Keynes Vs. Hayek

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Old Aug 24, 2011, 8:51pm   #25
 
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Re: Keynes Vs. Hayek

If the bigwigs of USA, UK, France etc could stop mouthing off on this subject of which they know next to nothing and have a look at the better economic examples like Korea, Singapore. Hong Kong etc. then they might get the ball rolling in the right direction imho.

Gordon Brown, that self proclaimed guru, is now thankfully quiet. So much for his 5 golden principles etc.
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Old Aug 24, 2011, 9:13pm   #26
 
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Re: Keynes Vs. Hayek

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Originally Posted by Atilla View Post
No you understood totally wrong. Your mind is like smash potatoes with a mixture of peas. Keep taking the medicine...
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Obviously if you have debt you wouldn't substitute leisure for work until debt is paid off. Where did this come from...
You stated that when the books are balanced, that you would cut taxes. This equates to cutting income. The debt isn't going to be paid off any time soon, so why would you even consider cutting taxes (income) when times are good? It's the opposite of what you should do, because as you point out debt needs to be paid off. In fact taxes should be raised in good economic times.

"Obviously if you have debt"... well the government does. This is a fact. Any discussion about not having the debt is irrelevant. So again, why cut taxes just because on a particular year, our government might be running a surplus? If you're suggesting that balanced books means there is no total debt either, then your point again is irrelevant, because we can't be in that position for a long time, if ever.

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The point is as people become well off and cash rich by working harder they don't do more hours. They simply work less hard. Someone earning less money works weekends and BHolidays and in some cases two jobs.
Are we having a discussion about what people do, or what people SHOULD do? Suppose times are good and I can earn £20 per hour for work, and I am aware that in a few years I may not be able to earn much or at all, AND I have debts. Then yes I work harder now while times are good and pay off my debt. I don't have any debt, eliminating any debt asap is one of my priorities, and I'll work 3 jobs to pay it off if I need to. Again, as you say some people in that position will work less hard. They may have to suffer the repercussions of that choice. We're all suffering the repercussions now of our governments 'leisure time'

It's interesting that I gave an analogy comparing your philosophy of what governments should do (cutting taxes etc), with an individual in a similar position. And on reading it you realise it's a ridiculous philosophy for the individual. But for some reason your head is clouded with economic concepts, which stop you from seeing the obvious. The policy that you espouse IS ridiculous. Whether it be for an individual working, or for a government.
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Old Aug 24, 2011, 9:20pm   #27
 
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Re: Keynes Vs. Hayek

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Originally Posted by spreader_legger View Post
I think that the conservatives critique over the period was better to cut taxes and let the private sector allocate resources as opposed to wasteful public spending ..... where the country won't see any future returns
Well my taxes have gone up. PLus with the high inflation, my money has been devalued which compounds the effect. And yet wasteful spending still seems to be going strong.
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Old Aug 24, 2011, 9:27pm   #28
 
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Re: Keynes Vs. Hayek

No doubt ... but it takes time to reform public sector & change the overall culture.

PS ... I am by no means a Tory, but neither am I a Blairite

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Well my taxes have gone up. PLus with the high inflation, my money has been devalued which compounds the effect. And yet wasteful spending still seems to be going strong.
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Old Aug 24, 2011, 9:40pm   #29
 
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Re: Keynes Vs. Hayek

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Originally Posted by Shakone View Post
You stated that when the books are balanced, that you would cut taxes. This equates to cutting income. The debt isn't going to be paid off any time soon, so why would you even consider cutting taxes (income) when times are good? It's the opposite of what you should do, because as you point out debt needs to be paid off. In fact taxes should be raised in good economic times.




Its not as simple as that. Different tax cuts will have different stimulative effects. You may find a situation that through tax cuts you actually stimulate the economy and increase revenue. This is what is referred to as the infamous Laffer curve.

You can for instance pursue a policy similar to Ireland's and attract FDI, foreign investments increased jobs + exports by pursuing a low corporation tax strategy. Indeed the Irish vehemently defended this during their IMF bailout package

Plenty other examples abound ..... but I guess you get the drift
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Old Aug 24, 2011, 9:52pm   #30
 
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Re: Keynes Vs. Hayek

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Originally Posted by Shakone View Post
You stated that when the books are balanced, that you would cut taxes. This equates to cutting income. The debt isn't going to be paid off any time soon, so why would you even consider cutting taxes (income) when times are good? I fail to understand. How can the books be balanced if one has debt. Applies to Gov or Individuals. It's the opposite of what you should do, because as you point out debt needs to be paid off. In fact taxes should be raised in good economic times. Why? If you run large surplus like Japan or China you are taking money out of the system. Balanced books is the objective not surplus or defecits. You may choose to raise taxation in good times and spend in recession but this leads to boom bust scenarios.

