Obama's Capital Gains Tax

[Imran Siddiqui]

Originally posted by rmsharpe
Removes money from the economy? What are you talking about? Cutting spending should mean that less revenue is collected (or is spent on the deficit/having the debt paid down, also beneficial to the economy) and that money would still be in the pockets of consumers and investors.

More would be invested than consumed, since the tax burden falls more on the rich, who have a far less marginial propensity to consume. Depends on where you are in the business cycle to see if that makes sense for the economy.

[rmsharpe]

All the better, since a long-term investment would generally yield more benefits than short-term consumption.

If only someone had told that to hundreds of thousands of people in the mortgage mess today.

[Imran Siddiqui]

Not when you are trying to get out of a recession.

[rmsharpe]

How did that stimulus package work out again?

[Imran Siddiqui]

A one time stimulus wasn't going to do much (especially when a lot of people saved it because they figured that'd mean the economy was in trouble). In this economy, it is consumption that drives it. When the people don't consume, it tends to go sour.

[DinoDoc]

Originally posted by Imran Siddiqui
Not when you are trying to get out of a recession.

Are we even in a recession?

[rmsharpe]

Originally posted by DinoDoc
Are we even in a recession?

Technically, no. There has to be a decline in the economy for two quarters before it's actually a recession.

[Imran Siddiqui]

Just because it doesn't meat those requirements (and there are economists that don't adhere to those necessarily) doesn't mean that we aren't hurting economically.

http://blogs.wsj.com/economics/2008/01/22/is-us-in-recession-discussions-begin/

The 87-year-old NBER, a nonprofit group of 600 academic economists, has become the unofficial arbiter of when recessions begin and end. Its definition of a recession: “A significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.” A simple rule of thumb is two straight quarters of declining GDP, but that is not necessary for the group to declare a recession.

[Jon Miller]

The core reasons that we are having economic problems right now, is becuse the wealth distribution has tipped too far to continue the current US standard of economic operation.

Either we need to return to the 19th century (ick), or we need to start returning wealth to the middle/lower classes.

JM

[rmsharpe]

Originally posted by Jon Miller
The core reasons that we are having economic problems right now, is becuse the wealth distribution has tipped too far to continue the current US standard of economic operation.

Either we need to return to the 19th century (ick), or we need to start returning wealth to the middle/lower classes.

JM

I love redistribution advocates. The problems change, but the "solution" always remains the same.

[Jon Miller]

We can't have the same level of consumption relative to our wealth if our wealth is concentrated in the hands of a few compared to if our wealth is concentrated in the hands of the many. Since our economy is based on consuption, then it won't work when wealth is concentrated.

This is obvious.

Now, you might be fine with a return to the 19th century model. I am not, but you might be.

The solution is only the same, because I like the 20th century model better than the 19th century model. Now I might like some future model even better, that wasn't consumption based. But just between the two models that I see as options, I know which one I favor.

JM

[Patroklos]

When did you become a believer in mercantilism Jon?

[Jon Miller]

How is my post an argument in favor of mercantilism?

JM

[rmsharpe]

Originally posted by Jon Miller
We can't have the same level of consumption relative to our wealth if our wealth is concentrated in the hands of a few compared to if our wealth is concentrated in the hands of the many. Since our economy is based on consuption, then it won't work when wealth is concentrated.

But the total amount of wealth isn't concentrated. Perhaps I should restate that; it doesn't matter even if it is because the consumer economy for even the lowest income groups is greater now than it ever has been. Even in my own situation, I'm in the lowest income group but I have more and better stuff available to me now than my parents did when they were growing up.

When you measure the number of cars on the road, televisions per household, etc., etc., the numbers are astounding.

Plus, we simply can't be fall into the trap of viewing the economy as one giant zero-sum pie; when someone gets a bigger piece, it doesn't come at the expense of your piece.

"Make the pie higher!"

[rmsharpe]

Originally posted by Patroklos
When did you become a believer in mercantilism Jon?

Wait, what?