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Saturday, August 24, 2013

Running out of other people's money

France's Socialists are running out of income to tax:
France's Socialist government has admitted that the country cannot cope with any further tax rises and promised no more hikes just days ahead of the country's largest ever tax bill.

 In an unfortunate piece of timing, however, the pledge came just as the environment minister announced the creation of a new "carbon tax" and amid reports that the overall tax pressure on French households will rise even further next year.

Returning from their summer break, the French are about to discover stinging rises in tax bills in their letter boxes – the result of a series of new levies enacted by President François Hollande as he seeks to plug the French deficit and bring down public debt – now riding at 92 per cent of GDP.

But the extent of the hikes has apparently even shocked the very Socialist ministers who implemented them. The total tax pressure (taxes and social security contributions) will account for 46.3 per cent of GDP this year – a historic high – compared to 45 per cent in 2012.
The Keynesians have the solution, of course.  Instead of taxing anyone, the government can simply print or borrow the money. In fact, if we follow Keynesian logic to its full extent, there is no need for any government to tax its citizens at all. That's not an option for France, however, since it turned over its authority for determining its money supply and public debt limits to the European Commission.

It's fascinating to see highly educated people with the benefit of decades of Socialist economic policy, Keynesian fiscal policy, and Monetarist monetary policy continue to keep insisting that there is no such thing as economic gravity and all an economy has to do to fly is to think positive thoughts.  It doesn't seem to matter how many times they witness an economy crashing and burning, because as long as it is in the financial interests of the elite to fail to understand that there are limits, they will continue to ignore them.

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61 Comments:

Anonymous Idle Spectator August 24, 2013 5:00 AM  

Educated French Socialists: "We'll just print more money. Eh, fuck it, we're fine."
Ph.D. Physicists at the Manhattan Project: "We'll just put shoe protection on, radiation is not in the air. Eh, fuck it, we're fine."

Anonymous Holmwood August 24, 2013 5:43 AM  

A carbon tax? France already gets nearly 80% of its electricity (~40% of energy) from nuclear power, and already has stunningly high fuel taxes. For any still naively assuming that fears about "climate change" concern saving the planet, this alone puts the lie to that.

In fact, if we follow Keynesian logic to its full extent
A blackly comic (or has that become racist?) thought: vibrant yutes "random" assaults create a great deal of economic activity in hospitals, police overtime, journalists, bloggers, etc.

(Bastiat, of course, had this pegged in the mid 19th century. But perhaps he's rather gone out of style relative to Keynes.)

If so, the "summer of recovery" is well under way. Pity about the Australians and WW 2 vets.

Anonymous zen0 August 24, 2013 6:24 AM  

Anita Manfredi got nine massages and 18 mud baths at a luxury spa in November. The French government paid two-thirds of the $1,022 bill. “The treatment has done me a lot of good,” says Manfredi, a French retiree who suffers from arthritis and enjoys a three-week retreat at the southern spa town of Dax every year. “I no longer have flare-ups.”

France's Health-Care System Is Going Broke
By Albertina Torsoli January 03, 2013

Marie Antoinette would be proud.

Anonymous Roundtine August 24, 2013 6:25 AM  

all an economy has to do to fly is to think positive thoughts

Haterz gonna hate, and cause recessions.

Anonymous Outlaw X August 24, 2013 6:27 AM  

The Keynesians have the solution, of course. Instead of taxing anyone, the government can simply print or borrow the money.

I think they know that people are to stupid about the Fed Reserve, yet can see their bank stamen in a "Bail In". There fore I cannot see any more "Bail ins" in the 1swt world West. I could be wrong. Just like yaking money out of paychecks, people look at the bottom line but going after their bank accounts is not an option. I am not pretending to be some economic guenius, I think they want inflation and are hard pressed to get any making your RTG a prophetic book. It took me a long while to understand what you meant between money as credit, years in fact.

"Bail ins" are a last resort of the desperate.

Anonymous Outlaw X August 24, 2013 6:42 AM  

Vox, That was bad spelling, but what I tried to say is people are less likely to understand why the stuff they need is going up than they are to see that I had 100,000 dollars or 10,000 dollars in the bank and now I have half that for example. People can see this most evidently, they don't see the other stuff. That being considered, I think the "Bail ins" are over.

