Welcome to the MacNN Forums.

If this is your first visit, be sure to check out the FAQ by clicking the link above. You may have to register before you can post: click the register link above to proceed. To start viewing messages, select the forum that you want to visit from the selection below.

You are here: MacNN Forums > Community > MacNN Lounge > Political/War Lounge > How government creates jobs by raising taxes

How government creates jobs by raising taxes
Thread Tools
turtle777
Clinically Insane
Join Date: Jun 2001
Location: planning a comeback !
Status: Offline
Reply With Quote
Aug 31, 2011, 06:18 PM
 
     
OAW
Addicted to MacNN
Join Date: May 2001
Status: Offline
Reply With Quote
Aug 31, 2011, 07:19 PM
 
The article really doesn't provide enough data for a thorough analysis. As you have often said yourself ... correlation is not necessarily causation. So simply because the job loss followed the tax increase in January ... it doesn't necessarily mean that they were caused by the tax increase. As you well know ... the economy started to sputter nationwide last spring. Even in states that didn't pass the tax increase. Furthermore, how is this aggregate job loss figure broken down by public sector vs. private sector? Nationwide trends over the last several months reflect private sector job growth ... coupled with growing public sector job losses. Resulting in anemic job growth overall that is basically just keeping up with population growth and not able to put a sizable dent in the unemployment rate. Private sector demand is in the tank. State budgets are dismal because the economy isn't firing on all cylinders. Why? Because private sector demand is in the tank. Stimulus money that was used to shore up state budgets while the private sector recovered is starting to run out. So public sector workers are starting to get pink slips in increasing numbers in order to balance state budgets ... especially in those states controlled by the GOP with its "cut spending" mantra. Which only further depresses private sector demand. And then people sit up and wonder why private sector companies aren't hiring when there simply isn't enough enough extra demand in the economy to justify the expense of additional workers?

Demand is the fundamental driver of the economy. Not tax policy. And for an individual business, the hire/don't hire decision is made a lot further upstream than tax considerations:

Net sales revenue
– Cost of goods sold
= Gross profit
– SG&A expenses (combined costs of operating the company)
= EBITDA
– Depreciation & amortization
= EBIT
– Interest expense (cost of borrowing money)
= EBT
– Tax expense
= Net income (EAT)

The cost of employees is in SG&A. At the end of the day a business is trying to increase its Net Income. That can be accomplished in a number of ways. But anyone who understands basic arithmetic can see that there are 6 areas to manage to that goal (identified in italics). Taxes is just one .... in most cases the smallest one in terms of dollars ... and the one that's at the tail end of the process. If a company can increase its Earnings Before Taxes (EBT) by $X as a result of hiring employees to service increased demand (thereby increasing Net Sales Revenue) ... well it's going to do that. It has to pay Y% * EBT anyway in taxes. (Let's keep it simple and not get caught up in tax credits, tax avoidance strategies, loopholes, etc.) So if the proposal is to increase the tax rate (Y%) by Z% ... then the only way it wouldn't make sense to hire due to said tax increase is if (Z% * EBT) > $X. And if an increase of 5 or even 10% in taxes will wipe out the marginal increase in EBT ... well then there wasn't much bang for the buck in increasing head count in the first place.

OAW
     
turtle777  (op)
Clinically Insane
Join Date: Jun 2001
Location: planning a comeback !
Status: Offline
Reply With Quote
Aug 31, 2011, 10:18 PM
 
I'm sorry, but what you said doesn't make sense: cost of employees (labor) is also in COGS.

The rest is too convoluted.

-t
     
OAW
Addicted to MacNN
Join Date: May 2001
Status: Offline
Reply With Quote
Sep 1, 2011, 01:14 AM
 
It makes sense. If one is more attuned to mathematics than ideology that is. My mother was a math teacher. Believe me … I know numbers quite well. You are correct that labor costs are included in COGS if they are directly attributable to the cost of the goods or service being sold. IOW … if a person is working as an IT consultant then their salary is part of COGS … whereas if that same person is working in the IT department at a consumer goods company then their salary is part of SG&A. Regardless .… my fundamental point stands. A business is going to be concerned with COGS or SG&A in relation to Net Sales Revenue when it comes to hiring decisions. Because tax considerations on EBT occur well after employee expenses have already been deducted. This is Business 101. One either knows how to read a financial statement or not. And it most definitely requires an understanding of basic mathematics. Not trigonometry. Not calculus. Not Einstein level equations. So if simple arithmetic is "too convoluted" for you … well then all I can say is that speaks volumes.

OAW
( Last edited by OAW; Sep 1, 2011 at 01:24 AM. )
     
CRASH HARDDRIVE
Addicted to MacNN
Join Date: May 2001
Location: Zip, Boom, Bam
Status: Offline
Reply With Quote
Sep 1, 2011, 03:13 AM
 
LOL! ^ Now that's what you call a classic smokescreen.

The left is clueless about money and job creation. They can't ever get it through their brick skulls that people don't hire other people as part of some social experiment, they hire other people because a. they have the money to so, and b. because doing so will expand their business and make them even more money. THAT'S IT. PERIOD. None of the other smokescreen bullcrap matters a hill of beans to anyone, because if a and b aren't met, there is no c: new jobs.

The problem with clueless lefties in charge, is they think the 'have money/make more money' parts of a and b are evil, and whenever someone achieves either, they can instantly be (despite any and all real-world circumstances) be labeled 'filthy rich' and therefore their money can be confiscated at will.

People not all being the mindless sheep that leftists think everyone else is, realize in such a climate that a. allowing clueless politicians to know you have money isn't a good thing if they're going to claim you're greedy for having it and try to confiscate it, so you're not as likely to expose it to that risk. And b. since hiring means means you're trying to make more money- why bother if idiot politicians are going to claim you're greedy for doing so and try to confiscate it and scapegoat you for everything under the sun. Better in all cases to keep as much as you can out of play.

The idiocy of far-left liberalism puts barriers up to both a and b conditions of hiring new people. Lefties will never understand this, because once more, they firmly believe job creation=social pet project. The having/making money part completely escapes them. It's one of the reasons why it's pointless to even try and have this discussion with people who are clueless about business and money.

