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  • #61
    Originally posted by Pheno
    Sorry bit of late editing to my other post so I'll repeat it again:

    So do you agree that the 3rd world is kept in poverty because of the protectionist policies of the west? I think that was the general jist of the arguments people were using.
    Yes and no. It is quite debatable that the protectionist policies alone are responsible for causing poverty in the 3rd world. I don't think you can just easily pin a single factor to poverty at all. It would mean ignoring all other important factors like wars, corruption, economic mismanagement, socialism, paternalism, brutal dictators, etc.

    I think the West is just an easy target for much of the blame since it once ruled Africa and had imperialistic influence in Asia. I think some of the countries who suffered greatly should bear some of the blame themselves. After all, America never blamed England for everything she did after she won the independence from England.

    The last thing the West needs is to go on the guilty trip all the time.

    Dan
    Major James Holden, Georgia Badgers Militia of Rainbow Regiment, American Civil War

    "Aim small, miss small."

    Comment


    • #62
      Originally posted by Pheno
      Anyway, redistribution payments are subsidies as far as I know. I'd can't think of any reason why it wouldn't be defined as such.

      Since the Family tax benefit is a subsidy aimed at low income workers, you could definitely argue that it is helping to price 3rd world countries out of the marketplace for cheep labour. Having lower tax rates for poor people is the same.

      Should we therefore get rid of it? If not, how can ethically justify it other than by saying people born in the west deserve to have more money than people born in the third world.

      It's a horrendously complicated question and involves ethics as much as economics. This is why I'm interested what Dan has to say about it
      Iīd have to disagree with the above. If redistribution of wealth within a society is deemed as de facto raising trade barriers. Isnt it the same as removing one of the main tools governments have to support economic growth.

      I dont think anyone would claim that workers in Australia, compete with third world countries on low wage.

      To redistribute wealth within a society is just a way of removing consumption from one individual to another. Actually it can a lot of sense to have the consumption done by a lower income group, depending on which country we are talking about.

      I totally agree with your definition of the trade problems in the world today. We helping our farmers producing crops, they really shouldnt bother producing. Adam Smith (he must be your hero Cheetah ) actually saw quite clearly that you should never weigh the producers needs over the consumer. I think we are doing that.

      Originally posted by Cheetah772
      Yes and no. It is quite debatable that the protectionist policies alone are responsible for causing poverty in the 3rd world. I don't think you can just easily pin a single factor to poverty at all. It would mean ignoring all other important factors like wars, corruption, economic mismanagement, socialism, paternalism, brutal dictators, etc.

      Dan
      I Agree you cant point on a single factor, but if we want to claim that the third world needs to help itself out of the mess they are in. The least we could do, is let them compete with us on fair terms.
      Last edited by Djarnis; 27 Jul 04, 02:46.
      I see why kyoto was unacceptable
      http://www.nationmaster.com/graph-T/env_pol_car_dio_199
      http://www.nationmaster.com/graph-T/env_co2_emi

      Comment


      • #63
        Originally posted by Djarnis
        Iīd have to disagree with the above. If redistribution of wealth within a society is deemed as de facto raising trade barriers. Isnt it the same as removing one of the main tools governments have to support economic growth.
        I don't think redistribution from rich to poor should be stopped, or even decreased - actually I really don't know enough to be sure about it either way! There are extremely good reasons to have redistribution payments if you believe in utility maximisation - because of decreasing marginal returns to wealth (ie poor people will value an extra dollar vastly more than a millionaire).

        Redistribution payments don't directly support economic growth though (unless you can explain how?). They do act as a shock absorber during economic slowdowns, but that's slightly different.

        Originally posted by Djarnis
        I dont think anyone would claim that workers in Australia, compete with third world countries on low wage.
        Could you explain why? I'll try to explain why I claim they do compete:

        Say, for example, there is a coal mine in Australia. Let's say coal mining in Australia is under pressure because workers are payed 40k per year, whereas in Indonesia they are payed 10k per year. However, due to more efficient machinery, Australian coal is produced only slightly more expensively than indonesia's. A wage subsidy on low payed workers could tip the balance and make Australian coal cheeper. That is direct competition as far as I can see.

        Don't get me wrong though - I am not equating rich->poor redistribution with the subsidies we pay to certain inneficient industries. They have completely different moral and economic justifications (or lack thereof!) I only talked about them because Temujin asked about them - normally I wouldn't put them in the same breath as industry specific subsidies.
        Last edited by Pheno; 27 Jul 04, 05:59.

