From [Marc Abrams (2006.06.24.0301)]
Rick, in reflecting on my last post I think it just might be worthwhile telling you why I have no interest in discussing much of anything with you,
First of all, my experience in this forum tells me that "discussions" with you end in acrimony and bad feelings. They also, for me at least, are unprofitable, unenlightening, and generally a very large waste of my time.
I said I owed you no explanations but I'm going to tell you why I believe this happens.
You are ideologically driven. Every "discussion" I have seen you enter, you enter for the purpose of "proving" a point or a belief you happen to hold. For you "knowing" that you believe in the "right" idea is very important. There doesn't seem to be room on this planet for more than one "right" view and it just so happens that you have it all the time.
Second, I understand that my ignorance far out weighs my knowledge even in subjects I think I know fairly well. So keeping an open mind is an important way of considering new ideas and things I may not have considered before. So I consider my "ignorance" a strength in that it continues to point me to areas where I may improve and expand my understanding. You on the other hand see ignorance as a "weakness" and you are unwilling to accept it for yourself or others.
Your economic "analysis" s a great example of all of this. What is the
purpose of your analysis? I'm not quite sure, but on the surface it seems you are trying to "prove" that Republicans are "bad" and taxes & Democrats are good for the economy.
For this you do some superficial correlation tests between the GNP and tax ratesand by golly, you come up with the fact that when taxes are raised the GNP continues to grow, so your claim than becomes. well how bad can taxes be if the GNP grows?
You call this an "analysis"? Apparently you don't take everything Bill POwers says sriously. The economy is so complex that no single mind minus simulation can understand how all the intereactions actually play out, yet you have no problem making a claim like this based on a single correlation. Sorry Rick, I would expect a great deal more from someone who was actually interested in understanding how taxation affects economic growth.
But that was not the purpose of your "analysis" was it? No. It was driven by your desire to "prove" that a certain set of beliefs you hold were valid and true and that makes for some _very_ bad science.
It is not even the fact that your knowledge of economics is superficial, but that you have no desire to improve it.
What can I gain by talking economics with you? Can you enlighten me? Not from what I have seen and certainly not from what you have done. So why bother. I'm afraid you have no idea as to how economics can inform perceptual control because you believe nothing can inform perceptual and I'm afraid you don't know enough about "micro" economics to understand how and where perceptual control informs it.
But again, this in itself is no crime. It is your seeming unwillingness to want to learn that limits your "discussions" to advocacy seesions for your beliefs.
Now to answer your post and be done with this thread.
[From Rick Marken (2006.06.23.1625)]
> Marc Abrams (2006.06.24.1314)--
>
> As I posted to JIm I am not interested in discussing economics per se > on this list.
You may not be interested in discussing economic facts but you are
clearly interested in discussing economic theories (such as >Rothbard's "insights";
No, I'm not interested in discussing Rothbard. I'm interested in discussing how economics informs perceptual control and how perceptual control informs economics.
Rothbard happened to be the author of a book on "data" about the Great Depression so I offered it to you as a way for you to educate yourself on how others view the role of FDR and Hoover and their contribution to the Depression. That was what were discussing wasn't it?
No, that was what I _thought_ we were discussing. But it really wasn't. We were actually discussing your lack of understanding about the economic conditions surrounding the Great Depression and my views countered your beliefs and was contrary to your "analysis" so the "discussion" than turned to dicrediting me personally, as it always seems to do when you come up short. But I'm not biting this time, sorry.
I had to take a shower after reading a couple of paragraphs). I'm not
interested in discussing economic theories until I know what the
economic facts are that we're trying to explain.
A good start Rick and you might want to apply this very good rule to your own "analysis"
So lets start from the beginning. What are you trying to explain with your analysis and what does this have to do with perceptual control?
If would not ask you to read Rothbard's book in order to learn economic theory. Here, Rothbard is _applyoing_ his understanding of economics and trying to provide some insights as to why the Depression took place. His voice in one among many and that is the point. Before you go off thinking you have some unique view that no oine has ever had you would be wise to research it a bit and see where the thinking tends to go. There is a tremendous amount of diverse thought in economics and some economic "facts" are more generally accepted than othes. But to make a general blanket statement about all economists is silly and shows your lack of understanding.
I'm still waiting to hear what the facts are on which you base your
conclusion that there was a depression in 1929
And you will continue to wait. But if I was interested in discussing this any further I would ask;
First we need to define _what_ a depression is, what a recession is, and how the two differ. That is, what criteria are you using to make this claim. So since you are making a claim that FDR got us out of a Depression I'd like to know exactly what you think he got us out of and what policies effectuated that helped do this. I of course would like to know what "data" you are using to come to your conclusions.
and that FDRs >policies exacerbated that depression.
Read Rothbard's book. And in order to understand what Rothbard is saying you might want to get yourself up to speed a bit on economic history and theory, but I know you don't need to do that. Your "understanding" of your "data" is all you need and I will not try to disuade you. It is futile.
(And I would love to see the data relating state tax rates to state
growth rates).
So, what's stopping you? Go find the data, its available. Except that data would not fit neatly into your ideology so you will not seek it out because it could disconfirm everything you believe in with regard to taxes and you will not let that happen. But I will give you something to chew on; BTW, don't take this guysword for it, check his sources.
_Lower Tax Rates Mean Faster Economic Growth_
by Alan Reynolds
Alan Reynolds is a senior fellow with the Cato Institute.
Jeff Madrick recently wrote a New York Times article boldly claiming "there is no evidence" that "low-tax countries grow faster than high-tax countries."