OF COURSE excessively raising taxes on businesses at a time when they're going to be naturally hesitant to risk capital in the first place leads to fewer jobs. It's part of creating an overall climate that's unfriendly to business and unwelcoming of business expansion. It's a no-brainer. But by all means, throw up more smokescreens to avoid dealing with the obvious. Maybe reality will change itself magically. Like this:

*poof!*

<leftyloon land>
WHY YES! Businesses -those evil 'rich!' enjoy being hit with constant added costs and the blame for of all society's ills every time moronic politicians screw up their budgets! This is precisely why anyone goes into business- to fund and bail out in ever-increasing amounts the pet social projects of political hacks! Making money -and not being penalized and scapegoated for it when they do- isn't even a distant consideration!
</leftyloon land>
     
Kerrigan
Addicted to MacNN
Join Date: Apr 2005
Status: Offline
Reply With Quote
Sep 1, 2011, 03:33 AM
 
I'm sure that you know numbers quite well OAW. There are, however no numbers whatsoever in your argument.

Your argument, as best I can tell, is a broad overview of how cutting government spending lessens demand (this is a macroeconomic observation) combined, nonsensically, with a microeconomic formula illustrating how a business owner determines his net income.

The Macroeconomic side of your argument is incoherent. "Demand is the driver of the economy, not tax policy" makes no sense. Demand is a function of tax policy. I.E., when taxes go up, Consumption goes down and Aggregate Demand goes down because consumers have less money with which to consume.

The Microeconomic side of your argument makes perfect sense by itself (taxes are not the biggest expenditure that a business has, and therefore not its no. 1 concern with regards to hiring), but you didn't connect that at all with your Macroeconomic observation, except to say that in both regards, taxation is not the no.1 factor determining output/net income.

Try boiling your argument down to one logical sentence that connects the facts, then expand upon it. Until then, turtle's argument, by way of illustration, is far more compelling in its simplicity.
     
Doofy
Clinically Insane
Join Date: Jul 2005
Location: Vacation.
Status: Offline
Reply With Quote
Sep 1, 2011, 06:51 AM
 
Originally Posted by CRASH HARDDRIVE View Post
The left is clueless about money and job creation. They can't ever get it through their brick skulls that people don't hire other people as part of some social experiment, they hire other people because a. they have the money to so, and b. because doing so will expand their business and make them even more money. THAT'S IT. PERIOD.
Sorry, wrong. You forgot reason DD.
Been inclined to wander... off the beaten track.
That's where there's thunder... and the wind shouts back.
     
turtle777  (op)
Clinically Insane
Join Date: Jun 2001
Location: planning a comeback !
Status: Offline
Reply With Quote
Sep 1, 2011, 12:39 PM
 
Originally Posted by OAW View Post
... by OAW
I'm sorry, your math might by arithmetically right, but your thinking and conclusions are wrong.

And don't tell my about how finances, cost structures and P&L calculations work.
I've been working in finance and controlling for 15 years.

-t
     
finboy
Registered User
Join Date: Mar 2000
Location: Garden of Paradise Motel, Suite 3D
Status: Offline
Reply With Quote
Sep 1, 2011, 01:47 PM
 
Originally Posted by turtle777 View Post
And don't tell my about how finances, cost structures and P&L calculations work.

-t
Yeah, the idea that most labor cost is in S&GA is ludicrous. Unfortunately, math <> accounting, or, alternatively, I agree what CRASH said.
     
turtle777  (op)
Clinically Insane
Join Date: Jun 2001
Location: planning a comeback !
Status: Offline
Reply With Quote
Sep 1, 2011, 02:01 PM
 
Originally Posted by OAW View Post
The article really doesn't provide enough data for a thorough analysis. As you have often said yourself ... correlation is not necessarily causation.
Muahahaha

I completely overlooked this gem.

So, what you're sayin is that IL Democrats and Quinn just had bad luck.
Sorry, bro, I live and work in IL, I can guarantee you that the Democrats here are complete idiots and have no effing clue about business.

LOL, I can see Obama's 2012 campaign taking off like a rocket:

"We'll promise better luck in 2013 !!!1!oneone"



-t
     
OAW
Addicted to MacNN
Join Date: May 2001
Status: Offline
Reply With Quote
Sep 1, 2011, 03:06 PM
 
Originally Posted by CRASH HARDDRIVE View Post
LOL! ^ Now that's what you call a classic smokescreen.

The left is clueless about money and job creation. They can't ever get it through their brick skulls that people don't hire other people as part of some social experiment, they hire other people because a. they have the money to so, and b. because doing so will expand their business and make them even more money. THAT'S IT. PERIOD. None of the other smokescreen bullcrap matters a hill of beans to anyone, because if a and b aren't met, there is no c: new jobs.

blah blah blah
Let's put aside the fact that I have said nothing whatsoever about any "social experiment". I'll just chalk that up to your typical debate tactic of arguing a point that's not in dispute. The thing that I find most striking here is that your ideological blinders are on so tight that it doesn't even occur to you that you've reiterated the exact same thing that I said.

Originally Posted by OAW
At the end of the day a business is trying to increase its Net Income. That can be accomplished in a number of ways. But anyone who understands basic arithmetic can see that there are 6 areas to manage to that goal (identified in italics). Taxes is just one .... in most cases the smallest one in terms of dollars ... and the one that's at the tail end of the process. If a company can increase its Earnings Before Taxes (EBT) by $X as a result of hiring employees to service increased demand (thereby increasing Net Sales Revenue) ... well it's going to do that.
Offering a business owner a tax cut in the face of no increased demand for his product isn't going to result in "c: new jobs". That business owner isn't going to increase head count unless "doing so will expand their business and make them even more money". Just like you said right? So if there is no increased demand then what is that tax cut going to do other than make his pockets fatter? Which for the record ... isn't "evil". I never said anything of the sort. But it is ineffective when it comes to job creation. Can tax cuts spur an increase in aggregate consumer demand? Yes ... if they are broadly targeted to the many that consume with wage income as opposed to narrowly targeted to the few who primarily save investment income. Unfortunately, the former isn't the GOP's primary constituency and so its ideological inclinations favor the latter.

OAW
     
Athens
Addicted to MacNN
Join Date: Jan 2003
Location: Great White North
Status: Offline
Reply With Quote
Sep 1, 2011, 04:01 PM
 
The best thing a government can do to spur economic growth and job creating in times like this is invest tax dollars back into the system. Lots of well paid contract jobs results in secondary industry and suppliers for the projects also doing well with a trickle down effect. Same time you have lots of stable employment and people who are confident that will go out and spend money.

