Devin gave me a Thomas Sowell book for my birthday which I just finished reading. It is the second work of his I have read, and I really enjoyed it. I am almost finished reading "The Road to Serfdom" by Friedrich Hayek, who is much more methodical in making his arguments, but of course Hayek's writings were not produced with the general public in mind, where Sowell's editorials are definitely geared for wider readership.
One of Sowell's most potent points is that very little critical analysis and debate takes place in politics and higher education does not prepare people for such critical analysis. Once we attach ourselves to a view, we tend to hold it dear and not entertain other viewpoints.
I am pretty set in my conservative (19th century "liberal") ways and everything I have read lately tends to echo my own feelings. It is probably time to consider another viewpoint. Doing so may strengthen my convictions, but is bound to help me understand how others think, and I am always interested to learn about that. I appreciate Hayek's consistent refusal to ascribe bad motives to those of his acquaintances who believed differently. Sowell's impatience may have cooled a little with age, but I think he still has a rough time thinking well of otherwise intelligent people who continue to harbor what he views as destructive ideas.
Any suggestions as to what I should read next?
Saturday, October 30, 2010
Saturday, October 23, 2010
Monday, October 18, 2010
Tax vs. Revenue - Scoring - 2011
I read an editorial this morning by the Robertses (Cokie & Steve). I usually enjoy their commentary despite their center-left orientation. One statement in today's column, though, drove me nuts, given a vast body of emperical experience that contradicts it. they said the "Republicans' . . . 'Pledge to America' . . . promises to to cut taxes and reduce the deficit at the same time - a total impossibility." (my emphasis). Why categorically ("total") advance the notion that simultaneous tax and deficit reduction are mutually incompatible? Because there is nothing besides the statement to support the statement.
This notion has been proven false by Republican and Democratic administrations alike, and by Democratic and Repblican congresses alike. Lowering tax rates increases tax revenue. Increases in revenue decreases the deficit if spending does not increase. Logic and experience show this. When rates are lowered economic activity increases, resulting in more revenue. When projecting budgets and revenue "static scoring" assumes taxpayer behavior will remain unchanged as rates go up or down. "Dynamic scoring" takes into account behavioral changes that accompany tax (rate) increases and decreases. The Robertses would be correct if static scoring is borne out by experience. Experience shows that with every tax decrease, there has been a revenue increase. Kennedy deliberately calculated that behavior would change and revenues would increase when tax rates were lowered at his urging. He was proved right. the Reagan cuts made for a sharp U-turn and lasting recovery in the recession of the early 80s. After 9-11, there was no stimulus to keep the economy from tanking, but there was a 2001 tax cut, followed by another in 2003. These not only avoided disaster (think "jobs saved"), they helped fuel decent growth through mid-2008. And the "rich" (liberal term) or "employers and investors" (conservative terms) respond better to the swings in their rates than those who are employees and not investors. So cutting taxes of the "rich" generates more revenue than cutting taxes of the "middle class," especially since with progressive tax rates the "rich" are soaked (nicked? touched?) much heavier in the first place.
Maybe the Robertses are relying on what I call "extreme logic" to make their point. Of course if, on the one extreme, the government is taxing at a 5% rate and lowers it to zero, revenue will go down. But on the other end, do they really believe people will keep working and investing if their marginal rates are raised to 100%?
The Bush tax cuts are set to expire on January 1, 2011. The Obama administration (and Democrat congressional leadership) are in no hurry to avert that disaster. My question is whether their inaction can be explained by something other than incompetence or cynicism.
Your turn.
This notion has been proven false by Republican and Democratic administrations alike, and by Democratic and Repblican congresses alike. Lowering tax rates increases tax revenue. Increases in revenue decreases the deficit if spending does not increase. Logic and experience show this. When rates are lowered economic activity increases, resulting in more revenue. When projecting budgets and revenue "static scoring" assumes taxpayer behavior will remain unchanged as rates go up or down. "Dynamic scoring" takes into account behavioral changes that accompany tax (rate) increases and decreases. The Robertses would be correct if static scoring is borne out by experience. Experience shows that with every tax decrease, there has been a revenue increase. Kennedy deliberately calculated that behavior would change and revenues would increase when tax rates were lowered at his urging. He was proved right. the Reagan cuts made for a sharp U-turn and lasting recovery in the recession of the early 80s. After 9-11, there was no stimulus to keep the economy from tanking, but there was a 2001 tax cut, followed by another in 2003. These not only avoided disaster (think "jobs saved"), they helped fuel decent growth through mid-2008. And the "rich" (liberal term) or "employers and investors" (conservative terms) respond better to the swings in their rates than those who are employees and not investors. So cutting taxes of the "rich" generates more revenue than cutting taxes of the "middle class," especially since with progressive tax rates the "rich" are soaked (nicked? touched?) much heavier in the first place.
Maybe the Robertses are relying on what I call "extreme logic" to make their point. Of course if, on the one extreme, the government is taxing at a 5% rate and lowers it to zero, revenue will go down. But on the other end, do they really believe people will keep working and investing if their marginal rates are raised to 100%?
The Bush tax cuts are set to expire on January 1, 2011. The Obama administration (and Democrat congressional leadership) are in no hurry to avert that disaster. My question is whether their inaction can be explained by something other than incompetence or cynicism.
Your turn.
Sunday, October 10, 2010
Death of Neglect?
Hello. So, we are a little over three weeks away from the mid-term elections, and there has been no activity on this blog since July. Has this blog turned into a vacuum from an echo chamber from a lively blog? Just wanted to know.
My prediction for the upcoming election - both houses of Congress will move to the right. The Democrat survivors will have moved to the right. The replacement Democrats will be to the right of their predecessors. The Republican survivors will have shifted further to the right. And the new Republicans will be futher to the right than their (R or D) predecessors. The only person whose stated or closely held ideology will have remained as far left as before (or perhaps moved further left) is President Obama.
This is a recipe for federal gridlock, a welcome change from what we have seen for the past four years.
Comments?
My prediction for the upcoming election - both houses of Congress will move to the right. The Democrat survivors will have moved to the right. The replacement Democrats will be to the right of their predecessors. The Republican survivors will have shifted further to the right. And the new Republicans will be futher to the right than their (R or D) predecessors. The only person whose stated or closely held ideology will have remained as far left as before (or perhaps moved further left) is President Obama.
This is a recipe for federal gridlock, a welcome change from what we have seen for the past four years.
Comments?
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