as important. If letting a big firm implode sends a message, and makes just one other firm think twice about rolling the dice and counting on a bailout, it might very well be worth it.
I like the proposition.

[Shrinn]

I don't know if more consumption is a way to go here... part of the problem of our economy is that there's too much consumption, and not enough income to offset it. i.e. to far extended credit limits to people who shouldn't be spending money.

I like the idea of increased cash consumption instead of credit consumption. That way it helps businesses without being spent by people who shouldn't be spending money. Credit, while awesome, needs to not be abused so much.

My tax idea is more along the lines of... instead of taxing income, tax purchases. That way you get tax money from illegal immigrants and tourists and everyone else who spends a dime in the country. You get more taxes from people who spend more, and less from those more frugal. It awards those who invest with their money instead of spending it.


I like the sound of this. I'm not sure how it'd work in actuality because my knowledge of the economic workings is so tiny, but it certainly sounds like a good idea.


PENALIZING large corporations does nothing but reduce available jobs.

But doesn't not penalizing them encourage these dangerous and harmful business practices?

[DoctorFinger]

There have been a lot of religion-based threads around here, but not a lot of threads about the economy, which has a lot to do with politics. I think it would be interesting if we gave our opinions on the U.S. economy and how to fix it, how to improve it, what caused the current problems and why, etc.

IMO, One major cause of our current problems with the economy was too many tax cuts in the wrong places (i.e. for the richest) and too many bailouts for failing banks. Those banks also gave interest-free loans out to people who had no way to pay them back. Here's my general summary of how to get out of this mess:

1. Return to Keynesian economics, i.e. focus on getting more money into the hands of consumers, and encouraging consumption.

2. No more bailouts for banks. If a bank starts to fail, let it fail. Big or small. HOWEVER! To keep people from losing everything from such a collapse, inprove the FDIC to ensure that people will have compensation if their bank fails.

3. No more big tax cuts. Our country is broke partially because nobody is putting money into our coffers via taxes. Don't tax small businesses, too heavily, though; instead of income tax increases or sales tax increases, focus on taxes that involve shipping and manufacturing within the U.S. Also, legalize and regulate the sale/purchase of marijuana, as it will not only deal a blow to organized crime (people will go through legal channels rather than having to deal with people who might kill them if they stop buying), it will be a new source of revenue for taxes.

4. Ban outsourcing of jobs to other countries, i.e. make it absolutely illegal, punishable by heavy fines and potentially prison time for the people who do the outsourcing. As for jobs already outsourced, set a deadline for companies to bring those jobs back here and open them up. This will create more jobs, which in turn will get people more money with which to consume.

5. Bring back regulations that keep an eye on large corporations to make sure they play by the rules. If a corporation breaks the law, don't just fine them--increase the taxes that those responsible have to pay.

6. Encourage businesses that deal in consumer goods to raise salaries and benefits for their employees while increasing brand loyalty among said employees. The first part of this plan might sound risky, but it worked for Henry Ford--it's called "welfare capitalism". The idea is, the more money and benefits your employees have, the more productive they'll be. You can even make your money back if you encourage said employees to buy from the very company they work for. Cutting costs by cutting salaries and benefits only works in the short term; long term plans need to take priority if the economy is going to get any better.

Does anyone else have opinions on the subject, or the ideas listed above? What do you think caused this mess, and what could/should be done about it? Discuss.
1. Keynesian economics is actually the theory that more gov't intervention in the economy - ie higher taxes, more central regulation - is a good thing. Which is pretty much the opposite of consumers having more money and choice.

2. Agree (more or less) completely. If it's too big to fail, then it's too big to succeed.

3. Lowering taxes is the absolute key to reviving the economy. People can't spend money if the gov't is taking all of it. The current Dem philosophy of "hose the rich" ignores the fact that the rich are generally the ones who run small businesses. Studies historically show that lowering taxes actually increases revenues.

4. This would cripple the economy overnight (if it was even possible). Look around your home at the stuff you use. How much of it was made in the US? Now imagine having to pay double or triple for that product. That's what outsourcing does. Yes it costs jobs, but it allows us to buy products at greatly reduced prices. It would also absolutely devastate the nations we outsource to. In one fell swoop you'd probably topple the gov'ts of Mexico, India, Taiwan and the Philippines. You want to provide tax relief to companies who don't outsource? Fine, but on the macro scale outsourcing is a plus.

5. Was Enron not regulated? AIG? WaMu? GM? Fannie Mae? No, they were all regulated, and in some cases they used the regulations to their advantage.

6. In an economy where people will take almost any job, there's no benefit to large scale increases in salary & benefits for manufacturing jobs. Or to put it another way, which is better for the economy: 2,000 well-paid employees, or 3,000 decently-paid employees?

[RandoM51]

You won't fix our economy without reducing our resource consumption. America's standard of living is not supported by what it produces.

We used to cover most of that by exploiting developing economies where people get paid peanuts for working 80 hours a week. Not too many of those left for us to exploit, nor will the rest of the world turn a blind eye to it.

Simply put, America has been living too high on the hog for too long. Trying to fix that is a great way to make sure you don't get re-elected. Few people are willing to sacrifice any of their quality of life to provide a stable economy in the long-term. Easier to party while Rome burns.

[Chris_D]

Before that, can you guys fix the Japanese economy! Pretty please!!

[Dorkandproudofit]

1. Keynesian economics is actually the theory that more gov't intervention in the economy - ie higher taxes, more central regulation - is a good thing. Which is pretty much the opposite of consumers having more money and choice.

Actually, I'm getting my definition from the history books--and from what Keynes himself said.

[Generation ABXY]

Before that, can you guys fix the Japanese economy! Pretty please!!

Pfft, Japan's not worth saving. I mean, you guys lost a decade - a whole decade! You're not even that big...

[Chris_D]

Pfft, Japan's not worth saving. I mean, you guys lost a decade - a whole decade! You're not even that big...

We're heading for a second lost generation if you believe the reporting at the moment.

[Generation ABXY]

Tie a bell to it.

[jeffbax]

1. Return to Keynesian economics, i.e. focus on getting more money into the hands of consumers, and encouraging consumption.

This is what we've had for the past decade. It's what is fucking things up repeatedly, and you want more intervention? Do not understand your reasoning here.

We need a tremendous reduction in government, not more of it! Spending doesn't save an economy. It's an artificial boost that will only fall eventually.