8 Billion worth of spending in my region over the last 7 years with most of it during the peak of the recession, and because of it we really didn't feel a recession.

600 Million for the Sea to Sky Highway upgrade (Compelted)
2 Billion for the Canada line (Compelted)
900 Million on the Olympic Village (Compelted)
820 Million on the Golden Ears Bridge (Compelted)
890 Million on the Vancouver COnvention Centre (Compelted)
3 Billion on the Gateway Program including the new freeway and Port Mann Bridge (On-Going)
A lot of smaller projects as well.
Blandine Bureau 1940 - 2011
Missed 2012 by 3 days, RIP Grandma :-(
     
OAW
Addicted to MacNN
Join Date: May 2001
Status: Offline
Reply With Quote
Sep 1, 2011, 04:30 PM
 
Originally Posted by Kerrigan View Post
I'm sure that you know numbers quite well OAW.
Indeed.

Originally Posted by Kerrigan View Post
There are, however no numbers whatsoever in your argument.
Sure there are. Let's look at it again ....

Originally Posted by OAW
Net sales revenue
– Cost of goods sold
= Gross profit
– SG&A expenses (combined costs of operating the company)
= EBITDA
– Depreciation & amortization
= EBIT
– Interest expense (cost of borrowing money)
= EBT
– Tax expense
= Net income (EAT)

$X
Y%
Z%
Y% * EBT
(Z% * EBT) > $X.
These are all numbers. Explicit, hard numbers like $123.56? No. But numerical concepts like EBT and abstractions of how increases in EBT are impacted by increases in tax rates ... e.g. (Z% * EBT) > $X? Most definitely.

Originally Posted by Kerrigan View Post
Your argument, as best I can tell, is a broad overview of how cutting government spending lessens demand (this is a macroeconomic observation) combined, nonsensically, with a microeconomic formula illustrating how a business owner determines his net income.
Well this ought to be interesting.

Originally Posted by Kerrigan View Post
The Macroeconomic side of your argument is incoherent. "Demand is the driver of the economy, not tax policy" makes no sense. Demand is a function of tax policy. I.E., when taxes go up, Consumption goes down and Aggregate Demand goes down because consumers have less money with which to consume.
Demand is function of many things. Certainly tax policy has an impact. But employment rates and income levels have a much greater impact n'est-ce pas? Furthermore, when taxes go up Aggregate Demand does not necessarily go down. A dollar spent is a dollar spent is a dollar spent. This is a pretty straightforward, non-controversial concept. Or at least it ought to be. Tax policy impacts who is doing the spending. So unless taxes go up and the government completely sits on the increased tax revenue ... which I think we can all agree ain't gonna happen ... then that dollar is still being spent. On a new aircraft carrier. On a Social Security payment. On a contract for office supplies at a government facility. On a salary for a local Congressman. Something! So Aggregate Demand isn't decreased. Which is why government spending contributes to GDP. Now there may be some "re-classification" at play. That is, that portion of Aggregate Demand that is made up of Consumer Demand may decrease. Or the breakdown of Aggregate Demand into Private Sector Demand vs. Public Sector Demand may shift. But even then that may only be temporary. Because government spending that ends up in the pockets of consumers in the form of salaries or entitlement program payments or private sector contracts once again becomes Consumer Demand. That spent dollar continues to recirculate throughout the economy. (Unless of course it leaves the economy via federal debt servicing to the Chinese or egregious foreign trade imbalances ... but that's a topic for another day.)


Originally Posted by Kerrigan View Post
The Microeconomic side of your argument makes perfect sense by itself (taxes are not the biggest expenditure that a business has, and therefore not its no. 1 concern with regards to hiring),
Well I'm glad you can acknowledge that.

Originally Posted by Kerrigan View Post
but you didn't connect that at all with your Macroeconomic observation, except to say that in both regards, taxation is not the no.1 factor determining output/net income.

Try boiling your argument down to one logical sentence that connects the facts, then expand upon it. Until then, turtle's argument, by way of illustration, is far more compelling in its simplicity.
I suppose I'm confused as to exactly what you are looking for. I'll give it a shot ... but sorry a single sentence isn't going to cut it.

A) You've acknowledged that "taxes are not the biggest expenditure that a business has, and therefore not its no. 1 concern with regards to hiring".

B) You've also acknowledged that "taxation is not the no.1 factor determining output/net income".

Ok. Well if one takes that position then it would logically follow that both A and B are the case whether taxes are increased or decreased. N'est-ce pas?

So if tax increases automatically mean job losses ... which is the position turtle777 has taken in the OP ... well then the booming economy and federal surpluses that were achieved during the Clinton Administration must have been a figment of our collective imagination.

And if tax cuts automatically mean job creation .... which is the standard GOP mantra ... well then the Net Job Creation figure of ZERO for the Bush Administration must be some sort of mass hallucination.

So I'll reiterate what I said originally ....

Originally Posted by OAW
The article really doesn't provide enough data for a thorough analysis. As you have often said yourself ... correlation is not necessarily causation. So simply because the job loss followed the tax increase in January ... it doesn't necessarily mean that they were caused by the tax increase.
The economy is just a bit more complicated than the simplistic notions outlined in the OP. I'm just saying ....

OAW
( Last edited by OAW; Sep 1, 2011 at 04:46 PM. )
     
OAW
Addicted to MacNN
Join Date: May 2001
Status: Offline
Reply With Quote
Sep 1, 2011, 04:40 PM
 
Originally Posted by Athens View Post
The best thing a government can do to spur economic growth and job creating in times like this is invest tax dollars back into the system. Lots of well paid contract jobs results in secondary industry and suppliers for the projects also doing well with a trickle down effect. Same time you have lots of stable employment and people who are confident that will go out and spend money.
Indeed. Unfortunately, the GOP dogma of "Government spending is the problem." ... despite the simple mathematically based evidence to the contrary prevents that from happening.

OAW
     
Kerrigan
Addicted to MacNN
Join Date: Apr 2005
Status: Offline
Reply With Quote
Sep 1, 2011, 05:01 PM
 
Dude, you haven't mathematically proven anything. You are repeating a formula that one uses to compute a business's net income.

Your big picture analysis makes absolutely no sense, and it is painful to read. What is the "breakdown of Aggregate Demand in Public Sector demand vs. Private Sector Demand?" It means nothing, that's what.

