Paul Krugman slams Art Laffer & Ayn Rand-type economics

[oldfart]

The only thing I would suggest is that you may want to say marginal propensity to consume instead of MPC. The majority of those out there have no idea, nor do they care, what MPC is or why it is important.

Thanks for the catch!

The whole issue of MPC as related to taxes is really important. The republican economic policy is basically: REDUCE TAXES. With absolutely NO consideration of mpc implications. Which is why, as a general statement, tax decreases on the wealthy, or across the board, have never had a beneficial impact on high unemployment. And a major determinant on why AUSTERITY had no chance of working in Europe. IMO.

I agree. My criticism of Helicopter Ben is that he did not specify that the helicopters drop money only in poor neighborhoods. Dropping it on Lake Shore Drive in Chicago would only increase cash hoards!

Seriously, there is a major la-la factor in discussions of what rich people actually do with money. To call them "job-creators" that would respond by adding employees when they already have excess capacity and high inventories is obvious nonsense (where is the fiduciary duty to shareholders?). The same for investment in plant and equipment. Since they are not income-constrained, they are unlikely increase that spending. Which leaves only one thing that makes sense: financial investment that is independent of economic investment. Anyone smell a bubble here?

It's a portfolio issue. With interest rates until very recently at the lower zero bound, the volume of cash held by the public to GDP has risen. With returns so low, why not hold cash? Or invest it in exotic forms of investment like gold (which has a long history of moving in opposition to real interest rates), artwork, and so forth. A lot of what's happening in markets today is influenced by this basic insight and yet it gets fairly little attention. There is nothing capricious or irrational about this behavior.

 

[Toro]

Also, the wonkish one tends to get on here, the more the insults increase for some odd reason. It's like cordial debate is impossible.

For the most part, it's not.

You'll have to get used to it.

 

[OohPooPahDoo]

You can make a gain and choose not to report it. You can make a loss and choose not to report it. Any unreported income will not be counted towards your gross income. I really don't see how this takes away from anything I said. You don't have to claim income at all. There's a revelation...

If you have it, you do.

You do realise that there is something called 'adjusted gross income', correct? Everything is adjusted once you have totaled up your sources of income. It's still before-tax income all the same.

Great! But before you go off redefining another common income related term, what LINE of the 1040 do the gross proceeds of my home sale wind up on?

You find the line which was 'Other' and the you enter it in. And then, when your taxes are calculated, everything is complied on your Adjusted taxable amount. Hence the term, Adjusted Gross Income...

Was it really this hard?

Really? Funny how the IRS itself isn't aware of this fact. In the instructions here, http://www.irs.gov/pub/irs-pdf/i1040.pdf, on page 11, it tells you to report 1099-S proceeds on Forms 4797, 6252, 8824, and/or 8949 - not 1040 line 21 as you suggest.

You should immediately phone the IRS and report this grave error to them. You're so smart.

 

[Kimura]

Haring, Coolidge, Kennedy and Reagan cut taxes and the US economy flourished.

FDR and Obama raised taxes, the economy sucked.

It's not that hard, people

Clinton raised taxes. The economy boomed.

Toro,

I tend to view it differently.

The second Clinton Administration had some good growth, low inflation, and low unemployment. However, with that being said, the CBO was forecasting like 15 years of government surpluses in their models which was sort of insane. In order for the government to run surpluses for 15 or more years, the domestic private sector would have to run deficits for thee same amount of time. The private sector can't function properly in spending more than its income year after year. The economy will inevitably enter a phase of contraction, causing the private sector to economize, and the government sector will shift back into a deficit.

If we analyze the Clinton surplus, we still had high interest rates, and the surplus didn't provide a cushion against the crash which resulted. This surplus is what caused the private sector to incur huge debt loads to finance consumption. We also had an increase in the trade deficit which meant that the only other sector which could compensate was private consumption. This helped to create the dotcom bubble and housing bubble. I should also mention that household savings disappeared under Clinton, too.

We should count our blessings we only suffered a recession at the beginning of the 21st century. It could have been terrible. History tells us anytime there is a large decrease in debt, it's followed by a depression. We need to look no further than 1819, 1837, 1857, 1893 and 1929 as examples.

My two cents worth ....

Under the Clinton administration, the private sector went into deficit while the government ran a surplus. The government's deficit is our surplus; their red is our black so to speak.

Our GDP accounting identity:

GDP= C + I + G + (X -M)

C = aggregate private consumption or spending
I = aggregate investment spending
G= aggregate government spending
X-M = net exports minus net imports (trade surplus)

If the government runs a surplus, it’s taking in more than its spending, which is the opposite of any type of stimulus spending. Under Clinton, our trade deficit massively increased, which had the effect of (X-M) impeding GDP during this time period. The trade deficit was actually stifling GDP while the government sector was bringing in more money from private sector than it was spending. This left only one sector to compensate which was private consumption. Household debt began to skyrocket and household savings ended up in the toilet. As Clinton’s trade policies and budget became a burden on the country’s GDP, households took on massive debt loads and went into massive debt to finance consumption.

