Tax cuts to "Job Creators"

[daenku32]

I remember President Obama getting flack for using the "job saved or created" term to defend the stimulus package. The issue was that "jobs saved" was just political nonsense.

But when you look at the tax compromise that's exactly what the argument for extending them was. It was to "save jobs", not to create new ones.

So the self-described "job creators" still have to create some new jobs to deserve that nomicle.

Now the various special interests want more tax cuts for "job creators", even though the unemployment rates are high. Maybe if the job creators actually showed that they were capable to creating jobs they should get the reward for doing so.

[drkitten]

I remember President Obama getting flack for using the "job saved or created" term to defend the stimulus package. The issue was that "jobs saved" was just political nonsense.

But when you look at the tax compromise that's exactly what the argument for extending them was. It was to "save jobs", not to create new ones.

So the self-described "job creators" still have to create some new jobs to deserve that nomicle.

Now the various special interests want more tax cuts for "job creators", even though the unemployment rates are high. Maybe if the job creators actually showed that they were capable to creating jobs they should get the reward for doing so.

Generally, job creators do get rewarded for doing so. You create jobs by finding something for someone to do that is more valuable than the person who does it is paid.

E.g. if it's worth $10/hour to defrobrillate snorkums, but you can get away with paying only $8/hour to a snorkum defrobfrillator, your "reward" is $2/hour. (Less payroll taxes.)

The nice thing about this reward is you don't have to do anything yourself to collect it. Which is why a bank CEO can be rewarded to the tune of hundreds of millions without ever leaving the golf course.

[NewtonTrino]

It wouldn't shock me if we added 50 people to the payroll in the next year. My crystal ball is kinda cracked though but things are looking positive...

[CatOfGrey]

I remember President Obama getting flack for using the "job saved or created" term to defend the stimulus package. The issue was that "jobs saved" was just political nonsense.

There is a difference between a government created job and a private sector job. Private sector jobs are funded by their own productivity, and pay taxes (income taxes, corporate taxes, and taxes on investment gains and dividends) from their 'profits'. Government jobs normally take money that would be used for private sector jobs (either by increased taxes, or reduced growth), so they do not increase the standard of living for the country.




But when you look at the tax compromise that's exactly what the argument for extending them was. It was to "save jobs", not to create new ones.

So the self-described "job creators" still have to create some new jobs to deserve that nomicle.

I believe that the tax compromise won't do much good for the economy. First, it didn't actually change much. Rates generally stayed the same, they didn't decrease. And second, the government's poor handling of the situation, delaying until the last possible moment, sent the message that future increases are uncertain, and that future increases in tax rates are likely. This discourages future expansion of business, and less capital investment (which is what gives us our higher standard of living.)

Now the various special interests want more tax cuts for "job creators", even though the unemployment rates are high. Maybe if the job creators actually showed that they were capable to creating jobs they should get the reward for doing so.

"Special interests" are intelligent people that are creating plans to expand their businesses. Unfortunately, the current administration has sent a message that the government will act in ways that make planning difficult, or just simply increase the cost of expanding a business. And when you raise the price of expanding your business, whether that's building a new factory, or opening a new hot dog stand, you prevent new jobs from being created. I don't think that Obama, Pelosi, and Reid sent this message on purpose, but that is the message that was sent.

As an aside, no government programs or spending is required to create jobs. When the cost of expanding or creating a business goes down, then new jobs will be created.

If you aren't used to thinking like this, it may be tough to grasp. Follow-up's welcome!

[DavidJames]

There is a difference between a government created job and a private sector job. Private sector jobs are funded by their own productivity, and pay taxes (income taxes, corporate taxes, and taxes on investment gains and dividends) from their 'profits'. Government jobs normally take money that would be used for private sector jobs (either by increased taxes, or reduced growth), so they do not increase the standard of living for the country. What if the people who had those government jobs used their income to help buy a house, a car, some food, toys, electronic, get their hair cut etc.? I wonder what that might do to demand and supply. I wonder if the increased demand would impact the private sector jobs?

