California Considers Flat Tax and Completely Eliminating Welfare

Agnapostate said:

That would be quite a ridiculous proposal. As I noted yesterday, it's merely so basic an economic concept as the diminishing rate of marginal utility that renders a flat tax necessarily unequal. As to the "elimination" of welfare, that would also eliminate the positive externalities generated by welfare (i.e. lower crime rates), and undercut the ability of the state to maintain the physical efficiency of the working class. That said, it would ultimately destabilize capitalism, so maybe I should be all for it. :rofl

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Do you have any credible data to support these absurd assertions?

How about this one for all you Welfare supporters; the best way to REDUCE crime is the growth of the private sector to create JOBS and actually enforce our laws. Everything else is pure hyperbolic BS.

A Flat tax would go a LONG way towards expanding job growth and increasing the State's revenue.

:2wave:

Agnapostate said:

If he actually cared about the elimination of theft, he'd condemn capital accumulation through wage labor, as it relies on the unjust extraction of surplus labor in the production process and utilization in the circulation process to maintain a "vicious cycle" of sorts.

But he can't be expected to care about anything so trivial as that! :lol:

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Another vast pile of nonsensical bile. :roll:

Agnapostate said:

A sounder conclusion would be that it's not necessary to maintain a financial class whose sole purpose is to "provide capital," and that embracing the efficiency benefits of workers' ownership and management would do us all good.

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In the entire history of man, you will not find ONE example where this has ever worked.

The thing about externalities, everyone wants companies to pay for negative externalities, but no one wants to pay for the positive externalities that they produce. If you're going to get into externalities, there's a problem you're going to have to get around:

Should Henry Ford have paid for the negative externality of the lost jobs in the other transportation companies? By definition, it was a negative externality, so should he have been forced to pay for it? If a neighbor grows a beautiful lawn in front of his house, should I have to pay for the positive externality it produces in my higher property values and the beauty that I like seeing?

Truth Detector said:

Do you have any credible data to support these absurd assertions?

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For a broad summary, refer to Headey et al.'s Is There a Trade-Off Between Economic Efficiency and a Generous Welfare State? A Comparison of Best Cases of `The Three Worlds of Welfare Capitalism’ Consider the abstract:

A crucial debate in policy-making as well as academic circles is whether there is a trade-off between economic efficiency and the size/generosity of the welfare state. One way to contribute to this debate is to compare the performance of best cases of different types of state. Arguably, in the decade 1985-94, the US, West Germany and the Netherlands were best cases - best economic performers - in what G. Esping-Andersen calls the three worlds of welfare capitalism. The US is a liberal welfare-capitalist state, West Germany a corporatist state, and the Netherlands is social democratic in its tax-transfer system, although not its labor market policies. These three countries had rates of economic growth per capita as high or higher than other rich countries of their type, and the lowest rates of unemployment. At a normative or ideological level the three types of state have the same goals but prioritise them differently. The liberal state prioritises economic growth and efficiency, avoids work disincentives, and targets welfare benefits only to those in greatest need. The corporatist state aims to give priority to social stability, especially household income stability, and social integration. The social democratic welfare state claims high priority for minimising poverty, inequality and unemployment. Using ten years of panel data for each country, we assess indicators of their short (one year), medium (five year) and longer term (ten year) performance in achieving economic and welfare goals. Overall, in this time period, the Netherlands achieved the best performance on the welfare goals to which it gave priority, and equalled the other two states on most of the goals to which they gave priority. This result supports the view that there is no necessary trade-off between economic efficiency and a generous welfare state.

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Do you have any contrary empirical research that you can refer to?

Truth Detector said:

How about this one for all you Welfare supporters; the best way to REDUCE crime is the growth of the private sector to create JOBS and actually enforce our laws. Everything else is pure hyperbolic BS.

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I have far greater disdain for government intrusion into the economy than the rightists here, and ultimately desire the abolition of the state. However, as long as you wish to maintain capitalism, the state is a key agent in doing that; the government is an integral stabilizing and growth agent in the capitalist economy. I'm fully willing to abandon capitalism and the government along with it. But I somehow don't think you're up for that.

Truth Detector said:

A Flat tax would go a LONG way towards expanding job growth and increasing the State's revenue.

:2wave:

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Actually, a flat tax is merely based on economic irrationality. It ignores the basic reality of the diminishing rate of marginal utility, and is thus fundamentally unfair and regressive.

