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| A Rational
Advocate REASONED VIEWS ON ISSUES OF THE DAY |
"The most formidable weapon against errors of any kind is
reason" Thomas Paine - 1776 |
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featuring MILTON FRIEDMAN |
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 The Wealth of Nations No book has done more to instruct, enlighten, and inform conservatives about economics than Adam Smith's classic
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The President of General Electric, Jeffrey Immelt recently said
the following in a letter to stockholders. This should scare the hell out
of freedom loving Americans everywhere. But will it?
"We are in a recession and, at
times like these, it is difficult to predict how bad and for how long. We
are running GE to 'weather the cycle'. However, I believe we are going
through more than a cycle. The global economy, and capitalism, will be
reset in several important ways. The interaction between government and
business will change forever. In a reset economy, the government will be a
regulator; and also an industry policy champion, a financier, and a key
partner."
Corporate America appears to be
on its way to becoming hung on the government narcotics being offered to
them. Those duped by these words will rue the day they passively accepted
them as a path to Utopia. Think about it, Public-Corporate partnerships
cannot be partnerships because the government by its very nature will be
in control. The shareholders interest will become subservient to the
government. Socialism will take over. Goodbye American freedom!
What kind of gobbledygook
is this? How can the Fed“cut interest rates” by a mere pronouncement.
Sounds like King Canute commanding the tide to stop coming
in...... play video Friedman Foundation On Education
The Economic Case for School Choice: Why the Public School Model Doesn't Work MILTON
FRIEDMAN HONORED AT WHITE HOUSE
 President George W. Bush
honors soon to be 90 years old Milton Friedman for his Lifetime
Achievements What Every American
Wants
By Milton Friedman I have long said, "I
never met a tax cut I didn't like" -- though I would go on to say that I
like some better than others. The reason for my flat unhedged statement is
neither the Keynesian attribution of an economic stimulus to a tax cut,
which I believe is generally wrong, nor the supply-side attribution of
favorable incentive effects to a tax cut, which I believe is generally
correct. It is, rather, the effect of tax cuts on government
spending......
Bruce Bartlett (TownHall.com) Recently, I discussed new
IRS data showing that the share of total income going to the richest 400
individuals has increased. However, income is an imprecise measure of
well-being. That is better measured by wealth. A new study by the Federal
Reserve sheds important light on the distribution of wealth in the United
States..... Larry Kudlow (TownHall.com) Inflation causes prices
to rise because the Federal Reserve creates more an the economy needs.
Conversely deflation results in falling prices because the central bank
creates a shortage of money. So, if the most important goal of monetary
policy is domestic price stability -- i.e., neither the risk of inflation
nor deflation -- then the Federal Reserve should provide additional
liquidity for the economy.....
By Jack Kemp (TownHall.com) It is understandable that
a majority of Democrats want to oppose President Bush's tax cuts, but it
is incomprehensible when Republicans do...... By Bruce Bartlett (townhall.com) Last Friday, the
President Bush issued his annual Economic Report. Press coverage focused
heavily on the chapter relating to taxation. The lead was that President
Bush favors a shift toward consumption taxation. As is so often the case,
the news stories gave the barest hint of what the report actually said.
And the spin was designed to frighten voters into thinking that a new tax
was being imposed on top of all the others, one that will be especially
injurious to the poor. In fact, the Economic Report was more of a
philosophical discussion than a concrete proposal. But the points that it
makes will be central to any effort at fundamental tax reform.......
By Jude Wanniski (polyconomics.com) As early as 1972, soon
after he left the Nixon administration and returned to the University of
Chicago to teach economics, Art Laffer explained to me that there always
are two rates of taxation that will produce the same revenue. One is at a
higher level of national production and one at a lower level. The only
exception is if you are at exactly the point where the rate is optimum,
which means revenues will fall if you raise or lower them. When I met
Robert Mundell in May 1974, he elaborated on this concept by teaching me
that if a government is in the high range of the tax rate, it can lower
the rate safely even though the aggregate revenue immediately declines --
as long as the economy grows faster and produces more revenue than
predicted by assuming no behavioral change. .....
By Larry Kudlow (townhall.com) When the fog of war lifts
and Americans get ready to buy stocks again, the almost-forgotten old
economy might make a great investment. Stock groups that are tied to
metals and raw industrial materials have been ignored for years, and
they're now showing amazing signs of life..... By Thomas Sowell (townhall.com) Anyone who thinks that
business is gung ho for the free market has just not been paying attention
to business. Adam Smith knew better, back in the 18th century. Although he
was the patron saint of capitalism, Smith was no fan of capitalists. Any
policy advocated bybusinessmen, he said, "ought never to be adopted till
after having been long and carefully examined, not only with the most
scrupulous, but with the most suspicious attention."
