Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP Path: utzoo!watmath!clyde!bonnie!akgua!mcnc!decvax!cca!ima!inmet!nrh From: nrh@inmet.UUCP Newsgroups: net.politics Subject: Re: Re: The WSJ on Reaganomics Message-ID: <1858@inmet.UUCP> Date: Mon, 3-Dec-84 01:15:12 EST Article-I.D.: inmet.1858 Posted: Mon Dec 3 01:15:12 1984 Date-Received: Thu, 6-Dec-84 03:18:30 EST Lines: 130 Nf-ID: #R:dciem:-120800:inmet:7800204:000:6383 Nf-From: inmet!nrh Dec 1 15:09:00 1984 >***** inmet:net.politics / whuxl!orb / 3:31 pm Nov 30, 1984 >> Greg Kuperberg writes: >> The cost of government spending is two-fold: >> >> 1) Income tax is a tax on labor. It is in fact an exhorbitant tax on >> labor. This is one reason that labor is so expensive in the U.S. Such a >> huge tax on labor is very bad for business. Ask an auto company. >> >> 2) Most government money is given to government employees. Thus the U.S. >> government is a very competetive employer, diverting much labor away from >> the economy, and making the remaining labor yet more expensive. > >Rebuttal 1)other Western nations pay a greater percentage of their > income in taxes. How come they do well? That's being rather mealymouthed, isn't it? They could do well because they're prosperous or efficient enough to make mistakes and do well anyhow. The comparison Kuperberg's logic suggests is between two otherwise identical nations, one of which has, and the other of which does not have an income tax. Not possible to make, this comparison, as there's a shortage of synthetic nations available for lab testing. The best one can do is compare (say) two nations that started off as one nation (North & South Korea, for example) and compare their per-capita income or some such. I did this comparison about three months ago, and the socialist nations all lost. This doesn't prove the point (socialism implies centralized control of industry as well as high taxes) but is more suggestive than comparisons between relatively unrelated countries. > Also: a just income tax taxes income from capital as much as > income from labor. While it is unfortunately true that our > own tax system favors the wealthy, they do pay some income > taxes on their capital gains and interest income. > So? I invite you to find an example anywhere in history of a "just" income tax. Be sure and publish it here so that we know such a thing is possible. >Rebuttal 2)This great diversion of labor would be a surprise to the > 7.5% of the American population unemployed. If government > is employing everyone in sight, why do we have any unemployment? (Gag!) Look, Tim: you do yourself no credit here. He didn't argue that government employed EVERYBODY. Tsk. > What would happen to unemployment if all government workers > were laid off tomorrow? Do you suppose it would follow the > dreamworld scenario of the free enterprise advocates who imagine > that all miracles can be achieved by the "invisible hand"? I don't know of anyone who maintains this. The "invisible hand" is starkly limited to accomplishing outcomes that result from private self-interest. I do know LOTS of people who believe that government can screw things up badly, and that things would get better if government stopped doing that. As for what would happen if all government workers were laid off tomorrow, I suspect a sort of roiling chaos, punctuated by rioting and destruction, possibly by a foreign invasion or threat by the Russkis. On the other hand, if this were done in a more orderly fashion, the transition would be greatly to our benefit. Of course, with no minimum wage, we'd see unemployment drop and productivity rise. With no "voluntary import quotas", we'd begin to see really fuel-efficient cheap cars come out of Detroit (or else!), and with all those IRS auditors running around unemployed, we'd have a plentiful supply of people to work in the Salt mines. (Actually, their skills would probably get them places in private collection agencies and accountancy firms). We'd also see free immigration, again, and a renewal of chances for the *REALLY* poor to make it to the top (or don't poor people count unless they've made it past our immigration quotas?). > Or would it follow the reality of our present economy in which > the top 500 corporations control 2/3's of the economy and > steadily control more year by year? Source please (hopefully including what you mean by "control"). Or a retraction. Even if they could, so what? For all I know, the "Fortune 1,000,000,000" would control a free economy, but it wouldn't bother me, much. Just being part of a listing in "Fortune" doesn't give them the ability to fix prices, or some common intent. > Such a situation of oligpolistic control hardly seems to match > the assumptions of free market efficiency. Why? Remember the "voluntary" quotas on the Japanese? Farm price supports? A host of other governmental interferences in the market for the benefit of the big players already there? > How did this come about? Was it only "government interference" > or a natural cycle in which the free market leads to its own > demise with economies of scale, bureacratization, and so forth? Suppose YOU answer that question. In a free market, "bureacratization" not outweighed by economies of scale means destruction by being nibbled to death by smaller, less bureaucratic firms. Economies of scale exist, but there's some evidence that the scale is normally limited. If you really think that the free market destroys itself this way, I invite you to come up with a list of monopolies that a) were stable b) charged unduly high prices (higher than startup firms). c) (most important) were regulated, shielded, controlled, backed, or formed by government. I'm still waiting for Wayne Christopher's response to this one -- he asserted that these monopolies would spring up a lot if not prevented. And now a quote for you, Tim. I know it sums up my feelings about what I've read of your articles, and I suspect some others on the net feel the same way. The quote is from Walter E. Williams, and occurs in "The State Against Blacks", Pg. 49: These labor market myths have maintained their popularity down through the ages primarily because they have served particular interest groups and because many other people are decent and have legitimate concern for their fellowman. However, truly compassionate policy requireds dispassionate analysis. Therefore the debunking of these and other labor market myths is an important ingredient toward that end. Oh yes. The chapter is entitled "Minimum Wage, Maximum Folly".