I agree with you on no bailouts, we need the market to weed out inefficiency, and we need to stop promising people things we can't deliver.

"Taxing the rich" and inhibiting investment hurts everyone. Making generation after generation dependent upon more unsustainable debt hurts everyone (especially the poor).

I would say

1) Massive reversal on Keynesian economics that Bush and Obama have taken us into
2) Large cuts in government bloat, from state pensions to retarded corn subsidies to our huge defense budget
3) Lower taxes for everyone
4) Move to Fair Tax and overhaul our criminally complicated tax code that just lets people go through loopholes
5) Stop propping up companies and ditch the notion of "too big to fail" which removes all incentive for companies to self regulate... why worry of risk when you're always going to be able to steal taxpayer money?
6) Encourage free trade
7) Make it drastically cheaper for companies to operate here
8) Reverse the healthcare boondoggle
9) Give young people an exit strategy from the Social Security / Medicare / Medicaid pyramid schemes

Pretty much a significantly more Libertarian reality. Empower individuals to control their own destiny and stop dependence on government. Let people keep their earnings, be responsible for themselves, and enable the kind of government that made us so prosperous to begin with.

Honestly, I'm reading what you're suggesting and even wonder if you realize the things that have put us in the current situation. To do what you suggest would be a travesty.

[Serapth]

Simply put, America has been living too high on the hog for too long. Trying to fix that is a great way to make sure you don't get re-elected. Few people are willing to sacrifice any of their quality of life to provide a stable economy in the long-term. Easier to party while Rome burns.

This. The average American ( and the government ) is simply in too much debt. Take the licks, let your economy retract a bit and focus on paying down your debt. It sucks, but you have to do it. Even worse, the debt load you have now will be an additional burden which directly robs from the tax base available to pay down debt ( as a certain percentage of GDP is going to have to go to debt maintenance ). Looking out for number 1 might also be a good idea, which means less foreign aid ( which mostly means Isreal, Pakistan and Egypt ) and costly foreign occupations might be a good start, as would vastly decreased military spending offset by increased domestic infrastructure spending, swords to ploughshares if you will.


Things are going to get worse too, as there is a giant baby boom generation about to hit retirement with far too little money set aside for retirement. On the bright side, there is going to be a massive increase in available positions as these people leave the job market. Downside is, they are going to absolutely shitkick the retirement systems ( CPP in Canada, social security and medicare in the US ).

[DoctorFinger]

Actually, I'm getting my definition from the history books--and from what Keynes himself said.I'm using the definition that was taught to me in economics in college, and which has been reinforced by my reading the last few years. Keynes was a staunch interventionist and fan of central planning & authority. He also felt that in a crisis, it was the govt's duty to stop people from saving and get them spending money. While he's right that on a very macro scale that saving can be bad for the economy, I think we'd all agree that on a micro scale it's usually a good thing.

He's also the godfather of the concept of the stimulus packages - including the bailouts. His view is that in tough times the gov't should spend as much as possible, incurring as much debt as necessary and raising taxes as much as necessary, to essentially buy our way out of a recession. I just don't think that's sound economic theory.

[Ink Asylum]

"Taxing the rich" and inhibiting investment hurts everyone.

http://www.balloon-juice.com/wp-content/uploads/2009/03/graph.jpg

Taxing the rich is exactly the opposite of what we've been doing the past few decades. So since most of your solutions seem to revolve around reversing things that you think haven't been working, we should probably start with reversing those relatively low taxes on the rich, since they clearly haven't been working for anyone but the super rich.

[Serapth]

Is that graph really suggesting the rich were taxed to the tune of 90% during the 40s-50s?

[ShivaX]

Is that graph really suggesting the rich were taxed to the tune of 90% during the 40s-50s?

I thought that was common knowledge.

[Ink Asylum]

Is that graph really suggesting the rich were taxed to the tune of 90% during the 40s-50s?

Yup! Keep in mind these are top marginal rates, not top average rates. Those ~90% rates were on income above the top bracket. (http://www.truthandpolitics.org/top-rates.php)

During the 50s, according to that link, that level was $400,000, so the ~90% tax applied only to the dollars earned from $400,001+. Money earned below that bracket is taxed at a lesser amount until you hit the next bracket, and so on.

[jeffbax]

http://www.balloon-juice.com/wp-content/uploads/2009/03/graph.jpg

Taxing the rich is exactly the opposite of what we've been doing the past few decades. So since most of your solutions seem to revolve around reversing things that you think haven't been working, we should probably start with reversing those relatively low taxes on the rich, since they clearly haven't been working for anyone but the super rich.

Or you could argue that the taxes were reactionary and helped prolong the great depression (only offset by the "luck" the US had of a WW2 fueled economy)

Additionally, there was a much much smaller percentage of people earning that amount of money then than today, so much I would not even begin to try to compare them.

[ShivaX]

Or you could argue that the taxes were reactionary and helped prolong the great depression (only offset by the "luck" the US had of a WW2 fueled economy)

Additionally, there was a much much smaller percentage of people earning that amount of money then than today, so much I would not even begin to try to compare them.

The Great Depression lasted until 1988?

That really was a Great depression.

Funny thing is you can nearly invert that graph and it shows our national debt.

Amazingly if you cut taxes and don't cut spending, you run deficits. I know what you're saying, "We can do both!" But really... we can't. Unless you're going to cut into military, SS, medicare or those other untouchable projects. I mean it sounds good and all to say lets just Ron Paul this motherfucker, but the reality of it is actually quite horrific. I think our country is a better place with those pesky agencies like the FBI, FDA and EPA.

[Ink Asylum]

Or you could argue that the taxes were reactionary and helped prolong the great depression (only offset by the "luck" the US had of a WW2 fueled economy)

You could make that argument. Though the argument's kind of weakened when the next big crash happens after taxes dropped again and income inequality shot back up.

Additionally, there was a much much smaller percentage of people earning that amount of money then than today, so much I would not even begin to try to compare them.

So bump up the highest tax bracket until it's only affecting the same percentage of people today as it was back then. Have it only affect people making more than a million a year, or even $10 million. That'd be a fair trade to bring the top rate back up to Pre-Reagan levels.

[Ink Asylum]

Amazingly if you cut taxes and don't cut spending, you run deficits. I know what you're saying, "We can do both!" But really... we can't. Unless you're going to cut into military, SS, medicare or those other untouchable projects. I mean it sounds good and all to say lets just Ron Paul this motherfucker, but the reality of it is actually quite horrific. I think our country is a better place with those pesky agencies like the FBI, FDA and EPA.

