Posted on 12/10/2012 10:48:27 AM PST by ksen
Dean Baker responds to inconsistent worries about robots displacing labor and the ability of a smaller number of workers per retiree to support Social Security:
... we seem to be seeing rapid improvements in productivity growth ... that are drastically reducing the demand for labor. Yet all the gains from these improvements seem to be going to owners of capital as the labor share of output has been falling sharply.
The distributional issue ... is extremely important, both for workers who are not seeing gains in living standards, and also for the economy as a whole, since a continual upward redistribution of income will lead to stagnation as a result of inadequate demand. However, it is worth noting that the concern that rapid productivity growth will lead to less demand for labor is 180 degrees at odds with the often repeated concern that productivity growth will be inadequate to sustain rising living standards in the future.
... If you are concerned that a falling ratio of workers to retirees is going to make us poor then you are not concerned that excessive productivity growth will leave tens of millions without jobs.
It is possible for too much productivity growth to be a problem, if the gains are not broadly shared. It is also possible for too little productivity growth to be a problem as a growing population of retirees impose increasing demands on the economy. But, it is not possible for both to simultaneously be problems. ...
I'm not worried about low productivity growth and stagnation. Since we are in the midst of it, it's hard to see the full impact of the digital revolution, but I believe it's a bigger force for productivity growth than we realize. There are big changes in our future as robots/machines become better and better at displacing people. However, that growth will be more unequal than ever, and it's the distribution of the gains from growth that I worry about.
In the future, we'll have the ability to produce enough stuff, and that ability won't stop growing. The problem will be distribution, and our inherently selfish nature makes it an extremely difficult problem to solve.
In a free society with a rational culture and a just government,growth in productivity of capital goods is crucial to capital accumulation which is enormously beneficial to economic progress and prosperity of the nation as a whole. Growth in productivity of capital goods is increased by:
1) economic freedom and respect for property rights
2) free international trade
3) greater division of labor
4) population growth
5) existence of a free market price system
6) technological progress
7) uniformity of profit principle.
Growth in the productivity of capital goods is decreased by:
1) taxation of profits
2) subsidies
3) antitrust laws
4) prounion legislation
5) environmental legislation
6) government regulations.
In the economy as a whole,growth in productivity of labor helps to increase production, which leads to increase in aggregate supply, which leads to a decrease in average prices, which leads to a rise in real wage rates for the average worker which leads to an increase in the standard of living for the average worker.Growth in the productivity of labor is historically responsible for such beneficial effects as elimination of child labor,improvement in working conditions,rise in real wages, and shortening of hours of work. Growth in the productivity of labor is increased by:
1) saving and investment and other actions by businessmen and capitalists.
2) increases in supply of capital goods
3) capital accumulation
4) increases in the ecomomic degree of capitalism ( ratio of aggregate productive expenditure to aggregate sales revenues)
5) economic freedom and respect for property rights
6) increases in relative demand for and production of capital goods compared to consumer goods
7) technological progress.
Growth in the productivity of labor is decreased by:
1) government interventionism
2) unions and pro-union legislation
You mean this Hayek?
There is no reason why, in a society which has reached the general level of wealth ours has, the first kind of security should not be guaranteed to all without endangering general freedom; that is: some minimum of food, shelter and clothing, sufficient to preserve health.
. . .
Nor is there any reason why the state should not help to organize a comprehensive system of social insurance in providing for those common hazards of life against which few can make adequate provision.
Do you realize that should you win your beloved tax increases, that the victory will be pyrrhic?
The wealthy will always find a way to avoid those tax rates, even if it is to stop working, move abroad, change the nature of their earnings streams, or reinvest in their business until tax rates decline. Nobody signs up for a lashing by the tax man.
But the reduced economic activity will reduce revenues to the Treasury (we’re on the right-hand side of the peak of the Laffer Curve). So your favored constituencies will have:
1) Fewer jobs as the wealthy pull in their horns and reduce hiring further,
2) Less social services because government receipts will decline, and
3) The wealth of the middle class, tied up in 401Ks and housing will be destroyed.
You can’t pour fuel on the floor of an ammo dump, light a match and expect the results to be favorable. Harm the wealth creators and you get less wealth. Duh.
Government regulation and the rise of unions did those things. I've never seen it claimed that worker productivity was responsible for those reforms.
Did you purposefully avoid the point?
The point was about how government bureaucrats cannot ever be more capable of deciding how to allocate goods and services in an economy.
Having secured a FREE MARKET ECONOMY, I don’t have a problem with a social safety net of certain designs.
At least if you get the government out of the way of productive people, you can HAVE a social safety net.
You act as if we are going back to pre-Kennedy tax rates. We're not. We're going back to 1990s tax rates and the economy hummed just fine even after the taxes were originally raised to those level in the early 90s.
Trying to equate Clinton-era tax rates with Stalin and Pol Pot is just ridiculous.
Slippery slope. When this amount of tax increases fails, how much more will you raise taxes (which will also fail) until you stop?
Do you believe tax increases cause economic growth?
What is the point of the tax increases anyway?
The amounts raised even by the most optimistic estimates are NOTHING compared to the debt, deficit or spending of the 0bama Administration. They are so small, they are irrelevant.
The only thing I can figure is that they are 1) punishment for success, and 2) vote-getters.
Because there’s really no money in the tax increase compared to any relevant thing.
No. There is no statistically significant impact on economic growth and marginal tax rates, good or bad.
If taxes were 100%, what would happen to GDP?
To raise revenue to pay for spending. Why?
Who cares? No one is talking about 100% tax rates. And taxes 100% of what?
I guess since we’ve now moved to asking questions to try and get a “gotcha!” let me ask you:
If a nation goes to war should it pay for it?
Despite Major Tax increases, California Revenues in Freefall
http://www.thegatewaypundit.com/2012/12/despite-major-tax-increases-california-revenues-in-freefall/
December 4, 2012
Cut Tax Rates, Boost Tax Revenues
http://www.realclearmarkets.com/articles/2012/12/04/cut_tax_rates_boost_tax_revenues_100020.html
How to Increase Revenue Without Increasing Taxes
Amanda Reinecker 66 comments
July 7, 2011
Did you know that it’s possible to increase tax revenue without increasing taxes? It’s true. And a recent report from the Congressional Budget Office confirms it.
Writing for The Washington Times, Heritage tax policy analyst Curtis Dubay explains the CBO’s latest findings:
The CBO reported that if Congress simply left taxes as they are today, tax revenues would return to normal levels -18 percent of the gross domestic product – in just six years … and keep growing after that. Eventually we would need to cut taxes to keep them from reaching an all-time high.
How is this possible? Through renewed economic growth. Once it takes hold, taxpayers earn more and move into higher tax brackets. At the same time, job creation rebounds, creating more taxpayers than before. And that combines to pour more and more money into the federal coffers.
Yet, despite the CBO’s “objective, nonpartisan” analysis, liberals in Congress continue to move full-steam ahead on tax hikes as they debate their conservative counterparts about raising the $14.3 trillion debt ceiling.
Then why all the sackcloth and ashes over the impending tax increases? I mean if it's not enough to make a difference to the deficit then how can it be enough to destroy the economy?
While the plan would force millionaires and billionaires to part with more of their money, Congress’ Joint Committee on Taxation estimated that if enacted, legislation reflecting Obama’s proposal would collect $47 billion through 2022 — a trickle compared with the $7 trillion in federal budget deficits projected during that period.
Dude, $47B / $7T = 0.6%, less than one percent of 0bambi’s deficits.
Where’s the real plan to fund 0bambi’s massive spending splurge?
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