 

[EdwardBaiamonte]

To call them "job-creators" that would respond by adding employees when they already have excess capacity and high inventories is obvious nonsense (where is the fiduciary duty to shareholders?). The same for investment in plant and equipment. Since they are not income-constrained, they are unlikely increase that spending

Jeff Bezos said the most important $50K of his life was the $50k no one would loan him when he was trying to start Amazon. The VC industry always says the more you tax us the less new ventures like Amazon Apple Intel HP Oracle we can fund. And, the cheaper money is or the more of it there is for even huge companies the easier it makes getting a favorable return on any expansion or new products.
Dropping money on ghettos is a waste as it merely bubbles or churns the economy rather than causes sustainable growth. sorry to rock your world.

 

[EdwardBaiamonte]

The trade deficit was actually stifling GDP

interesting, but how is that possible since we've had a growing deficit for 40 years and now have 100 million smart phones.

 

[AmazonTania]

The trade deficit was actually stifling GDP

interesting, but how is that possible since we've had a growing deficit for 40 years and now have 100 million smart phones.

See? Both of you believe that Trade Deficits are better than Surpluses. You have more in common than you both realise.

 

[EdwardBaiamonte]

the link is a clip of Krugman's closing 3 min argument

Krugman of course is a liberal buffoon. Newt asked him if he would support France's new 70% income tax on the rich. Krugman said yes, apparently not realizing that the per capita income in France is about equal to that of Arkansas, about our poorest state.

 

[oldfart]

To call them "job-creators" that would respond by adding employees when they already have excess capacity and high inventories is obvious nonsense (where is the fiduciary duty to shareholders?). The same for investment in plant and equipment. Since they are not income-constrained, they are unlikely increase that spending

Jeff Bezos said the most important $50K of his life was the $50k no one would loan him when he was trying to start Amazon. The VC industry always says the more you tax us the less new ventures like Amazon Apple Intel HP Oracle we can fund. And, the cheaper money is or the more of it there is for even huge companies the easier it makes getting a favorable return on any expansion or new products.
Dropping money on ghettos is a waste as it merely bubbles or churns the economy rather than causes sustainable growth. sorry to rock your world.

No problem, Ed. My point remains, neither VC companies nor other investors will invest in start-ups (or plant expansion, or new hires) unless such a move will reasonably result in increased profits. That is not the case right now because of inadequate product demand.

 

[Toro]

To call them "job-creators" that would respond by adding employees when they already have excess capacity and high inventories is obvious nonsense (where is the fiduciary duty to shareholders?). The same for investment in plant and equipment. Since they are not income-constrained, they are unlikely increase that spending

Jeff Bezos said the most important $50K of his life was the $50k no one would loan him when he was trying to start Amazon. The VC industry always says the more you tax us the less new ventures like Amazon Apple Intel HP Oracle we can fund. And, the cheaper money is or the more of it there is for even huge companies the easier it makes getting a favorable return on any expansion or new products.
Dropping money on ghettos is a waste as it merely bubbles or churns the economy rather than causes sustainable growth. sorry to rock your world.

VC returns suck. There's too much money chasing it as it is. Taxes don't really matter.

 

[Toro]

To call them "job-creators" that would respond by adding employees when they already have excess capacity and high inventories is obvious nonsense (where is the fiduciary duty to shareholders?). The same for investment in plant and equipment. Since they are not income-constrained, they are unlikely increase that spending

Jeff Bezos said the most important $50K of his life was the $50k no one would loan him when he was trying to start Amazon. The VC industry always says the more you tax us the less new ventures like Amazon Apple Intel HP Oracle we can fund. And, the cheaper money is or the more of it there is for even huge companies the easier it makes getting a favorable return on any expansion or new products.
Dropping money on ghettos is a waste as it merely bubbles or churns the economy rather than causes sustainable growth. sorry to rock your world.

No problem, Ed. My point remains, neither VC companies nor other investors will invest in start-ups (or plant expansion, or new hires) unless such a move will reasonably result in increased profits. That is not the case right now because of inadequate product demand.

People invest in VC because they hope to catch the next Google or Facebook and become extraordinarily wealthy. The truth is that in aggregate, since 1980, VC returns have been no better than buyouts. And since 2000, it has been worse than buyouts, in fact, one of the worst asset classes one could have invested in.

 

[Kimura]

the link is a clip of Krugman's closing 3 min argument

Krugman of course is a liberal buffoon. Newt asked him if he would support France's new 70% income tax on the rich. Krugman said yes, apparently not realizing that the per capita income in France is about equal to that of Arkansas, about our poorest state.

Sure he is. I don't agree with Paul on many, many, many things but how dare you, sir?

What have you contributed to economics? Besides your propensity to hit on underage women?

 

[Dot Com]

The fact remains, teh rw opponents couldn't stand up to Krugman's withering attack during the debate.

