The Economics Thread

[Pessimism]

Good point. I have a problem concerning primarily small businesses that are taxed.

Most people's concerns are dealing with small businesses, so it's not as if you are somehow in error. I was just pointing that out because I see that most peoples beliefs seem to state that a majority of the rich are somehow contingently identified with the upper echelons of business (by being owners), when the statistical fact is that many are rich by means of being employed by a company that can afford to offer a high salary. To extend their tax break would do nothing for the federal government other than correlate to a loss of money because they (very well paid employees) are not funneling their earnings back into the system as an actual business owner would (again, assuming the goal of the business is to grow wealthy - which in an economy that centralizes itself around trade of product would necessitate).

There are still plenty of small businesses that are growing and expanding even in this economy. It hasn't hurt everyone. Those who have still managed to expand should be allowed to prosper to their full extent.

This is very true; there are many businesses that are growing by means of acquiring new consumer bases. The question is are they pulling in consumers from the void, or are they taking them from other businesses? To pull in a consumer from nothing is nothing short of a positive mark in an economy, but to merely pull from one businesses consumer pool to another does not equate to growth when considering the system as a whole - it's just a transference of blood from one vein to another.

Why does the government need to increase taxes? Why not decrease spending?

Why not do both?


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The one thing I do find hilarious is that there exists an assumption about the market; that assumption being that it is controlled by rational people who have the best interests of the people at heart (as a free-market would hold). Even though it is apparent that the sole means of most businesses is to acquire as much wealth and power as fast as one can in order to stay at the top of the power pyramid by mostly any means necessary.


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Side question: It's obvious (mathematically) that the wealthiest pay the most taxes. However, does anyone have a chart showing how much money the largest corporations get back on their taxes? "Charitable donations" and various other loopholes typically allow a great deal of kickback/returned money - and since most graphs only show what was paid into the system, and not given back, I was curious to see the extent some corporations go to in order to avoid paying what they ought.

 

[Einherjar86]

This is very true; there are many businesses that are growing by means of acquiring new consumer bases. The question is are they pulling in consumers from the void, or are they taking them from other businesses? To pull in a consumer from nothing is nothing short of a positive mark in an economy, but to merely pull from one businesses consumer pool to another does not equate to growth when considering the system as a whole - it's just a transference of blood from one vein to another.

I disagree. It functions as growth if it inspires/encourages the business from which it "stole" to evolve its market in some way as to appeal to a wider clientele or attract a broader range of customers.

 

[Pessimism]

And if there is no "evolving" in the business model?

 

[Dak]

Why not do both?

What are we raising the taxes to pay for? Nearly half of the income taxes I currently pay go to Social Security, which at this point is merely a old robbing the young program (instead of the retirement fund it was supposed to be), and prevents me from being able to put as much money as I could into an actual retirement fund.

LEt's go ahead and dissolve Social Security and all the other worthless Federal programs and then see how fast we can pay down the debt with current taxation before talking about raising rates.

Also, until we become a massive net exporter again, we will not be able to grow the economy enough to pay it down anyway.

 

[King Richard]

Of Social Security is scraped I want my fucking money back.

 

[Einherjar86]

And if there is no "evolving" in the business model?

I don't understand the question. Any company can evolve; it just takes creativity.

 

[Pessimism]

I don't understand the question. Any company can evolve; it just takes creativity.

I meant two separate things with my analogy.

One example could be something like this: A company goes under (let's say due to mismanagement). Another company moves in and gathers up its customer base without offering anything new - in fact, it is the exact same service (theoretically it could even be of a somewhat lower quality). They don't need to expand in the creativity department because they already have the entire original customer base - they don't need to offer anything new because they are easily sustained by the lack of competition. Because there is no competition, no "growth" - then the business model will stay near-exactly the same while this transference took place.

Another one could be this: Two companies (A & B) are in direct competition and are trying to oust the other. One succeeds. In total, how many new jobs are created by the destruction of the other company? The answer off the bat is none, jobs are lost. Now, this can be rectified if we look at other variables - let's say other businesses that are able to take on the extra weight. But that seems just a bit disingenuous to assume that other businesses would be able to absorb the extra weight (example: all current businesses). The only way for this job loss to be rectified would then be for Company A to absorb some number of people from the unemployment pool that would negate the newly created overflow (after all, with that original job loss, the sum of unemployed people would in fact go up). But, what if the company discovered it had no need to grow,or needed to grow very little? Example: company B lost 200 people, but due to the infrastructure of company A, A only needs to hire 3 people be be able to supply a variety of products equivalent to what A&B could produce (let's say this is due to better internal organization, or access to a very nice dock/warehouse). If one can keep up with supply and demand, with what would be considered a negligible upkeep cost, why would we assume that company A would need to hire an equivalent to what company B lost? Why would we assume that company A needs to hire anything remotely close to half of what B lost? If a company can eliminate overhead while simultaneously keeping a large share of the market in their possession then there is no need to hire extra resources. Conceptually, as time goes on and the population grows exponentially - then yes it may be obvious that an increase in overhead (i.e. more employees) would be worth the extra upkeep because they can offer more services to a wider audience - but if the internal organization of a company is great, they may still require far less employees than that of another company. There is still going to be a net loss of jobs here.