And since their inflation scheme is failing I don't know what they will do? And I meant RTGD.

Blogger The Observer August 24, 2013 6:49 AM  

You know, in Bad Fantasy Novels, crushing taxes is often cited as the reason as to why the Evil Ruler is Evil(TM) and needs to be deposed.

Hmm...

Anonymous E. PERLINE August 24, 2013 7:32 AM  

We all know that a government printing too much money is also a form of taxation. The government's attitude is--
we already got you coming and going--this is the way we can get at what a few of you have managed to save.

Blogger JACIII August 24, 2013 7:39 AM  

Why are they bitching? They wanted to be socialists, didn't they?

Anonymous zen0 August 24, 2013 7:47 AM  

That being considered, I think the "Bail ins" are over.

Bail ins haven't started in America yet, have they? Did the people of Cyprus rise as one and throw off the yoke of their oppressors?

To soon to tell. I expect the usual grumbling, and the formation of an anti-bail-in party, that gets some members elected after it is infiltrated by the usual brigands and thieves, who will suddenly sees the light upon arriving in Shangri-La.....er.....Washington, D.C.

Blogger Rantor August 24, 2013 8:06 AM  


At least the Germans seem smart enough to reject the SPD and their promise to raise taxes... In fact the SPD is reviewing that portion of their platform as it may not be helping them in the campaign. Their loser of a candidate for chancellor is a problem too. They might as well be running Dole/McCain/Romney.

I wonder if the unpopularity of the French socialists has hurt the SPD in Germany?

Blogger Rantor August 24, 2013 8:10 AM  

@Zeno,

If the bail ins are localized to start with, it will be hard for the people to get a mass movement going. By the time the problem is recognized at the national level, it could be too late.

Anonymous Godfrey August 24, 2013 8:10 AM  

"It's fascinating to see highly educated people with the benefit of decades of Socialist economic policy, Keynesian fiscal policy, and Monetarist monetary policy continue to keep insisting that there is no such thing as economic gravity... because as long as it is in the financial interests of the elite to fail to understand that there are limits, they will continue to ignore them."



The elites use socialism and socialists to impoverish their potential competition. They won't allow capitalism because capitalism is a dynamic economic system, not a static one. Capitalism is a threat to their economic dominance because it will allow the intelligent and industrious among the serfs the ability to rise up off their knees. One cannot build wealth without the ability to accumulate capital.

The banking and politically connected elites use socialism in their effort to destroy the middle class, i.e. the bourgeoisie. Socialism will not lead to an egalitarian utopia. It will lead to a return to feudalism. The elites know this.

Anonymous ericcs August 24, 2013 8:26 AM  

Keynesianism is simply the adopted child of liberalism, and plays out the same way.

The trouble with liberalism is that once you accept its basic premises, there is no logical way to stop. Other than unprincipled exceptions by random individuals, liberalism has no built-in limitations to its means and ends. They don't call it progressivism for nothing. Thus liberals become leftists, and the left not only sees nothing wrong with government taking over every facet of existence, but ultimately cannot conceive of anything else. If someone questions the size and role of government they are seen as throwbacks mired in some binary regressive condition. The State grows ever bigger, and the left myopically takes it as an article of faith that it cannot be otherwise and indeed has always been so.

This is one of the most elemental differences with traditionalism/conservatism, which inherently espouses self-limitations. Thus in any conflict between the two, liberalism will inevitably take advantage of traditionalists to encroach via the damned slippery slope of its own unabashed aggrandizement. As long as the left surreptitiously and disingenuously never declares open warfare, traditionalists automatically tend to limit their own reactions, quite possibly to the point where their own survival is in doubt.

Anonymous Godfrey August 24, 2013 8:34 AM  

Socialism is the marketing of envy. The banking and politically connected elites use it in their push-pull strategy to destroy the middle-class.