By Jack Kemp (townhall.com) For every rule, there is
an exception that proves it. "There's no such thing as a free lunch" is a
good example. There is a "free lunch" when you discover that its makings
are already bought and paid for but foolishly wasted or spoiled before
they can be combined into a nourishing meal. If you change whatever is
causing the waste and spoilage, presto, you've got a free lunch. When it
comes to tax rates, Art Laffer made the point back in the 1970s that you
get no revenue at both a zero and a 100 percent tax rate.......
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John Maynard Keynes once said: "Nor shall the argument seem strange, that taxation would be so high
as to defeat its object and that given sufficient time to gather the
fruits, a reduction of taxation will run a better chance than an increase
of balancing the budget. To take the opposite view today is to resemble a
manufacturer who, running at a loss, decides to raise his price. And when
his declining sales increase the loss, wrapping himself in the rectitude
of plain arithmetic, decides that prudence requires him to raise the price
still more. And who, when at last his account is balanced when naught on
both sides is still found righteously declares that it would have been the
act of a gamble to reduce the price when you were already making a loss."
click on titles to
read complete essay
Posing the question -
"what is the best way to increase tax revenue?" - there are some that
would say that the simple answer is to increase tax rates especially on
those earning higher incomes. Their reasoning being that this would
obviously increase tax revenue since it would direct more of the taxpayers
earnings to the government. In a world where the earnings were a constant
then this might be true - but - earnings do not stay constant and are
effected by what goes on in the country and world that affects the
economy. The fact is that increasing the tax rate could decrease tax
revenue if earnings taken out of the private sector caused business
activity to decline that then diminished the earnings of business and
individuals. There are those who
believe that to stimulate the economy it doesn’t matter whether it is the
government or the people who spend for goods and services as long as the
spending occurs. However, it does matter if one desires to stimulate the
economy in a way that at least maintains the nation’s standard of living.
Reason provides this conclusion... Whenever our economy
experiences a recession calls are made for fiscal action by the Executive
and Legislative branches to stimulate it. Unfortunately the proposals that
are proposed by those of different political persuasions fall far short of
what is truly required for a variety of reasons. Narrowed, the reasons
fall into two categories..... By John Linder (Member of Congress) In Robert Novak’s column
on Thursday, May 31st, he mentioned a revolutionary new tax proposal
called the FairTax. He cited the potential rewards of the FairTax as
“immense”and described the "impressive starting support in
Congress.”.....
By Anonymous Let's put tax cuts in terms everyone can understand. Suppose that
every day, ten men go out for dinner. The bill for all ten comes to $100.
They decide to pay their bill the way we they pay their respective taxes
and do so in the following manner. The first four men-the poorest-pay nothing; The fifth pays $1: The
sixth pays $3; The seventh $7; The eighth $12; The ninth $18. The tenth
man-the richest-pays $59. That's what they decided to do. The ten men ate dinner in the
restaurant every day and seemed quite happy with the arrangement-until one
day, the owner threw them a curve. "Since you are all such good
customers," he said, "I'm going to reduce the cost of your daily meal by
$20." So now dinner for the ten only cost $80. The group still wanted to
pay their bill the way we pay our taxes..(read more).. "Government
spending and economic growth are actually the primary determinants of
whether there will be a surplus or a deficit. If federal spending had
risen no faster than the rate of inflation, there would have been
surpluses in 28 of the 32 fiscal years since 1970." W. James Antle
III A civil
engineer, a chemist and an economist are traveling in the countryside.
Weary, they stop at a small country inn. "I only have two rooms, so one of
you will have to sleep in the barn," the innkeeper says. The civil
engineer volunteers to sleep in the barn, goes outside, and the others go
to bed.
In a short time they're awakened by a knock. It's the engineer, who says, "There's a cow in that barn. I'm a Hindu, and it would offend my beliefs to sleep next to a sacred animal." The chemist says that, OK, he'll sleep in the barn. The others go back to bed. Soon they are again awakened by another knock. It's the chemist who says, "There's a pig in that barn. I'm Jewish, and cannot sleep next to an unclean animal." So the economist is sent to the barn. It's getting late, the others are very tired and soon fall asleep. Again they are awakened shortly by an even louder knocking. They open the door and are surprised by what they see: It's the cow and the pig! Topic content, other
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or redistributed without the permission of A Rational Advocate
The Way the World Works Jude Wanniski and Robert Novak |
