Tag Archives: taxes

Supply Side Economics: The Fatal Assumption

Back in the late 70’s, there came the idea of “trickle down economics.”  The basic idea, at least as it was put to the public, was that by reducing the tax rates on the rich and corporations, they would have more money to invest, which would create more jobs and economic activity farther down.  In other words, by the government taking less from the wealthy, the benefits would “trickle down” to the rest.  As more businesses and jobs were created by this, pay scales would rise and with it, the government would receive the same – or more – tax revenue than it would have had it continued with the previous tax schedules.    As a theory, it sounded good.  In practice, it has been a miserable failure.   It turns out there was a core assumption being made, that in practice turned out not to be the case.  An “implied contract” that was broken.

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Low government spending? The hypocrisy

For a couple of years, I lived in Southwest Colorado.   One of the places I used to go on various service calls was a small little resort town called Pagosa Springs.  It’s a pretty place, at the western bottom of Wolf Creek Pass.   It has a year-round population of about 1600, with a lot of “second homes” in the area.  A typical resort town, in many ways.  On the other side of the Rockies, there’s a major city – Colorado Springs  It has over 400,000 people, and a fairly stable and vibrant economy.   It’s the home base of a lot of conservative organizations, a haven for low-tax and small government advocates.    Which is rather interesting, because Colorado Springs and Pagosa Springs wouldn’t be that much different, if it weren’t for one thing:  Government spending.

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Random observations and thoughts

Well, now that CPAC is over and the House Republicans have announced some of their proposed cuts, what they’re after is increasingly clear.  They want the US to be just like Nigeria.  Mostly poor, malnourished, poorly-educated, and living in a toxic wasteland.   But it’s all good if you’re wealthy and in power.

Watching various state legislators trying to prove how much they “respect” the Second Amendment by passing inane gun laws makes me want them to take it to the max.  I want them to pass a requirement that all state legislators must carry a gun while in the legislative chambers, that there be a rule of “fair shooting”,  since both sides were armed, and no charges will ever be filed.    Either they’ll learn to be civil and compromise, or they’ll be weeded out in a hurry.  Either way, it’d be a win-win for the electorate.

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“Cost per student” – Again

At the end of November, I wrote a post about “unit pricing” when it comes to education.   You see it brought up a lot when people start talking about the cost of education.  There’s an idea that somehow a school district should have a set cost per student.  That is, if School District A is spending $10,000 per student, it’s doing better budgeting and cost control than District B which is spending $20,000 per student.  It also creeps into “quality” measures, where you see people claiming that the higher cost is an indicator of a better education.  Which makes it a convenient target for complaints when it comes to tax money.   As I said back then, it’s not the entire story – or even correct.   In one of the local  papers, there was an story about the school costs, and the price per student.  Interestingly, the same points came up.

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Do it with what … and who?

Our new governor, Andrew Cuomo has said that he wants to “right size” the state government.  While few people disagree with him on the generalities, there are likely to be major battles ahead when it comes to the specifics.   One of the problems he is going to face is that Governor Paterson made a number of cuts, some of them significant – to the extent that he virtually gutted one department,  the Department of Environmental Conservation.  This is the state department which is responsible for enforcing the environmental laws, protecting the fish, wildlife, and forests of the state, as well as running a significant campground and trail system.  Besides the already significant cuts that had been made through 2010, Governor Paterson lopped an additional 150 positions, leading to the firing of the Commissioner of the department when he protested.

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