"One of the most interesting research papers on the subject," he wrote, was done "a few years ago" by Sergio Rebelo and Nancy Stokey." That paper first appeared in 1993 -- the same year Rebelo co-authored a more ambitious study with William Easterly, who Madrick quotes approvingly. That study, "Fiscal Policy and Economic Growth," found that "marginal tax rates ... tend to be highly correlated with the level of income." Easterly and Rebelo also found "a negative association between growth and one tax variable: the marginal tax rate."
But Madrick, of course, only mentions Rebelo's other 1993 paper. And he also prudently avoids mentioning that Stokey's more prominent co-author, Nobel Laureate Robert Lucas, has estimated that cutting taxes on capital to zero could raise the stock of capital by 30 percent to 50 percent.
According to Madrick, Rebelo and Stokey "noted that income tax revenue in the United States rose to 15 percent of gross domestic product in 1942, from about 2 percent in 1913, when the tax was introduced. ... But, they concluded, 'This large rise in income tax rates produced no noticeable effect on the average growth rate of the economy.'"
The first problem is that averaging growth rates from World War I through the Great Depression obscures what happened when. From 1913 to 1921, the highest income tax rate soared from 7 percent to 73 percent and average economic growth was minus 0.3 percent. The top tax rate was then cut from 56 percent in 1922 to 25 percent from 1925 to 1928, and economic growth averaged 6 percent from 1921 to 1929.
In 1930, there was a huge increase in taxes on trade (tariffs). In 1932, the Hoover administration nearly tripled all tax rates, putting the highest rate at 63 percent. From 1929 to 1938, economic growth again averaged minus 0.3 percent. But lumping it all together, as Madrick does, makes it technically correct to say that growth of real GDP averaged 2.9 percent from 1913 to 1942, down modestly from a 4.3 percent pace from 1870 to 1913.
The second problem is that Rebelo and Stokey confuse tax revenues with tax rates. Revenues collapsed after the huge increases in tax rates and tariffs. Individual income tax receipts in 1939 were still 10.3 percent smaller than in 1930. And revenues from the steep tariffs on imports fell 38.4 percent from 1929 to 1936. In 1942, by contrast, individual income tax revenues rose by 130 percent in a single year because of war mobilization. To refer to the tax receipts of 1942 as if that was part of a long-term trend was deceptive.
Madrick also misquotes Joel Slemrod and Jon Bakija's 1996 book, "Taxing Ourselves," by saying, "Relatively low-tax nations like the United States and Japan did well, they found, but so did high tax nations in Scandinavia." What Slemrod and Bakija actually wrote was that "high tax countries like Sweden ... did relatively poorly."
Aside from that subtle distinction between doing well and doing poorly, it is not even clear what it means to boast that Sweden has merely a third less GDP per person than the United States when well over half of Sweden's GDP consists of government spending. Numerous studies, including Easterly and Rebelo, show that government consumption spending is bad for growth. My recent column "Supply Side Goes to Harvard" cited two of the latest studies showing that big government and high tax rates hold economies down.
Madrick instead looks backward, claiming Slemrod and Bakija "contradict earlier findings that purported to show that high taxes reduced growth rates." One of those "earlier findings" was the Easterly-Rebelo study. But Easterly and Rebelo were estimating the effect of marginal tax rates -- the income tax on each extra dollar earned. Slemrod and Bakija, by contrast, were talking about average tax receipts from 1970 to 1990 -- the sum of all taxes divided by GDP. That is a useless measure of tax distortions because taxes that do the most damage usually yield the least revenue.
Countries with the most progressive income tax rates, with top rates of 50 percent or more, collect very little revenue from that tax. That includes Japan and Turkey, which Slemrod and Bakija mislabeled as "low-tax" countries. France, with income tax rates as high as 57 percent, collects only about 6 percent of GDP from that tax. The United States, with federal tax rates below 40 percent, collects about 11 percent of GDP. When New Zealand's top tax was still only 33 percent, their individual income tax brought in nearly 17 percent of GDP. And since Russia adopted a 13 percent flat tax last year, revenues have been rising dramatically.
Countries trying to collect punitive taxes from the rich, like France and Sweden, end up short of rich people to tax. As a result, they mainly rely on flat-rate payroll and sales taxes (VAT). That is another reason we cannot combine revenues from all taxes to gauge the economic damage from high income tax rates. A 1999 study in the Journal of Public Economics by Kneller, Bleaney and Gemmell found that progressive income taxes were clearly harmful to growth, but found far less damage from flat-rate taxes on what people earn or spend.
Contrary to Madrick, the evidence from 1913 to 1942 shows that increased taxes and tariffs were accompanied by long periods of zero economic growth, and that sharply lower tax rates from 1922 to 1929 had the same invigorating effect that lower tax rates had in1964-69, 1983-89 and 1997-99. Ironically, even Madrick's handpicked sources, Easterly and Rebelo, found that marginal tax rates affected both the level of income and the rate of economic growth. Far from proving "there is no evidence" that lower tax rates are conducive to faster economic growth, Madrick has inadvertently demonstrated the extreme degree of trickery required to defend such an indefensible remark.
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When you can come on this forum and say you were wrong and attribute it to your lack of knowledge rather than simply making an inadverdant "mistake" that would be a clear signal that you have opened up your mind to new ideas and are willing to listen to new ideas and accept the fact that no one view is perfect or certain.
BTW; were we in a recession or depression in 1929? If so in what month did one evolve to the other?
Regards,
Marc
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