Not that cutting the FBI, FDA, EPA, etc would do much.

Not many people actually want to cut big government. (http://www.themonkeycage.org/2010/04/why_its_so_hard_to_cut_the_fed.html)

http://andrewsullivan.theatlantic.com/.a/6a00d83451c45669e20133ec8c3692970b-550wi

Most people would say they want to cut big government but when you tell them that in order to do that it means cuts to Medicaid, Medicare and Social Security support plummets. Not surprisingly, people like programs that take care of the sick and elderly.

[Serapth]

Again, Social Security is on its way towards a giant crash or a huge spike in cost. On the bright side, once the big bubble of old people die off, its percentage of cost should decrease greatly. Time to swing the axe at the DoD though.

Regardless to where you stand on the healthcare debate, you really need to rein in healthcare spending, somehow.

http://upload.wikimedia.org/wikipedia/commons/thumb/a/a1/International_Comparison_-_Healthcare_spending_as_%25_GDP.png/800px-International_Comparison_-_Healthcare_spending_as_%25_GDP.png

[Ink Asylum]

Again, Social Security is on its way towards a giant crash or a huge spike in cost. On the bright side, once the big bubble of old people die off, its percentage of cost should decrease greatly. Time to swing the axe at the DoD though.

The next war should be fought by old people. Problem solved!

[Serapth]

The next war should be fought by old people. Problem solved!

Sadly, that would actually do the trick, where as a conventional war would just exasperate the problem by culling out the up and coming generations.

Really, we need the bengay wars, and we need them now!

[ClannerDelta]

It's simple. Cocoon the elderly into war machines and let them do all the fighting.

Who needs drones when you have Grand pop? You'd have to disable the blinkers though.

[TheEpicOfTyler]

I was listening to an interview with Bill MicKibben today on Science Talk (Scientific American's podcast) and he was talking about his new book which is about this basically.

Here's a quote from his website about the book as I don't have a lot of time to type what he says and how I feel about it.

"Our hope depends, McKibben argues, on scaling back—on building the kind of societies and economies that can hunker down, concentrate on essentials, and create the type of community (in the neighborhood, but also on the Internet) that will allow us to weather trouble on an unprecedented scale. Change—fundamental change—is our best hope on a planet suddenly and violently out of balance. "

It's all about sustainability. We have outgrown what we can support, need to de-industrialize things like farming and dismantle the institutions that are 'too big to fail', as when something goes wrong with them, a lot of things go wrong with them and there's nothing anyone can do about it.

http://www.scientificamerican.com/podcast/podcasts.cfm?id=science-talk

It's a two part interview, I highly recommend listening to it.

[ShivaX]

I was listening to an interview with Bill MicKibben today on Science Talk (Scientific American's podcast) and he was talking about his new book which is about this basically.

Here's a quote from his website about the book as I don't have a lot of time to type what he says and how I feel about it.

"Our hope depends, McKibben argues, on scaling back—on building the kind of societies and economies that can hunker down, concentrate on essentials, and create the type of community (in the neighborhood, but also on the Internet) that will allow us to weather trouble on an unprecedented scale. Change—fundamental change—is our best hope on a planet suddenly and violently out of balance. "

It's all about sustainability. We have outgrown what we can support, need to de-industrialize things like farming and dismantle the institutions that are 'too big to fail', as when something goes wrong with them, a lot of things go wrong with them and there's nothing anyone can do about it.

http://www.scientificamerican.com/podcast/podcasts.cfm?id=science-talk

It's a two part interview, I highly recommend listening to it.

I don't have time to listen atm, but how would "de-industrializing" farming help sustain anything? It would mean less, more expensive food. That seems like a big step in the wrong direction.

I'll listen to it tomorrow, maybe he explains his point on that, but I don't see how it makes sense.

[Ox]

1. Return to Keynesian economics, i.e. focus on getting more money into the hands of consumers, and encouraging consumption.
Would you mind pointing out when we stopped employing Keynesian economics? We've had a solidly Keynesian economic policy in this country since at least 2001.

I wonder: those of you endorsing Keynesianism, are you familiar with the Phillips curve (http://en.wikipedia.org/wiki/Phillips_curve)? And its evil twin, the expectations-adjusted Phillips curve? What's your take on that?

2. No more bailouts for banks. If a bank starts to fail, let it fail. Big or small. HOWEVER! To keep people from losing everything from such a collapse, inprove the FDIC to ensure that people will have compensation if their bank fails.
This is simply nonsensical. First, the FDIC already guarantees deposits up to $100,000. "Strengthening" the FDIC can only mean expanding the types of bank debt the federal government will guarantee. You can do that if you like, but offering a federal guarantee on a bank's debt constitutes bailing it out. This isn't an ideological issue, this is a logical issue.

3. No more big tax cuts. Our country is broke partially because nobody is putting money into our coffers via taxes. Don't tax small businesses, too heavily, though; instead of income tax increases or sales tax increases, focus on taxes that involve shipping and manufacturing within the U.S.
Taxes on domestic interstate trade are unconstitutional.

4. Ban outsourcing of jobs to other countries, i.e. make it absolutely illegal, punishable by heavy fines and potentially prison time for the people who do the outsourcing. As for jobs already outsourced, set a deadline for companies to bring those jobs back here and open them up. This will create more jobs, which in turn will get people more money with which to consume.
I think you mean offshoring -- you presumably aren't saying that AT&T executives should go to prison because they spun off Lucent as a separate corporation. There are a lot of very serious economic errors you make here. But ultimately, the biggest problem is the simplest: the only way to prohibit offshoring is to ban international trade. Autarky has been tried before, but it is usually not a recipe for economic success. And we would be in breach of a variety of treaties.

I'm curious: where do you get this stuff? What makes you think any of these proposals could possibly help the economy? I assume you aren't generating these ideas out of thin air, but there isn't a single mainstream economist in the country who would endorse criminalizing offshoring.