What if the services they provided helped society with crime, road repair, libraries, etc.? Not very far fetched.

[drkitten]

There is a difference between a government created job and a private sector job. Private sector jobs are funded by their own productivity, and pay taxes (income taxes, corporate taxes, and taxes on investment gains and dividends) from their 'profits'. Government jobs normally take money that would be used for private sector jobs (either by increased taxes, or reduced growth), so they do not increase the standard of living for the country.

Standard tea bagger lies.

You don't think that police protection, fire protection, national defense, and public education increase the standard of living?


If you aren't used to thinking like this, it may be tough to grasp.

Yeah. The pseudophysicists and pseudoeconomists use this line about their gibberish all the time, too. "If you've been brainwashed by reason and evidence, then you just won't understand the Ultimate Truth that I've been espousing."

Or to put it another way, incorrect thinking should be tough to grasp. If it isn't, then there's a problem with the grasper.

[NewtonTrino]

drkitten, I appreciate your comments along these lines but aren't you employed in the public sector? It's no surprise that you would support more public sector growth. In the same way it's no surprise that people with high incomes want the huge sums they send to government to be spent wisely (or not at all).

I think a lot of this comes down to what kind of society you want to live in. I certainly support some amount of governmental spending just nowhere near the current amount, especially at the federal level.

[lomiller]

I think a lot of this comes down to what kind of society you want to live in. I certainly support some amount of governmental spending just nowhere near the current amount, especially at the federal level.

This is a rather meaningless statement. The fact is that money is spent on programs so any discussion about “spending cuts” needs to be focused on specific program cuts rather than just some vague “they should spend less”

[drkitten]

drkitten, I appreciate your comments along these lines but aren't you employed in the public sector?

Nope. Private university. Of course, we rely on the public sector to provide most of the basic education that qualifies our students to attend my university.
And the best hospital in the area is publically funded, and of course local police and fire are all publically funded.


I certainly support some amount of governmental spending just nowhere near the current amount, especially at the federal level.


No. You just want the services that are provided, without actually paying for them.

Every dollar that the government spends is spent because someone -- typically someone fairly influential, or representative of a large group of people -- thinks it will improve their "standard of living." The only way the Republicans have been able to "cut budgets" at all in the past thirty years is by promising essentially the same level of service, but paying for it off-budget by borrowing. Or they'll cut from the people who are politically powerless --- I guess if you're mentally ill and homeless, you don't need food.

[NewtonTrino]

This is a rather meaningless statement. The fact is that money is spent on programs so any discussion about “spending cuts” needs to be focused on specific program cuts rather than just some vague “they should spend less”

Is "All of them" not a good answer? I would cut most programs to ZERO and the ones I keep around would be a lot smaller including the military.

Unfortunately I don't think this is something that could be done overnight without destroying the country. Damned if we do, damned if we don't.

[NewtonTrino]

Nope. Private university. Of course, we rely on the public sector to provide most of the basic education that qualifies our students to attend my university.
And the best hospital in the area is publically funded, and of course local police and fire are all publically funded.


Ok, my mistake.


No. You just want the services that are provided, without actually paying for them.


Not really, a lot of these services I would like to see nuked. For example why does the ATF exist? IMHO they do nothing useful considering we already have other federal law enforcement agencies. It's just bloat.





Every dollar that the government spends is spent because someone -- typically someone fairly influential, or representative of a large group of people -- thinks it will improve their "standard of living."


No disagreement here. It's one of the reasons I think our system is broken.


The only way the Republicans have been able to "cut budgets" at all in the
past thirty years is by promising essentially the same level of service, but paying for it off-budget by borrowing. Or they'll cut from the people who are politically powerless --- I guess if you're mentally ill and homeless, you don't need food.

The republicans are among the worst of the spenders, they just spend on bombs instead of other stuff.

I personally think things like metal illness/homelessness are best handled at a state level. I don't support most of what the federal government does in terms of spending.

[drkitten]

Not really, a lot of these services I would like to see nuked. For example why does the ATF exist?