Anonymous David of One August 24, 2013 8:51 AM  

Vox,

Krugman & Caplan & Noah Smith... economath versus reasoning intuitively.

http://www.overcomingbias.com/2013/08/math-over-used-but-useful.html

http://krugman.blogs.nytimes.com/2013/08/21/the-point-of-economath/?_r=0

http://noahpinionblog.blogspot.com/2013/08/a-few-words-about-math.html

http://econlog.econlib.org/archives/2013/08/economath_fails.html

OpenID 972989a8-d210-11e2-ac4d-000bcdcb8a73 August 24, 2013 9:12 AM  

Meanwhile, The Obama Club for Economic Recovery is
necessitating the same (ie)less than fourty hour "work" week, with the Comunis...um,Sociali...um National Wellness Discount so favored by contemporary French(et al) "economic" histerians(sic).

It's for the children...who NOW have no expectation of affording medical "care", because they can't "earn" the take home pay afforded those with a 40 hour MINIMUM "work" week.

I wonder how long the taxable "work week" is for those filty bourgeois(e?) tradesmen, merchants, and entrepreneurs?

CaptDMO

Anonymous Godfrey August 24, 2013 9:31 AM  

The banking and politically connected elites sell socialist fantasies while using the centrally controlled fiat monetary system to prevent capital formation among the lower classes to protect their monopoly of wealth and power.

Anonymous Porky August 24, 2013 9:41 AM  

The French are revolting.

Blogger Jordan179 August 24, 2013 9:44 AM  

A blackly comic (or has that become racist?) thought: vibrant yutes "random" assaults create a great deal of economic activity in hospitals, police overtime, journalists, bloggers, etc.

Yep. The classic "broken window" fallacy. And Keynesians often do overlook the difference between productive economic activity and mere economic activity. The key, of course, is to look at the whole system.

Anonymous Porky August 24, 2013 9:54 AM  

"...as long as it is in the financial interests of the elite to fail to understand that there are limits, they will continue to ignore them."

They don't "fail to understand". They don't "ignore the limits".

Why do you think they will be tapering their bond purchases in the coming months? They've understood the limits.

As smart as you are, Vox, you've really failed to grok the mindset of these people.

Anonymous Orville August 24, 2013 10:05 AM  

I don't always agree with Charles Hugh Smith, but he has a new article http://www.oftwominds.com/blogaug13/risk-govt8-13.html titled "The Grand Experiment" where he posits that the fiscal problem that governments face is that risk has been concentrated in the state, which will cause the state to fail. His position is that risk cannot ultimately be eliminated, but only pooled and shared.

One thing he didn't mention is that instead of insuring against risks of various kinds, we should accept them. Carrying that on to the federal level we should have accepted the financial depressions as necessary instead of trying to "insure" against them with monetary policy.

Instead of pooling and sharing risk, wouldn't it be ultimately better left atomized? Sure, somebody is always going to get stuck with the hot potato, but a decentralized risk seems wiser for society.

Anonymous Stilicho August 24, 2013 10:27 AM  

Vox, regarding your limits of demand hypothesis, we are seeing evidence of that via the Z1 numbers, any thought of quantifying it (a la Rogoff et al. with public debt as a percentage of GDP)? It would be a multifaceted approach to be sure: current burden of public debt, current burden of private debt, current tax burden (to the extent not already accounted for) etc. compared to current GDP (or other productivity metric) to provide general guideline showing where the demand limits might fall. Keynes animal spirits have been prodded and extended beyond their natural limits through debt issuance (and Krugman thinks the state's animal spirits are infinite) but there seems to be a limit beyond which even the insatiable maw of the state is reluctant to feed on more debt.

Anonymous Stilicho August 24, 2013 10:30 AM  

Instead of pooling and sharing risk, wouldn't it be ultimately better left atomized? Sure, somebody is always going to get stuck with the hot potato, but a decentralized risk seems wiser for society.

Yes. However, it is a mistake to think of it as sharing risk: once the state takes on or pools the risk, it distributes the risk as it serves the purposes of the state. It isn't really sharing.

OpenID artisanaltoadshall August 24, 2013 10:44 AM  

Vox... You ignore that its a religious issue for them. Religion means it's a matter of faith and facts don't matter.

Anonymous Porky August 24, 2013 11:02 AM  

You ignore that its a religious issue for them.

No. It's not.

Anonymous Hyperphrenius August 24, 2013 11:49 AM  

Religion means it's a matter of faith and facts don't matter.

No. It doesn't.