Stick to your business 101 approach and come back after you've taken Econ 101.

     
OAW
Addicted to MacNN
Join Date: May 2001
Status: Offline
Reply With Quote
Sep 1, 2011, 05:02 PM
 
Originally Posted by finboy View Post
Yeah, the idea that most labor cost is in S&GA is ludicrous. Unfortunately, math <> accounting, or, alternatively, I agree what CRASH said.
Suffice it to say that whether labor cost is accounted for in COGS or SG&A is determined by the type of business. So "most labor cost" may fall in COGS for an automaker but in SG&A for a commodities trading organization. In any event, my fundamental point remains .... regardless of where it falls, the cost of an employee (existing or new hire) is factored into EBT long before taxation enters the equation.

OAW
     
Athens
Addicted to MacNN
Join Date: Jan 2003
Location: Great White North
Status: Offline
Reply With Quote
Sep 1, 2011, 05:38 PM
 
Originally Posted by OAW View Post
Indeed. Unfortunately, the GOP dogma of "Government spending is the problem." ... despite the simple mathematically based evidence to the contrary prevents that from happening.

OAW
What is the ideal situation is during economic good times governments which are making a lot more from the economic activity pay down debt and save a surplus supply (not just lower taxes) and during economic slow times like now invest into the infrastructure of the nation and run up deficits supporting those in need and stimulating the economy.

What actually happens is the government spends spends spends both in good and bad times.

What should happen now is the large companies, the real large ones should be broken up. Part of the mess is lack of competition for both employment seekers and for consumers. We need another Franklin Roosevelt to put the balance back into business.
Blandine Bureau 1940 - 2011
Missed 2012 by 3 days, RIP Grandma :-(
     
OAW
Addicted to MacNN
Join Date: May 2001
Status: Offline
Reply With Quote
Sep 1, 2011, 05:44 PM
 
Originally Posted by Kerrigan View Post
Dude, you haven't mathematically proven anything. You are repeating a formula that one uses to compute a business's net income.
And? Is not a business's purpose in life to increase its net income? You've already acknowledged ....

"taxes are not the biggest expenditure that a business has, and therefore not its no. 1 concern with regards to hiring".

Why? Because the way net income is determined means that other components of the equation are way more influential in the hiring decision than the taxation component. So if you acknowledge that then why do you take issue with my fundamental point where I dispute this notion that a tax increase will automatically lead to job losses? Or that tax cuts will automatically lead to job creation? Does it not occur to you that macroeconomics and microeconomics aren't separate and distinct but are in fact related? You either stand by your acknowledgment or you don't. Sorry ... but at some point one can't break down a simple concept any further.

Originally Posted by Kerrigan View Post
Your big picture analysis makes absolutely no sense, and it is painful to read. What is the "breakdown of Aggregate Demand in Public Sector demand vs. Private Sector Demand?" It means nothing, that's what.

Stick to your business 101 approach and come back after you've taken Econ 101.

I'll try this one mo' gin ....

AD = C + I + G + NX

AD = Aggregate Demand
C = Consumer Spending
I = Investment (private sector spending aimed at the production of some future consumable)
G = Government Spending (gross government investment and consumption expenditures)
NX = Net Exports (total exports less total imports)

Follow me? Now hold up a sec ... wait for it .....

C + I + NX = Private Sector Demand
G = Public Sector Demand

Capiche? So about that Econ 101 ... you were saying?

OAW
     
Athens
Addicted to MacNN
Join Date: Jan 2003
Location: Great White North
Status: Offline
Reply With Quote
Sep 1, 2011, 05:45 PM
 
Blandine Bureau 1940 - 2011
Missed 2012 by 3 days, RIP Grandma :-(
     
turtle777  (op)
Clinically Insane
Join Date: Jun 2001
Location: planning a comeback !
Status: Offline
Reply With Quote
Sep 1, 2011, 05:48 PM
 
Originally Posted by OAW View Post
I'll try this one mo' gin ....

AD = C + I + G + NX

AD = Aggregate Demand
C = Consumer Spending
I = Investment (private sector spending aimed at the production of some future consumable)
G = Government Spending (gross government investment and consumption expenditures)
NX = Net Exports (total exports less total imports)

Follow me? Now hold up a sec ... wait for it .....

C + I + NX = Private Sector Demand
G = Public Sector Demand

Capiche? So about that Econ 101 ... you were saying?

OAW
Seriously, dude, you are a laughing stock. What the f*ck is this supposed to be ?

A cut-&-paste competition ?

-t
     
OAW
Addicted to MacNN
Join Date: May 2001
Status: Offline
Reply With Quote
Sep 1, 2011, 05:56 PM
 
Originally Posted by turtle777 View Post
Seriously, dude, you are a laughing stock. What the f*ck is this supposed to be ?

A cut-&-paste competition ?

-t
Oh really? So Kerrigan says ...

"What is the "breakdown of Aggregate Demand in Public Sector demand vs. Private Sector Demand?" It means nothing, that's what. "

As if I'm just pulling this out of my ass. So I show the breakdown which clearly demonstrates that, unlike Kerrigan apparently, I know what the hell I'm talking about. And that supposedly makes me a "laughing stock" in your esteemed opinion?

Feel free to prove what I just said is wrong with an actual rebuttal .... because your lame dismissal is just that. Lame. Until then ....

OAW
( Last edited by OAW; Sep 1, 2011 at 06:05 PM. )
     
turtle777  (op)
Clinically Insane
Join Date: Jun 2001
Location: planning a comeback !
Status: Offline
Reply With Quote
Sep 1, 2011, 06:08 PM
 
I'm not saying it's wrong. I'm saying that you have no conceptual grasp of the things you're cut-&-pasting.

It's nothing but trolling - posting "facts" that are completely disconnected from your understanding and without any original thought processes.

-t
     
lpkmckenna
Addicted to MacNN
Join Date: Jul 2004
Location: Toronto
Status: Offline
Reply With Quote
Sep 1, 2011, 06:32 PM
 
If there's one thing to be learned here, it's that Mish's blogspot ranting sucks. Who the fnck would bother to listen to the economic analysis coming out of a blogspot account?

Anyways, the painfully idiotic dogma that "lower taxes = stronger economy" only appeals to morons.
     