Bad example. ATF exists primarily to enforce federal revenue laws on,... you guessed it,... alcohol, tobacco, and firearms. It's been doing that job (originally as an arm of the Treasury department) since 1789. If you think that tax laws should go unenforced,... well, let me just say that that's an innovative way to balance the budget. But as a tax enforcement arm, it generates more money than it costs.

Of course, it has other responsibilities, mostly having to do with firearms, which switches it back into the money-losing columns, like the other law enforcement agencies. And while you could fold its responsibilities out of Justice and move them back to Treasury, or make the ATF a sub-agency of the FBI, that wouldn't actually save any money anywhere. The laws would still need to be enforced, and the other law enforcement agencies already have their hands full with the other laws that need to be enforced. It's actually much more cost-effective to have specialists working on particular areas of law, as every local police department realizes.


I personally think things like metal illness/homelessness are best handled at a state level.

Well, we've done that experiment. It didn't work, which is why the Fed picked up that issue.

[NewtonTrino]

Bad example. ATF exists primarily to enforce federal revenue laws on,... you guessed it,... alcohol, tobacco, and firearms. It's been doing that job (originally as an arm of the Treasury department) since 1789. If you think that tax laws should go unenforced,... well, let me just say that that's an innovative way to balance the budget. But as a tax enforcement arm, it generates more money than it costs.


I would still nuke it. As I would nuke the taxes it enforces ;)


Of course, it has other responsibilities, mostly having to do with firearms, which switches it back into the money-losing columns, like the other law enforcement agencies. And while you could fold its responsibilities out of Justice and move them back to Treasury, or make the ATF a sub-agency of the FBI, that wouldn't actually save any money anywhere. The laws would still need to be enforced, and the other law enforcement agencies already have their hands full with the other laws that need to be enforced. It's actually much more cost-effective to have specialists working on particular areas of law, as every local police department realizes.


I don't want those areas of law to exist to begin with. ;)



Well, we've done that experiment. It didn't work, which is why the Fed picked up that issue.

I disagree. I think the fed picks up issues because THEY CAN. The states would handle these issues if they were forced too. I generally prefer distributed power to centralized power. I would love to see more competition between states on many of the issues the fed controls.

[CatOfGrey]

QUOTE=drkitten;6762358]Generally, job creators do get rewarded for doing so. You create jobs by finding something for someone to do that is more valuable than the person who does it is paid.

E.g. if it's worth $10/hour to defrobrillate snorkums, but you can get away with paying only $8/hour to a snorkum defrobfrillator, your "reward" is $2/hour. (Less payroll taxes.)

The nice thing about this reward is you don't have to do anything yourself to collect it. Which is why a bank CEO can be rewarded to the tune of hundreds of millions without ever leaving the golf course.[/QUOTE]

This couldn't be further from the truth. The owners of a company have to buy defrobrillators, train employees how to use them, buy vans for employees to drive to inspect snorkums with extra frobs, not to mention licenses and taxes.

[drkitten]

This couldn't be further from the truth.

No, it's the absolute truth.

The owners of a company have to buy defrobrillators, train employees how to use them, buy vans for employees to drive to inspect snorkums with extra frobs, not to mention licenses and taxes.

Nope. The owners of the company don't need to do any of that. That's what the executives of the company have to do. In fact, this distinction is one of the key observations that makes the modern corporation possible; the owners of the company merely need to supply startup capital, and everything else can be hired.

[CatOfGrey]

Standard tea bagger lies.

You don't think that police protection, fire protection, national defense, and public education increase the standard of living?

Yeah. The pseudophysicists and pseudoeconomists use this line about their gibberish all the time, too. "If you've been brainwashed by reason and evidence, then you just won't understand the Ultimate Truth that I've been espousing."

Or to put it another way, incorrect thinking should be tough to grasp. If it isn't, then there's a problem with the grasper.

Yes, those things you mention increase the standard of living. And I am deeply skeptical (though not certain) that most of these services could be performed better or cheaper with increased privatization.

When re-reading my old post today, I realize that 'difficult to grasp' comes off as condescending. You might do better than ad hominem attacks on me as well.

