(10-10-2013, 02:13 PM)Clement Wrote: [ -> ]I think more along utilitarian lines. The rich sometimes seem to forget that the poor are still potential customers at the very least. There is no way an economy can prosper if a larger proportion of wealth is in the hands of a smaller proportion of people. The rich can have the resources to invest and help that way, but too much investment and too little consumption leads typically to asset bubbles and bridge to nowhere situations.
Agree... that's part of the self-enlightened interest process
(10-10-2013, 02:11 PM)freedom Wrote: [ -> ]Quote:In short you don't believe in cross subsidising while I think the able should help the less able. Not to the extent that it becomes unsustainable.
What you are saying is not true. The able ones already subsidise the less able ones by paying higher tax. But how much more should the able ones subsidise the less able ones? Or how much are you proposing as a threshold for sustainability?
Or another question, how does the able ones subsidising more to the less able ones benefit the society as a whole? Transferring wealth from the able ones to the less able ones does not produce wealth. No significant amount of money is hidden under someone's pillow. Not transferring additional money from the able ones to the less able ones does not prevent the money from circulating in the system.
My ultimate goal for the government is not to transfer or distribute wealth(that's a small part of their job scope, as most people are able to provide for themselves), but to provide a platform for everyone to utilize their ability to contribute to the society(the most important job scope).
Paying higher tax in absolute terms or %? I think it is right that the rich has to pay higher % of tax. You know the system is wrong when the tea lady pays a higher tax. And as discussed, poor spend much more on their consumption and food... so when we talk about higher tax rates, I'm talking about the % tax vs total income, including consumption tax and passive income... not just a simple tax rate.
You are misled by the phrase "transfer of wealth". When the able help the less able to fish, the society as a whole benefits. In physiological terms, if a disabled is able to walk and take care of himself, we will be able to free up resource for caretakers. And the disabled can contribnute to societies in ways we cannot phantom. That is unleashing the human potential
Wealth per se has to be created by one's innovativeness and hard work. This is the basis of meritocracy which I have no issue with. But we need to help those less fortunate to
at least stand up to be on a fair platform to compete... am not suggesting getting them a ferrari to ride. I believe the children of the poor are just as smart as the rich if we can unleash the potentials by creating a better environment. I don't believe our potential (not smarts) is determined by genes, but by opportunities and environment. I believe people don't choose to be sick but wants a better life if they have a plausible go at it.
But if the society don't help them, those are massive opportunities lost. And the society might just be the loser. Steve Jobs wouldn't have a chance in Singapore's system. So was Sim Wong Hoo. But both flourished in US where opportunities and environment help even those who have nothing.
(10-10-2013, 02:24 PM)freedom Wrote: [ -> ] (10-10-2013, 02:13 PM)Clement Wrote: [ -> ]I think more along utilitarian lines. The rich sometimes seem to forget that the poor are still potential customers at the very least. There is no way an economy can prosper if a larger proportion of wealth is in the hands of a smaller proportion of people. The rich can have the resources to invest and help that way, but too much investment and too little consumption leads typically to asset bubbles and bridge to nowhere situations.
May I ask a question? How could investment not turn into consumption?
Does the investment not provide job and income for the people? Does the investment not produce tax for the government?
To me, every investment eventually turns into consumption somewhere. Of course, some stimulate more consumption and some stimulate less. But no investment curbs consumption.
Sorry for being unclear, i mean a lower income person would have a large propensity to consume and therefore putting money in his pocket tends to lead to more consumption. A poor person might spend up to 80% of his annual income on essentials and other lifestyle needs driving up aggregate demand, while i doubt a billionaire consumes even 10% of his annual income (except maybe Roman Abramovich and Larry Ellison). Therefore the feedback mechanism is stronger when wealth is put in the hands of the poor, within reason of course.
(10-10-2013, 02:24 PM)freedom Wrote: [ -> ]May I ask a question? How could investment not turn into consumption?
Does the investment not provide job and income for the people? Does the investment not produce tax for the government?
To me, every investment eventually turns into consumption somewhere. Of course, some stimulate more consumption and some stimulate less. But no investment curbs consumption.
You are talking supply side economics: When there is supply, there will be demand.
Just look at China. Or try supplying the wrong widgets. For sure "no investment curbs consumption" but neither does it grow consumption per se. And it could also be "consuming in savings". It's not a simple GDP= (X-M) +C+I+G thingy.