Truth Detector said:

Another vast pile of nonsensical bile. :roll:

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And such a thorough and extensive response that you've offered too! :2wave:

Truth Detector said:

In the entire history of man, you will not find ONE example where this has ever worked.

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Similarly false! You're not doing very well today, are you? As I've mentioned to you previously, aside from microeconomic analysis into the superior efficiency of worker-owner enterprises and labor cooperatives, there are indeed examples of the successful implementation of libertarian socialism that can be referred to. For example, I know for a fact that I've previously mentioned the Spanish Revolution, the anarchist social revolution that occurred during the Spanish Civil War that involved widespread collectivization, direct democracy, and workers' self-management. As noted by the anarchist historian Gaston Leval:

In Spain, during almost three years, despite a civil war that took a million lives, despite the opposition of the political parties . . . this idea of libertarian communism was put into effect. Very quickly more than 60% of the land was very quickly collectively cultivated by the peasants themselves, without landlords, without bosses, and without instituting capitalist competition to spur production. In almost all the industries, factories, mills, workshops, transportation services, public services, and utilities, the rank and file workers, their revolutionary committees, and their syndicates reorganised and administered production, distribution, and public services without capitalists, high-salaried managers, or the authority of the state.

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Conversely, you have no example of successfully implemented laissez-faire capitalism to refer to...which one of us is utopian again? :rofl

phattonez said:

The thing about externalities, everyone wants companies to pay for negative externalities, but no one wants to pay for the positive externalities that they produce. If you're going to get into externalities, there's a problem you're going to have to get around:

Should Henry Ford have paid for the negative externality of the lost jobs in the other transportation companies? By definition, it was a negative externality, so should he have been forced to pay for it? If a neighbor grows a beautiful lawn in front of his house, should I have to pay for the positive externality it produces in my higher property values and the beauty that I like seeing?

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We can help companies when they have positive externalities. That explains the tax free status universities have.

And of course, we need to be practical with how we can only assist the truely positive externalities.

While the benefit of someone having a nice garden is limited, having a more educated population has a great benefit to me.

nerv14 said:

We can help companies when they have positive externalities. That explains the tax free status universities have.

And of course, we need to be practical with how we can only assist the truely positive externalities.

While the benefit of someone having a nice garden is limited, having a more educated population has a great benefit to me.

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You ignored half of my question. Some companies produce pollution and you want to tax that negative externality, but Henry Ford produce a negative externality by forcing other companies to eliminate jobs because they couldn't compete with Ford. Should Henry Ford have paid for those lost jobs? After all, by definition, it was a negative externality.

Also, things are externalities for a reason: they are impossible to price. Who's to say how much we should be charged for them.

phattonez said:

Also, things are externalities for a reason: they are impossible to price. Who's to say how much we should be charged for them.

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Socialists and Communists think that THEY should be the ones deciding. It doesn't work, never has worked and never will work.

Unfortunately the people who infest our educational systems still fill the heads of our young with farcical notions about externalities, commonalities and mediocrities.

Truth Detector said:

Socialists and Communists think that THEY should be the ones deciding. It doesn't work, never has worked and never will work.

Unfortunately the people who infest our educational systems still fill the heads of our young with farcical notions about externalities, commonalities and mediocrities.

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What communists?

phattonez said:

You ignored half of my question. Some companies produce pollution and you want to tax that negative externality, but Henry Ford produce a negative externality by forcing other companies to eliminate jobs because they couldn't compete with Ford. Should Henry Ford have paid for those lost jobs? After all, by definition, it was a negative externality.

Also, things are externalities for a reason: they are impossible to price. Who's to say how much we should be charged for them.

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But free market competition isn't a negative externality, so I didn't notice that it was another question

If you want, you can say that driving others out of business is, but then expanding your own production more efficency would have to be a positive externality.
So no government intervention needs to be done in that scenario to reach an efficency market equalibrium.


But when you look at things like pollution, there is actual ways to guess what level of taxation is nescesary to reach a more efficent situation. If anything, an estimated taxation or regulation against things that have negative externalities is better then doing nothing.

Because then we would still have lead paint, poissonous pesticides ect. Those are all examples of externalities, and I think we can all agree that our economy is more efficenct with regulations against them.

nerv14 said:

But when you look at things like pollution, there is actual ways to guess what level of taxation is nescesary to reach a more efficent situation.

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Why, when taxation isn't the answer? The public isn't polluting, a specific factory is, and that factory is owned by a specific corporation which can be fined and commanded to comply with existing pollution laws.

nerv14 said:

Because then we would still have lead paint, poissonous pesticides ect. Those are all examples of externalities, and I think we can all agree that our economy is more efficenct with regulations against them.