[CatOfGrey]

What if the people who had those government jobs used their income to help buy a house, a car, some food, toys, electronic, get their hair cut etc.? I wonder what that might do to demand and supply. I wonder if the increased demand would impact the private sector jobs?

What if the services they provided helped society with crime, road repair, libraries, etc.? Not very far fetched.

Very good. Workers spending money have the same impact on the economy no matter where the source of their money. However with private sector jobs, the money comes from production. My salary comes from the work I produce, which is sold to someone else. With a government job, the salary comes from taxes, which cuts into everyone else productivity. If you are a crazy libertarian, you might believe that gov't doesn't produce anything. I am skeptical of that, too - I believe that many government functions are much less efficient than if they were left to the private sector.

[drkitten]

Yes, those things you mention increase the standard of living. And I am deeply skeptical (though not certain) that most of these services could be performed better or cheaper with increased privatization.

But the mere fact that those jobs exist and they do increase the standard of living shows that your blanket statement "Government jobs normally take money that would be used for private sector jobs (either by increased taxes, or reduced growth), so they do not increase the standard of living for the country" is simply wrong.

There's always the possibility that the way we do things today is not the Platonically ideally most efficient way to do things. But merely to increase the standard of living is not nearly that high a bar. A job increases the standard of living if it provides something more cheaply than it would otherwise be available, after taking the costs of providing it into account.

And economic theory is pretty well convinced that 'public goods' are best and most efficiently provided by the government via taxation, as the free market is known to undersupply public goods and to be unable to deal with the free rider problem. So unless you're going to suggest that national defense is not a public good, then I think your skepticism is misplaced.

[CatOfGrey]

No, it's the absolute truth.



Nope. The owners of the company don't need to do any of that. That's what the executives of the company have to do. In fact, this distinction is one of the key observations that makes the modern corporation possible; the owners of the company merely need to supply startup capital, and everything else can be hired.

OK, I'm looping owners and CEO's into the same boat here. Owners provide capital, which is, to date, the best way to finance job creation (Evidence? Compare market economies with government controlled economies. My favorite example is to compare Vietnam, Burma, and North Korea with Malaysia, India, and Indonesia.)

CEO's create and execute plans. Plans that turn that capital into a productive business, that literally creates jobs where there were none before.

Pardon the confusion. Among other hats, 'small business owner' is one I wear. That means that 'owner' and 'CEO' are one in the same.

[drkitten]

OK, I'm looping owners and CEO's into the same boat here. Owners provide capital, which is, to date, the best way to finance job creation (Evidence? Compare market economies with government controlled economies. My favorite example is to compare Vietnam, Burma, and North Korea with Malaysia, India, and Indonesia.)

That's right. And they are rewarded by the return on their capital; why should they need further reward?


CEO's create and execute plans. Plans that turn that capital into a productive business, that literally creates jobs where there were none before.

And, again, they're rewarded by the owners through increased salary. (Or if they aren't, perhaps they should find other jobs).

In either case, job creation inherently carries its own reward through the structure of the enterprise. The idea that someone should get rewarded from the public purse for doing something that already profits him is,.... interesting. Especially from a free-market advocate.

[CatOfGrey]

Nope. Private university. Of course, we rely on the public sector to provide most of the basic education that qualifies our students to attend my university.
And the best hospital in the area is publically funded, and of course local police and fire are all publically funded.

No. You just want the services that are provided, without actually paying for them.

Every dollar that the government spends is spent because someone -- typically someone fairly influential, or representative of a large group of people -- thinks it will improve their "standard of living." The only way the Republicans have been able to "cut budgets" at all in the past thirty years is by promising essentially the same level of service, but paying for it off-budget by borrowing. Or they'll cut from the people who are politically powerless --- I guess if you're mentally ill and homeless, you don't need food.

Not to open up many topics for discussion, but I find many parts of this post interesting.

1. Most of your students are publicly educated, but in my experience, private schools do a better job, usually with far less resources, such as buildings or land. And you rarely see private school dropout rates of 50%, in sharp contrast to many urban school systems. And when people take matters into their own hands and homeschool their kids. Wow. Off the charts smart...