(10-10-2013, 02:30 PM)specuvestor Wrote: [ -> ]^^^ Agree... that's part of the self-enlightened interest process
(10-10-2013, 02:11 PM)freedom Wrote: [ -> ]Quote:In short you don't believe in cross subsidising while I think the able should help the less able. Not to the extent that it becomes unsustainable.
What you are saying is not true. The able ones already subsidise the less able ones by paying higher tax. But how much more should the able ones subsidise the less able ones? Or how much are you proposing as a threshold for sustainability?
Or another question, how does the able ones subsidising more to the less able ones benefit the society as a whole? Transferring wealth from the able ones to the less able ones does not produce wealth. No significant amount of money is hidden under someone's pillow. Not transferring additional money from the able ones to the less able ones does not prevent the money from circulating in the system.
My ultimate goal for the government is not to transfer or distribute wealth(that's a small part of their job scope, as most people are able to provide for themselves), but to provide a platform for everyone to utilize their ability to contribute to the society(the most important job scope).
Paying higher tax in absolute terms or %? I think it is right that the rich has to pay higher % of tax. You know the system is wrong when the tea lady pays a higher tax. And as discussed, poor spend much more on their consumption and food... so when we talk about higher tax rates, I'm talking about the % tax vs total income, including consumption tax and passive income... not just a simple tax rate.
You are misled by the phrase "transfer of wealth". When the able help the less able to fish, the society as a whole benefits. In physiological terms, if a disabled is able to walk and take care of himself, we will be able to free up resource for caretakers. And the disabled can contribnute to societies in ways we cannot phantom. That is unleashing the human potential
Wealth per se has to be created by one's innovativeness and hard work. This is the basis of meritocracy which I have no issue with. But we need to help those less fortunate to at least stand up to be on a fair platform to compete... am not suggesting getting them a ferrari to ride. I believe the children of the poor are just as smart as the rich if we can unleash the potentials by creating a better environment. I don't believe our potential (not smarts) is determined by genes, but by opportunities and environment. I believe people don't choose to be sick but wants a better life if they have a plausible go at it.
But if the society don't help them, those are massive opportunities lost. And the society might just be the loser. Steve Jobs wouldn't have a chance in Singapore's system. So was Sim Wong Hoo. But both flourished in US where opportunities and environment help even those who have nothing.
I realize that often our discussion derails to somewhere I believe non-essential.
In most of my discussion, I ignore those disabled ones. The disabled ones are really the minority in the society, less than 1%, I guess. They are well taken care and do not consume most of the government spending. I am not including the elder/retired ones, they are supposed to be mostly funded by themselves when they were young and able. The less able ones I refer to are those unemployed adults or those adults who "give up" their seek of employment.
Another question from me is that how more consumption on basic need and food benefits the society more than the business investment made by the riches? I heard the argument too many times, but I haven't seen a convincing argument yet. My simple understanding is that the human/society progress centers on technology and investment, which are not basic consumption or food.
Ultimately, if we trace the owners of the tax revenue, mostly are still from the riches. The riches do business investment, which creates jobs and income for the general population, which enables them to pay payroll tax and other taxes and consume other products and services. Of course, I am not saying that the riches provides 100% of the tax revenue. But the origin of the tax revenue often traces back to the riches partly. Or think from another perspective. If we remove the business investment from the riches, the economy provided by the government is much smaller, so is the tax revenue.
(10-10-2013, 02:41 PM)specuvestor Wrote: [ -> ] (10-10-2013, 02:24 PM)freedom Wrote: [ -> ]May I ask a question? How could investment not turn into consumption?
Does the investment not provide job and income for the people? Does the investment not produce tax for the government?
To me, every investment eventually turns into consumption somewhere. Of course, some stimulate more consumption and some stimulate less. But no investment curbs consumption.
You are talking supply side economics: When there is supply, there will be demand.
Just look at China. Or try supplying the wrong widgets. For sure "no investment curbs consumption" but neither does it grow consumption per se. And it could also be "consuming in savings". It's not a simple GDP= (X-M) +C+I+G thingy.
Indeed, today a lot of investment is in the form of buying investment property, shares and bonds of existing business. Investments nowadays are mostly about shareholder value and how to divide up existing value to get a bigger slice for ourselves. The only benefit are to the financial sector. Some investments might even destroy jobs especially with the popularity of hit and run capitalism these days. True, survival of the fittest is an important tenet in capitalism, but what we have here today is so short sighted that i fear it is destructive in the long run.