TLDR Ex. 2: A & B both had 200 employees; B goes under, A takes up 10 employees of B - A can sustain itself while simultaneously cornering the market that existed between the two companies; A now has 210 employees, B has none - unemployment pool = 190 workers). Unless other businesses can take on the extra workforce in some way, there is a permanent loss of jobs until some form of work opportunity opens up. So although A grows very strong, the economy as a whole does not due to the misplaced wage earners.

Chunk in response to "why not both?" statement

I was just saying there are times when one can both raise taxes while decreasing spending. It all depends on the model that is applicable to the scenario at hand. It wasn't in any specific reference to your statement/position.

 

[Einherjar86]

Another one could be this: Two companies (A & B) are in direct competition and are trying to oust the other. One succeeds. In total, how many new jobs are created by the destruction of the other company? The answer off the bat is none, jobs are lost. Now, this can be rectified if we look at other variables - let's say other businesses that are able to take on the extra weight. But that seems just a bit disingenuous to assume that other businesses would be able to absorb the extra weight (example: all current businesses). The only way for this job loss to be rectified would then be for Company A to absorb some number of people from the unemployment pool that would negate the newly created overflow (after all, with that original job loss, the sum of unemployed people would in fact go up). But, what if the company discovered it had no need to grow,or needed to grow very little? Example: company B lost 200 people, but due to the infrastructure of company A, A only needs to hire 3 people be be able to supply a variety of products equivalent to what A&B could produce (let's say this is due to better internal organization, or access to a very nice dock/warehouse). If one can keep up with supply and demand, with what would be considered a negligible upkeep cost, why would we assume that company A would need to hire an equivalent to what company B lost? Why would we assume that company A needs to hire anything remotely close to half of what B lost? If a company can eliminate overhead while simultaneously keeping a large share of the market in their possession then there is no need to hire extra resources. Conceptually, as time goes on and the population grows exponentially - then yes it may be obvious that an increase in overhead (i.e. more employees) would be worth the extra upkeep because they can offer more services to a wider audience - but if the internal organization of a company is great, they may still require far less employees than that of another company. There is still going to be a net loss of jobs here.

My idea of a company evolving should figure in before either one goes out of business. Company A has significantly higher sales than Company B and begins taking some of their clientele because they can somehow offer either a) better prices or b) better products.

Company B now has to figure out some kind of response. They're not in the red yet, they still have sufficient funds and the ability to manuveur in the market. They have to come up with a new business plan in order to counter Company A's advance. This would naturally involve some kind of evolution. Maybe Company B adds a new feature to their product that they need a new designer for. Maybe they need more engineers in order to be able to offer larger quantities. If Company B does nothing then yes, it will go out of business and jobs will be lost; the ingenuity comes in when management puts a new plan into action that leverages their stance in the economy.

 

[Pessimism]

Ah management, always understanding what needs to be done!

 

[Einherjar86]

Well, not according to Dak.

 

[Dak]

Most managers are promoted past their level of competency, and down the chain it goes, since the majority prefer to promote people who aren't a threat to challenge them.

 

[Einherjar86]

So you and Scott Adams are friends?

 

[Death Aflame]

The problem isn't management per se, but hierarchy in general. This goes beyond individual competency as well since information problems arise the more removed one is from the actual work the firm does (production/service/etc). Thus from a manager's perspective they could be making the most rational decisions based on the information they have, but if the information is flawed from the beginning...

 

[Dak]

Scott Adams is merely profiting off of the truth.

 

[Manic Ferocity]

Over the course of the past year, I've drastically changed my viewpoints from Libertarian to Socialist. The idea of infinite liberty was once appealing to me but now I see it as something that shouldn't be inherited but, rather, earned. I'm personally for the idea of having priority job opportunities that are regulated and for the collective interest.

Are there any other Socialists here? If not, I'd like to hear some discussion about the long-term benefits of Capitalism for mankind as a whole. I'm struggling to find many.

 

[Einherjar86]

We have to earn our freedom now? They used to say that to the slaves in Rome.

 

[Jimmy... Dead.]

@O.I, I think our forefathers Earned liberty.

Also, speak for yourself. If you feel worthless to your community you probably are.

Socialism is not the answer, limited Government is.

 

[Badbird]

Socialism has great things that come to it, and then things that don't. Same with Libertarism. And the US system OI, is a mixed system, not capitalism.

 

[Einherjar86]

Hey Brady, I know you have that clever quip about Rand being dead; but you do know that Maynard Keynes is too, right? If you're leveling some kind of criticism at Rand simply because of the fact that she's dead, it would appear that you would have to level that same criticism at Keynes.

As far as socialism goes, I'm completely against it because of its capacity to, without anyone realizing it, become totalitarianism. As far as Marx's theories on capitalism go, I'm very impressed with his intellectual reasoning. I think that, theoretically, something seems amiss in a capitalist system; but the reason I'm not prepared to argue against it is that in practice there's no evidence of any of Marx's criticism. His whole process of critique is theoretical. What Marxists today say is that capitalism doesn't perish because it "reifies" itself, constantly changing and evolving so as to survive, but eventually it will collapse. That may be so, but it still functions in practice.

 

[V.V.V.V.V.]

*John Keynes