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Economics 101: Wealth and Money

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  • It would seem that taxation is only one of many factors that would effect GDP. How taxes are spent being a key component of the effect of taxes on suppressing private sector productivity. Infrastructure spending for example could expand opportunities for businesses to expand. The lag between that spending and it's effect could be decades apart and get lost in the noise of other forces acting on the economy.

    Another issue is that taxation through inflation and wage suppression would be extremely difficult to estimate. For example immigration policy can suppress wages and increase profits in some sectors stripping wealth away from some segments of the population and redistributing it to others. It is likely however that the lag between policy changes and their effect would again be outside the range of any policy time frame.

    The point would be that you could measure the historical effect of tax rates on tax revenues but it is unlikely that it would be a useful guide for any particular policy. If the Laffer curve has any utility it would be as an estimate of when tax rates were approaching a dangerous level because of short term effects. There has to be a today for there to be a tomorrow. The cost of two low a tax rate would be social disintegration. The balance between GDP and social cohesion may be fairly indirect most of the time.

    We hunt the hunters


    • Bump for reference.


      • Once again, bumped for reference ...


        • Originally posted by Cambronnne View Post

          Perhaps, but who is in the best position to determine the value of the CEO?
          The people actually paying his salary and hoping he makes them money? Or us?

          I am sure that we could find a lot of people to play LeBron James' position for less money, but does that mean the replacement would be anywhere near as valuable?

          I am stunned at how much CEOs are paid too (the same is true of pro athletes), but accept that the people who voluntarily enter into those agreements are in a far better position than I am to determine if the agreement is worth it.
          Except that it's the customers' money that pays for it all, and the Law of Lowest Common Denominator says that yes, we can find highly talented people to do the same job for less.

          Take the Dead Today Test: if the person you're paying so highly dies today, will the world continue? Will the company stay in business? Will the sport continue? If the answer is yes, then the person isn't worth it. Especially given the salaries and working conditions of those who actually do all of the work.
          Quis Custodiet Ipsos Custodes? Who is watching the watchers?


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