Nick wrote:Some good stuff in there, but what a shame he confuses trickle-down with the Laffer curve. Two different things entirely. And his tale of Henry Ford is just plain wrong.
I watched the video a couple more times and did not see or hear the Laffer curve mentioned (though I did notice two misspelt captions!) Presumably the curve does not really argue for a particular increase or decrease in income tax, simply pointing out that both 0% and 100% will generate no revenue and that there is some optimum in between which generates most.
On re-viewing the clip, Obama gets trickle-down wrong too. He says it has never happened. He then promptly gives an example in Henry Ford. The "middle class" benefitted immeasurably from him and his fellow industrialists.
From what I remember, Henry Ford had to pay his workers high wages because of the extreme monotony of the work and the existence of alternative jobs. Not so that they could afford his cars.
Nor is trickle down equal to "supply side" economics, which is a much wider concept. He implies tax cuts are a supply-side argument, whereas investment in education is not. In fact, tax cuts relate to the Laffer Curve, whereas education is a supply-side measure (though, IMO, widely misunderstood and abused).
I do agree with him that the wealthy in the US are not taxed so heavily that the Laffer Curve adversely affects growth and investment. But I do think there is huge scope for tax cuts if exemptions and allowances (eg on home loans) were phased out. This would help, but is such a political hot potato that the chances of it being introduced are slim. Ryan is nearest to it, but he only mentions tha tax cuts, not the cuts in allowances. Naughty.
Also, the reasons for greater wealth at the very top have far more to do with the expansion of world markets and astonishing technological change, rather than any tax policy. It might be right to be concerned about those at the bottom, but they are not poor because
others are rich. We need to help the poor, not clobber the rich.
I would also hesitate to use the cataclysmic economic events of the past 8 years as a guide to how an economy behaves in general. He talks about weak regulation. Hmmm.. . not weak, but wrong. America has been losing out to London because of this. More of the same willl not help America.
Corporate profit growth could be a good or a bad thing- it all depends. But it has nothing to do with soaring medical costs and health insurance premiums. Grrr!
Yes, the Republicans are a bunch of wing-nuts, but at least get your facts straight, please!
And, of course, my own country is the greatest on earth
I think you are right about Henry Ford - what the video said does not make sense if taken too literally; maybe Obama was trying to point out that the Keynesian multipier still works and that, since poor people spend more of their income than do rich people, cutting the taxes of the rich may be not be the best way out of recession:
http://www.forbes.com/sites/timworstall ... you-think/
Nice ot see Tim Worstall referenced. Well worth reading- very provocative!
Obama wasn't talking about the Keynsian multiplier, though he could have. Note, however, that this is a matter of on-going discussion amongst economists and is not as clear-cut as you think it might be. But, as things stand, tax cuts for the richest will be of no consequence. IMO, they are low enough already.
Only a couple of days to go - the hurricane seems to be an Obama supporter, according to tonight's TV news
Indeed. Perhaps the ultimate ill-wind will blow Obama some good!