"When an investment is made, whether to build a railroad or to open a new restaurant, the first money is spent hiring people to do the work"

If, at this time and point in the business cycle, there is a glut in productive capacity, no fresh ideas (similar to computers) likely to generate big profits, great fear of job loss, etc., what makes you think that people benefiting from a capital gains tax cut would invest in new or expansive enterprise? Rather, they are more likely to invest counter-cyclicly (depressed real-estate), or defensively (government securities) - investments which protect their wealth but do nothing for the larger economy.

There is already evidence of this (see, for example, the Shorenstein funds).

Among the suggestions being made for getting the American economy moving up again is a reduction in the capital gains tax.
But any such suggestion makes people on the left go ballistic.

Yet one more reason to keep bringing it up, if for one other reason than it drives them nuts.

Larry, Larry, Larry... where do I begin?

First, your comments seem to indicate that you have a limited concept of the breadth and variety of productive investment opportunities available out there for individuals interested in putting their money (capital) to work, if only the penalties (taxes) for being successful weren't so high.

Secondly, the whole idea of decreasing the tax penalty on successful investment is to pull capital out of it's current, "safe" resting places, "investments which protect their wealth but do nothing for the larger economy", and move it into riskier, but more productive uses.

Why is the financial disincentive of punitive taxation such a hard concept for Liberals to understand? What's so hard to understand about the concept: "That which you tax you get less of; that which you subsidize you get more of"?

Paragraph one. I do have a limited concept of such opportunities. But it's an empirical question. I assume the experts, such as Greenspan and Rubin and many others more acceptable to you, are trying to decide whether you're right.

Paragraph 2. That may be the idea but that may not be the result. Lots of ideas are not very good - as we all know. That was the point of my response to the article.

Paragraph 3. Well Doc, that makes me laugh. I barely understand enough to speak for myself let alone for the large class of people known as "Liberals". And of course, there's a bit of tongue in cheek, to your - I'm not sure question is the proper description.

But let me give it a try. I don't see government programs as an evil in the way modern conservatives seem to. It's much more nuanced. And since government programs are financed by taxation I don't see taxation as necessarily evil. Nor do I see competitive capitalism as without fault. It too is nuanced. I've been giving this a lot of - consideration? - I don't want to seem too pompous. And one of the things I really enjoy about this site are the clever and beautiful ways people find to express themselves so;

"Democratic capitalism is the worst system ever invented by man - except for all the others"
attributed to Churchill

"Democratic Capitalism is the best of all possible worlds"
Dr. Pangloss, updated

The first is me, the second you.