"Obviously if you have debt"... well the government does. This is a fact. Any discussion about not having the debt is irrelevant. So again, why cut taxes just because on a particular year, our government might be running a surplus? If you're suggesting that balanced books means there is no total debt either, then your point again is irrelevant, because we can't be in that position for a long time, if ever. Let's apply your arguement to what today. If you spend more than you earn you raise debt. If you then complement that by taxing less you are encouraging greater disparity between earning and expenditure -> even more debt. This is why Keynesian approach fails. Politicians will spend out of recession and continue spending on in a boom cutting taxes. You can't have it both ways.

What is your objection to;
1. Raising taxes
2. Reducing spending

to pay off debt. What part of the logic do you object to. The rest of the geezers banging their drum about lower taxes making people work harder is tosh.

Think how you would respond to the stimulus. (assuming you have no debt but savings too. Would you really work twice as hard)?


Are we having a discussion about what people do, or what people SHOULD do? Suppose times are good and I can earn £20 per hour for work, and I am aware that in a few years I may not be able to earn much or at all, AND I have debts. Then yes I work harder now while times are good and pay off my debt. Look mate - If you have debt you are not well off alright. Have can you class people in debt as well off??? If your assets > liabilities and you are in positive equity then you're ok I don't have any debt, eliminating any debt asap is one of my priorities, and I'll work 3 jobs to pay it off if I need to. Again, as you say some people in that position will work less hard. They may have to suffer the repercussions of that choice. We're all suffering the repercussions now of our governments 'leisure time'. So when will you ease off work? Ask this question will you then continue working as hard. Would more money make you work harder. Taxes go down are you going to say - oh taxes went down I can earn more money. Don't know how much you earn but let's say you earn £50-100K and this range is not unusual to many people in Banking... +bonuses on top. You going to want to work on BH and weekends doing OT?

It's interesting that I gave an analogy comparing your philosophy of what governments should do (cutting taxes etc), with an individual in a similar position. And on reading it you realise it's a ridiculous philosophy for the individual. But for some reason your head is clouded with economic concepts, which stop you from seeing the obvious. The policy that you espouse IS ridiculous. Whether it be for an individual working, or for a government. No you didn't. You conjured up some daft assumption with debt saying you are well off.
Giving up the will to live...

Look policy is simple...

1. Raise Taxes
2. Reduce Spending
3. Mild inflation > interest rates

Hey presto debt paid off in no time.

Anything else is pissing in the wind...
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Old Aug 24, 2011, 9:55pm   #31
 
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Re: Keynes Vs. Hayek

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Originally Posted by spreader_legger View Post
Its not as simple as that. Different tax cuts will have different stimulative effects. You may find a situation that through tax cuts you actually stimulate the economy and increase revenue. This is what is referred to as the infamous Laffer curve.

You can for instance pursue a policy similar to Ireland's and attract FDI, foreign investments increased jobs + exports by pursuing a low corporation tax strategy. Indeed the Irish vehemently defended this during their IMF bailout package

Plenty other examples abound ..... but I guess you get the drift
Agreed. Which in my opinion is why you need to reduce taxes and stimulate when times are bad, not increase. Also since you can't always reduce taxes, or they would converge to zero, you have to have a time when you increase taxes. When is the time to do this?

In my opinion the best time to do that is when times are good, booming in fact. It will it will have far less of a negative impact at that time, and the revenues will be increased more dramatically then. Which is why I disagreed with Atilla, that you cut taxes when the yearly books are balanced and debt outstanding.

Last edited by Shakone; Aug 24, 2011 at 10:09pm.
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Old Aug 24, 2011, 9:58pm   #32
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Re: Keynes Vs. Hayek

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Originally Posted by Atilla View Post
Giving up the will to live...

Look policy is simple...

1. Raise Taxes
2. Reduce Spending
3. Mild inflation > interest rates

Hey presto debt paid off in no time.

Anything else is pissing in the wind...
Are you a simpleton?
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