        Comment


        • #64
          Originally posted by Pheno
          Say, for example, there is a coal mine in Australia. Let's say coal mining in Australia is under pressure because workers are payed 40k per year, whereas in Indonesia they are payed 10k per year. However, due to more efficient machinery, Australian coal is produced only slightly more expensively than indonesia's. A wage subsidy on low payed workers could tip the balance and make Australian coal cheeper. That is direct competition as far as I can see.
          I agree, i worked in an industry where this was the case. Most of the workers in our division were given tax assistance in this form but still the company had trouble keeping up in traditional markets due to competition from Asian manufacturers. BTW, we were told we just had to work harder and not expect any annual pay rises (which was originally a deal made with the workers before i got there so they would dump the union) so that the oweners could still afford the payments on their Jaguar, Dodge Viper and Porsche's, usual story
          Not lip service, nor obsequious homage to superiors, nor servile observance of forms and customs...the Australian army is proof that individualism is the best and not the worst foundation upon which to build up collective discipline - General Monash

          Comment


          • #65
            Originally posted by Pheno
            I don't think redistribution from rich to poor should be stopped, or even decreased - actually I really don't know enough to be sure about it either way! There are extremely good reasons to have redistribution payments if you believe in utility maximisation - because of decreasing marginal returns to wealth (ie poor people will value an extra dollar vastly more than a millionaire).

            Redistribution payments don't directly support economic growth though (unless you can explain how?). They do act as a shock absorber during economic slowdowns, but that's slightly different.
            I think we agree.
            When i say that redistribution of wealth can support growth its because the low income group have a different consumption than High income groups. Which can sometimes have an inoptimal consumtion (employment wise). But you are of course right that the total amount of consumption will stay the same. Unless the tax decrease is financed by budget deficits.

            The utility argument is also correct and a far stronger argument for wealth distribution.

            Originally posted by Pheno
            Could you explain why? I'll try to explain why I claim they do compete:

            Say, for example, there is a coal mine in Australia. Let's say coal mining in Australia is under pressure because workers are payed 40k per year, whereas in Indonesia they are payed 10k per year. However, due to more efficient machinery, Australian coal is produced only slightly more expensively than indonesia's. A wage subsidy on low payed workers could tip the balance and make Australian coal cheeper. That is direct competition as far as I can see.

            Don't get me wrong though - I am not equating rich->poor redistribution with the subsidies we pay to certain inneficient industries. They have completely different moral and economic justifications (or lack thereof!) I only talked about them because Temujin asked about them - normally I wouldn't put them in the same breath as industry specific subsidies.
            I agree that in your example it could be considered a subsidy. Iīm just not certain the workers wage is to be compared to a commodity. I dont know a lot about Australia, but in many countries the wage and the workforce is highly regulated. By unions, government etc.
            Therefore i donīt think that u can equate a lower tax for lower income, with a lower salary. I think the tax cut will equate a higher consumtion by the low income group instead.
            The worker will still cost 40k but will have a consumtion of
            40k - taxes + tax decrease.

            If your arguments is valid, you could argue that you are influencing the free market by redistribution og wealth within a society.
            As i see it as long as the consumption is the same, it really doesnt matter (for the market) who the end user of the wealth is.
            Therfore i dont think u can use market considerations, as an argument agaisnt wealth redistribution.

            I think we agree, in principle, its just a matter interpretation.

            Originally posted by Temujin
            I agree, i worked in an industry where this was the case. Most of the workers in our division were given tax assistance in this form but still the company had trouble keeping up in traditional markets due to competition from Asian manufacturers. BTW, we were told we just had to work harder and not expect any annual pay rises (which was originally a deal made with the workers before i got there so they would dump the union) so that the oweners could still afford the payments on their Jaguar, Dodge Viper and Porsche's, usual story
            Temujin When you recieve the tax benefit, do your available income (the amount you can spend each month) rise or stay the same?
            Last edited by Djarnis; 27 Jul 04, 06:42.
            I see why kyoto was unacceptable
            http://www.nationmaster.com/graph-T/env_pol_car_dio_199
            http://www.nationmaster.com/graph-T/env_co2_emi

            Comment


            • #66
              Originally posted by Djarnis
              The worker will still cost 40k but will have a consumtion of
              40k - taxes + tax decrease.
              You're half right and I'm half wrong! But you have actually gone to the opposite extreme What happens is any tax or subsidy is spread between the producer and the consumer - in proportions relative to their supply/demand elasticity. So that if government puts a tax on fuel, some of that is passed on to car drivers in the form of higher prices and some is taken by petrol companies cutting back on production to more efficient levels, or by forcing less efficient companies out of business.

              I should have made what I said more technically correct, but I didn't want to confuse things! But the effect of redistributions lowering the price of labour still holds.

              Originally posted by Djarnis
              If your arguments is valid, you could argue that you are influencing the free market by redistribution og wealth within a society.
              As i see it as long as the consumption is the same, it really doesnt matter (for the market) who the end user of the wealth is.
              Yes I am arguing you are influencing the free market It isn't consumption, but production that I'm talking about. Highly payed forms of work (say Java programmers) will not get any subsidy. Less highly paid work (say sheep farming) will be subsidised and there will be more sheep farmers and less Java programmers than there would be under a free market. From a pure economics point of view, this is a similar effect to direct subsidising of sheep farming.