Anonymous Red Comet August 24, 2013 12:06 PM  

Vox, it seems like they're running out of income to tax in Italy too. Check out what this guy did during Europe Slack Off Month:

Italian factory owner moves company to Poland while staff are on holiday

OpenID cailcorishev August 24, 2013 12:12 PM  

all an economy has to do to fly is to think positive thoughts.

Most people think New Age religion is just something hippies dabble with, but it looks to me like it underpins a lot of people's assumptions today. People think "positive thinking" can do anything, from killing cancer to fixing an economy. Maybe it didn't precede liberalism, but it's at least thrown gasoline on it.

Anonymous tiredofitall August 24, 2013 12:25 PM  

"The French are revolting." - Porky

Admittedly if they bathed more often, and weren't quite as rude they might be less off-putting. But "revolting" may be taking things too far.

Anonymous Porky August 24, 2013 12:36 PM  

The mindset of a thief:

When a thief sees $200 lying on the seat of your shiny new Bugatti parked on the street, he smashes the window with a cinderblock.

Although he is certainly not ignorant of the fact, he simply doesn't care that he has caused thousands of dollars in damage to a beautiful automobile. Vox may be stunned by the sheer lunacy of doing $5000 worth of damage to make $200 dollars, but it's not the thief's car. He simply doesn't care.

He got his money. He is remorseless. And this is key...in his mind he is completely blameless. He actually thinks that it is YOUR fault for leaving the money where he could get it. And he thinks you are a contemptible, stupid moron for doing so.

The thieves who are currently robbing you and I blind are much more sophisticated and coordinated than the usual "smash and grab" variety. More on the order of snake oil salesmen or Peter Popov televangelist types.

But rest assured - the mindset is no different than the petty thief. They hold themselves to be blameless. They know they are smarter than you and I, evidenced by the fact that we keep our car parked where they can get to it. And they have nothing but contempt for us. They'll keep taking us again and again until we wise up and park our car in a garage.

But they are not ignorant. They know - much better than we do - exactly what they are doing, and what their limits are.



Anonymous Anti-Democracy Activist August 24, 2013 12:40 PM  

Good. I'm with John Derbyshire on this one - I'm tired of coddling the public. Conservatives of all stripes have for years tried to shield "the people" from the consequences of their own poor electoral decisions, and have ended up hated for it. Enough! You want Socialism, Frenchies? You got it - now cough up 75% of your income to pay for it. You want Obamacare, America? You got it - now you figure out how to pay doubled premiums on 29.5 hours a week. You want all this stuff? Great - you pay for it and deal with the consequences.

Then think - think hard - next time you enter a voting booth.

Anonymous Credo in Unum Deum August 24, 2013 12:55 PM  

100 or so years ago, housewives with barely a high school education knew what these French socialists don't.

If you spend more than you take in each month you're gonna have a bad time.

Anonymous Godfrey August 24, 2013 12:59 PM  

@Anti-Democracy Activist August 24, 2013 12:40 PM
"Then think - think hard - next time you enter a voting booth."


You're kidding , right? We don't have elections here, we have selections. Politicians are first vetted and selected and then elected. You're merely allowed to vote for who is going to be the pitchman. The product never changes.

Do you really think a man can go from a nobody Illinois state senator to US Senator to President in a mere few years without the backing of the establishment elite? Obama is the pitchman for the establishment's eight-year commercial.

Anonymous Anti-Democracy Activist August 24, 2013 1:25 PM  

@Godfrey

While I agree that American elections are a rigged game, they're only rigged just so far. Malfeasance in the American system works on the principle that you really only have to fool enough of the people enough of the time. It - for now - runs on things like media manipulation, not outright Stalinist "it only matters who *counts* the votes" style fraud.

The point of which is, the people could have voted for Ron Paul if they'd really wanted to. All the media and political system manipulations put him behind a near-insurmountable 8-ball, but they still *could* have. They didn't. No sympathy.

And that's the point - you are again committing the error of trying to let "the people" off the hook for what's happened. "If only it wasn't for that rascally media and those rascally two parties, we'd be doing great!" But that's not what twenty-five centuries of observations of how democracies rise and fall - starting with Plato, right up through Spengler, and on to Fred Reed - says. Democracy works for a while; a long as the people still retain hardy yeoman virtues. But when "the people", inevitably, figure out that they can vote themselves rich, your democracy becomes a dead man walking.

