The 'Tax Cut, For or Against' thread

[Kidlicious]

Originally posted by Adam Smith
Are you DuncanK's DL?

I was wondering when Imran was going to figure it out, but you beat him to it. Actual this is my login now.

We are talking about the short run, right? Increasing the income available to make make business investments doesn't create new innovations. Technology effects the long run only. We should agree on that, but in the short run things are different.

Purchasing stock is not issuing stock. That is, just because a tax cut results in more demand for stock, it doesn't follow that more stock is issued.

[Imran Siddiqui]

I was wondering when Imran was going to figure it out, but you beat him to it. Actual this is my login now

God Damn! No wonder!



Only if you weren't actually who you are, 'Duncan' might look better today .

[Kidlicious]

Originally posted by Imran Siddiqui

Are you DuncanK's DL?

AS answered your queries. AS does shift with technology, and of course stock sales end up with output.

What you guys are talking about is not supply-side economics. We are talking about short run stimulus to get the economy back on track. Supply-side economics involves stimulating business investment.

Now, knowing you, you will still argue that supply-side economics is about stimulating innovation. If you are going to do that I just ask that you admit that stimulating business investment does not create growth in the short run. That's only fair since you seem to be abandoning that argument in favor of this argument that stimulating business innovation creates growth in the short run.

Btw, this is a new business cycle theory. Who should get the credit for it, you or Adam Smith? Or should we call it the Smith Siddiqui business cycle theory.

[Imran Siddiqui]

We are talking about short run stimulus to get the economy back on track.

Supply-side economics isn't a short term theory. It doesn't care about short run stimulus, it merely concerns itself with long run goals.

In the short-run some supply-side actions (like fiddling with interest rate) DOES help in the short run. Monetarism isn't 'supply-side economics' (at least the Laffer-Say version... which is what we consider that term to be).

[Kidlicious]

Originally posted by Imran Siddiqui

We are talking about short run stimulus to get the economy back on track.

Supply-side economics isn't a short term theory. It doesn't care about short run stimulus, it merely concerns itself with long run goals.

In the short-run some supply-side actions (like fiddling with interest rate) DOES help in the short run. Monetarism isn't 'supply-side economics' (at least the Laffer-Say version... which is what we consider that term to be).

So we agree that increasing supply in the short run does not create economic growth. Then we agree that Say's so called law is bull****, because there will be no market clearing when AS is increased. And the Laffer theory must also be bull****, because a cut in the tax rate will not be able to increase tax revenue, since there is no growth in the short run.

[Kidlicious]

We need to agree to forget about the long run. We agree that advances in technology will create economic growth in the long run. However, if the economy colapses in the short run we will all be 'dead in the long run.' So if an increase in AS creates a depression like in did in the 20s there will be no innovation in the long run. Just like there was no innovation in the 30s.

[Imran Siddiqui]

You don't understand (or learn much) do you? When I said supply-side economics was normally long run, saying those long run theories are 'bull****' because they don't work the way you want them too in the short run is not only dumb, but intellectually dishonest.

Laffer's Theory was ALWAYS a long-term solution. A cut in the tax rate leads to increased tax revenue in the LONG RUN!

And, btw, decreasing the interest rate does lead to economic growth within, say, 6 months. Is that considered long run to you?

And when AS increases, at some point AD will probably catch up. The question is when. Say's Law may be correct, but it may not apply every time.

[Kidlicious]

Originally posted by Imran Siddiqui
Laffer's Theory was ALWAYS a long-term solution. A cut in the tax rate leads to increased tax revenue in the LONG RUN!

That's not true, but even if it were true you still have to deal with the short run consequences.

Originally posted by Imran Siddiqui
And, btw, decreasing the interest rate does lead to economic growth within, say, 6 months. Is that considered long run to you?

According to neo-classical theory no. There is no way you can get instantaneous stimulus. So we have to consider the short run to be within a year or so.

Originally posted by Imran Siddiqui
And when AS increases, at some point AD will probably catch up. The question is when. Say's Law may be correct, but it may not apply every time.

No, increases in AS cause market glut and system failure. Then everything is broken. There is no catching up. Either there has to be new innovations or demand stimulus for the economy to recover. There is no automatic creation of AD from and increase in AS.

[Imran Siddiqui]

No, increases in AS cause market glut and system failure. Then everything is broken. There is no catching up. Either there has to be [b]new innovations[b]

What do you think causes shifts in AS? Technology, more efficient production techniques. What else do you think shifts the curve?

[Kidlicious]

Originally posted by Imran Siddiqui

No, increases in AS cause market glut and system failure. Then everything is broken. There is no catching up. Either there has to be [b]new innovations[b]

What do you think causes shifts in AS? Technology, more efficient production techniques. What else do you think shifts the curve?

Again. That is the long run. Short run shifts in supply are caused by changes costs, expectations, and number of sellers. Long run shifts are caused by changes in technology and changes in the labor force.

[Imran Siddiqui]

[Kidlicious]

Go buy a used textbook Imran. Good night.

[Kidlicious]

Here's an internet poll on this subject in case anyone hasn't seen it.


Do you think the president's tax-cut plan will...

Create jobs by year-end? 19%

Worsen the federal budget deficit? 55%

Both? 15%

Neither? 11%

total responses to this question: 10777


It seems like the proposed tax cuts are about as popular with cnn.com viewers as poly posters.

[Sava]

The benefits of tax cuts would only really them useful during surpluses. The negative effects of monsterous deficits far outweigh any possible rewards of tax cuts.

[Caligastia]

Originally posted by Jon Miller
I would prefer a tax increase to 100%

If you give me all your money I promise to spend it wisely.