2. You mention you work for a private university. How much of the university is publicly funded? How much tuition is paid directly from a student or parent pocket? Even student loans are heavily subsidized by guarantees, at least when I went to college.

3. If you are mentally ill and homeless in my town, there are no shortage of places where you can get treatment, a bed, and a meal. And most have no government connection, except that they often refer folks to public services. And solving this problem is more difficult than just funding, because the mentally ill often refuse to take steps that improve themselves.

On this point, I have an idea which I would love your commentary, drkitten. How about a tax credit (not deduction) of up to 20% of paid income tax, for charitable donations to social causes? Instead of paying taxes to a [in my opinion] bloated, corrupt welfare system, let them give directly to the best organizations in their own neighborhood. I would guess that $100 in charity is worth $150 in welfare.

[CatOfGrey]

That's right. And they are rewarded by the return on their capital; why should they need further reward?

And, again, they're rewarded by the owners through increased salary. (Or if they aren't, perhaps they should find other jobs).

In either case, job creation inherently carries its own reward through the structure of the enterprise. The idea that someone should get rewarded from the public purse for doing something that already profits him is,.... interesting. Especially from a free-market advocate.

Exactly! But reducing taxes isn't a reward by the public purse. Lowering taxes merely frees up more money to build their business and hire more people.

Back to my first post on this thread. If you want to reduce taxes, don't play with it, with a bunch of rules. Just cut general rate, and let all business be treated equally. Not bailouts, not corporate welfare, not "helping out ____ industry". But, perhaps more importantly, stop sending a message that business expenses, such as hiring new people will be more expensive in the future.

[NewtonTrino]

I think this is another angle on this.

http://falkenblog.blogspot.com/2010/03/why-envy-dominates-greed.html

[DavidJames]

1. Most of your students are publicly educated, but in my experience, private schools do a better job, usually with far less resources, such as buildings or land. And you rarely see private school dropout rates of 50%, in sharp contrast to many urban school systems. And when people take matters into their own hands and homeschool their kids. Wow. Off the charts smart...Go find me some studies where they compared apples to apples. Demographics, admission and discipline policies, teacher student ratio's, etc. etc. etc. Without a proper comparison, will private schools show better numbers, of course they will. But the results are worthless.

3. If you are mentally ill and homeless in my town, there are no shortage of places where you can get treatment, a bed, and a meal. And most have no government connection, except that they often refer folks to public services. And solving this problem is more difficult than just funding, because the mentally ill often refuse to take steps that improve themselves.Please tell me the part if bold is a joke.
Instead of paying taxes to a [in my opinion] bloated, corrupt welfare system, let them give directly to the best organizations in their own neighborhood. I would guess that $100 in charity is worth $150 in welfare.Have you ever considered doing some research to better inform your opinions or limit the need for guessing?

[DavidJames]

I believe that many government functions are much less efficient than if they were left to the private sector.I believe you are over simplifying a very complex subject. Having worked in some very large corporations the past 30 years, I can personally testify they were far from efficient. Of course, that anecdote can't be used for anything other then to negate your belief.

Just one thought on efficiency. Perhaps a valid trade off for reduced efficiency is a guarantee that a service will be available when you need it. Making the service more "efficient" might eliminate that guarantee.

[Francesca R]

There is a difference between a government created job and a private sector job. Private sector jobs are funded by their own productivity, and pay taxes (income taxes, corporate taxes, and taxes on investment gains and dividends) from their 'profits'. Government jobs normally take money that would be used for private sector jobs (either by increased taxes, or reduced growth), so they do not increase the standard of living for the country.To really believe that you need to regard all public goods as undesirable (welfare-lowering) and to regard the alleviation of poverty (funded by tax) as also being net welfare reducing. Some people think that, but rather few.

[Francesca R]

The idea that someone should get rewarded from the public purse for doing something that already profits him is,.... interesting. Especially from a free-market advocate.Not really. Tax reductions are seldom regarded as "rewards from the public purse". The latter would be public money obtained from taxes.