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"Efficient"?

No, the laws are intended to ensure that safe products are sold without deceit. Issues of efficiency are left to the manufacturer.

Scarecrow Akhbar said:

Why, when taxation isn't the answer? The public isn't polluting, a specific factory is, and that factory is owned by a specific corporation which can be fined and commanded to comply with existing pollution laws.




"Efficient"?

No, the laws are intended to ensure that safe products are sold without deceit. Issues of efficiency are left to the manufacturer.

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Thank you for agreeing with me that companies should comply with regulations for pollution. That is an example of a negative externality and why government internvention is needed.

Taxation is needed though for regulations though, because of the harmful effect that pollution has in creating acid rain, and harming other people's property. There needs to be taxes on producers of acid rain to pay for repairing other people's harmed property from acid rain.

Without those taxes, there will be an inneficency in the economy from an overproduction of ellectricity.

nerv14 said:

Thank you for agreeing with me that companies should comply with regulations for pollution. That is an example of a negative externality and why government internvention is needed.

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No, it's just an example of the violation of private property rights by a second party.

The government exists to protect those property rights from intrusion by othesr.

Ain't got a damn thing to do with any socialist "externalities" or "interalities" or hangnails, either.

nerv14 said:

Taxation is needed though for regulations though, because of the harmful effect that pollution has in creating acid rain,

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Not demonstrated.

nerv14 said:

and harming other people's property. There needs to be taxes on producers of acid rain to pay for repairing other people's harmed property from acid rain.

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No, if damage from so-called acid rain is proven, the transgressor needs to make reparations.

nerv14 said:

Without those taxes, there will be an inneficency in the economy from an overproduction of ellectricity.

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Taxes produce inefficiency in the economy.

Free markets product economic efficiency.

Naturally, one can never produce more electricity than is used. It's gotta go somewhere, fast.

Scarecrow Akhbar said:

Taxes produce inefficiency in the economy.

Free markets product economic efficiency.

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This is mere inaccuracy. The nonexistence of free markets is in fact the precise reason for the existence of taxation: the correction of market failure. The presence of negative externalities in the capitalist economy is indeed a form of such market failure.

Scarecrow Akhbar said:

No, it's just an example of the violation of private property rights by a second party.

The government exists to protect those property rights from intrusion by othesr.

Ain't got a damn thing to do with any socialist "externalities" or "interalities" or hangnails, either.



Not demonstrated.



No, if damage from so-called acid rain is proven, the transgressor needs to make reparations.



Taxes produce inefficiency in the economy.

Free markets product economic efficiency.

Naturally, one can never produce more electricity than is used. It's gotta go somewhere, fast.

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The problem is that it is INCREDIBLY inneficent for each single person to bring up their case that their property was harmed by another companies actions. (like acid rain)

Only the wealthy would be able to fund that type of endevour, and it gets even more complicated when there is pollution in one state harming someone else in another state, and each industry that pollutes needs to have their pollution input factored in....

so its very odvious that there needs to be a government mechanism to handle all of that.


And you aren't making much sense by agreeing that a company should be sued by the government if it violates regulations, but refusing to aknowedge taxation to reduce negative externalities.

but thats fine ive made my point, thats what matters

Agnapostate said:

This is mere inaccuracy. The nonexistence of free markets is in fact the precise reason for the existence of taxation: the correction of market failure. The presence of negative externalities in the capitalist economy is indeed a form of such market failure.

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Just remember that this market failure is the exception in a capitalist economy, because normally government intervention does increase inneficencies.

nerv14 said:

Just remember that this market failure is the exception in a capitalist economy, because normally government intervention does increase inneficencies.

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No, it doesn't. More often than not, the government is a critical agent in stabilizing the overall market, which is why capitalism has always relied on a mixed economy. For example, consider trade policy. Unrestricted market competition is not in the ultimate interests of the "weaker" participants, so traditionally, it's been typical for countries to use the state sector to extend protection over infant industries and thus facilitate their development and eventual ability to compete with others, thereby maximizing dynamic comparative advantage.

Agnapostate said:

No, it doesn't. More often than not, the government is a critical agent in stabilizing the overall market, which is why capitalism has always relied on a mixed economy. For example, consider trade policy. Unrestricted market competition is not in the ultimate interests of the "weaker" participants, so traditionally, it's been typical for countries to use the state sector to extend protection over infant industries and thus facilitate their development and eventual ability to compete with others, thereby maximizing dynamic comparative advantage.

