NationStates Jolt Archive

Now now before you say Oh noes not again there is a catch.

For the regulars on NSG we all have a feeling where we stand on this issue. With that being said I want you to argue for the opposite set of beliefs to your own.

In order for consumers to start spending again, government must spend the consumer's money for them!

Now now before you say Oh noes not again there is a catch.

For the regulars on NSG we all have a feeling where we stand on this issue. With that being said I want you to argue for the opposite set of beliefs to your own.

So will you make a serious argument for spending increases?

The issue with the current economy is a bubbles. bubbles are caused by investors seeking short term high yield gains rather then long term safe gains. The current market crash has caused a lack of profitable short term investment, leading to a stagnation in the economy. Government needs to invest in infrastructure that will provide long term benefits to the economy.

So will you make a serious argument for spending increases?

Is that serious enough?

Dammit. What are those with a more nuanced opinion supposed to do?

Dammit. What are those with a more nuanced opinion supposed to do?

just inverse from whatever your basic position is.
If you feel the government should expand explain why it should contract.
If you feel running a deficit in a recession is good then explain why you should control your budget.

just inverse from whatever your basic position is.
If you feel the government should expand explain why it should contract.
If you feel running a deficit in a recession is good then explain why you should control your budget.
Hmmm...

The Obama administration should continue its current handling of bad banks, because the share market obviously likes it.

They should also nationalise companies and run them on a continuing basis, because it's been shown that private management of large industrial and financial companies results in failures with huge social repercussions.

Furthermore, in a situation like this, the only way to keep the economy going is to provide job security. That means reducing foreign competition for our workers.

Also, it's all about confidence.

...

Wait, I can't do this in a way that doesn't sound stupid. It's like you think this whole thing is about opinion rather than an objective right and wrong.

So will you make a serious argument for spending increases?

Easy. Given a tough economic time and economic scares, tax cuts will result in hoarding of money and/or paying parts of debts. There will be minimal putting money back into the economy, thus not providing a stimulus for it and in fact providing less economic effect than usual. Lack of spending causes a death spiral of less business income resulting in layoffs which results in less spending, rinse, repeat. Thus when the people arn't spending, the government has to in order to get everything back to normal.

SO any of the Keynesian going to argue against Keynesian economic theory? I want to actually get a reverse debate going.

SO any of the Keynesian going to argue against Keynesian economic theory? I want to actually get a reverse debate going.
Of course, illogically, if you give the people money they will obviously spend it on things which will then be spent by other people and eventually reach those who give people jobs and thus save the economy.

Or, the actual argument for the other side when stripped of the bullshit economics cover: We dun wanna pay no taxes.

Of course, illogically, if you give the people money they will obviously spend it on things which will then be spent by other people and eventually reach those who give people jobs and thus save the economy.

Or, the actual argument for the other side when stripped of the bullshit economics cover: We dun wanna pay no taxes.

That trickle down stuff is just nonsense.
In a deflationary cycle, with a collapse of international trade the government needs to run a deficit and raise taxes on the upper segments of society to redistribute wealth to those most likely to spend it.

Now now before you say Oh noes not again there is a catch.

For the regulars on NSG we all have a feeling where we stand on this issue. With that being said I want you to argue for the opposite set of beliefs to your own.
ya but i GOT a tax cut (as did the vast majority of today's tax protestors)

and i think that spending is a better way.

should i argue against reality or preference?

ya but i GOT a tax cut (as did the vast majority of today's tax protestors)

and i think that spending is a better way.

should i argue against reality or preference?

there are a lot of decent arguments for both sides. I guess if your incapable of flipping the table around you can make your own thread.

ya but i GOT a tax cut (as did the vast majority of today's tax protestors)

and i think that spending is a better way.

should i argue against reality or preference?

I don't think they are protesting the tax rate.


Anyway, I think the government should just keep on doing what they are doing. Enabling fraud, stealing and looting are obviously rebuilding this economy on a sound footing. Clearly, unemployment levels are dropping, people have more money and prosperity is everywhere.

Can't argue with results.

the government should drastically raise taxes whilst at the same time drastically cutting spending in all areas as a means to shore up the current government in the face of recession.

We cannot afford to daddle on this most pertinent issue as it is vital that we maintain not only the current pounds strength but to further increase it for it is time Britain be made rich again!

Gimme money. Gimme money. Awooga. Awooga.

SO any of the Keynesian going to argue against Keynesian economic theory? I want to actually get a reverse debate going.

Technically spending increases and tax cuts are both forms of Keynesian policies. Really, given that the OP implies that stimulating the economy is a good the thread is a debate between Keynesians on which policy is more effective.

Technically spending increases and tax cuts are both forms of Keynesian policies. Really, given that the OP implies that stimulating the economy is a good the thread is a debate between Keynesians on which policy is more effective.

Yeah, this thread confuses me.

