Quote:
Originally Posted by Poppinjay
What will happen if they put more compensation in tax free plans? Those plans will hopefully make more money in an economy not headed up by chimpy the president. People will or should always defer as much income as possible, but one way or another, the money makes it to the market.
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This is not entirely correct. In order for the economy to grow, money needs to be put to productive use. The reason Warren Buffet is a billionaire is because he is a master at allocating capital in a manner that is most productive and maximizes the return.
Moving away from theory, and using a personal experience. I know a very wealthy man who helped a person he knew start a business from scratch. The wealthy man invested money (capital) and the other person had the idea and was willing to invest labor. The wealthy man had the opportunity to invest in low yielding fixed income investments or anything else. We do know that even investing in low yeilding fixed investments as compared to more productive uses, will eventually have a positive impact on the economy, but the impact will be made smaller due to a number of factors including the fact that most financial institution will not loan out 100% of the money the have available and in some cases it would be illegal for them to do that. We also know, based on our current crisis, that financial institutions may not always lend money to people who have the ability to use the money properly and pay it back - meaning the money gets wasted.
So, this business that is started initially employs one person, and overtime employs more people. This business provides a valuable service, pays taxes, buys supplies, rents office space, opens bank accounts, buys insurance, etc,etc,etc. The business establishes a track record and has value. Value that is created based on the investment of capital and labor. The person who started the business passed away, and his surviving spouse puts the business up for sale, and I buy it.
In order to buy the business, I basically invest my life savings, and was able to negotiate a note from the wealthy guy because he did not need the cash right away. The widow of the guy who sold the business will live comfortably the rest of her life because her husband started something from nothing with the help of the wealthy guy.
So if you are still with me - the wealthy guy by putting his capital to work in a productive maner, created a large number of jobs, paid much more in taxes through the bussiness than if he had purchased a few tax free municipal bonds, caused an increase in money circulating through the business' operating expenses, and he helped create wealth for the family of the person who started the business and some others.
So now I own the business and I leave my corporate job (creating employment for another), my wife leaves her corporate job and our goal is to grow the business, to employ even more, to pay more taxes, to have higher operating expenses, etc., again thanks to the wealthy guy.
The first year I own the business, we make no money, we reinvest in the business and actually incur more debt. In the years after, we start to realize some of our growth goals, payoff most of the debt and start to make a profit. However, if I divide what I have taken out of the business by my time, my wife and I have been making less than minimum wage. At the end of many years we have had a few laughs over the fact that some of the people we employed actually made more than we did. At some point that will change, and after all the work, all we have done, all the taxes, etc, I personally find it offensive to hear from a person who never had to meet a payroll talk about "spreading the wealth around". But our goal is to be in the position of the person who helps us, the person who helped get the business started, the "rich" guy. So, again, if I realize my goal, I will help others realize theirs - again all thanks to the "rich" guy and perhaps there was a "rich" guy who help him. Again we are talking about creating wealth, real wealth, employing real people, paying real taxes. It is not a shell game, trickle down economics works, I live it.
So, the "rich" can invest in corporate bonds and create virtually no new jobs and do nothing for economic growth or they can use their capital to directly create new wealth. Government does not do this, big business does not do this, and poor people do not do this. I say let "rich" people use the judgment that got them rich to help others. People in Washington, Trust Fund Babies, big corporate employees, academic types, generally don't know what they are talking about on this subject.
-----Added 30/10/2008 at 02 : 51 : 15-----
Quote:
Originally Posted by roachboy
this is the differend (the point of talking-past each other) that inevitably turns up in this sort of discussion--ace does not EVER relativize his position enough to entertain the possibility that his way of thinking is PARTICULAR, but expects others to relativize their positions enough to engage with his. this is why he cannot outline his own premises--it's almost like there are not premises because there are not arguments because this is how things *are* for him.
i do not find discussion in good faith to be possible under these rules of engagement.
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I don't determine the "rules". I post what I post, and other respond (or ignore) based on what they want. Your premise that I some how define the "rules" is absurd on its face. If your point expresses a frustration with interacting with me, that is different. Like I have said many times before, I know it is not easy. I look to those up to the challenge to challenge me. I often post things for my own benefit because I know what types of responses will follow.