In response to economic illiteracy

I will explain economics as simply as I can:
You either provide a product or service and trade it for the things you want, or you get someone to steal it from someone else and give it to you.

I think we can all agree the first option is the moral one? Good, that's called capitalism. The second is what you get in a socialist/communist state, not accidentally but as an inherent part of Marxism. Marxism only works if the products and services we want will fall magically out of the sky in unlimited quantities, if not you will end up with one group of people stealing from another group of people.

That being said, the more is stolen from people the less they are incentivised to produce things, and the less things will be produced for people to use. That's why the free market works and any system that infringes upon it doesn't.

Any questions?

 

So you think that in order for the government to have money it has to steal it from someone else?

So, let's say were on a boat. It's a bog boat with individual rooms. The rooms are well secured with steel walls and doors and in the door is a very small window. Someone looks in and sees that there is a hole in the boat in your room. When asked for the key, you remind everyone that that room is yours and you lecture everyone on how immoral it would be to steal your key and invade your private space.

Question. Is it immoral to steal your key?

It may have worked like that at one time, but that's not how fiat economies work today. Taxes aren't used to "pay" for borrowing or the interest it accrues.

And yet the period of highest relative productivity happened when the top tax rate was 94%

I'd ask you the same.

 

stealing the key is not an economic situation so your example is not irrelevant.

 

wrong. 94% was top marginal rate that nobody paid. Then govt collected less of GDP than they do now. Sorry!!

 

he was not talking about a fiat economy but rather a communist and capitalist economy. Under capitalism to consume something you must make something, while under a socialist society you must steal something to consume something.

 

You mean, you can't see how it's relevant.

 

So, your saying what he said is irrelevant with respect to the US economy?

 

The room isn't yours. The room belongs to the owner(s) of the boat. And I'm sure that, as part of your cruise ticket agreement, your contract states that in the case of an emergency the owners may enter your room (the room you rented).

 

no I mean it is irrelevant

 

and indeed you would happy for them to enter your room and help plug the leak but not steal your stuff!!!

 

I'm saying it is not relevant to socialism versus capitalism.

 

Now your obfuscating... This is an obvious example and you know what I was shooting for, but if you're going to make me type more in order to make my point, fine.

Let's say the whole ship belongs to you and everyone else is a passenger, should everyone respect your property if it costs them their health or their lives?

 

No. When you took them on your ship, you took responsibility for their safety. It would be like an airline deciding to eject someone while a mile in the air.

 

no of course not but that does not give them the right to steal your stuff

 

So let's review, lest we forget what we're talking about.

Kenny said:

Now, let's say you have a disability, maybe a vet who cannot work, can the government provide that vet money and subsistence without stealing it from someone?
That is a third option, is it not? Is there something immoral about that?

 

@Kenny Naicuslik was talking about the different methods by which a person may obtain the necessary means for satisfying his desires. He can induce someone to give them to him by offering something the other person wants. Or he can use violence. The former is called the economic means, while the later is called the political means.

As to your question, I can't see how the government could provide subsistence. That would mean goods or services, and I don't see how it would acquire these goods and services without taking them from someone else. Unless they were donated voluntarily, I suppose.

As far as giving money, since the government has used its power to take over the monetary system, the government can give as much money as it want to anyone it desires. That is, after all, the reason it takes over the monetary system in the first place. I mean, who wouldn't want the ability to produce money at will?

 

No they can also print it, which is even worse. Another option would be for the government to run businesses to finance itself, but bureaucracies tend to be so horrendously inefficient that I sincerely doubt any government would be capable of running a profitable business. In the Netherlands the government had a monopoly on the casino industry and it still managed to work at a loss.

How would it be theft if they asked him for the key? Anyhow what you are describing is hostage taking, if someone doesn't allow you to leave his property then he is violating natural law and therefore immoral.

No because he is violating your rights be keeping you hostage... That would've been immoral if the boat weren't sinking too. And how the hell does that equate to taxation? Rich people aren't taking anyone hostage. The example you are trying to get at, I think, is "if a rich guy has 10 sandwiches and a starving man has zero, would it be immoral for the starving man to steal a sandwich from the rich guy?" The answer that is yes, it would be immoral. Unless the government interfered, the starving man owns himself and the product of his labour. He is therefore more than capable of producing his own sandwiches.

I honestly don't have a clue what you mean by this? How does a currency being backed by state violence rather than reserves mean taxation isn't tax? And what the hell does the purpose of taxes have to do with whether or not it is theft? I think you are just throwing a bunch of words you heard in a Youtube video once at me hoping I don't know what they mean.

That's because that was only during the final years of the second world war, in which the government produced loads of weapons with money they borrowed. Productivity might have been high those years but the nation's wealth was lower than it ever was. Are you also going to argue that that ridiculously high tax rate was responsible for the low unemployment rate during world war two? hahahaha
Anyhow, here is a graph you should ACTUALLY be looking at for these kinds of things: https://gyazo.com/7717f8cbf113cdf0554193d2657c5488 See that peak in Reagan era? It's almost like lowering taxes is good for the economy....

