Low Taxes Do What? [WSJ:Sowell]

Wall Street Journal ^ | Feb 24, 2004 | Thomas Sowell

[The Raven]

Some years ago, the distinguished international-trade economist Jagdish Bhagwati was visiting Cornell University, giving a lecture to graduate students during the day and debating Ralph Nader on free trade that evening. During his lecture, Prof. Bhagwati asked how many of the graduate students would be attending that evening's debate. Not one hand went up.

[The Raven]

Mr. Sowell, a senior fellow at the Hoover Institution, is the author, most recently, of "Basic Economics: A Citizen's Guide to the Economy, Revised and Expanded," just published by Basic Books.

[Phyto Chems]

WOW can this guy write, so a simple person can understand something, THANK YOU Dr. Sowell

[Cronos]

Wage rates per unit of time are not the same as labor costs per unit of output. When workers are paid twice as much per hour and produce three times as much per hour, the labor costs per unit of output are lower. That is why high-wage countries have been exporting to low-wage countries for centuries. An international study found the average productivity of workers in the modern sector of the Indian economy to be 15% of that of American workers. In other words, if you paid the average Indian worker one-fifth of what you paid the average American worker, it would cost you more to get the job done in India.

In particular industries, such as computer software, Indian workers are more comparable, which is why there is so much outsourcing of computer work to India. But virtually every country has a comparative advantage in something, whether it is a high-wage country or a low-wage country.

For s/w, Indians have comparable productivity and are cheaper, so it's viable.  For manufactured goods, China is cheaper, but it's artificially cheap.  It'sproductivity is low.  If the yuan/renmimbi was brought to it's actualy value of about 2yuan = $1 instead of 8.4 : 1, that competitiveness would vanish.  If it's even reduced to 6:1 then we'd see something reasonable.

[Cronos]

What Mr. Reagan's "tax cuts for the rich" actually cut were the tax rates per dollar of income. Out of rising incomes, the country as a whole -- including the rich -- paid more total taxes than ever before.

Exactly, a lower tax rate is a more affordable tax rate.

[tm22721]

I predict that the Democrats will successfully use the 'job exports' phobia to win this fall.

BUMP

[Oldeconomybuyer]

Econ 101 bump.

[Stallone]

Because Socialists don't think (they react), the impact of taxes on their own lives and the lives of their devotees has never been fully understood by these primitives.

Consider this:

If one is poor, AND DESIRES TO BE WEALTHIER, it will happen over time.

If there are higher taxes, it will take more time, as government intervenes to shutdown your wealth accumulation and stem your growth.

Lower taxes means achieving your wealth goals sooner.

What part of this escapes the Communist monkeys?

The part about desiring wealth.

Socialists don't want wealth themselves - they only want to prevent YOU from acquiring it.

Socialism is simply disguised envy.

[The Raven]

The Dem's effectively use "You don't know - what you don't know" as a tactic. They even use it with the war - by suggesting their way would have produced far better results. Or the economy - by lowering taxes - somehow things got worse?

They point to Clinton's economy and say it was great. They don't know how much better it would have been if he wasn't President.

But they had a big problem when Carter was contrasted with Reagan. The big lie was exposed.

[The Raven]

>>>Socialism is simply disguised envy.

How about greed......envy comes before they actually confiscate wealth.

[Stallone]

The Clinton economy?

Clinton inherited a booming economy...and handed in one in full recession.

You won't hear the truth from the Socialist media because they are filled with anti-Christ DNC members.

[wita]

Socialism drowns the very nature and spirit of man. You cannot support a family on the negative and demeaning philosophy that you aren't worth what other people are and that increasing your Talents "as seen in the Bible", is not a truthful philosophy in direct opposition to the worldly one called socialism. It is, to quote one who knows, one of the undeniable facts of life.

[laredo44]

The shame of it is capitalism needs to be taught in every school at every level every day. But it isn't that is why the collectivists' sophistry continues to beguile a seemingly always ignorant public.

Tax rates and revenues are connected just like any other rate/revenue relationship. If higher rates translated into higher revenues, Ford would be charging $1 million per Taurus. But it can't and it knows why. Even in unregulated monoply situations there is a price that maximizes revenues.

[The Raven]

>>The shame of it is capitalism needs to be taught in every school

Instead of socialism? The communists needed to "teach" their propaganda, as do the socialists. The degree of difficulty is high, since the ideology consistantly produces a result opposite of what's intended - it should be a college level course.

[proxy_user]

The same thing is true of India. If the rupee and the dollar were aligned by purchasing power, there would be 15 rupees to a dollar, not 47.

But investors believe the US is a better place to put their money....for now.

[frossca]

Nobel Laureates Milton Friedman and Gary Becker are other such exceptions in addressing a wider general audience, rather than confining what they say to technical analysis addressed to fellow economists and their students.

Of course, modesty prevented him from doing so, but the author could have added his own name to this depressingly short list.

[roses of sharon]

"Demagoguery beats data".

Lou Dobbs of CNN has a new show title.

[Cacique]

ping

[Sam Cree]

"Mr. Sowell, a senior fellow at the Hoover Institution, is the author, most recently, of "Basic Economics: A Citizen's Guide to the Economy, Revised and Expanded," just published by Basic Books."

If you've read it, how is it? Thanks for the post, btw.

[justshutupandtakeit]

Yeah, but who cares the only thing that matters is how I "feel" about these issues.

Here Dr Sowell tries vainly to have a ray of light penetrate the deliberately spread darkness of the RATmedia liars. Even here there are those claiming that NAFTA has cost us jobs.

What chance does the voice of truth have against the cacophony of lying ignorance spread 24/7 by the RATmedia?