              Originally posted by Djarnis
              I think we agree, in principle, its just a matter interpretation.
              Yes it's just a minor technical point, I'm all in favour of redistribution payments

              Comment


              • #67
                Originally posted by Pheno
                You're half right and I'm half wrong! But you have actually gone to the opposite extreme What happens is any tax or subsidy is spread between the producer and the consumer - in proportions relative to their supply/demand elasticity. So that if government puts a tax on fuel, some of that is passed on to car drivers in the form of higher prices and some is taken by petrol companies cutting back on production to more efficient levels, or by forcing less efficient companies out of business.

                I should have made what I said more technically correct, but I didn't want to confuse things! But the effect of redistributions lowering the price of labour still holds.


                Yes I am arguing you are influencing the free market It isn't consumption, but production that I'm talking about. Highly payed forms of work (say Java programmers) will not get any subsidy. Less highly paid work (say sheep farming) will be subsidised and there will be more sheep farmers and less Java programmers than there would be under a free market. From a pure economics point of view, this is a similar effect to direct subsidising of sheep farming.


                Yes it's just a minor technical point, I'm all in favour of redistribution payments
                I see your point, but if the tax decrease is for all low income jobs, u canīt claim that you are subsidyzing an industry.
                It doensīt really matter because, in effect you are. Of course you are right you are in effect making it possible to get an abnormal profit (wage) in certain an industries. Some producers will use that to lower prices. Thereby undermining competitors who doesnīt have the advantage of a work force with tax decrease.

                I guess you can only use the economic arguments for a free market, so far. I think we reached the border where economic arguments should yield to other considerations.
                I see why kyoto was unacceptable
                http://www.nationmaster.com/graph-T/env_pol_car_dio_199
                http://www.nationmaster.com/graph-T/env_co2_emi

                Comment


                • #68
                  Originally posted by Djarnis


                  Temujin When you recieve the tax benefit, do your available income (the amount you can spend each month) rise or stay the same?
                  Not sure if i'm interrepting the Q properly, but yes it does risein certaian cases, if the wage is more for one month than the other i may get say 5% less of the benefit but have earned say 10% more for that month. depending on earnings you may be entitled to 100% through to 10% of the benefit. So if the wage goes up 10% you may get a decrease in benefit of half that amount. so you can be up 5% at month end
                  Not lip service, nor obsequious homage to superiors, nor servile observance of forms and customs...the Australian army is proof that individualism is the best and not the worst foundation upon which to build up collective discipline - General Monash

                  Comment


                  • #69
                    Originally posted by Temujin
                    Not sure if i'm interrepting the Q properly, but yes it does risein certaian cases, if the wage is more for one month than the other i may get say 5% less of the benefit but have earned say 10% more for that month. depending on earnings you may be entitled to 100% through to 10% of the benefit. So if the wage goes up 10% you may get a decrease in benefit of half that amount. so you can be up 5% at month end
                    So its a way of securing a certain income, even if the wage decreases.
                    Is that correct understood?
                    I see why kyoto was unacceptable
                    http://www.nationmaster.com/graph-T/env_pol_car_dio_199
                    http://www.nationmaster.com/graph-T/env_co2_emi

                    Comment


                    • #70
                      Originally posted by Djarnis
                      So its a way of securing a certain income, even if the wage decreases.
                      Is that correct understood?
                      Yeah that is correct
                      Not lip service, nor obsequious homage to superiors, nor servile observance of forms and customs...the Australian army is proof that individualism is the best and not the worst foundation upon which to build up collective discipline - General Monash

                      Comment


                      • #71
                        Originally posted by Temujin
                        Yeah that is correct
                        Ok then Pheno is right it is a form of subsidy.
                        I hope cheetah has stopped reading this thread.
                        I see why kyoto was unacceptable
                        http://www.nationmaster.com/graph-T/env_pol_car_dio_199
                        http://www.nationmaster.com/graph-T/env_co2_emi

                        Comment


                        • #72
                          Originally posted by Djarnis
                          Ok then Pheno is right it is a form of subsidy.
                          I hope cheetah has stopped reading this thread.
                          No, I haven't stopped reading this thread, it's just that the term, "redistribution," is very disturbing to me. That is why I am in favor of a flat-out tax rate. Less complicated and a fairer way to collect the tax revenues.

                          Dan
                          Major James Holden, Georgia Badgers Militia of Rainbow Regiment, American Civil War

                          "Aim small, miss small."

                          Comment


                          • #73
                            Originally posted by Cheetah772
                            No, I haven't stopped reading this thread, it's just that the term, "redistribution," is very disturbing to me. That is why I am in favor of a flat-out tax rate. Less complicated and a fairer way to collect the tax revenues.

                            Dan
                            I know it would be disturbing to you, but we have actually given you a sound economic argument against it.
                            That was why i was hoping you hadnīt read it.

                            The flat out tax rate, goes against the utility argument Pheno posted earlier. Therefore it actually wouldīt be fairer.
                            I see why kyoto was unacceptable
                            http://www.nationmaster.com/graph-T/env_pol_car_dio_199
                            http://www.nationmaster.com/graph-T/env_co2_emi

                            Comment

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