Economics @ ITT

Big Unemployment, the New Normal?

Posted in economics, employment, macroeconomics, Policy Issues, Regulation, Taxation by ittecon on July 9, 2013

I tried to respond to a post by Don Peppers responding to this article, but LinkedIn limits the character count. I quote Don’s post here for context.

It’s common knowledge that LESS government, LESS regulation, and LOWER marginal tax rates will all improve employment. Unfortunately, the politics of envy is irresistible to some, and there are very few politicians on either side of the aisle who will vote for less of anything related to the government.

It may be common knowledge that less of these things might increase employment, but this favours a local maxima at the expense of a global maxima. It is the typical short-term benefit with a long-term detriment. Still, this argument and its subarguments are specious. I won’t even give any more attention to the dubious official unemployment figure definition and methodology.

Less government is a vague term. What government? Fewer dog-catchers? Interesting how, ad reductio, this becomes an argument for anarchy.

As for regulations, business favours regulations that shield it from the public and markets; intellectual property “rights” come to the top of my mind. Government (or a quasi-government acting entity) are necessary so as not to devolve into a situation where warlords rule. Afghanistan comes to mind. I could imagine a football match with no rules or regulations. Even rugby and UFC have rules, as do wars.

In economic terms, the lower marginal taxes argument is patently false (without even delving into marginal verse effective territory). Laffer’s concept is not false in and of itself, but it fails on two accounts. First, we can agree that at some point lowering marginal tax rates will create positive incentives, but it doesn’t follow this is true at all levels. Empirically, we can easily determine that we are below that point. On a practical level, this not only means that a reduction with not have positive effects; there will be negative effects. Second, the primary driver to hiring is demand for products or services (or at least the prospect thereof). A marginal tax rate of zero has no impact if no one is purchasing what I am offering.

Advertisements

We’re living in an Ayn Rand economy

Posted in economics, Taxation by ittecon on May 18, 2013

Ayn Rand’s philosophy suggests that average working people are “takers.” In reality, those in the best position to make money take all they can get, with no scruples about their working-class victims, because taking, in the minds of the rich, serves as a model for success. The strategy involves tax avoidance, in numerous forms.

via We’re living in an Ayn Rand economy – Salon.com.

Inequality: The Elephant in the Room

Posted in economics, Policy Issues, progressive taxation, Taxation by ittecon on April 30, 2013

Robert Reich discusses the elephant in the room and advocates Keynesian economics over supply-side austerity.

The Supreme Court Has the Constitutional Power to Hike Medicine Prices to 5x Their Cost?

Posted in antitrust, economics, Policy Issues, Regulation, Taxation by ittecon on March 30, 2013

U.S. pharmaceuticals get a very good deal from the federal government. For every new drug they produce, they get rewarded with long-term patents that grant them exclusive rights to market and sell the product for as much as 20 years – which guarantees them billions in profits and no competitors in the marketplace. Drug companies claim that they must be allowed to profit off of products they nurtured with expensive research and development. In reality, taxpayer-funded research from academia or the National Institutes of Health account for the vast majority of vital drugs brought to market every year, and R&D is a small fraction of the overall drug company budget. What’s more, drug companies routinely use their monopoly power to jack up pharmaceutical prices, which cost far more in the U.S. than anywhere in the world.

via Where Does It Say the Supreme Court Has the Constitutional Power to Hike Medicine Prices to 5x Their Cost? | Alternet.

Bye, Bye American Dream! Economic Inequality Is Permanent

Posted in economics, Income Redistribution, Policy Issues, Taxation by ittecon on March 23, 2013

A new study by a team of economists in academia and the government has concluded that economic inequality is a permanent—not temporary—feature in the United States, based on an analysis of 350,000 federal income tax returns between 1987 and 2009.

via Bye, Bye American Dream! U.S. Economic Inequality Is Permanent, Study Finds | Alternet.

March Madness

Posted in economics, Taxation by ittecon on March 22, 2013
March Madness

Effective tax rates in the US are not among the highest of industrialised countries.

The Myth of Americans Living Beyond Their Means

Posted in economics, Policy Issues, Taxation by ittecon on March 8, 2013

A video of and by Robert Reich.

‘Privacy tax’ creator makes his case, warns ‘software is eating the world’

Posted in economics, Taxation by ittecon on February 15, 2013

Colin, a tax inspector for the Ministry of the Economy and Finance in France, believes that corporations have turned the Digital Age into a massive tax haven which dwarfs anything high-priced accountants have ever pulled off in places like the Cayman Islands. His beef: Corporations don’t pay a penny in taxes on all that free labor.  In other words, not only are you are the product, but you’re also paying for all the roads, fiber-optic lines and airports that digitally dependent corporations need to get rich.

via ‘Privacy tax’ creator makes his case, warns ‘software is eating the world’ – Red Tape.

Conservatives Still Pushing Regressive Taxation Schemes

Posted in economics, Income Redistribution, Policy Issues, regressive taxation, Taxation by ittecon on January 29, 2013

[I]n Louisiana Mr. Jindal is pushing a plan to eliminate the state’s income tax, which falls most heavily on the affluent, and make up for the lost revenue by raising sales taxes, which fall much more heavily on the poor and the middle class. The result would be big gains for the top 1 percent, substantial losses for the bottom 60 percent.

via Makers, Takers, Fakers – NYTimes.com.

Collapse of the American Dream

Posted in economics, Policy Issues, Taxation by ittecon on January 19, 2013

Not entirely accurate depiction of the money and banking system, but still interesting.