OAW
Addicted to MacNN
Join Date: May 2001
Status: Offline
Reply With Quote
Sep 1, 2011, 07:06 PM
 
Originally Posted by turtle777 View Post
I'm not saying it's wrong.
Fascinating. You actually are capable of backing up off the ideology just a smudge in order to acknowledge the obvious.

But we'll return to this in a minute.

Originally Posted by turtle777 View Post
I'm saying that you have no conceptual grasp of the things you're cut-&-pasting.

It's nothing but trolling - posting "facts" that are completely disconnected from your understanding and without any original thought processes.

-t
Well that's an uh ... "interesting" observation. Especially seeing how that portion of my post where I said this ....

Originally Posted by OAW
That is, that portion of Aggregate Demand that is made up of Consumer Demand may decrease. Or the breakdown of Aggregate Demand into Private Sector Demand vs. Public Sector Demand may shift.
... along with the other sentences in that particular section before and after that part were made prior to what you deride as "cut-&-pasting" of the actual formula for calculating Aggregated Demand. Now my description ... using my own words ... of the different ways in which Aggregate Demand can be broken down was accurate. As you just acknowledged above. Yet somehow in your esteemed opinion that somehow translates into not having a "conceptual grasp" of the topic? Man ... that's a really neat trick.

You know what turtle? This makes about as much sense as me A) solving an equation, B) showing my work, and C) verbally describing why the algorithm I used achieves the correct result .... and then you turn around and claim that I don't understand algebra nevertheless. Ok. If that's what you have to tell yourself than hey ... whatever.

I'll just make a general observation about the particular position that you are taking here ... which can essentially be summed up as this:

Originally Posted by turtle777's bottom line
Even when OAW is right because the facts back him up ... he's still wrong because I said so.
Well suffice it to say that this is precisely the mentality David Frum was talking about when he said that "conservatives have a unique capacity to ignore unwelcome fact."

OAW
     
turtle777  (op)
Clinically Insane
Join Date: Jun 2001
Location: planning a comeback !
Status: Offline
Reply With Quote
Sep 1, 2011, 07:33 PM
 
Originally Posted by lpkmckenna View Post
If there's one thing to be learned here, it's that Mish's blogspot ranting sucks. Who the fnck would bother to listen to the economic analysis coming out of a blogspot account?

Anyways, the painfully idiotic dogma that "lower taxes = stronger economy" only appeals to morons.
Another useless post from Canuckistan.
Do you have anything substantial to say other than that you don't like blogs ?

Thanks for playing.

-t
     
turtle777  (op)
Clinically Insane
Join Date: Jun 2001
Location: planning a comeback !
Status: Offline
Reply With Quote
Sep 1, 2011, 07:36 PM
 
Originally Posted by OAW View Post
OAW
*plonk*

-t
     
Kerrigan
Addicted to MacNN
Join Date: Apr 2005
Status: Offline
Reply With Quote
Sep 1, 2011, 07:59 PM
 
If I'm mistaken as to your argument, OAW, then correct me: tell me, in one sentence, what your argument is. Fill in the blank: Raising taxes lowers the unemployment rate / has no effect on said rate BECAUSE ____________________.

Please do not copy and past formulas. I studied economics for years. I'd like to see some actual numbers to support your yet-to-be-stated thesis rather than this 101 garbage.
( Last edited by Kerrigan; Sep 1, 2011 at 08:09 PM. )
     
Athens
Addicted to MacNN
Join Date: Jan 2003
Location: Great White North
Status: Offline
Reply With Quote
Sep 1, 2011, 08:58 PM
 
Raising and lowering taxes have zero affect on unemployment rate. Supply and demand are the only things that affect unemployment rates. If the product and service demand is greater then the business ability to produce and service people get hired to return to equilibrium. If not enough product or service is in demand from consumers then the business terminates employment to return to equilibrium. Cutting taxes affects the ability of a government to inject stimulus into the economy with infrastructure projects.
Blandine Bureau 1940 - 2011
Missed 2012 by 3 days, RIP Grandma :-(
     
OAW
Addicted to MacNN
Join Date: May 2001
Status: Offline
Reply With Quote
Sep 1, 2011, 09:43 PM
 
Originally Posted by Kerrigan View Post
If I'm mistaken as to your argument, OAW, then correct me: tell me, in one sentence, what your argument is. Fill in the blank: Raising taxes lowers the unemployment rate / has no effect on said rate BECAUSE ____________________.

Please do not copy and past formulas. I studied economics for years. I'd like to see some actual numbers to support your yet-to-be-stated thesis rather than this 101 garbage.
My argument from the very beginning is that an economy as large and complex as the USA's … especially in the context of a global economy … doesn't lend itself to simplistic notions about the impact of tax policy on the unemployment rate one way or the other. And if you really have studied economics for years that would be readily apparent to you.

But if it still hasn't registered with you then let me answer your question with a question that should prove illuminative. Which do you think has the greater impact by far on job creation? Demand for the goods/services that a company provides? Or the tax rate that company is subject to on its earnings after employee costs have already been deducted? Oh wait … never mind. You already acknowledged the answer to that question earlier. So why are you having so much difficulty putting 2 and 2 together?

OAW
     
turtle777  (op)
Clinically Insane
Join Date: Jun 2001
Location: planning a comeback !
Status: Offline
Reply With Quote
Sep 1, 2011, 10:00 PM
 
Originally Posted by Athens View Post
Raising and lowering taxes have zero affect on unemployment rate. Supply and demand are the only things that affect unemployment rates.
Wrong.

Raise taxes to 100%, and private company employment will fall dramatically.
Yes, government employment will rise, but those dummies will not produce anything of value add, therefore, resources are wasted and standards of living will go down the toilet.

-t
     
turtle777  (op)
Clinically Insane
Join Date: Jun 2001
Location: planning a comeback !
Status: Offline
Reply With Quote
Sep 1, 2011, 10:02 PM
 
OAW, you're so full of shit. And you know it.

Stop craping in my thread.

Kthxbai.

-t
     
OAW
Addicted to MacNN
Join Date: May 2001
Status: Offline
Reply With Quote
Sep 1, 2011, 11:04 PM
 
^^^^^

Nice. Spoken like the truly intellectually inadequate.

OAW
     
Athens
Addicted to MacNN
Join Date: Jan 2003
Location: Great White North
Status: Offline
Reply With Quote
Sep 1, 2011, 11:45 PM
 
Originally Posted by turtle777 View Post
Wrong.