 

No because refusing someone their right to leave a property any time they see fit is a violation of your rights. Also, if the ship belonged to you then why would you let it sink with everyone including yourself on it? All you are doing is proving that in a free market these types of things wouldn't happen because nobody would benefit, especially not the ship owner.

 

1) If you have a disability go seek out a charity or go do the work you are capable of doing.
2) For someone to be a vet he has to have been victim by a government stealing money from its citizens and spending it on a war. If we didn't allow the government to steal then we wouldn't have to take care of any vets either. Your argument makes no sense.
3) There is something immoral about fighting wars to make sure the terrible currency called the dollar backed by oil so America doesn't collapse under hyperinflation. Maybe we should focus on not doing that, rather on what to do with the victims after we do do that?

 

Actually the FED is governed by Federal Reserve Act ( act of Congress) which mandates no inflation or deflation.

 

Just to be clear, the US government or the Fed (wich is really an autonomous arm of the US government) does not print money except to meet people's demand to withdraw cash, mostly from the ATM.

The US government creates cash by crediting bank accounts. If the government hires you to do work, they don't "print" cash and send it to a bank. They, quite litterally mark up your bank account by the amount they owe you.

Now having said that, can you explain to me why cash creation is worse than taking money from people in the form of taxes?

Lastly, you still didn't answer the question. Do you think the government imposing a tax is stealing?

Today I work for the 10th largest private company in the world, DellEMC ($67 billion in revenue), Prior to their merger, Dell had 138k employees to EMC's 70k. Given some duplications, after the merger, there was large layoffs, about 10% of the workforce. By way of comparision, the US government employs 4.3 million people and does $2.9 trillion.

The US Patent Office is quite profitable.

Now I've been assigned to work at over a dozen government institutions including the IRS, DEA, Pentagon, USPTO, ATF, NIH (to name a few)....In that time I was working either for EMC, Dell, or Lockheed Martin. What you perceive as waste is largely due to the massive scale of government and the fact that, when compared to private business, is much more transparent. Companies like Dell have no obligation to make their financials public, you have no idea the amount of waste that occurs, you just make that assumption based on your preconceptions. Government organizations can be searched easily on the web and their finances laid to bare for everyone to scrutinize. In government, what is lost in waste is often made up for in economies of scale. This myth that government is inherently inefficient as if people in government offices don't care how much money they waste is BS. I've worked in both government and the private sector (sometimes both at once) and I can tell you, after having worked for some of the nation's largest tech companies, that there is no magic of free enterprise. As companies get larger, there are certain inefficiencies that creep in. That's just the nature of businesses that large. Furthermore, there were just as many hard working people in government trying to do a good job as there are in private industry.

As a matter of fact, there are many anecdotal examples of inefficiency in private business that aren't as prevalent in government.

First, the government usually lags behind private industry in technology. This means that private business pays more for it, both in the acquisition of it and the administration and deployment of it. Most government organizations I've worked in acquire new technology slowly after the prices fall and the number of people who know how to operate them increase, helping to lower cost. There are lots of examples like these, some are pros and others are cons, but like I said, there is no inherent inefficiency despite the desire of some to perpetuate the myth.

Let me rephrase because it's obvious I either sucked at explaining to you or you aren't understanding, instead of arguing which is what, let me try another example.

Plainly speaking. If there is something that poses a threat to the health of society and the only way to fix it is to force your way onto a person's private property (presumably because that person says he won't allow it) is that wrong? Is that immoral?

Should people respect a person's property no matter what? Or are there extenuating circumstances where the government can take or invade private property for the good of society?

I never said taxation wasn't a tax....I said the government does NOT tax its citizens in order to repay its treasury obligations or the interest on them, at least since 1974 when the fiat standard was made law. Perhaps even longer than that, without looking I suspect that would be true all the way back to 1934 when we stopped redeeming dollars for gold.

This is going to be a very long conversation if you aren't going to read what I wrote more carefully. I said, "Taxes aren't used to pay for borrowing". I didn't say what purpose of taxes are, I set aside a single example of what taxes aren't used for. Thus, when someone claims that government takes money from one person to pay for someone to have welfare, this isn't true. Taxes don't pay for spending. Period.

No, no, not at all. You will find I'm exceedingly patient, polite and willing to talk to anyone who wants to have a productive conversation. As far as my "creds". I've been studying economics since 2003, but became more serious and began taking courses (online) in 2005. My message to everyone is that few people, on the right or the left understand the system of economics in the US today. I simply try to help people understand the system we have so they can understand the real constraints on government spending. Once you understand that government isn't limited fiscally, you can better understand your own personal ideology in light of better understanding.

Yes you are quite right, that was the precipitating factor.

This is where things get confusing....