Do I really think that the people will wake up, and democracy will be saved, and we'll all go back to an Eisenhower-era dream of fedoras, cars with tailfins, sound fiscal policy, and elections between level-headed candidates who were clearly grownups? Of course not. I'll leave that delusion to dreamers like Sean Hannity, Glenn Beck, and (oddly enough) Alex Jones. I'm a Spenglerian, and I know that the Spenglerian cycle is inevitable and inescapable. But what I am saying is that I feel no need to shield "the people" from their (rather large) share of the blame for the situation we're in. Or from the consequences of their own poor decisions.

Anonymous Gen. Kong August 24, 2013 1:28 PM  

The thing that continues to amaze is how long the charlatans and mountebanks who read the decrees of the ruling vampire-squids are able to keep the scam running, and how the masses of chumps continue to believe in the complete fairy-tales they are told 24 x 7 x 365. It never seems to end, but just keeps spinning along.

Blogger Some dude August 24, 2013 1:52 PM  

because as long as it is in the financial interests of the elite to fail to understand that there are limits, they will continue to ignore them

One of the reasons I love this line so much, is because today I was concentrating on repentence using some prayers written by Natan Sternhartz (Rav Natan of Breslov), and that line sums up the truth of all sin and stupidity.

We make ourselves into fools because it is convenient to do so.

Anonymous Jack Amok August 24, 2013 3:01 PM  

people are less likely to understand why the stuff they need is going up than they are to see that I had 100,000 dollars or 10,000 dollars in the bank and now I have half that for example

True, and socialists are very good at blaming private enterprise for price increases. "Oh, those greedy capitalists are gouging people with high prices!!!!"

It's also why the love, love, love VAT taxes, and any other taxes they can impose where only businesses see the size of the tax. A while back some gas stations were putting up signs on the pumps breaking down the cost of a gallon of gas and showing all the taxes included in the $3.98/gal (or whatever it was) price. Local government jackboots threatened them with some sort of action (really? posting tax rates is illegal?) if they didn't take them down. Well, in the Regulatory State, businesses can be quite effectively persecuted, so they caved.

I suspect ultimately if they decide inflation isn't working, they'll try to institute some sort of VAT tax. Businesses hate it, but as the gas tax example shows, if the kleptocrats are ruthless enough with the regulations and prosecutorial discretion, while also being generous enough with the corporate fat cats, they'll fall in line.

Anonymous Jack Amok August 24, 2013 3:10 PM  

Yes. However, it is a mistake to think of it as sharing risk: once the state takes on or pools the risk, it distributes the risk as it serves the purposes of the state. It isn't really sharing.


The great failure of Leftism is the relentless conversion of voluntary associations into forcible ones. A voluntary pooled risk system (like say the original Lloyds of London) can be very beneficial, letting people engage in risky but potentially highly rewarding activities. The voluntary nature means everyone has an incentive to keep the system reasonably fair, since people will leave the association if they come to believe they are being taken advantage of.

But forced - that is, government - associations, well, that's the whole point, you can't leave. Your only choice is to stay, or get enough people and guns together to shoot the folks running it and start running it yourself. Talked about risky...

Blogger Tom Kratman August 24, 2013 3:52 PM  

Since GDP _includes_ government expenditures, the percentage of the real economy taken up by the French government is much larger than that 46% would seem to indicate.

Anonymous FP August 24, 2013 4:24 PM  

Porky: The French are revolting.


You said it. They stink on ice.

Blogger TontoBubbaGoldstein August 24, 2013 5:07 PM  

This comment has been removed by the author.

Blogger TontoBubbaGoldstein August 24, 2013 5:11 PM  

NEVER OT @ Vox Popoli!!!

Certain horned Minnesotans should perhaps ponder this.

Or not.

Blogger Phoenician August 24, 2013 6:02 PM  

The Keynesians have the solution, of course. Instead of taxing anyone, the government can simply print or borrow the money. In fact, if we follow Keynesian logic to its full extent, there is no need for any government to tax its citizens at all.

Nope.