Raise taxes to 100%, and private company employment will fall dramatically.
Yes, government employment will rise, but those dummies will not produce anything of value add, therefore, resources are wasted and standards of living will go down the toilet.

-t
No they will raise prices. They wont turf employees and sacrifice profits because they can't meet the demand of consumers and customers. If they don't need the employee to supply consumers and customers then chances are they where over staffed and already looking at terminating. Now if customers cant afford to purchase stuff because the price is to high then it will cost jobs. But since the 100% tax increase will also hit the competition which will have to raise prices as well, only the customers hurt. Try again Donatello
Blandine Bureau 1940 - 2011
Missed 2012 by 3 days, RIP Grandma :-(
     
ebuddy
Posting Junkie
Join Date: Aug 2003
Location: midwest
Status: Offline
Reply With Quote
Sep 2, 2011, 07:29 AM
 
Originally Posted by OAW View Post
Offering a business owner a tax cut in the face of no increased demand for his product isn't going to result in "c: new jobs". That business owner isn't going to increase head count unless "doing so will expand their business and make them even more money". Just like you said right? So if there is no increased demand then what is that tax cut going to do other than make his pockets fatter? Which for the record ... isn't "evil". I never said anything of the sort. But it is ineffective when it comes to job creation. Can tax cuts spur an increase in aggregate consumer demand? Yes ... if they are broadly targeted to the many that consume with wage income as opposed to narrowly targeted to the few who primarily save investment income. Unfortunately, the former isn't the GOP's primary constituency and so its ideological inclinations favor the latter.

OAW
I disagree with this breakdown for the reasons mentioned by Kerrigan et al. Demand indeed drives the economy. Demand is the product of consumer confidence and consumer confidence is the product of income stability and income stability is the product of stable employment. When you create an environment (taxes/regulatory) more favorable to business, businesses will respond by attempting to grow because that's what they do. If you're not growing, you're dying. For example, I've not once worked for a company where "grow the business" wasn't the mantra. There are times however, when the environment causes enough concern that the mantra becomes "sustain the business". When the mantra moves from "grow" to "sustain", jobs are cut or new jobs halted (which equates to a cut because the available workforce continues to grow regardless of hiring), employment is unstable, incomes are unstable, and demand decreases.

Modern Drop Forge leaves Illinois and moves operations to Indiana employing 240 new people. CME "eyeing an exit" claims the Chicago Tribune. Sears, Motorola, Caterpillar, Navistar, Mitsubishi, US Cellular, Jimmy Johns, Continental Tire... all expressing a desire to leave Illinois specifically because of the tax environment. I'm sure some pretty sweet deals have been made to keep them, but that's just an additional, unnecessary give-away on the backs of taxpayers when the culprit was a naive tax environment to begin with. This is going to get worse for Illinois before it gets better and the surrounding States know it. They're wooing businesses out of Illinois and it's paying off for them.

This is failed ideology manifest in a failing economy.
ebuddy
     
ebuddy
Posting Junkie
Join Date: Aug 2003
Location: midwest
Status: Offline
Reply With Quote
Sep 2, 2011, 07:34 AM
 
Originally Posted by Athens View Post
No they will raise prices. They wont turf employees and sacrifice profits because they can't meet the demand of consumers and customers. If they don't need the employee to supply consumers and customers then chances are they where over staffed and already looking at terminating. Now if customers cant afford to purchase stuff because the price is to high then it will cost jobs. But since the 100% tax increase will also hit the competition which will have to raise prices as well, only the customers hurt. Try again Donatello
Wrong again. If the 100% tax is in Illinois, they will leave Illinois. If the 100% tax is in the US, they will leave the US. Government will take over those sectors of the economy and all will be employed by the State.

No thanks Shredder.
ebuddy
     
Laminar
Posting Junkie
Join Date: Apr 2007
Location: Iowa, how long can this be? Does it really ruin the left column spacing?
Status: Offline
Reply With Quote
Sep 2, 2011, 07:37 AM
 
Originally Posted by OAW View Post
My argument from the very beginning is that an economy as large and complex as the USA's … especially in the context of a global economy … doesn't lend itself to simplistic notions about the impact of tax policy on the unemployment rate one way or the other.
     
BadKosh
Professional Poster
Join Date: Aug 2007
Location: Just west of DC.
Status: Offline
Reply With Quote
Sep 2, 2011, 09:33 AM
 
No jobs this month. Perhaps it has more to do with over regulation?
     
turtle777  (op)
Clinically Insane
Join Date: Jun 2001
Location: planning a comeback !
Status: Offline
Reply With Quote
Sep 2, 2011, 09:52 AM
 
Originally Posted by Athens View Post
No they will raise prices. They wont turf employees and sacrifice profits because they can't meet the demand of consumers and customers. If they don't need the employee to supply consumers and customers then chances are they where over staffed and already looking at terminating. Now if customers cant afford to purchase stuff because the price is to high then it will cost jobs. But since the 100% tax increase will also hit the competition which will have to raise prices as well, only the customers hurt. Try again Donatello
You're not making any sense at all.

My point: if taxes go to 100%, employment will fall, because people can not buy anything anymore, so employers will shed jobs.

You: No, employers will keep their employees, but raise prices.

WTF ?

Let me put it in simpler terms: if you raise taxes to 100%, people will stop working because they would be working for free (because they don't make a single $). Therefore, raising taxes to 100% will DECREASE employment.

It's very clear that your original statement is wrong. Own it.

-t
     
Kerrigan
Addicted to MacNN
Join Date: Apr 2005
Status: Offline
Reply With Quote
Sep 2, 2011, 11:16 AM
 
OAW: so the US economy doesn't "lend itself to simplistic notions about the impact of tax policy on the unemployment rate."

Your entire "argument" up to this point is repeatedly pasting two highly simplistic formulas, and failing to connect them.

Originally Posted by OAW
My mother was a math teacher. Believe me … I know numbers quite well.
Tell us then, what are the numbers? It must be very complex indeed.
     
hyteckit
Addicted to MacNN
Join Date: May 2001
Status: Offline
Reply With Quote
Sep 2, 2011, 10:15 PM
 
Tax increases don't create jobs.

Tax increases are intended to raise revenue.

DUH!

Tax cuts don't create jobs either.