A thought from the public sector:

In public finance, we view tax reductions as a type of spending, and usually recommend that they be accounted for in such a fashion. So, even if you do use stimulative tax cuts, we still think of it as spending--just with shifted administrative costs.

Technically spending increases and tax cuts are both forms of Keynesian policies. Really, given that the OP implies that stimulating the economy is a good the thread is a debate between Keynesians on which policy is more effective.

At least from my perspective, the only real difference is that we're shifting the administrative costs from whatever disbursement agencies might be developed, directly to the individual tax payers and, to some degree, those damnable bastards at the IRS who we hate too.

Technically spending increases and tax cuts are both forms of Keynesian policies. Really, given that the OP implies that stimulating the economy is a good the thread is a debate between Keynesians on which policy is more effective.

Keynesian not the only one with claims to tax cuts.
Also to go specifically then more progressive versus more flat taxes.

Keynesian not the only one with claims to tax cuts.
Also to go specifically then more progressive versus more flat taxes.

Still you're making it seem with that title that if you support spending then you can't support tax cuts, which is a very bizarre thing to say.

Still you're making it seem with that title that if you support spending then you can't support tax cuts, which is a very bizarre thing to say.

I am sorry i should have put a Deficit versus surplus option. Though I was trying to be vague so people had room to find their opposite position.

Keynesian not the only one with claims to tax cuts.

Keynesians have claim on tax cuts whose stated purpose is to stimulate the economy, ie to increase aggregate demand.

Also to go specifically then more progressive versus more flat taxes.

?

At least from my perspective, the only real difference is that we're shifting the administrative costs from whatever disbursement agencies might be developed, directly to the individual tax payers and, to some degree, those damnable bastards at the IRS who we hate too.

One could argue that when the business cycle reverses it'll be easier to cut nonstructural public works than it will be to raise taxes, which is evil evil evil.

Keynesians have claim on tax cuts whose stated purpose is to stimulate the economy, ie to increase aggregate demand.

as do supply siders

?

progressive tax- Rich people a large percentage of wealth, poor people pay less or get a credit.
Flat tax tax rates are the same rate. A more so a scale goes from progressive to flat.

as do supply siders

Supply siders think tax cuts will increase the savings rate, investments and increase the numbers of hours worked. Not really stimulation of the economy as I've seen it used.

progressive tax- Rich people a large percentage of wealth, poor people pay less or get a credit.
Flat tax tax rates are the same rate. A more so a scale goes from progressive to flat.

I know, but what does that have to do with Keynesian policies per se?

Supply siders think tax cuts will increase the savings rate, investments and increase the numbers of hours worked. Not really stimulation of the economy as I've seen it used.
Investment spurs economic growth. Hey I have an extra million dollars lets start a business and hire people.



I know, but what does that have to do with Keynesian policies per se?

In general most Keynesians favor progressive taxes. While most supply siders favor a more flat tax.

Investment spurs economic growth. Hey I have an extra million dollars lets start a business and hire people.

I know, but growth happens in the medium to long term. Stimulating the economy on the other hand is a short term phenomenon.


In general most Keynesians favor progressive taxes. While most supply siders favor a more flat tax.

I know but a tax cut could be keynesian for whatever type of tax one has whether it be flat, progressive, or regressive.

I know, but growth happens in the medium to long term. Stimulating the economy on the other hand is a short term phenomenon.

Supply side argues it is stimulating because people instantly have jobs.
jobs = pay checks
pay checks =spending


I know but a tax cut could be keynesian for whatever type of tax one has whether it be flat, progressive, or regressive.

I haven't seen a repressive tax since the 20th century in the developed world.
In general a tax cut that moves more to a flat tax is called supply side, and a tax cut that moves toward progressive is called a demand side.
Aka Reagan's Tax cuts Versus Obama's. which is considered Supply side and which is considered Demand side.

Supply side argues it is stimulating because people instantly have jobs.
jobs = pay checks
pay checks =spending

How would people have jobs? Because the tax cuts allow for more spending perhaps since jobs don't just happen? Increasing spending to stimulate the economy is Keynesian.

I haven't seen a repressive tax since the 20th century in the developed world.
In general a tax cut that moves more to a flat tax is called supply side, and a tax cut that moves toward progressive is called a demand side.
Aka Reagan's Tax cuts Versus Obama's. which is considered Supply side and which is considered Demand side.

That's untrue. Sales taxes, VAT taxes, gas taxes, sin taxes, and payroll taxes are all forms of regressive taxes that exist in the developed world. Also, given Reagan's budget deficits and the lowering savings rate under his presidency hi tax cuts seemed to be more keynesian in practice even though they were supposed to be supply-side in theory.

I haven't seen a repressive tax since the 20th century in the developed world.
In general a tax cut that moves more to a flat tax is called supply side, and a tax cut that moves toward progressive is called a demand side.
Aka Reagan's Tax cuts Versus Obama's. which is considered Supply side and which is considered Demand side.
Do you mean "regressive?" If so, than there are still plenty, as Tech-gnosis pointed out. If you really mean repressive, I guess it's a matter of opinion, although I haven't seen any tea dumping or Bastille storming lately so maybe you're right.