Admittedly anti-free market advocates often interchange them (spending and tax cuts) as though they were the same.

[Francesca R]

Having worked in some very large corporations the past 30 years, I can personally testify they were far from efficient. Of course, that anecdote can't be used for anything other then to negate your belief.Private corporations can be inefficient, but unless they are extracting monopolistic rent or government favours, they usually have to be at least efficient enough to be viable in the market place. The same is not true of public agencies--which underscores the desirablility of the latter to be restricted in number (namely, restricted to provide true public goods and correcting market failures).

But a more important distinction is that private corporations--if they waste money--waste somebody else's money that was voluntarily provided, rather than everyone's money that was compulsorily paid. So a lot of the time when people advocate private operation, they don't necessarily have an interest in how efficiently stuff will be done, just that someone else pays.

Just one thought on efficiency. Perhaps a valid trade off for reduced efficiency is a guarantee that a service will be available when you need it. Making the service more "efficient" might eliminate that guarantee.That's quite capable of being incorporated in the definition of efficient, and private concerns provide that sort of thing all over the place.

[DavidJames]

Private corporations can be inefficient, but unless they are extracting monopolistic rent or government favours, they usually have to be at least efficient enough to be viable in the market place. The same is not true of public agencies--which underscores the desirablility of the latter to be restricted in number (namely, restricted to provide true public goods and correcting market failures).The company I work for makes up for their inefficiencies by getting rid of U.S. workers and moving the work to countries with much lower wages. Public agencies don't have that flexibility.

But a more important distinction is that private corporations--if they waste money--waste somebody else's money that was voluntarily provided, rather than everyone's money that was compulsorily paid. So a lot of the time when people advocate private operation, they don't necessarily have an interest in how efficiently stuff will be done, just that someone else pays.That's an interesting point but I'm not sure I understand. Ultimately it's the people who pay. Whether it's for services provided by the government (the government the people elected, therefor approve) or by private company's.

[CatOfGrey]

The company I work for makes up for their inefficiencies by getting rid of U.S. workers and moving the work to countries with much lower wages. Public agencies don't have that flexibility.
That's an interesting point but I'm not sure I understand. Ultimately it's the people who pay. Whether it's for services provided by the government (the government the people elected, therefor approve) or by private company's.

As for my mentally ill comment, no it's not a joke. But to clarify, the problems of the mentally ill, chronically homeless are not solved merely by increased funding.

On outsourcing: This is the consequence of a couple of things. One is increased regulations that help workers, but also limit them. Minimum wage is one example, overtime is another. Both make 'home grown workers' expensive. The other reason is that we are simply more wealthy. When I first bought my house, I did my own gardening. Now, not only can I afford to pay a gardener, but doing so frees up time that I can work. I 'outsource' a less efficient task to make more income here. The United States is more than happy to outsource much of its oil production, plastics manufacturing, etc.

On charity: I'll give a couple of examples. The Salvation Army runs it's operations with less than 2% of its expenses going to administration costs. Compare that ratio with the Dept. of Welfare. Especially coupled with the added effect that if the SA didn't show that high efficiency and integrity, people would donate somewhere else. Our welfare system is wasteful and a target for corruption because there is no such need to clean it up. If they lose $100,000, we don't have a choice to donate elsewhere.

On another item: The Getty trust, established by the noted oil robber-baron/philanthropist, runs on admin expenses under 1% of their total assets. That's better than quite a few mutual funds, let alone a government agency.

[lomiller]

On outsourcing: This is the consequence of a couple of things. One is increased regulations that help workers, but also limit them. Minimum wage is one example, overtime is another. Both make 'home grown workers' expensive.

“Home-grown” workers are expensive because they expect to earn enough to maintain a certain standard of living. Yes you could make producing things in the US more viable by removing all the things that make this type of earnings power possible, but who in hell thinks paying US workers third world wages is a good idea?

[DavidJames]

As for my mentally ill comment, no it's not a joke. But to clarify, the problems of the mentally ill, chronically homeless are not solved merely by increased funding.
That's not a clarification, that's a total rewrite.