Bush Tax Cuts == Job Killer
June 2001: 132,047,000 employed
June 2003: 129,839,000 employed
2.21 million jobs were LOST after 2 years of Bush Tax Cuts.
Bush Tax Cuts == Job Killer
June 2001: 132,047,000 employed
June 2003: 129,839,000 employed
2.21 million jobs were LOST after 2 years of Bush Tax Cuts.
     
hyteckit
Addicted to MacNN
Join Date: May 2001
Status: Offline
Reply With Quote
Sep 2, 2011, 10:20 PM
 
OMG. You mean employment goes up during the holiday season and goes down after Christmas?


Besides, the job loss is directly correlated with Republicans taking over the House. Republicans are bad for jobs creation.
( Last edited by hyteckit; Sep 2, 2011 at 10:29 PM. )
Bush Tax Cuts == Job Killer
June 2001: 132,047,000 employed
June 2003: 129,839,000 employed
2.21 million jobs were LOST after 2 years of Bush Tax Cuts.
     
hyteckit
Addicted to MacNN
Join Date: May 2001
Status: Offline
Reply With Quote
Sep 2, 2011, 10:45 PM
 
Analyzing 2 years of Tax Cuts on Jobs under Republican control.

Reagan's Tax Cuts in 1981. Passed on Aug. 1981.

Sept. 1981: 90,205,000
Sept. 1983: 89,171,000

1.03 million jobs were LOST.



Bush's Tax Cuts in 2001. Passed on June 7, 2001.

June 2001: 132,047,000 employed
June 2003: 129,839,000 employed

2.21 million jobs were LOST.
Bush Tax Cuts == Job Killer
June 2001: 132,047,000 employed
June 2003: 129,839,000 employed
2.21 million jobs were LOST after 2 years of Bush Tax Cuts.
     
el chupacabra
Mac Elite
Join Date: Apr 2001
Status: Offline
Reply With Quote
Sep 3, 2011, 01:14 AM
 


Americans..
     
Athens
Addicted to MacNN
Join Date: Jan 2003
Location: Great White North
Status: Offline
Reply With Quote
Sep 3, 2011, 03:32 AM
 
Originally Posted by ebuddy View Post
Wrong again. If the 100% tax is in Illinois, they will leave Illinois. If the 100% tax is in the US, they will leave the US. Government will take over those sectors of the economy and all will be employed by the State.

No thanks Shredder.
Labor is the most expensive part of a business. What ever labor jobs that can be sent to China will be sent to China. Everything else will continue to do business in the US until profit can't be made. Stores will not pack up and leave as long as it is profitable. Labor costs are the deciding factor of what stays and what goes.

Originally Posted by turtle777 View Post
You're not making any sense at all.

My point: if taxes go to 100%, employment will fall, because people can not buy anything anymore, so employers will shed jobs.

You: No, employers will keep their employees, but raise prices.

WTF ?

Let me put it in simpler terms: if you raise taxes to 100%, people will stop working because they would be working for free (because they don't make a single $). Therefore, raising taxes to 100% will DECREASE employment.

It's very clear that your original statement is wrong. Own it.

-t
I thought you meant raised by 100% ie 6% now to 12% not raise taxes to 100% which is just ludicrous to even suggest that as a possibility. I also thought you where talking about business taxes not taxes on all people.
Blandine Bureau 1940 - 2011
Missed 2012 by 3 days, RIP Grandma :-(
     
hyteckit
Addicted to MacNN
Join Date: May 2001
Status: Offline
Reply With Quote
Sep 3, 2011, 06:12 AM
 
Originally Posted by turtle777 View Post
You're not making any sense at all.

My point: if taxes go to 100%, employment will fall, because people can not buy anything anymore, so employers will shed jobs.

You: No, employers will keep their employees, but raise prices.

WTF ?

Let me put it in simpler terms: if you raise taxes to 100%, people will stop working because they would be working for free (because they don't make a single $). Therefore, raising taxes to 100% will DECREASE employment.

It's very clear that your original statement is wrong. Own it.

-t
More proof that conservatives are able to think only in Black and White.

Government: Finding the optimal rate to maximize revenue.
Corporations: Finding the optimal rate to maximize profits.
Economists: Finding the optimal rate to maximize economic growth.
Conservatives: Tax cuts, tax cuts, tax cuts. God, God, God.
Bush Tax Cuts == Job Killer
June 2001: 132,047,000 employed
June 2003: 129,839,000 employed
2.21 million jobs were LOST after 2 years of Bush Tax Cuts.
     
hyteckit
Addicted to MacNN
Join Date: May 2001
Status: Offline
Reply With Quote
Sep 3, 2011, 07:00 AM
 
Illinois job numbers:

Total nonfarm employment



Dec 2010: 5623.8
Tax Hike
Jan 2011: 5648.0
May 2011: 5684.9
-----------------
From Jan to May: 61 thousands jobs create after tax hike


$216 million in budget cuts in May
May 2011: 5684.9
July 2011: 5652.7
-----------------
32 thousand jobs lost from Jun to July.


Government Jobs:



May 2011: 855.0
July 2011: 846.2
---------------
9 thousand government jobs lost from Jun to July.



Summary:

1. Tax hikes in Illinois resulted in job growth from Jan 2011 to May 2011.
2. Lost of jobs in Jun thru July resulted from Government layoffs and budget cuts in May 2011.
Bush Tax Cuts == Job Killer
June 2001: 132,047,000 employed
June 2003: 129,839,000 employed
2.21 million jobs were LOST after 2 years of Bush Tax Cuts.
     
Waragainstsleep
Posting Junkie
Join Date: Mar 2004
Location: UK
Status: Offline
Reply With Quote
Sep 3, 2011, 07:34 AM
 
Lets not forget that since labour is expensive, government spending cuts will often manifest in job losses. Lets also not forget that those big tax cuts will sooner or later need to be offset by either a tax raise or a spending cut. Since raising taxes doesn't keep you in government, you get budget cuts and job losses.

Its a great political tactic. Bush cuts taxes making everyone happy but republicans especially so and simultaneously leaves the following government with a crazy mess just waiting to happen which even if they don't take the blame for, they'll get blamed for putting the taxes back up again.