 

[AmazonTania]

Jeff Bezos said the most important $50K of his life was the $50k no one would loan him when he was trying to start Amazon. The VC industry always says the more you tax us the less new ventures like Amazon Apple Intel HP Oracle we can fund. And, the cheaper money is or the more of it there is for even huge companies the easier it makes getting a favorable return on any expansion or new products.
Dropping money on ghettos is a waste as it merely bubbles or churns the economy rather than causes sustainable growth. sorry to rock your world.

No problem, Ed. My point remains, neither VC companies nor other investors will invest in start-ups (or plant expansion, or new hires) unless such a move will reasonably result in increased profits. That is not the case right now because of inadequate product demand.

People invest in VC because they hope to catch the next Google or Facebook and become extraordinarily wealthy. The truth is that in aggregate, since 1980, VC returns have been no better than buyouts. And since 2000, it has been worse than buyouts, in fact, one of the worst asset classes one could have invested in.

Netflix had the same performance from start to present. It's merely a testament to how quickly fads can fade.

 

[Rshermr]

To call them "job-creators" that would respond by adding employees when they already have excess capacity and high inventories is obvious nonsense (where is the fiduciary duty to shareholders?). The same for investment in plant and equipment. Since they are not income-constrained, they are unlikely increase that spending

Jeff Bezos said the most important $50K of his life was the $50k no one would loan him when he was trying to start Amazon. The VC industry always says the more you tax us the less new ventures like Amazon Apple Intel HP Oracle we can fund. And, the cheaper money is or the more of it there is for even huge companies the easier it makes getting a favorable return on any expansion or new products.
Dropping money on ghettos is a waste as it merely bubbles or churns the economy rather than causes sustainable growth. sorry to rock your world.

No problem, Ed. My point remains, neither VC companies nor other investors will invest in start-ups (or plant expansion, or new hires) unless such a move will reasonably result in increased profits. That is not the case right now because of inadequate product demand.

Problem is, ed does not understand what demand is. Totally beyond him. I tried that discussion with him before.
But, on the bright side, he is amusing.

 

[Friends]

the link is a clip of Krugman's closing 3 min argument

Krugman of course is a liberal buffoon. Newt asked him if he would support France's new 70% income tax on the rich. Krugman said yes, apparently not realizing that the per capita income in France is about equal to that of Arkansas, about our poorest state.

The per capita income in France is $23,334. In Arkansas it is $21,274. In Mississippi it is $19,977.

List of countries by per capita personal income - Wikipedia, the free encyclopedia

List of U.S. states by income - Wikipedia, the free encyclopedia

 

[CrusaderFrank]

To call them "job-creators" that would respond by adding employees when they already have excess capacity and high inventories is obvious nonsense (where is the fiduciary duty to shareholders?). The same for investment in plant and equipment. Since they are not income-constrained, they are unlikely increase that spending

Jeff Bezos said the most important $50K of his life was the $50k no one would loan him when he was trying to start Amazon. The VC industry always says the more you tax us the less new ventures like Amazon Apple Intel HP Oracle we can fund. And, the cheaper money is or the more of it there is for even huge companies the easier it makes getting a favorable return on any expansion or new products.
Dropping money on ghettos is a waste as it merely bubbles or churns the economy rather than causes sustainable growth. sorry to rock your world.

No problem, Ed. My point remains, neither VC companies nor other investors will invest in start-ups (or plant expansion, or new hires) unless such a move will reasonably result in increased profits. That is not the case right now because of inadequate product demand.

 

[Rshermr]

Jeff Bezos said the most important $50K of his life was the $50k no one would loan him when he was trying to start Amazon. The VC industry always says the more you tax us the less new ventures like Amazon Apple Intel HP Oracle we can fund. And, the cheaper money is or the more of it there is for even huge companies the easier it makes getting a favorable return on any expansion or new products.
Dropping money on ghettos is a waste as it merely bubbles or churns the economy rather than causes sustainable growth. sorry to rock your world.

No problem, Ed. My point remains, neither VC companies nor other investors will invest in start-ups (or plant expansion, or new hires) unless such a move will reasonably result in increased profits. That is not the case right now because of inadequate product demand.

And the winner of the Edward Bailamonte stupid award is................C. FRANK.
Congratulations, frank. Most said it could not be done. But you have ACTUALLY EQUALED Ed in congenital idiocy.

 

[GWV5903]

The fact remains, teh rw opponents couldn't stand up to Krugman's withering attack during the debate.

You didn't watch the whole debate...

Krugman is a liberal mouth piece, he is the perfect example...

His solution to everything is tax and spend, it does not work, never will...

 

[Dot Com]

ummm..... I DID watch the entire debate 2X. First on the radio THEN I located it on cspan video library archive.

Needless to say, Krugman mopped the floor w/ his Randian adversaries.

Wonder if Ryan (R) came out & told the truth that he indeed DOES worship the philandering atheist- Ayn Rand since he threw her under the bus in the election?