tag:blogger.com,1999:blog-33399132.post3382405159810548309..comments2024-03-04T08:09:21.453-08:00Comments on Richard's Real Estate and Urban Economics Blog: Fun with Charting Tax Rates and GrowthRichard Greenhttp://www.blogger.com/profile/02161226214739034402noreply@blogger.comBlogger13125tag:blogger.com,1999:blog-33399132.post-44489026514267023822009-03-12T23:22:00.000-07:002009-03-12T23:22:00.000-07:00Yes - it's creative destruction.So was the Bolshev...<I>Yes - it's creative destruction.</I><BR/><BR/>So was the Bolshevik revolution. You gotta admit those guys were creative.<BR/><BR/><I>Governments keep people on the same job whether or not conditions change.</I><BR/><BR/>Yes, because the jobs that the government fills--delivering mail, defending our borders, teaching our children--are in sectors that society depends on whether the Dow is up or down. The government does not staff Best Buy.<BR/><BR/>Of course, the stimulus does provide extra temporary employment on the government's dime, so that does sorta refute your claim.<BR/><BR/><I>Markets adjust to changing circumstances.</I><BR/><BR/>Indeed they do. They don't always adjust in time to avoid catastrophe, of course, but that's neither here nor there.<BR/><BR/><I>Temporary unemployment is a cost of transition.</I><BR/><BR/>Indeed it is. And it would of course cause great damage to hire such temporarily unemployed people to build roads or fix schools because they should instead be busy staying at home watching Oprah, because that's what the market has decided is the best use of their resources.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-33399132.post-4032200047641664212009-03-12T22:59:00.000-07:002009-03-12T22:59:00.000-07:00Governments keep people on the same job whether or...<I>Governments keep people on the same job whether or not conditions change. Markets adjust to changing circumstances. Temporary unemployment is a cost of transition.</I><BR/><BR/>Uh... wouldn't that make government employment more efficient?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-33399132.post-32928909966231896272009-03-11T18:19:00.000-07:002009-03-11T18:19:00.000-07:00Is it possible that Art Laffer was right, and that...Is it possible that Art Laffer was right, and that it is a curve. It seems plausible that raising marginal rates from 35% to 40% would not have a negative effect on GDP growth, and that it may even correlate to GDP growth. Maybe even taking it from 40% to 45% or 50% would be okay, but I find it hard to imagine that raising marginal rates above 50% would not lead to diminishing revenues, and reduced incentive to be productive upon reaching a certain level of income. No less then Paul Krugman indicated that he thought that raising rates above 50% leads to reduced productivity at higher incomes, more cheating, and eventually decreased Government revenue.(See his interview with Charlie Rose. I am thinking it could be found on youtube or PBS online.)Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-33399132.post-40237594741548735522009-03-10T12:18:00.000-07:002009-03-10T12:18:00.000-07:00Yes - it's creative destruction. Governments keep...Yes - it's creative destruction. Governments keep people on the same job whether or not conditions change. Markets adjust to changing circumstances. Temporary unemployment is a cost of transition.David Barkerhttps://www.blogger.com/profile/17243910374364993035noreply@blogger.comtag:blogger.com,1999:blog-33399132.post-30718182063073880122009-03-10T10:45:00.000-07:002009-03-10T10:45:00.000-07:00Presupposing the existence of deadweight loss assu...Presupposing the existence of deadweight loss assumes the market can find a better allocation of resources than the government. I ask you, is 8% unemployment a sign of good resource allocation?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-33399132.post-522697934683429982009-03-10T07:29:00.000-07:002009-03-10T07:29:00.000-07:00Anonymous neglects deadweight loss from taxation. ...Anonymous neglects deadweight loss from taxation. Wealth really does magically disappear!David Barkerhttps://www.blogger.com/profile/17243910374364993035noreply@blogger.comtag:blogger.com,1999:blog-33399132.post-85658126763807127812009-03-09T22:47:00.000-07:002009-03-09T22:47:00.000-07:00And the reason is quite obvious: in general, tax r...And the reason is quite obvious: in general, tax revenue either pays down government debt, which returns money to the private sector, or goes to government spending projects, which also returns money to the private sector. <B>Tax revenue does not magically disappear</B> once it leaves taxpayers' hands, <B>it is funneled directly back into the economy.</B> <B>Therefore it should be little surprise that tax rates have little if any effect on economic growth.</B> The only difference is that funds that might otherwise have been used for private investment or consumption are instead used for government investment or consumption, which depending on the individual case may be either better or worse for the overall economy. For example, it might have been better for the overall economy if the funds that were used for real estate speculation by the private sector were instead used by the government to invest in assets with certain value such as infrastructure, energy security and conservation projects, education and healthcare. <BR/><BR/>Sometimes the private sector invests more wisely than the government and sometimes it doesn't. It is up to us to determine which is the case on an individual basis rather than by making broad unsupported claims on the basis of ideology.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-33399132.post-68671900891565045092009-03-08T12:17:00.000-07:002009-03-08T12:17:00.000-07:00Hi Richard:Great to see you tackling this question...Hi Richard:<BR/><BR/>Great to see you tackling this question. An even better experiment looks at multiple countries--government size versus growth in GDP per capita--over long periods.<BR/><BR/>The results are pretty resounding and conclusive:<BR/><BR/>http://trueconservative.typepad.com/trueconservative/2008/02/small-governmen.html<BR/><BR/>http://trueconservative.typepad.com/trueconservative/2008/05/europe-vs-us-wh.html<BR/><BR/>http://feedproxy.google.com/~r/trueconservative/~3/OHJXGji-Wvg/an-open-letter-to-robert-barro.html<BR/><BR/>Looking forward to reading more of your blog.<BR/><BR/>SteveSteve Rothhttps://www.blogger.com/profile/11895481216028771016noreply@blogger.comtag:blogger.com,1999:blog-33399132.post-54832247177991801362009-03-08T11:17:00.001-07:002009-03-08T11:17:00.001-07:00What's R^2 or the results of an F-test on that dat...What's R^2 or the results of an F-test on that data, it looks hardly correlated at all.Michaelhttps://www.blogger.com/profile/15057113283154126104noreply@blogger.comtag:blogger.com,1999:blog-33399132.post-22829300387370592832009-03-08T11:17:00.000-07:002009-03-08T11:17:00.000-07:00This comment has been removed by the author.Michaelhttps://www.blogger.com/profile/15057113283154126104noreply@blogger.comtag:blogger.com,1999:blog-33399132.post-68165478627180389432009-03-08T10:28:00.000-07:002009-03-08T10:28:00.000-07:00In response to David Barker, what happens if the d...In response to David Barker, what happens if the data is time shifted 12 months into the future?The Oriole Wayhttps://www.blogger.com/profile/16483309131692836436noreply@blogger.comtag:blogger.com,1999:blog-33399132.post-83901091365043351252009-03-07T19:01:00.000-08:002009-03-07T19:01:00.000-08:00The important takeaway is that high tax rates does...The important takeaway is that high tax rates doesn't of necessity slow growth. In fact, the marginal tax rate seems not to make much of a difference. Bring back the 90% bracket and let's take care of everyone's health!<BR/><BR/>--ericAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-33399132.post-40117954547444369372009-03-07T17:58:00.000-08:002009-03-07T17:58:00.000-08:00Simultaneity? It could be that tax rates are lowe...Simultaneity? It could be that tax rates are lowered in response to slow growth, creating a positive correlation.David Barkerhttps://www.blogger.com/profile/17243910374364993035noreply@blogger.com