Increasing spending to stimulate the economy is Keynesian.


Now you're being too broad. Obviously both monetarists and Keynesians prefer a greater flow of money with increased velocity.

How would people have jobs? Because the tax cuts allow for more spending perhaps since jobs don't just happen? Increasing spending to stimulate the economy is Keynesian.
Depends where the Tax cuts are targeted. middle and upper classes are seen as supply meant to encourage investment, even indirectly by saving in a bank. Loans from banks allow businesses to start up within weeks.


That's untrue. Sales taxes, VAT taxes, gas taxes, sin taxes, and payroll taxes are all forms of regressive taxes that exist in the developed world. Also, given Reagan's budget deficits and the lowering savings rate under his presidency hi tax cuts seemed to be more keynesian in practice even though they were supposed to be supply-side in theory.

Those taxes are flat they are the same for everyone.
Are arguable slightly progressive as the rich will buy more expensive items.
the trick with Regan's lower of the saving rate was with what savings it lowered. Reagan got people out of gold and back into currencies.

Depends where the Tax cuts are targeted. middle and upper classes are seen as supply meant to encourage investment, even indirectly by saving in a bank. Loans from banks allow businesses to start up within weeks.

Actually I think only upper class tax cuts are seen as such and if they don't increase savings and investment, like they didn't under Reagan, but they do stimulate consumption then they are keynesian



Those taxes are flat they are the same for everyone.

They are regressive because the poor and middle classes spend larger percentages of their income on these taxes.

Are arguable slightly progressive as the rich will buy more expensive items.

Arguably not. The wealthy spend less on average as a percentage of their income on consumption items, gas, alcoholic beverages, and cigarettes. Payroll taxes aren't applied to wages above I think the current max is around 100K so someone making 50K has a larger percentage of their income taxed than someone who makes 150K, at least when it comes to payroll taxes.

the trick with Regan's lower of the saving rate was with what savings it lowered. Reagan got people out of gold and back into currencies.

How would that lower the savings rate? Arguably the savings rate would increase if gold isn't counted as savings.

Actually I think only upper class tax cuts are seen as such and if they don't increase savings and investment, like they didn't under Reagan, but they do stimulate consumption then they are keynesian


I think what matters here is the intent. If the intent is to get suppliers to supply more, then the tax cut is supply side and not Keynesian.

Depends where the Tax cuts are targeted. middle and upper classes are seen as supply meant to encourage investment, even indirectly by saving in a bank. Loans from banks allow businesses to start up within weeks.
I think you're confused. Tech-gnosis is right.

Keynesians think that because investment and various other things are driven by animal spirits rather than by rational people making economic decisions, when there is a recession there is a lot of excess economic capacity that is not being used. We're below our production possibility frontier, if you will. In that case, the government can go in there, spend money and directly pay it to people. It's not about investment - because Keynes thinks investment has as much to do with how the investor got up in the morning as with economic fundamentals, he doesn't think directly stimulating investment is the best way to go. Better to channel money directly to employees, if necessary using his famous example of simply burying money underground and letting unemployed people dig it back up. It does not necessarily have to be "productive" work. And one alternative is to "spend" government money by giving tax cuts. But the idea here is to target those with the highest marginal propensity to consume the extra funds.

Supply siders think agents usually make rational decisions, and when people stop employing or stop investing, it's because they rationally judge that the economy can't support their extra spending on these things and they couldn't earn a return. So the economy is pretty much always on the production possibility frontier, it's that frontier itself which shifts. They support tax cuts as a means of changing people's behaviour by changing the parameters of economic activity itself: lower tax rates encourage people to work more, less red tape makes investment cheaper and so on. The former logic is applied across the board: it doesn't necessarily matter to a supply sider whether the tax cut is to the poor or to the rich, it's simply a question of judging objectively where it will deliver the biggest change in behaviour. And since marginal tax rates are usually the most punishing for those with high incomes, and since those with high incomes are more likely to invest rather than consume (which in turn has the potential for an additonal multiplier, as it creates jobs and earns an extra return, and increases the capacity of the economy as well) they are usually the ones who should get the tax cuts first.

Anyways, both sides advocate tax cuts, but for different reasons. There is probably some truth to both ideas. Hence why I was talking about a nuanced view.

I think what matters here is the intent. If the intent is to get suppliers to supply more, then the tax cut is supply side and not Keynesian.

On the other hand I think that intent and the effects of the policy both matter.

On the other hand I think that intent and the effects of the policy both matter.

The effect does of course matter, but if a policy doesn't have the desired effect, that doesn't make the policy un-Keynesian and vice versa.

Well a definition debate is not what I had in mind.
But I am going to sleep pulled 2 all nighters in a row. I will check on this thread when ever I wake up. continue the definition debate.