[DavidJames]

The United States is more than happy to outsource much of its oil production, plastics manufacturing, etc.I don't believe you can speak for "The United States", but I agree corporations are quite happy to pay people 25% or less then they do here. Funny that at least at my company none of the executives have outsourced themselves. ;)

[NewtonTrino]

Outsourcing is often done simply to remain competitive. You have a choice, either cede the business to someone else who does outsource, figure out a way to increase efficiency or outsource first. I'm not sure what you expect business owners to do because if the business can't be profitable there isn't a point in doing it.

That being said I think option number two of becoming more efficient is often overlooked.

[stevea]

I remember President Obama getting flack for using the "job saved or created" term to defend the stimulus package. The issue was that "jobs saved" was just political nonsense.

No - the Whitehouse was rightly criticized for claiming specific numbers of "jobs saved", when there is no statistic kept that relates to that concept.

http://www.cnbc.com/id/31063979/Tony_Fratto_The_White_House_Jobs_Saved_Deception

It's more "proof by alternative history" - like when the Stimulus proponents proclaim it was a success, since things would have been worse (alternative history, no possible evidence) without it.

This is a "negative proof fallacy" or "appeal to ignorance fallacy" being promulgaed by politicians.

[geni]

Government jobs normally take money that would be used for private sector jobs (either by increased taxes, or reduced growth),


Given the utterly patheric returns on US goverment bonds it seems unlikely that anyone buying them is seriously considering investing money in the private sector. So for the time being the US goverment is spending rather a lot of money that would otherwise be sitting under mattresses or perhaps lent to one of the other goverments with AAA credit ratings (tricky since most wouldn't be interested in borrowing $s).

[geni]

On charity: I'll give a couple of examples. The Salvation Army runs it's operations with less than 2% of its expenses going to administration costs.

You are aware that charities game the living daylights out of those figures?

[geni]

That's quite capable of being incorporated in the definition of efficient, and private concerns provide that sort of thing all over the place.

As the recent events in the banking sector showed no they don't. Now of course even goverments can't guarantee that a service will be available when you need it (see north irish water of late) but they are more resistant to certian types of shock than any private enterprise.

[NewtonTrino]

What was this thread about again?

[geni]

What was this thread about again?

Err should we tax people who take money out of companies rather than reinvesting it.

[stevea]

And economic theory is pretty well convinced that 'public goods' are best and most efficiently provided by the government via taxation, as the free market is known to undersupply public goods and to be unable to deal with the free rider problem. So unless you're going to suggest that national defense is not a public good, then I think your skepticism is misplaced.

Perhaps you mean that Keynesian economic theorists agree. If you read a little more widely you'll find plenty of criticism of samuelson.

That's quite a blanket statement, extrapolating from national defense to all 'public goods'. Do you really believe that US broadcast TV or radio, or internet sources like google, facebook etc under-supply or suffer from a free-rider problems ? Not perfect "public goods", but neither is defense.

FOSS software, such as Linux is a nearly perfect example of a public good. Even though there are numerous, probably a majority, free-riders the proposition is still economically advantageous since developers gain access to a large edifice of software that they are not required to develop.

Plenty of examples of public goods in the free market.

[Undesired Walrus]

Government jobs normally take money that would be used for private sector jobs (either by increased taxes, or reduced growth), so they do not increase the standard of living for the country.



A publicly funded programme can not only increase living standards but save money over the long term. It can easily be expected that an efficient and well funded programme for, say, ex-offenders or drug users will end up saving 2 for every 1 spent (reduced crime rate, reduced hospital and welfare bills, increased employment).

[Francesca R]

As the recent events in the banking sector showed no they don't. Now of course even goverments can't guarantee that a service will be available when you need it (see north irish water of late) but they are more resistant to certian types of shock than any private enterprise.Second sentence is debatable (Sometimes public is more resilient, sometimes private is). First sentence is wrong (being a blanket "no they don't")

[Francesca R]

FOSS software, such as Linux is a nearly perfect example of a public good. Even though there are numerous, probably a majority, free-riders the proposition is still economically advantageous since developers gain access to a large edifice of software that they are not required to develop.