(10-10-2013, 02:41 PM)specuvestor Wrote: [ -> ] (10-10-2013, 02:24 PM)freedom Wrote: [ -> ]May I ask a question? How could investment not turn into consumption?
Does the investment not provide job and income for the people? Does the investment not produce tax for the government?
To me, every investment eventually turns into consumption somewhere. Of course, some stimulate more consumption and some stimulate less. But no investment curbs consumption.
You are talking supply side economics: When there is supply, there will be demand.
Just look at China. Or try supplying the wrong widgets. For sure "no investment curbs consumption" but neither does it grow consumption per se. And it could also be "consuming in savings". It's not a simple GDP= (X-M) +C+I+G thingy.
Yes. The Chinese has more savings than consumption. But I don't see a problem here. The saving turns into investment by the financial institutions and creates job opportunity and consumption. You can say the efficiency in China is low to be a problem. But I don't see the problem of saving. Japan also has a high saving rate, which did not prevent it from becoming the second biggest economy many many years ago.
(10-10-2013, 02:32 PM)Clement Wrote: [ -> ] (10-10-2013, 02:24 PM)freedom Wrote: [ -> ] (10-10-2013, 02:13 PM)Clement Wrote: [ -> ]I think more along utilitarian lines. The rich sometimes seem to forget that the poor are still potential customers at the very least. There is no way an economy can prosper if a larger proportion of wealth is in the hands of a smaller proportion of people. The rich can have the resources to invest and help that way, but too much investment and too little consumption leads typically to asset bubbles and bridge to nowhere situations.
May I ask a question? How could investment not turn into consumption?
Does the investment not provide job and income for the people? Does the investment not produce tax for the government?
To me, every investment eventually turns into consumption somewhere. Of course, some stimulate more consumption and some stimulate less. But no investment curbs consumption.
Sorry for being unclear, i mean a lower income person would have a large propensity to consume and therefore putting money in his pocket tends to lead to more consumption. A poor person might spend up to 80% of his annual income on essentials and other lifestyle needs driving up aggregate demand, while i doubt a billionaire consumes even 10% of his annual income (except maybe Roman Abramovich and Larry Ellison). Therefore the feedback mechanism is stronger when wealth is put in the hands of the poor, within reason of course.
Please elaborate more on this.
So Warren Buffet putting his money into business investment is worse than he just distributing his money to the poors in the world?
My understanding is simple. Business investment is much more efficient than distributing wealth. It creates income, which creates and stimulates more consumption, not merely creating consumption.
Just imagine a world without business investment, everyone is given some money and they spend. The money is recycled and given to everyone again. How is the economy going to grow in such scenario?
(10-10-2013, 02:52 PM)freedom Wrote: [ -> ] (10-10-2013, 02:41 PM)specuvestor Wrote: [ -> ] (10-10-2013, 02:24 PM)freedom Wrote: [ -> ]May I ask a question? How could investment not turn into consumption?
Does the investment not provide job and income for the people? Does the investment not produce tax for the government?
To me, every investment eventually turns into consumption somewhere. Of course, some stimulate more consumption and some stimulate less. But no investment curbs consumption.
You are talking supply side economics: When there is supply, there will be demand.
Just look at China. Or try supplying the wrong widgets. For sure "no investment curbs consumption" but neither does it grow consumption per se. And it could also be "consuming in savings". It's not a simple GDP= (X-M) +C+I+G thingy.
Yes. The Chinese has more savings than consumption. But I don't see a problem here. The saving turns into investment by the financial institutions and creates job opportunity and consumption. You can say the efficiency in China is low to be a problem. But I don't see the problem of saving. Japan also has a high saving rate, which did not prevent it from becoming the second biggest economy many many years ago.
(10-10-2013, 02:32 PM)Clement Wrote: [ -> ] (10-10-2013, 02:24 PM)freedom Wrote: [ -> ] (10-10-2013, 02:13 PM)Clement Wrote: [ -> ]I think more along utilitarian lines. The rich sometimes seem to forget that the poor are still potential customers at the very least. There is no way an economy can prosper if a larger proportion of wealth is in the hands of a smaller proportion of people. The rich can have the resources to invest and help that way, but too much investment and too little consumption leads typically to asset bubbles and bridge to nowhere situations.