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Even if the "weaker" participants will be run out of bussiness, the resources that the company used will go to more efficent companies, which is by definition more efficent.

And once again, tariffs simillar to what this country had for its fledgling industries was helpful in making them more efficent in the long run. However, that is a very limited role, and America had its government protection much longer then what was needed more max efficency.


I am not saying that government intervention is NEVER makes the market more efficent, but simply that it is not the norm. Look at how industries function today, and most types of government intervention DO make the industries less efficent.

nerv14 said:

The problem is that it is INCREDIBLY inneficent for each single person to bring up their case that their property was harmed by another companies actions. (like acid rain)

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Oh.

I see the problem.

You've never heard of "class action lawsuits".

nerv14 said:

so its very odvious that there needs to be a government mechanism to handle all of that.

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We call them "courts".

nerv14 said:

And you aren't making much sense by agreeing that a company should be sued by the government if it violates regulations, but refusing to aknowedge taxation to reduce negative externalities.

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Sure I am.

Agnapostate said:

The nonexistence of free markets is in fact the precise reason for the existence of taxation:

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So, when translated into English this means....governments tax because government interference in free markets makes the markets less efficient and therefore the government need to tax them.

Agnapostate said:

the correction of market failure.

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Government's don't need to correct market failures.

Market failures in the free market are self-correcting.

Government's make markets fail and make market failures worse.

Agnapostate said:

The presence of negative externalities in the capitalist economy is indeed a form of such market failure.

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No, that some people can handle freedom isn't a failure of the market, it's their very own and personal failure.

nerv14 said:

Even if the "weaker" participants will be run out of bussiness, the resources that the company used will go to more efficent companies, which is by definition more efficent.

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I didn't refer to "companies" I referred to industries. The protection of infant industries as a whole is actually a necessary practice precisely because of underdeveloped resources, often spawned through over-reliance on the agricultural sector which causes the consequent result of neglect of industrial development. Protection of such industries maximizes dynamic comparative advantage in the long-run rather than static comparative advantage in the short run, to oversimplify things somewhat.

nerv14 said:

And once again, tariffs simillar to what this country had for its fledgling industries was helpful in making them more efficent in the long run. However, that is a very limited role, and America had its government protection much longer then what was needed more max efficency.

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Actually, government protection was a critical factor in American development, as well as British development. It's simply a reality that the "powers" of the world relied extensively on a variety of interventionism that they today disavow for the development of other countries, which is why the "Washington Consensus" is so blatantly hypocritical. For example, consider Ha-Joon Chang's Kicking Away the Ladder:

Contrary to the conventional wisdom, the historical fact is that the rich countries did not develop on the basis of the policies and the institutions that they now recommend to, and often force upon, the developing countries. Unfortunately, this fact is little known these days because the “official historians” of capitalism have been very successful in re-writing its history.

Almost all of today’s rich countries used tariff protection and subsidies to develop their industries. Interestingly, Britain and the USA, the two countries that are supposed to have reached the summit of the world economy through their free-market, free-trade policy, are actually the ones that had most aggressively used protection and subsidies.

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You can see why there would be an interest among some in avoiding acknowledgment of this reality, of course.

nerv14 said:

I am not saying that government intervention is NEVER makes the market more efficent, but simply that it is not the norm. Look at how industries function today, and most types of government intervention DO make the industries less efficent.

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Markets are plagued by many more problems than is immediately evident: information asymmetries, negative externalities, various disequilibria, etc. On the whole, I'm inclined to regard them as a rather inefficient means of resource allocation. However, the state has and continues to function as an integral agent through bringing about stabilization and a host of other benefits to said markets. For example, have a look at Yu's A new perspective on the role of the government in economic development: Coordination under uncertainty:

[The government] possesses some unique features that distinguish it from the firm. Such features allows the government to regulate competition, reduce uncertainty and provide a relatively stable exchange environment. Specifically, in the area of industrial policy, the government can help private enterprises tackle uncertainty in the following ways: first, locating the focal point by initiating projects; providing assurance and guarantees to the large investment project; and facilitating the exchange of information; second, reducing excessive competition by granting exclusive rights; and third, facilitating learning and diffusion of technologies, and assisting infant industry firms to build up competence. The history of developmental success indicates that the market and the state are not opposed forms of social organisation, but interactively linked (Rodrik, 1997, p. 437). In the prospering and dynamic nations, public-private coordination tends to prevail. Dynamic private enterprises assisted by government coordination explain the successful economic performances in the post-war Japan and the Asian newly industrialising economies. It is their governments' consistent and coordinated attentiveness to the economic problems that differentiates the entrepreneurial states (Yu, 1997) from the predatory states (Boaz and Polak, 1997).