6. Encourage businesses that deal in consumer goods to raise salaries and benefits for their employees while increasing brand loyalty among said employees. The first part of this plan might sound risky, but it worked for Henry Ford--it's called "welfare capitalism". The idea is, the more money and benefits your employees have, the more productive they'll be.
Yeah, because it's "efficiency wages": you're paying above-market rates, so you have a lot of people applying for the jobs and you can select only the best. This only works, though, if you are paying above-market rates -- if everyone increases wages, then none of them have a line around the block and none of them can cherry-pick the best workers.
You can even make your money back if you encourage said employees to buy from the very company they work for.
Some basic math should demonstrate this is incorrect. If I increase a worker's wages by x, he'll have a certain propensity to spend that money on whatever I manufacture (y) and a certain propensity to spend that money on, well, everything else in the universe (x-y). When the worker purchases my good, I will earn as profit the price of the good minus the cost c of manufacturing it, plus the increased cost of wages [x/z, the increased wages divided by the quantity of goods they manufacture, essentially the productivity of the workers]. When will profit be greater than x , that is to say, when will I actually make back the money I spend on wages through my workers' increased consumption of my products? Only when

x < y - c - x/z

Hmmm. Notice something here? Clearly c and x/z are positive numbers. And we said that y is a fraction of x, because workers sometimes spend their wages on goods that their employer did not manufacture. The only way the above function can hold true -- i.e., the only way raising a worker's salary can result in that salary coming back to the employer through spending -- is if y is significantly greater than x. In other words, the worker can't just spend 100% of his raise on his employer's products; he has to divert a sizeable fraction of his current income to new purchases from his employer as well! This happens sometimes, but it's not common and you are wrong to suggest it is a rule.

Does anyone else have opinions on the subject, or the ideas listed above? What do you think caused this mess, and what could/should be done about it? Discuss.
Without meaning to be rude, I think one of the problems with the economy is the sort of magical thinking at evidence here.

In terms of my own policy prescriptions, they are very simple: do nothing. The business cycle exists, it is highly unlikely that any economic theory currently available will abolish it. While it might theoretically be possible for a wise policymaker to smooth the cycle slightly, this would require exquisite knowledge of market conditions and a superlative model of the economy... neither of which are on hand. This is not a partisan point, nor is it an anti-government one, particularly. I just think the absolute best the government can hope to do is react six months late to changing economic conditions. Generally speaking, poorly-timed economic policies are not helpful and can be harmful.

[TheEpicOfTyler]

I don't have time to listen atm, but how would "de-industrializing" farming help sustain anything? It would mean less, more expensive food. That seems like a big step in the wrong direction.

I'll listen to it tomorrow, maybe he explains his point on that, but I don't see how it makes sense.

I was working while listening to it, but if I remember correctly he made a point to say that the only 'farm' product that cost more was meat. It also had to do with the fact that industrialized farming is not very sustainable in terms of it's environmental costs and subsidies given to those industries which he would like to see removed.

I have none of his information or sources and I haven't read any of his literature, just passing along something I found interesting.

[Straximus]

His view is that in tough times the gov't should spend as much as possible, incurring as much debt as necessary and raising taxes as much as necessary, to essentially buy our way out of a recession. I just don't think that's sound economic theory.

Isn't the other half of the theory that we should be running surpluses during the boom cycles, rather than accumulating more debt? The idea was never to run deficits in boom periods and bigger deficits in busts, but to use the surplus from the boom cycle to shorten the bust cycle.

Would you mind pointing out when we stopped employing Keynesian economics? We've had a solidly Keynesian economic policy in this country since at least 2001.

Large tax cuts during a boom cycle isn't very Keynesian. Nor is increased spending.

[Ink Asylum]

Isn't the other half of the theory that we should be running surpluses during the boom cycles, rather than accumulating more debt? The idea was never to run deficits in boom periods and bigger deficits in busts, but to use the surplus from the boom cycle to shorten the bust cycle.

Well, at the end of the Clinton years we finally achieved that....then Bush.

[Ox]

Isn't the other half of the theory that we should be running surpluses during the boom cycles, rather than accumulating more debt? The idea was never to run deficits in boom periods and bigger deficits in busts, but to use the surplus from the boom cycle to shorten the bust cycle.
I think if you go back and look at Keynes's actual recommendations, there was never a time in which he said, "Now we should be running a surplus." Keynes tended to recommend inflating debt away.

Large tax cuts during a boom cycle isn't very Keynesian. Nor is increased spending.
What boom cycle was this? The Bush tax cuts were enacted in 2001, when the economy was facing downturn. They were highly Keynesian in intent.

Of course, much of their effect took place during the (fairly mild) boom of the 2000s. But this goes back to my earlier point: governments are bad at gaming the business cycle because their data is obsolete even before they collect it and it's considered very fast for a new law to be enacted within six months.

As for the increased spending, my understanding is that Bush's increase in spending was due to three factors: the war, his creation of new Medicare entitlements, and his expansion of the federal role in education. You can certainly critique all of those decisions, but they weren't conceived as methods to game the business cycle. And I'm not sure you want to say that decisions like war and peace, whether people should have healthcare, etc. should be made primarily with an eye to the consumer confidence index. Even Keynes didn't think macroeconomics was that important.

[Khrymsyn]

Time to swing the axe at the DoD though.


Have to be very careful how you swing that Axe though. You can't just plow through willy nilly. The DoD is one of the highest single employers of non-higher educated (at signing) workers in this country, and also has a large impact on research and development in areas that are decidedly non-military in usage (such as Cell Phones being an improvement off of radio based telephony used by the military in WWII, or Microwave Ovens based off of an experiment gone bad trying to build a new RADAR).

Think of the consequences past the savings from the DoD. That's less R&D money, that's less available jobs (not just at the DoD itself, but from companies the DoD spends contracts with such as Lockheed Martin, Boeing, General Motors, etc, etc), and less available jobs means less available spending. That's also much less financial aid, meaning less education for American citizens, meaning a reduction overall. I'd be all for reduction of DoD spend with an implementation of a proper self-auditing system and a removal of a LOT of the restrictions they have to go through for aquisition of items, but a blanket cutback I'd struggle with supporting.

[TheFlyingOrc]

Well, at the end of the Clinton years we finally achieved that....then Bush.

Bush caused the economy to downturn in 2000, before he was elected? Fascinating.

[Ink Asylum]

Bush caused the economy to downturn in 2000, before he was elected? Fascinating.

Nope, but he did kill the surplus.

[Ox]

Nope, but he did kill the surplus.
It's an interesting question whether President Bush was actually responsible for killing the surplus. Basically, Bush lowered tax rates and increased spending, both of which tend to have negative effects for the budget in the short run. On the other hand, the economy also went south at the end of the Clinton Administration, which also tends to have negative consequences for tax revenues and spending (more unemployed means more people drawing unemployment and fewer people paying taxes).