The fact is, in the 1940's the dollar was not redeemable for gold. The government backed the currency in circulation with gold, but all that meant was that there should be no more currency in circulation that the government had value in gold. So let's say there were $1000 in gold, there would naturally be $1000 in circulation. So let's say the government spent $100 into the economy, now the economy has $1100 and $1000 in gold. Now the government has an obligation to remove $100 from circulation so the government taxed some away and for the rest, it told savings accounts (US Treasuries)>

But, the government spent before it taxed the money. That means the government created the $100 and spent it and then, after the fact it removed it.

That may seem like a small distinction, but the FACT is that the money it taxed and collected via the sale of treasuries was destroyed, not spent. The government had already created and spent the money earlier. The government doesn't need tax money to fund expenditures, it can create all the money it wants, it taxes in order to prevent inflation. In the 1940's inflation was determined by the amount of gold the nation held. Since the government couldn't triple its gold supply it had to increase the velocity of money via massive spending and massive taxation and bond sales.

Think about it like this. If the government ONLY accepts it's dollar in taxes, how can people pay taxes before the government spends money into the economy?

Patently false. Saving rates were at all-time highs for two reasons, the government was encouraging people to ration so that private sector expenditures didn't compete with government expenditures on war supplies (driving up costs) and because so much of the countries industry was dedicated to the war effort there was less to purchase. As a result, the personal savings rate increased. After the war, the private industry turned away from supporting the war effort to going after that huge pile of savings. Monetary wealth was turned into real wealth. One of the reasons the 1950's and 1960's is known as the golden age. The US government created $4.1 trillion dollars in three years (in 2013 dollars) and people saved 25% of it for 3-5 years, then they deployed those savings over the next 10-20 years. There was a place to spend it because the US government had created so much industry.....

Again, it's going to be a long conversation if you keep quoting things I never said.

To the contrary, the top tax rate was 94% because unemployment was so low and salaries earned were so relative to the supply of consumer goods that could be purchased. It was all about limiting inflation.

See, here again, you end up putting your foot in your mouth. First, the amount the government should tax depends on prevailing economic conditions. Sometimes increasing taxes is the right thing to do and other times it is not.

Now, let's look at taxes and spending during the Regan years:



Ok, we see taxes begin to decline in 1982, but we also see a massive increase in spending at about the same time.

What can we infer from this?

Was it lower taxes or increased spending that was good for the economy.

The answer is, it was the combination of BOTH!

Note the gap:



That means the government spent more money into the economy and taxed out less. This is exactly what an economy with spare capacity and labor needs.

Now according to anyone that supports "fiscal responsibility", this is the opposite of responsibility as the gap increased the deficit by 5.7%. You'd have to go back to 1946 or move forward to after the housing crash in 2008 to find larger deficits. Anywhere you find a large gap between spending into the private sector and taxing you will find economic prosperity. Having said that, the gap post-2008 was larger, and while it did prevent a global economy collapse it did not result in the kind of prosperity we saw in the 1980's because so much of the money created never ended up in the hands of the middle class. Over 90% of the wealth taken after 2008 went to the top 10% or so of the economy. It's a testament to supply side failure as a policy.

So, just to be clear, I don't support high taxes unless the US private sector is running out of real resources or labor...Something not likely to happen anytime soon as the US private sector is operating at 75% of its capacity:



Questions, comments?

 

Under "policy objectives", I found:

HERE is the link to the Federal Reserve Act.

Can you find for me the section that mandates "no inflation"? I would be interested to read it.

 

Kenny, I wrote that last bit to you pretty late and I did a poor job proof reading....A few corrections:

I said:

"The fact is, in the 1940's the dollar was not redeemable for gold. The government backed the currency in circulation with gold, but all that meant was that there should be no more currency in circulation that the government had value in gold. So let's say there were $1000 in gold, there would naturally be $1000 in circulation. So let's say the government spent $100 into the economy, now the economy has $1100 and $1000 in gold. Now the government has an obligation to remove $100 from circulation so the government taxed some away and for the rest, it told savings accounts (US Treasuries)>"

Should be:

The fact is, in the 1940's the dollar was not redeemable for gold. The government backed the currency in circulation with gold, but all that meant was that there should be no more currency in circulation that the government had value in gold. So let's say there were $1000 in gold, there would naturally be $1000 in circulation. So let's say the government spent $100 into the economy, now the economy has $1100 and $1000 in gold. Now the government has an obligation to remove $100 from circulation so the government taxed some away and for the rest, it sold savings accounts (US Treasuries).
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"To the contrary, the top tax rate was 94% because unemployment was so low and salaries earned were so relative to the supply of consumer goods that could be purchased. It was all about limiting inflation."

Should be:

"To the contrary, the top tax rate was 94% because unemployment was so low and salaries earned were so high relative to the supply of consumer goods that could be purchased. It was all about limiting inflation.
-----------------------------------------------------

 

Inflation is exclusively a monetary phenomenon

 

Before 1974, perhaps, after 1974, it is unemployment that is a monery phenomenon.