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This doesn't change the fact that I despise this role and the very existence of the government more than any rightist here; I merely acknowledge that this major role is a necessary condition of the continued existence of capitalism. On that count, I might not object to an attempt to implement laissez-faire; it might bring capitalism down faster.

Agnapostate said:

I didn't refer to "companies" I referred to industries. The protection of infant industries as a whole is actually a necessary practice precisely because of underdeveloped resources, often spawned through over-reliance on the agricultural sector which causes the consequent result of neglect of industrial development. Protection of such industries maximizes dynamic comparative advantage in the long-run rather than static comparative advantage in the short run, to oversimplify things somewhat.

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While it is proven that infant industry protection is critical in a global environment, your long run assertion on comparative advantage goes a bit to far. As any industry gains market share/capital, the need (and most definitely the desire from the institutions) for such direct subsidization diminishes. Take the US financial institutions for example; once once the balance sheets are strong enough to stand without extremely low rates, they are going to pay back their TARP bill. The transition from "government supported" to "market supported" leads to greater growth.

Actually, government protection was a critical factor in American development, as well as British development. It's simply a reality that the "powers" of the world relied extensively on a variety of interventionism that they today disavow for the development of other countries, which is why the "Washington Consensus" is so blatantly hypocritical.

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The style of the protection has evolved recently. Now there is a $500 billion + military industrial complex (US), along with lending facilities, and (quite possibly in the US) free health care. Not lagging far behind are the lobbying capabilities. The SEC, FDA, DoA (see Monsanto), etc... are the other faucets for corporate interests.

Markets are plagued by many more problems than is immediately evident: information asymmetries, negative externalities, various disequilibria, etc. On the whole, I'm inclined to regard them as a rather inefficient means of resource allocation.

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Government intervention displays unintended consequences of its own. Business decisions being made by politicians, slow paced progress, and the ever increasing propensity for corruption (made possible by those generous government salaries:lol are worse IMHO. Rent caps in NYC for apartments is a great example.

This doesn't change the fact that I despise this role and the very existence of the government more than any rightist here; I merely acknowledge that this major role is a necessary condition of the continued existence of capitalism. On that count, I might not object to an attempt to implement laissez-faire; it might bring capitalism down faster.

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You are correct, capitalism as we know it, let alone the proverbial laissez-faire, are extremely dependent on the political climate. Anti-fraud legislation is probably the most important government action for capitalism to exist. The very private property rights granted by the US Constitution (fifth and fourteenth Amendments)allow capitalism the advantage over other political-economic systems such as anarcho-socialism.

I do believe there are legitimate roles for government intervention. I hate the idea of politicians making business decisions. They would be just as effective picking fashion trends.

nerv14 said:

But free market competition isn't a negative externality, so I didn't notice that it was another question

If you want, you can say that driving others out of business is, but then expanding your own production more efficency would have to be a positive externality.
So no government intervention needs to be done in that scenario to reach an efficency market equalibrium.


But when you look at things like pollution, there is actual ways to guess what level of taxation is nescesary to reach a more efficent situation. If anything, an estimated taxation or regulation against things that have negative externalities is better then doing nothing.

Because then we would still have lead paint, poissonous pesticides ect. Those are all examples of externalities, and I think we can all agree that our economy is more efficenct with regulations against them.

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It's obvious that you're just making stuff up. From Wikipedia, "In economics, an externality or spillover of an economic transaction is an impact on a party that is not directly involved in the transaction." Other transportation companies were put out of business because of Henry Ford, so he did in fact produce a negative externality. Should Henry Ford have paid for that externality?

Agnapostate said:

No, it doesn't. More often than not, the government is a critical agent in stabilizing the overall market, which is why capitalism has always relied on a mixed economy. For example, consider trade policy. Unrestricted market competition is not in the ultimate interests of the "weaker" participants, so traditionally, it's been typical for countries to use the state sector to extend protection over infant industries and thus facilitate their development and eventual ability to compete with others, thereby maximizing dynamic comparative advantage.

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But making the country as a whole weaker. By protecting the industry it means that the people of the country are excluded from the purchase of the better products of that industry.