Ultimately, the Bush tax cuts reduced 2003 tax revenues by $188 billion (http://www.taxfoundation.org/news/show/323.html) (this assumes the tax cuts had absolutely no economic effect whatsoever, it was purely a giveaway). But total federal tax revenue declined (http://www.usgovernmentrevenue.com/downchart_gr.php?year=2000_2003&view=1&expand=&units=k&fy=fy11&chart=F0-fed&bar=1&stack=1&size=m&title=&state=US&color=c&local=s) by much more than that.

Year GDP-US (2005) Total Revenue-fed
2000 11226 2284.86 a
2001 11347.2 2196.84 a
2002 11553 2012.00 a
2003 11840.7 1894.29 a

Legend:
a - actual reported

As you can see, although the Bush tax cuts cost $188 billion in 2003, federal tax returns declined $391 billion (in 2005 dollars) between 2000 and 2003. Thus, the declining economy caused tax revenues to fall by $203 billion per annum between 2000 and 2003.

What about spending? Again, some of the increase in spending was Bush's decision (the war, Medicare Part D) and some of it was not (increased unemployment payments, natural growth of entitlements). This is an interesting subject for someone with a little more time to explore. Possibly I'll do it later, but no promises.

[Dorkandproudofit]

Damn, Ox, we ought to keep you from coming in here and owning us all the time. It's almost unfair.

[Ultima Thulian]

Generally speaking, our economy goes through cycles, and that likely won't change whether we employ Keynesian theory or not. Though generally speaking, that's what we've been doing for a while now.

Personally, I'd support much higher taxes on the rich. Legalization of "soft drugs" and do them in a manner similar to Amsterdam. Impose the the regulations in place against companies hiring illegals. Impose much greater and harsh regulations against businesses engaging in illegal affairs, while rewarding those that are in the clear with tax breaks. Become more energy dependent. Etc etc etc. Tons of little things we can do that add up.

I do think we need to tax the rich more though, and I'm so sick and tired of that bullshit "trickle down" theory. That noise should've died with the Reagan administration. The rich have bought off the senate, and it shows. The gap between rich and poor is staggering, and the rich haven't had this little of a tax burden in a long time. That needs to change. As for bailouts, I'm in support of them in a moderate sense. We can't save 'em all, and nor should we. I'd suggest bailouts with stipulations attached.

[AversionFX]

I do think we need to tax the rich more though, and I'm so sick and tired of that bullshit "trickle down" theory. That noise should've died with the Reagan administration. The rich have bought off the senate, and it shows. The gap between rich and poor is staggering, and the rich haven't had this little of a tax burden in a long time. That needs to change. As for bailouts, I'm in support of them in a moderate sense. We can't save 'em all, and nor should we. I'd suggest bailouts with stipulations attached.

I disagree entirely with the "tax the rich more" viewpoint. I know that most people have this idea that the rich person is this shady person, whose sole purpose in life is to spit on poor people, and enjoy their yachts, skating by on unfair advantages. But that's really arrogant. For example, and I don't consider anecdotes to mean a whole lot, but in a situation like this, I think it's a little more valid.

My dad grew up pretty poor, joined the Navy because it was pretty much the only way to get out of the shithole that is most of Maryland. Retired from the Navy, finished his education with a master's, and now is a high-level network administrator for the FAA. In the case of "tax the rich harder!" I don't really understand why people who work hard and make a good living on their own merit deserve to pay higher taxes. Isn't the entire point of the "American dream" to work hard and make your own way?

Taxing those people harder seems kind of counter-intuitive.

[DoctorFinger]

Here's a question. How much do each of you think a person has to make a year to qualify as "rich?"

[TheManEatingCow]

Well, at the end of the Clinton years we finally achieved that....then Bush.


You know, it burns me every time I hear someone tout this. Those surpluses were a mirage because they did not count the intra-governmental borrowing that actually occurred. Point me to the magical time during the Clinton administration that the total national debt decreased.

[Ink Asylum]

My dad grew up pretty poor, joined the Navy because it was pretty much the only way to get out of the shithole that is most of Maryland. Retired from the Navy, finished his education with a master's, and now is a high-level network administrator for the FAA. In the case of "tax the rich harder!" I don't really understand why people who work hard and make a good living on their own merit deserve to pay higher taxes. Isn't the entire point of the "American dream" to work hard and make your own way?

Because wealth isn't earned in a vacuum. You mention the "American Dream" and that dream only exists because there's an America. Your father worked very hard, and that helped him succeed, but he also benefitted from the public infrastructure, the economy, and everything else that the government and the American people maintain.

The American Dream isn't just about getting rich today, it's about maintaining the country that made that possible so future generations can benefit as well, just as the rich today benefitted from what previous generations made possible, like the Navy, the education system, etc. That can't be done if the an increasingly smaller number of the very rich keep accumulating a larger and larger share of the wealth in America.

[Ultima Thulian]

I disagree entirely with the "tax the rich more" viewpoint. I know that most people have this idea that the rich person is this shady person, whose sole purpose in life is to spit on poor people, and enjoy their yachts, skating by on unfair advantages. But that's really arrogant. For example, and I don't consider anecdotes to mean a whole lot, but in a situation like this, I think it's a little more valid.

My dad grew up pretty poor, joined the Navy because it was pretty much the only way to get out of the shithole that is most of Maryland. Retired from the Navy, finished his education with a master's, and now is a high-level network administrator for the FAA. In the case of "tax the rich harder!" I don't really understand why people who work hard and make a good living on their own merit deserve to pay higher taxes. Isn't the entire point of the "American dream" to work hard and make your own way?

Taxing those people harder seems kind of counter-intuitive.

On the contrary, I have nothing against the rich. Hell, being rich is the point. However, I'm saying the top 2% earners in this country have a very small tax burden, especially when compared to times past. I'm not saying tax the hell out of them, but I don't think a tax hike for them would not be negative.

[biosc1]

Because wealth isn't earned in a vacuum. You mention the "American Dream" and that dream only exists because there's an America. Your father worked very hard, and that helped him succeed, but he also benefitted from the public infrastructure, the economy, and everything else that the government and the American people maintain.