Once again, dipshit, if you can only beat up strawmen, it's no wonder everyone laughs at you.

Blogger Tom Kratman August 24, 2013 6:54 PM  

I don't know that anyone entitled to an opinion is laughing at him, Phony. Oh, sure, some leftists are, but - with very few exceptions - they're just stupid and ignorant vermin.

Blogger Ann Morgan August 24, 2013 7:39 PM  

Keynesians are idiots. Money is a symbol of wealth, it is not actually wealth in and of itself. Creating more symbols does not create more wealth. Thinking it does is idiotic. It's rather like a cave man, who wants to keep track of how many apples he has stored up for the winter. He has 100 apples, so he carves 100 notches in a big branch. Carving another 100 or another 1,000 notches will not magically increase his store of apples, and any cave man who thinks it will, so spends his time carving notches instead of going out and picking more apples, will starve to death.

Although I imagine the Keynesians expect everyone else, other than themselves, to do the inevitable starving to death, in order to prove their magical theories right.

Blogger Ann Morgan August 24, 2013 7:48 PM  

**And Keynesians often do overlook the difference between productive economic activity and mere economic activity.**

I see the same thing with a lot of bad managers, they are incapable of telling the difference between productive motion, and pointless motion. They see some people standing and doing nothing, and others moving around frantically, and assume the latter are their 'good' workers, when it is very often the case that the first group of people have actually finished their work, and aren't good at playing the 'look busy when boss is around' game, whereas the second group of people have accomplished absolutely nothing, but are good at madly scrambling around (but still accomplishing nothing) as soon as the boss appears.

Blogger James Dixon August 24, 2013 7:49 PM  

> I think the "Bail ins" are over.

What's to keep the government from declaring an individual bank insolvent as needed, seizing their assets to hand over to another of their banking buddies, and only guaranteeing a "fair" amount of the account holder's savings. Doesn't that have the same effect?

Blogger Ann Morgan August 24, 2013 7:53 PM  

Keynesians are idiots. Money is a symbol of wealth, it is not actually wealth in and of itself. Creating more symbols does not create more wealth. Thinking it does is idiotic. It's rather like a cave man, who wants to keep track of how many apples he has stored up for the winter. He has 100 apples, so he carves 100 notches in a big branch. Carving another 100 or another 1,000 notches will not magically increase his store of apples, and any cave man who thinks it will, so spends his time carving notches instead of going out and picking more apples, will starve to death.

Although I imagine the Keynesians expect everyone else, other than themselves, to do the inevitable starving to death, in order to prove their magical theories right.

Anonymous geoff August 24, 2013 8:09 PM  

voting is irrelevant to what the elites are going to do. for the young men ammo is more relevant

Anonymous Godfrey August 24, 2013 8:36 PM  

@Phoenician August 24, 2013 6:02 PM
"Once again, dipshit, if you can only beat up strawmen, it's no wonder everyone laughs at you."



Aren't you the one who dips into shit?

Blogger James Dixon August 24, 2013 8:59 PM  

> Since GDP _includes_ government expenditures, the percentage of the real economy taken up by the French government is much larger than that 46% would seem to indicate.

Absolutely Tom. Figuring out exactly how much is probably an impossible task. However, let's take a stab at it.

Even at a 46+% tax rate, they're still running a deficit, so we know the government share of GDP is more than that.

We also know that governments don't like paying taxes themselves, so we can almost certainly assume that the government portion of the GPD is not taxed at all.

That means that a minimum of a 46% tax rate is assessed on a maximum of 100-46 or 54% of the economy. 46/54 gives you a minimum effective tax rate of over 85% on the private economy.

The same is true of the US economy and tax rates of course, though the exact figures would differ.

Blogger Ann Morgan August 24, 2013 9:07 PM  

**"Once again, dipshit, if you can only beat up strawmen, it's no wonder everyone laughs at you."

Aren't you the one who dips into shit?**

People: let's please stop the insulting of shit. Shit is actually highly useful as fertilizer. In fact, in a survival situation it might be worth your while to poke around the local wastewater treatment plant, there are several plants whose seeds are not digested when eaten (such as tomatoes) and can often be found growing around and near such places.

Keynesian economists and politicians on the other hand are of no use whatsoever. They'd probably taste horrible, and would poison the ground if you tried to use them as fertilizer.