I've long thought that the party system needs to be done away with in the UK, simply because we have hundreds of elected officials who should be far more effective working together for the common good than they are currently because they spend more than half their time trying to make each other look stupid.
This is far more exaggerated in the states where it seems that the Republicans in particular are willing to cause untold damage to their own country in order to win back power.
I have plenty of more important things to do, if only I could bring myself to do them....
     
ebuddy
Posting Junkie
Join Date: Aug 2003
Location: midwest
Status: Offline
Reply With Quote
Sep 3, 2011, 08:19 AM
 
Originally Posted by Athens View Post
Labor is the most expensive part of a business. What ever labor jobs that can be sent to China will be sent to China. Everything else will continue to do business in the US until profit can't be made. Stores will not pack up and leave as long as it is profitable. Labor costs are the deciding factor of what stays and what goes.
In the US for example, small businesses employ more than half of all private sector employees, have generated more than 60% of all new jobs in the last 15 years, and are 52% home-based. If these new jobs are created, they will be created in America, by Americans, employing Americans. They are not particularly interested in or capable of exploiting Chinese labor. People who do not consider the impact of small business on the economy have a tendency of thinking only of the large corporate monoliths because it feeds their distaste for capitalism. Of course, failing to recognize the product of their own wealth.

The workforce continues to grow. New startups are necessary for the new jobs that need continued expansion to keep up with the workforce, otherwise you're left with higher unemployment. The tax environment determines (as it always has and always will) the number of new startups and new jobs created. A tax environment that is not favorable to business will hinder it. Tax increases on tobacco reduces tobacco usage, tax increases on alcohol reduces alcohol consumption, tax increases on energy reduces energy consumption; these taxes are all designed with the subsequent reduction in that behavior in mind. It boggles the mind how one cannot connect one with the other as if they're not well-versed on the impact of taxation on business under the exact same premise.

IMO, this is just willful ignorance to perpetuate a naive and misdirected hatred for capitalism. Other people's capital mind you as they are quite attached to their own.
ebuddy
     
ebuddy
Posting Junkie
Join Date: Aug 2003
Location: midwest
Status: Offline
Reply With Quote
Sep 3, 2011, 09:01 AM
 
Originally Posted by hyteckit View Post
Analyzing 2 years of Tax Cuts on Jobs under Republican control.

Reagan's Tax Cuts in 1981. Passed on Aug. 1981.

Sept. 1981: 90,205,000
Sept. 1983: 89,171,000

1.03 million jobs were LOST.
Reagan increased taxes in 1982 taking the unemployment rate from 8.6% in January 1982 to 10.6% in January 1983 per the Bureau of Labor Statistics. You seem to have a real problem understanding that these Presidents both cut taxes (Reagans tax cuts were designed to "phase-in" over several years to garner Democratic support) and increased taxes (in Reagan's case, reductions in deductions and credits) and in every case whatever factor leading to increasing unemployment was exacerbated by tax increases. We saw it under Kennedy, we saw it under Carter, we saw it under Reagan, we saw it under Bush I, under Clinton, and under Bush II. It is simply unmistakable.

Under Reagan, inflation fell from 12.5 percent in 1980 to 3.9 percent in 1984, interest rates fell, and economic growth went from -.2% in 1980 to +7.3% in 1984, leading to Reagan's landslide re-election. Real economic growth averaged 3.2% during the Reagan years versus 2.8% during the Ford-Carter years and 2.1% during the Bush-Clinton years. Real median family income grew by $4,000 during the Reagan period after experiencing no growth in the pre-Reagan years; it experienced a loss of almost $1,500 in the post-Reagan years. Interest rates, inflation, and unemployment fell faster under Reagan than they did immediately before or after his presidency. On almost every economic variable you can cite, the country fared better under Reagan than the Administrations before or after.

Bush's Tax Cuts in 2001. Passed on June 7, 2001.

June 2001: 132,047,000 employed
June 2003: 129,839,000 employed

2.21 million jobs were LOST.
Bush signed in the first wave of tax cuts in 2001 and it too was designed to "phase-in" over several years to garner Congressional support. In 2003, the phase-in was found to be a mistake (based on lessons learned from the timid "phase-in" of Reagan's cuts) and the proposed cuts were made effective immediately and within months of enactment, job growth exploded leading to 8.1 million jobs through 2007. GDP grew at an annual rate of just 1.7% in the six quarters before the 2003 tax cuts, but in the six quarters following the tax cuts, the growth rate was 4.1%. The S&P 500 dropped 18% in the six quarters before the 2003 tax cuts but increased by 32% over the next six quarters. The economy lost 267,000 jobs in the six quarters before the 2003 tax cuts, but in the next six quarters added 307,000 jobs followed by 5 million jobs in the next seven quarters.

Revisionist history for those who haven't a clue on US politics or the economy based on information spoonfed you by those opposed to (R)s at all costs won't help you in any discussion of facts.

Meanwhile, Buffet goes on tour talking about how he's not paying enough into the Fed, calling for tax increases on the rich while his own company Berkshire Hathaway is mired in a legal battle with the IRS over 1 BILLION DOLLARS IN UNPAID TAXES. Just once it'd be nice to see someone other than a tax cheat recommend higher taxes... on everyone else.
ebuddy
     
ebuddy
Posting Junkie
Join Date: Aug 2003
Location: midwest
Status: Offline
Reply With Quote
Sep 3, 2011, 09:16 AM
 
Originally Posted by hyteckit View Post
More proof that conservatives are able to think only in Black and White.

Government: Finding the optimal rate to maximize revenue.
Finding the optimal rate for government growth and expansion at your expense.

Corporations: Finding the optimal rate to maximize profits.
Finding the optimal rate for growth and expansion at their own expense, producing profit for all including the closet-capitalist pigs on the left.

Economists: Finding the optimal rate to maximize economic growth.
Confused and conflicted as hell who couldn't care less where money comes from as long as it's around to discuss and debate.

Conservatives: Tax cuts, tax cuts, tax cuts. God, God, God.
Liberals: What are you going to do for ______ (pay no attention to the man behind the curtain!) and FOX NEWS, REAGAN, BUSH.
ebuddy
     
 
Thread Tools
 
Forum Links
Forum Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts
BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Top
Privacy Policy
All times are GMT -4. The time now is 06:08 PM.
All contents of these forums © 1995-2017 MacNN. All rights reserved.
Branding + Design: www.gesamtbild.com
vBulletin v.3.8.8 © 2000-2017, Jelsoft Enterprises Ltd.,