The American Dream isn't just about getting rich today, it's about maintaining the country that made that possible so future generations can benefit as well, just as the rich today benefitted from what previous generations made possible, like the Navy, the education system, etc. That can't be done if the an increasingly smaller number of the very rich keep accumulating a larger and larger share of the wealth in America.

Doesn't this argue for a flat tax rate? Everyone has the same benefits, same access to the infrastructure. Should we penalize the successful because they made it work for them and prop-up the failures because they couldn't make it work for them even though they had the same environment?

Speaking from personal experience, I've refused bonuses from my company because it would bump me up to the next tax bracket and I would actually pay more tax and have less "take home" than if I don't take the bonus. That seems flawed to me.

[Serapth]

Doesn't this argue for a flat tax rate? Everyone has the same benefits, same access to the infrastructure. Should we penalize the successful because they made it work for them and prop-up the failures because they couldn't make it work for them even though they had the same environment?

Speaking from personal experience, I've refused bonuses from my company because it would bump me up to the next tax bracket and I would actually pay more tax and have less "take home" than if I don't take the bonus. That seems flawed to me.

I frankly don't understand why we don't have a flat tax with a low end exemption. Do a flat 20% tax on all income, with anyone making < 20K exempted from taxes completely. I know... I know, poor people are unfairly burdened, blah blah blah.

[TheFlyingOrc]

The American Dream isn't just about getting rich today, it's about maintaining the country that made that possible so future generations can benefit as well, just as the rich today benefitted from what previous generations made possible, like the Navy, the education system, etc. That can't be done if the an increasingly smaller number of the very rich keep accumulating a larger and larger share of the wealth in America.

My understanding is that wages for the non-super rich have been pretty steady for the past 30 years or so (adjusted for inflation), and that a large, large part of this can be attributed to the price-decreasing pressure of a really large number of women entering the workforce, depressing wages.

The rich have seen significant growth versus inflation, however.

[Jackel]

Doesn't this argue for a flat tax rate? Everyone has the same benefits, same access to the infrastructure. Should we penalize the successful because they made it work for them and prop-up the failures because they couldn't make it work for them even though they had the same environment?

Speaking from personal experience, I've refused bonuses from my company because it would bump me up to the next tax bracket and I would actually pay more tax and have less "take home" than if I don't take the bonus. That seems flawed to me.

My father in-law is a commercial fisherman with his own boat, and I know that he makes his decision on how many deckhands to hire based on the tax levels for that year.

[Ink Asylum]

Doesn't this argue for a flat tax rate? Everyone has the same benefits, same access to the infrastructure. Should we penalize the successful because they made it work for them and prop-up the failures because they couldn't make it work for them even though they had the same environment?

No, it doesn't argue for a Flat Tax because a Progressive Tax system also recognizes that the less you earn the greater percentage of your earnings go towards necessities like food, clothing, housing, transportation, health care, etc, while the richer you get the more wealth you have freed up for luxuries, and Progressives believe that wealth should be more open to taxation. Adam Smith described it this way: (http://en.wikipedia.org/wiki/Progressive_tax)

The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. A tax upon house-rents, therefore, would in general fall heaviest upon the rich; and in this sort of inequality there would not, perhaps, be anything very unreasonable. It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.

We're all humans with the same basic needs, and every person in America, rich or poor, has the same amount of income subject to lower taxes in order to afford those needs. When you become richer the amount of food/clothes/housing/etc that you need doesn't increase, but the amount you may want does. So it's not a penalty for being able to buy stuff you want in addition to stuff you need, but a relief for all people to be able to afford to eat, clothe, and house themselves.

Speaking from personal experience, I've refused bonuses from my company because it would bump me up to the next tax bracket and I would actually pay more tax and have less "take home" than if I don't take the bonus. That seems flawed to me.

I'd be interested how that happens, as a higher tax bracket should only affect the dollars that fall into that bracket, not all your earnings.

I would favor a more simplified tax system, but one that is still progressive in definition.

[Ink Asylum]

My understanding is that wages for the non-super rich have been pretty steady for the past 30 years or so (adjusted for inflation), and that a large, large part of this can be attributed to the price-decreasing pressure of a really large number of women entering the workforce, depressing wages.

The rich have seen significant growth versus inflation, however.

Is "pretty steady" what the non-super rich deserve when corporate profits and productivity have been rising?

And it's remained steady largely because of progressive policies that keep people from falling into poverty when they're laid off, injured, sick, or old; that require companies pay a living wage, obey safety standards, and otherwise prevent abuse of workers; etc.

[Hemalin]

I frankly don't understand why we don't have a flat tax with a low end exemption. Do a flat 20% tax on all income, with anyone making < 20K exempted from taxes completely. I know... I know, poor people are unfairly burdened, blah blah blah.
Would 20% cover everything though? Has anyone done the math to figure out what the tax rate would need to be to equal current revenue.

[Serapth]

I'd be interested how that happens, as a higher tax bracket should only affect the dollars that fall into that bracket, not all your earnings.

This is not the case in Ontario ( but it is in Canada ).

Federal income taxes are as follows:

15% on the first $40,970 of taxable income, +
22% on the next $40,971 of taxable income (on the portion of taxable income between $40,970 and $81,941), +
26% on the next $45,080 of taxable income (on the portion of taxable income between $81,941 and $127,021), +
29% of taxable income over $127,021.


But provincial are:

1st income bracket Less than $36,020 Less than $36,848 Less than $37,106
2nd income bracket From $36,020 to $72,041 From $36,848 to $73,698 From $37,106 to $74,214
3rd income bracket Greater than $72,041 Greater than $73,698 Greater than $74,214


Bracket1 = 5.05%
Bracket2 = 9.15%
Bracket3 = 11.16%



This completely ignores the fact of disqualifications based on income, for example someone making lower income can qualify for a few thousand dollars in rebates that someone of higher income can't.

So, in Ontario, someone making 35 grand pays about 20% taxes ( then receives 2-3K in credits ), while someone making 75 grand pays about about 33% taxes. Even worse, someone making over 75 grand pays the same tax rate as someone making 55 billion. So, not only is it not a purely progressive system, but it actually puts the most burden on the middle class.

[ShivaX]

Would 20% cover everything though? Has anyone done the math to figure out what the tax rate would need to be to equal current revenue.

Theres no way 20% would do it.

Maybe 30% or so.

Ultimately all it becomes is a tax on the lower and middle class though. The rich get a huge tax break (assuming they actually paid fucking taxes) and the bottom gets a big tax increase, since they weren't paying nearly that much.