Blogger Ann Morgan August 24, 2013 9:09 PM  

This comment has been removed by the author.

Blogger Tom Kratman August 24, 2013 10:17 PM  

I'd guessed around 75%, James, but 85 doesn't seem impossible to me. I wonder if the Soviets ever really managed to capture 85% of their economy.

Anonymous The other skeptic August 24, 2013 11:59 PM  

We also know that governments don't like paying taxes themselves, so we can almost certainly assume that the government portion of the GPD is not taxed at all.

I think this is wrong. A great deal of that expenditure is in the form of bribes: salaries for people on the gov't teat, contracts for arms manufactures, etc.

That money will be taxed and very little of a productive nature was gained with the expenditure.

Anonymous E. PERLINE August 25, 2013 8:20 AM  

From a movie I saw as a kid--

Curly: Master, the people are revolting.

Moe: Yeah, and they smell, too.

Blogger James Dixon August 25, 2013 10:25 AM  

> A great deal of that expenditure is in the form of bribes: salaries for people on the gov't teat, contracts for arms manufactures, etc.

Which is only taxed when it's received as income, not when it's spent.

Here, from http://www.mindtools.net/GlobCourse/formula.shtml:

The basic formula for calculating the GDP is:

Y = C + I + E + G

where

Y = GDP

C = Consumer Spending

I = Investment made by industry

E = Excess of Exports over Imports

G = Government Spending

This analyzes things strictly from the expenditure side, and government expenditures are not taxed.

You can also analyze things from the income side, but government income isn't taxed either, and I don't know of a ready equivalent to GDP for doing so. You can't mix the two, which is what you're trying to do.

Blogger James Dixon August 25, 2013 10:30 AM  

Of course, I should note that I am not an economist, and this is a very simplistic analysis. Vox could undoubtedly point out a number of problems with it and offer a much better one. But I can usually manage basic math, which is all this is after you make a couple of simple assumptions.

Blogger Phoenician August 25, 2013 9:54 PM  

Keynesians are idiots. Money is a symbol of wealth, it is not actually wealth in and of itself.

PRE-cisely. So when idiots like Dipshit here talk about "running out of money", they indicate they are clueless.

Creating more symbols does not create more wealth.

Except, of course, if the economy could potentially produce more wealth, but won't because there's not enough symbols floating around.

You know, if there's unemployment and unused capacity...

You know, Ann, you don't seem to actually understand what Keynesians say before you start railing at them. I guess you've found your natural place on Dipshit's den of inadequacy.

Blogger Tom Kratman August 26, 2013 6:53 AM  

A half truth, Phony, hence, like other half truths, wholly misleading. No, money is not wealth. It is, however, a marker of where wealth resides and where and when it is transferred. Thus, we can say, "running out of other peoples' money," and mean, perfectly legitimately, "We have transferred so much real value, by transferring the markers that can be and are exchanged for it, that there's no more worth taking."

Unemployment and unused capacity...yeah, I've heard the argument before. Unfortunately, it remains somewhere between unproven theory and disproven intellectual fantasy. Has it ever worked out before, anywhere, for any substantial period of time? Oh, yeah, I know: "It's just that it's never been done _right_," isn't that the Pravda?

On the other hand, one suspects - _I_ suspect, and quite strongly - that it's all a fraud. We do not run out of all other peoples' money. What we run out of is the working class' money (America's working class being very large and including people Euros would not count as working class). The truly and obscenely rich, however? If we get any taxes out of them, it's only around the margins. No, I am not referring to clever lawyering or creative accounting; those are just ways of them keeping their place amongst themselves. Instead, I mean that any tax levied upon the really rich is simply passed on to the lower classes. So, corporate income tax? Fraud, the money taken is just another expense, passed on to the consumers of whatever the corporation produces. SSI? Fraud, passed on to consumers and removed from worker salaries which would be much higher without it. The personal income tax for the very rich? Still passed on through demands for higher returns from their investments, which show up as higher prices for the workers. It's not a conspiracy, mind you, anymore than people exiting a theater when someone shouts "fire" are engaged in a conspiracy. It's just normal people, responding to a fairly uniform external stimulus.

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