Re: UNCIVIL UNIONS

On Thu, Mar 10, 2011 at 11:32 AM, Mike Findlay <[email protected]> wrote:
>>In case it isn't obvious, I think labor theory of value is
> hogwash.<
>
> Only when it comes to actual selling price.  But on a small scale it has
> everything to do with asking price.  IOW if I create something the labor
> theory of value is very much a factor in setting the price.  IOOW, sellers
> are Marxist, buyers are Smithists.

Sellers have a bottom line below which they are not profitable, and
that is based on the cost of labor.  But most sellers are willing to
follow Smith when it allows them to price *higher* than their cost of
labor.

> But don't you admit that the higher the tax rate the more effort, those
> subject to that rate, expend to avoid it.  The key is figuring out what the
> rate is at which attempts to avoid it aren't worth, (or perceived as worth),
> the cost.

Sure.

> Poor buy what at a faster rate than the rich?

Sorry, I was unclear.  I meant "per dollar of income".  E.g. marginal utility.

> The best example I can think of is the auto industry.
> You hear about the big three as if they were the auto business.  What you
> don't hear about is the hundreds/thousands of suppliers, some rather small,
> who make products that go into the cars that the big three sell.

Yes, and while this industry (and many others) have high capital
expenditures to get started, they are still consumer driven industries
(i.e. heavily affected by trickle up).  Excepting, of course, military
and government contracts (far less prevalent in auto industry than in
aerospace).

>>Trickle down is not mutually exclusive with trickle up,<
>
> I'll buy that.
>
>>..nor is it even necessarily the stronger of the two.<
>
> Not as sure about that one.  In a true free market system I think common
> sense tells us that trickle down is stronger.

In a free market, I don't fully trust common sense.  That's one of the
key reasons free markets are more efficient than centrally managed
markets.  I trust market indexes and studies and measurements (and
even then only so far).  ;-)

> The problem we have is that
> we aren't operating in a true free market system.     When you think of it
> the govt has become to wall street what the Vichy French were to the
> Germans, (notice I avoided a nazi reference).

:-)

>>So, yes.  Poor people contribute to job creation.<
>
> Well that's kind of a tautology don't you think? Consumers contribute to job
> creation.

Yes, *exactly*.

>> And they tend to recirculate their currency more quickly than the rich,
>> who have more
> leisure in choosing when and how to do so.<
>
> Again what is your source for that?   It seems like you are confusing
> marginal spending with actual spending.

Yes, absolutely.  Marginal spending is what I meant all along.  Sorry,
I should have been clearer.

But marginal spending is what is most relevant to the question of
taxation and budget cuts and how to balance the budget.  If your only
two goals are to stimulate the economy and to balance the budget
(ignoring all other considerations), and your only two tools are pay
cuts or tax increases, you are (probably) better off increasing taxes
on the rich by $10 than decreasing wages or increasing taxes on the
middle class and poor by $10.  If you are doing something else, it's
probably because some other goal or principle is trumping economic
stimulus or budget balancing.

-- 
Nick

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