The problem is all the loopholes in the system. People at the bottom can rarely exploit them, but the people at the top easily can, so they pay less of the tax burden than they should. Obama talked big about fixing that sort of thing, but I don't see it ever happening. Even the Democrats want their loopholes.

[Serapth]

Theres no way 20% would do it.

Maybe 30% or so.

Ultimately all it becomes is a tax on the lower and middle class though. The rich get a huge tax break (assuming they actually paid fucking taxes) and the bottom gets a big tax increase, since they weren't paying nearly that much.

The problem is all the loopholes in the system. People at the bottom can rarely exploit them, but the people at the top easily can, so they pay less of the tax burden than they should. Obama talked big about fixing that sort of thing, but I don't see it ever happening. Even the Democrats want their loopholes.

Actually, if you did a flat tax at 20% and eliminated all deductions, it would easily be more than enough and a fuckton cheaper to administrate.

Granted, bean counters around the globe would be out of business as 90% of taxes could be taken care of and audited at the employer level if there were no deductions. Also, straight tax people on vested stock options at the same rate, so douchebags like Steve Jobs can't take a 1$ salary then make their money in stocks which they route through some Cayman islands holding company and pay zero capital gains taxes on.

Plus, make tax fraud a capital offence if the dollar value is over 50,000$, so fuckers like Wesley Snipes and Willy Nelson can go die in a fire.

[Ultima Thulian]

Tax code and laws are so complex that only accountants and lawyers understand them.

We vote in lawyers to office on a regular basis.

We complain that the system doesn't work for us.

Gee, I wonder why? It's all one big fucking tree-house club, and you poor fucks ain't in it.

[RandoM51]

I was working while listening to it, but if I remember correctly he made a point to say that the only 'farm' product that cost more was meat. It also had to do with the fact that industrialized farming is not very sustainable in terms of it's environmental costs and subsidies given to those industries which he would like to see removed.

I don't see how removing industrialization from farming would make it cheaper, unless his plan is to have lawyers doing all the farming labor currently being reduced/removed by industrialization/automation.

I'll have to listen to the podcast, I suppose.

[RandoM51]

Here's a question. How much do each of you think a person has to make a year to qualify as "rich?"

I don't base it upon how much they make, I base it upon how much they already have.

Somebody with 10 million in the bank who only reports $10k in profit for the year isn't poor, is he?

[Generation ABXY]

What, so you want to base taxes off of wealth now? Would that be based just on what he has in the bank, or do we count investments, too? I mean, if it's ten million in property, then we'd have to do appraisal's to determine his bracket. And I can hardly imagine the headache if it's stock...

[bstiff]

Here's a question. How much do each of you think a person has to make a year to qualify as "rich?"

According to the government, 200k if you're single 250k if you're married. Myself, I'd call that affluent but not "rich". I've got enough money to make sure my bills are paid and some investments put away for retirement and some extra if I would want to take a trip to the caribbean or something. It's not like I drive a lamborghini, live in a 5000 square foot house on the beach and have a swimming pool full of money.

[DoctorFinger]

My definition of rich is someone who can go a whole year without making a dime, and still maintain their lifestyle. Similarly my definition of middle class is someone who can miss a paycheck and still maintain their lifestyle.

[Generation ABXY]

My definition of rich is someone who can go a whole year without making a dime, and still maintain their lifestyle. Similarly my definition of middle class is someone who can miss a paycheck and still maintain their lifestyle.

Well, you did ask specifically how much a person had to "make a year." By that, what do you consider rich?

Also, what if they live ridiculously outside of their means? I mean, Nicholas Cage is losing houses left and right, but most people would still consider him rich...

[Ink Asylum]

Yeah. Lifestyle is a broad term, and can range from a 1br apartment and no car to five luxury houses and a yacht.

[bstiff]

Well, you did ask specifically how much a person had to "make a year." By that, what do you consider rich?

Also, what if they live ridiculously outside of their means? I mean, Nicholas Cage is losing houses left and right, but most people would still consider him rich...

There's a whole section of people I know who live WAY outside their means and live paycheck to paycheck. I don't consider them rich. God forbid they get sick and miss a paycheck then the whole house of cards comes tumbling down.

[ShivaX]

According to the government, 200k if you're single 250k if you're married. Myself, I'd call that affluent but not "rich". I've got enough money to make sure my bills are paid and some investments put away for retirement and some extra if I would want to take a trip to the caribbean or something. It's not like I drive a lamborghini, live in a 5000 square foot house on the beach and have a swimming pool full of money.

I agree there. We definately need to adjust the scales a bit. I'd say "rich" probably starts at a million a year. The "super rich" are probably 10 million+ a year. 200-250k is, as you said, affluent. You're doing well, but you're not buying private islands or million dollar supercars or anything.

[Banacek]

Replace income tax with a VAT. Illegal immigration becomes a non-issue. Thoughts?

[ShivaX]

Replace income tax with a VAT. Illegal immigration becomes a non-issue. Thoughts?

I don't see how VAT has anything to do with illegal immigration.

As far as taxes go, illegals are the best thing that can happen - people that pay into the system, but never use it.

And VAT is just a fancy sales tax. I don't see how it would even remotely work unless we're willing to ramp up social services to cover for all the people that can no longer afford things. You can't dodge VAT, the cost of it is passed on through the system, so that means everything costs more for people and you have no real way to assist them easily.

[Serapth]

I don't see how VAT has anything to do with illegal immigration.

No income tax means that an illegal isn't a drain on the economy, as all taxes are collected at the point of consumption, not when the money is earned. So even if an illegal is here working under the table, when they buy shit the money goes into the economy.

[Serapth]

Replace income tax with a VAT. Illegal immigration becomes a non-issue. Thoughts?

If you did that, stuff would get expensive really quick. Granted, you would have higher income but you would see a massive spike in smuggling and off shore investing.

[Ultima Thulian]

Living outside one's means is the American way. You takes your chances, and all that shit.

[txshurricane]

I don't see how VAT has anything to do with illegal immigration.

As far as taxes go, illegals are the best thing that can happen - people that pay into the system, but never use it.
Sure they do. 911 emergency service responds to everyone. Illegals enroll in public schools all the time. Food stamps and Welfare are handed out like candy.

You'd be surprised how many government support programs and faculties you can enroll in with a fake name and social security number - that stuff never gets checked unless you're applying for a credit card.