Plenty of examples of public goods in the free market.The market supplies an equilibrium amount of a public good if the returns (diminishing ones, mind you) still exceed the costs even though the good is not excludable or rivalrous. That's the case with your examples.

If the individual cost of provision is higher than the individual benefit obtained, the market will not provide an equilibrium amount (if any). That is not seriously contested. Right wing folks nonetheless try to squeeze goods out of the classification of "public" (just as left wingers try to squeeze stuff in)

[geni]

Second sentence is debatable (Sometimes public is more resilient, sometimes private is).

Anything that could take out a western goverment (war, major civil unrest, hyperinflation, metorite strike) could knock out any private sector entity in passing.


First sentence is wrong (being a blanket "no they don't")

Name one private sector company that can guarantee that a service will be available when you need it.

[Francesca R]

Anything that could take out a western goverment (war, major civil unrest, hyperinflation, metorite strike) could knock out any private sector entity in passing.Hardly an exhaustive list of eventualities there.

Name one private sector company that can guarantee that a service will be available when you need it.Red herring; you already said "of course even goverments can't guarantee that a service will be available when you need it"

[lomiller]

That's quite a blanket statement, extrapolating from national defense to all 'public goods'. Do you really believe that US broadcast TV or radio, or internet sources like google, facebook etc under-supply or suffer from a free-rider problems.
Not great examples since none of these exist without government taking an active role in regulating and creating the frameworks that make possible the bandwidth these services depend on. In the case of the internet sources the US government in effect created the World Wide Web by developing the Mosaic web browser.
Perhaps you mean that Keynesian economic theorists agree. If you read a little more widely you'll find plenty of criticism of samuelson.
If you read widely enough you find that the US destroyed the WTC itself, man has never landed on the moon and we are being regularly visited by little gray men from space. In fact if you read widely enough you will find support for any idea you want to believe in, so you’ll have to forgive me if I don’t fine “read more widely” to be a particularly convincing response here.

[geni]

Hardly an exhaustive list of eventualities there.

Feel free to provide a relivant one.


Red herring; you already said "of course even goverments can't guarantee that a service will be available when you need it"

But you said that private companies could. Do you wish you withdraw your claim?

[Francesca R]

Feel free to provide a relivant one.Wal-Mart compared with FEMA at the US Gulf Coast in 2005 is a high profile example. (This is a tad flowery because it's from a libertarian-inclined think-tank, but Steven Horwitz's (http://mercatus.org/sites/default/files/publication/WP0933_Hurricane%20Katrina%20and%20the%20Bourgeois %20Virtues.pdf)write up is decent)

But you said that private companies could. Do you wish you withdraw your claim?Yes unreservedly if that's how I made it come across. Companies (and governments) will happily provide guarantees which render them liable to compensation if they screw up.

[geni]

Wal-Mart compared with FEMA at the US Gulf Coast in 2005 is a high profile example. (This is a tad flowery because it's from a libertarian-inclined think-tank, but Steven Horwitz's (http://mercatus.org/sites/default/files/publication/WP0933_Hurricane%20Katrina%20and%20the%20Bourgeois %20Virtues.pdf)write up is decent)

Given that it doesn't contain the word FEMA I'm failing to see how it can be a comparision.

In any case the event in question did not appear to remove a western goverment.


Yes unreservedly if that's how I made it come across. Companies (and governments) will happily provide guarantees which render them liable to compensation if they screw up.

That rather assumes the company hasn't gone bankrupt.

[Francesca R]

Given that it doesn't contain the word FEMA I'm failing to see how it can be a comparision.Er what? It is an example of private enterprise being more resilient than public to a certain type of shock.

In any case the event in question did not appear to remove a western goverment.Which is hardly an exhaustive set of eventualities. Governments hardly need to be removed in order to fail to cover the liabilities they underwrite.

That rather assumes the company hasn't gone bankrupt.Going bankrupt is hardly exhaustive either.

So, in summary, guaranteeing service provision is easily something that private enterprise can deliver, and sometimes it is better at that than government.