May I ask a question? How could investment not turn into consumption?
Does the investment not provide job and income for the people? Does the investment not produce tax for the government?
To me, every investment eventually turns into consumption somewhere. Of course, some stimulate more consumption and some stimulate less. But no investment curbs consumption.
Sorry for being unclear, i mean a lower income person would have a large propensity to consume and therefore putting money in his pocket tends to lead to more consumption. A poor person might spend up to 80% of his annual income on essentials and other lifestyle needs driving up aggregate demand, while i doubt a billionaire consumes even 10% of his annual income (except maybe Roman Abramovich and Larry Ellison). Therefore the feedback mechanism is stronger when wealth is put in the hands of the poor, within reason of course.
Please elaborate more on this.
So Warren Buffet putting his money into business investment is worse than he just distributing his money to the poors in the world?
My understanding is simple. Business investment is much more efficient than distributing wealth. It creates income, which creates and stimulates more consumption, not merely creating consumption.
Just imagine a world without business investment, everyone is given some money and they spend. The money is recycled and given to everyone again. How is the economy going to grow in such scenario?
The thing is, the world needs both to types to be sustainable. Businesses need investment to fuel growth in production capacity and consumption for sales. Investments in increased capacity does not lead to anything if consumption in the economy does not grow to actually consume it. I agree it is more efficient for investment to create growth and am not proposing pure socialism by any means. I think society today is demanding a middle way. The issue is now, is efficiency the only way to measure the success of such policies? Should the economic system be made to fit the needs of society or should society be made to fit economic needs? I think shoes are made for feet and not feet for shoes.
(10-10-2013, 03:31 PM)Clement Wrote: [ -> ]The thing is, the world needs both to types to be sustainable. Businesses need investment to fuel growth in production capacity and consumption for sales. Investments in increased capacity does not lead to anything if consumption in the economy does not grow to actually consume it. I agree it is more efficient for investment to create growth and am not proposing pure capitalism by any means. I think society today is demanding a middle way. The issue is now, is efficiency the only way to measure the success of such policies? Should the economic system be made to fit the needs of society or should society be made to fit economic needs? I think shoes are made for feet and not feet for shoes.
You lost me on "Investments in increased capacity does not lead to anything if consumption in the economy does not grow to actually consume it.".
How does investment not create new consumption but wealth transfer does? Or basic consumption or food consumption fulfills the demand of new business investment?
I can understand basic social need are fulfilled by wealth transfer to ensure survival. But I never get the part that you need distribute more wealth than minimum necessary to the poor. And I don't understand why wealth transfer encourages basic consumption which creates more wealth than business investment.
(10-10-2013, 03:36 PM)freedom Wrote: [ -> ] (10-10-2013, 03:31 PM)Clement Wrote: [ -> ]The thing is, the world needs both to types to be sustainable. Businesses need investment to fuel growth in production capacity and consumption for sales. Investments in increased capacity does not lead to anything if consumption in the economy does not grow to actually consume it. I agree it is more efficient for investment to create growth and am not proposing pure capitalism by any means. I think society today is demanding a middle way. The issue is now, is efficiency the only way to measure the success of such policies? Should the economic system be made to fit the needs of society or should society be made to fit economic needs? I think shoes are made for feet and not feet for shoes.
You lost me on "Investments in increased capacity does not lead to anything if consumption in the economy does not grow to actually consume it.".
How does investment not create new consumption but wealth transfer does?
I can understand basic social need are fulfilled by wealth transfer to ensure survival. But I never get the part that you need distribute more wealth than minimum necessary to the poor. And I don't understand why wealth transfer encourages basic consumption which creates more wealth than business investment.
No one advocated transferring more than the minimum necessary to the poor. Of course it would be better if there are enough opportunities for business investment in the US for all the idle capacity and savings, but that is not the case is it? The departure of manufacturing from US shores brought on by globalization has put an end to the dream. I recognize wealth transfers to be a stopgap measure, but it is at the moment a necessary one.
I recognize that wealth transfer is necessary. At least the disabled ones receive wealth from someone else.
Today, problem in US is not about minimum necessary, but how much more should the riches be taxed to transfer to the poor?
As for there isn't enough opportunities for business investment in US, I don't believe it. Is US so advanced that it does not require any further improvement in anything? As for job opportunities, there are plenty, too. There are still lots of Mexicans coming to US for jobs. So how could we say there isn't job for Americans?