I'm all for VAT, but that doesn't fix the problem of the crime that is brought into our country by illegal aliens. Granted, not all crime is committed by illegals...but when your identity doesn't exist in any government databases, they rarely get prosecuted the way they should.

[ShivaX]

Sure they do. 911 emergency service responds to everyone. Illegals enroll in public schools all the time. Food stamps and Welfare are handed out like candy.

You'd be surprised how many government support programs and faculties you can enroll in with a fake name and social security number - that stuff never gets checked unless you're applying for a credit card.

I'm all for VAT, but that doesn't fix the problem of the crime that is brought into our country by illegal aliens. Granted, not all crime is committed by illegals...but when your identity doesn't exist in any government databases, they rarely get prosecuted the way they should.

But its been proven time and again that illegals are a net gain as far as taxes go.

What they put into the system is greater by magnitudes than what they use.

[txshurricane]

But its been proven time and again that illegals are a net gain as far as taxes go.

What they put into the system is greater by magnitudes than what they use.
How do you count the tax dollars received from people who do not have valid federal identification?
How do you determine what tax-sponsored service they use if they give false ID?

What you're referring to is estimated only.

EDIT: In doing some research, it's apparent that many employers of illegal immigrants are withholding from the immigrants' paychecks in order to avoid suspicion. If a legal citizen held the same job, the same taxes would be withheld; probably more.

EDIT 2: Even given the estimates above, the Washington Post (http://www.washingtonpost.com/wp-dyn/articles/A33783-2004Aug25.html) reported in 2004 that households of illegal aliens cost the feds an estimated $26.3 billion, and paid only $16 billion in taxes.

[ShivaX]

I was trying to find the articles I originally saw and eventually gave up.

I can find an article supporting both positions easily. That kinda makes all theses "studies" bullshit. The only thing I've found reliable is that they pay a ton more into Social Security than they'll ever use. As far as other costs everyone seems to bend the numbers to support their agenda.

[Banacek]

If you did that, stuff would get expensive really quick. Granted, you would have higher income but you would see a massive spike in smuggling and off shore investing.

But aren't those people (usually in the higher income brackets) doing this already with their income taxes? There has to be a better solution then what those idiots are doing in Arizona. As for the crime that illegal immigrants bring, a huge portion of it is directly tied to our failed war on drugs. Fix that, and you'll fix the crime.

[txshurricane]

I was trying to find the articles I originally saw and eventually gave up.

I can find an article supporting both positions easily. That kinda makes all theses "studies" bullshit. The only thing I've found reliable is that they pay a ton more into Social Security than they'll ever use. As far as other costs everyone seems to bend the numbers to support their agenda.
I'm going to wait until you actually put your links up before I take your sources as "reliable", if you don't mind. :D

As for the crime that illegal immigrants bring, a huge portion of it is directly tied to our failed war on drugs. Fix that, and you'll fix the crime.
If I were going off of what the headlines show - and I am - drugs are not nearly as much of a problem as identity theft, home invasions, and bank robberies right now. The war on drugs may be an answer; it's not the answer by a long shot. Bottom line: get the illegals out, or documented. Asap.

[Siraris]

Hey Shiva, this might help you out:

Clinton didn't mention it, but it's not just legal immigrants who contribute to the plus side of the Treasury's balance sheet. In fact, undocumented immigrants are even more lucrative for the government, particularly Social Security. Many undocumented workers have payroll taxes automatically withheld from their wages, but because they use fake numbers, never collect the benefits. (http://news.yahoo.com/s/huffpost/20100428/cm_huffpost/555415)

[Serapth]

But aren't those people (usually in the higher income brackets) doing this already with their income taxes? There has to be a better solution then what those idiots are doing in Arizona. As for the crime that illegal immigrants bring, a huge portion of it is directly tied to our failed war on drugs. Fix that, and you'll fix the crime.

Meh, there is no way in hell what is happening in Arizona is going to hold up to a legal challenge.

[Banacek]

If I were going off of what the headlines show - and I am - drugs are not nearly as much of a problem as identity theft, home invasions, and bank robberies right now. The war on drugs may be an answer; it's not the answer by a long shot. Bottom line: get the illegals out, or documented. Asap.

You don't think the home invasions are drug related? I lived in Arizona five years, I can tell you without a doubt the drug runners are biggest problem they have when it comes to illegal over the border activities. The drug cartels are taking on entire towns. The day laborers hanging outside of the Home Depot aren't breaking into houses and robbing banks. That's just silly.

[Narradisall]

I hear there is literally tons and tons of Black gold heading towards the US coast.

Problem. Solved!

[txshurricane]

You don't think the home invasions are drug related? I lived in Arizona five years, I can tell you without a doubt the drug runners are biggest problem they have when it comes to illegal over the border activities. The drug cartels are taking on entire towns. The day laborers hanging outside of the Home Depot aren't breaking into houses and robbing banks. That's just silly.
To be honest, I didn't equate the two, but you're right...many or most of the home invasions are probably drug related.

All I'm saying is: eliminating the drug problem will not eliminate the other crime-related issues that illegal aliens bring. Enforcing immigration law may.

Not that I have a good answer to the immigration problem.

[Ox]

You don't think the home invasions are drug related?
Home invasions are obviously often drug-related, in the sense that most drugs both engender great desire in their consumers and make it harder for their consumers to hold down steady jobs. So the consumers resort to crime to pay for their drug habits.

Unless drug legalization means that drug-users are either going to stop getting addicted to drugs, or they are somehow going to become reliable employees, I'm not sure how you think drug legalization would affect home invasions. This seems like a real non sequitur from the discussion of the macroeconomy.

[Banacek]

Home invasions are obviously often drug-related, in the sense that most drugs both engender great desire in their consumers and make it harder for their consumers to hold down steady jobs. So the consumers resort to crime to pay for their drug habits.

Unless drug legalization means that drug-users are either going to stop getting addicted to drugs, or they are somehow going to become reliable employees, I'm not sure how you think drug legalization would affect home invasions. This seems like a real non sequitur from the discussion of the macroeconomy.

Oh, I never said legalization, though for lesser drugs like pot it does make sense. I just think that our current war is not working, and the arrogance of refusing to admit this failure is seriously damaging this country. Once we admit defeat and figure out a new way to deal with drugs, the better we will be.

[jeffbax]

For the VAT fans: http://mises.org/daily/4296