Warren Buffet on Bush Tax Cuts and "Trickle Down"Follow

Precisely! Private business fails when they run out of money to run their business. If they choose a poor model, they lose money, and they fail. The loss is limited to the owners, investors, and employees of the business. The problem is that the government doesn't "fail" in this way, since it can't really run out of money in the same way. What happens is that when the government chooses a poor model, what they're doing becomes very cost inefficient, and the taxpayers end out losing money. It doesn't fail and then get replaced by something else, it just lingers on and on and on sucking the money out of the productive parts of the economy.


Businesses failing when they make bad decisions is *good* for the other players in the economy. The cost of the loss is born by those who made the bad decisions, and those who made good decisions (competitors presumably) gain by it. When government makes bad decisions it's bad for everyone. The costs are born by those who made good decisions, creating a really stupidly ridiculous economic black hole like effect.


This is why we should do as little as possible with the government. It's not really about whether you think it could do a better job, it's about protecting the rest of us from when it does inevitably do a poor job at something.

First, there's a huge difference between working part time minimum wage jobs because that's all you can get, and working slightly fewer hours as a matter of social policy, and that should be obvious to anyone.

Secondly, if you bothered to read any of my other posts, I pointed out that demand for work is decreasing in general. People still want to make money of course, but the actual amount of work that needs to be done is rapidly decreasing due to automation and the non-degradation of goods. So "work" is increasingly not a matter of actual productivity, but a matter of offering ******** that people will spend money on. As a result, there are simply fewer jobs to go around that are actually demanded. People turn to superfluous work, which by its nature offers less job stability.

It's actually fine if people are working less and making less money, because income is relative. Costs will go down as more people are working and spending, and the pricing of goods and services is declined to reflect the relative value of them.



Unfortunately your alternative in many cases is to stop providing valuable services which have an arguably positive overall impact even if they aren't economically successful programs.



No, it's not always "good" (wtf with the quotes?) to make employing someone less expensive because that person then makes less, has less to spend, and the economy suffers for it. Good for the business, sure. But if EVERYONE is hiring people for fewer hours, then they HAVE to hire more people to meet the current demands of productivity. If more people are working, then their business will go up if that service is actually valuable. If it isn't, then people will prioritize needs first, to which I can only say, "Oh well." If demand for some nonessential services decreases, the negative economic impact on those businesses is almost by definition being offset by a positive social impact.

Yes. The difference being that one is the result of the actual value of one's labor relative to other economic factors, while the other is imposed on the people by a government seeking to game the statistics in order to make them look better and win votes. It should be "obvious" why the latter is a really really dumb idea.



You pointed out something which is not true. Demand for work in some fields has decreased, but demand in other fields has increased dramatically. The problem is that we have social planners who want to manipulate things so that we keep employing people in those first fields and ignoring the latter. I've pointed out repeatedly that the company I work for hires a whole hell of a lot of foreign labor. And not just outsourced/offshored either. We hire them, then spend significant amounts of money getting them work visas, then pay them to relocate to one of the most expensive places in the US to live in, all because we can't find enough people in the US with the correct skill sets to do the work we need done.


Our social policy should focus less on trying to protect jobs and more on training people to work in the jobs that are actually in abundance and are part of actual growth industries.





Yes. Like supporting unions where 5 guys spend 8 hours doing the work that one person could have done in 2. That's not good economic planning, or good social planning. It's about control. By putting more workers in a position where the only way they can make enough to survive is to support various artificial labor structures you effectively control those people.



Huh!? Income is relative. But it's relative to total labor output. Prices of goods are related to that too. The idea that you can somehow support twice as many people by simply having them all work half as many hours is absurd. It simply doesn't work. They are still producing the same amount of goods, and thus their labor is worth half as much and their pay relative to the cost of the goods being produced will be half as much.

It's not even complicated math. And before you say it, I get the concept that if because of efficiency, we can produce the same amount of goods while consuming half the labor, it should work to just employ everyone for half as much time, but it doesn't. The infrastructure costs doing that eat away a lot of those benefits. Also, it make the time and money spent creating those efficiency enhancements meaningless if we don't then utilize that freed up labor for more productive pursuits.

There's a real cost to doing this, and if all we get is the same result, no one will do it. And that's when we stagnate.



Except that many of them *don't* have an arguably positive overall impact. Hence, why those programs have failed. But we keep funding them because government doesn't run out of money.



If the problem is unemployment, then it is good to do that. Context is kinda important here. I just finished telling you that you need to look at what the problem is and then assess your proposed solutions within that context.



How on earth do you think this could work? There's a serious flaw there.

But even ignoring that, can we agree that the Dem's policies have been completely backwards. Extending unemployment doesn't help. Increasing social service spending doesn't help. And borrowing money which will have to be paid back eventually in order to funnel money into selected portions of the economy also doesn't work.

Tax cuts on businesses will work. Cutting people off of unemployment will work. You get that no one will work half time for half pay if they can get similar (or more) money doing nothing on unemployment, right? And if they can get on disability or some other social program? Even better. All of those things run counter to even the flawed suggestion you are making.



No, it's not. Again, I'll ask how you think that would work. You're making the "pay people to dig a hole, and then pay them to fill it in", and thinking that this somehow helps them. Sure, that one person in the short term is helped. But we're spending money on non productive pursuits. And since the cost of goods is based on the total productivity, then paying them to be non productive makes the cost of everything we buy higher relative to everyone's income. You have marginally made that person's life better (since something is always better than nothing), but the cost is that you've made everyone else's economic prospects worse.

The total effect of that is going to be negative, not positive. And I'm not even sure how you're measuring "social impact". What does that mean? To me, it's how our society treats things. And call me crazy, but I can't imagine how helping people to think that they are entitled to a living even if their labor isn't worth much helps us as a society. I'm not sure how putting people in positions of dependence on government jobs programs helps us as a society. And I'm not sure how perpetuating a false class war in order to do this in the first place helps our society.

All of those things are negative social impacts. What about your suggestion generates a positive social effect? Can you explain this, because it makes no damn sense at all to me.

I did a search and he posted that information nearly a year ago.

Freak.

And my car rocks! And it's got a CD changer... :)

@gbaji- tl;dr

Just so we're clear, my posts are not assignments. You aren't obligated to respond to every point I make in paragraph form. Narrow it down a bit for me. I don't want to feel like I'm grading a paper when I respond to your essay.

Damn! And I was this close to ultimate coolness. I have a satellite radio and onstar thingies in the trunk, does that count? Pretty please!?

Ok righties, the rich boys got their tax cuts extended. I expect that they'll start hiring people en masse anytime now.... HAHAHAHAHAHA!

Which is an incredibly easy claim to make when the effects are untraceable and the economy is poised to turn around on its own regardless.

You know, those pesky 3.6 million jobs. By all means, show us the way.

No. Think for yourself and try again.

By that argument, no economic effects can be traced to any political decisions then. Which makes one wonder why anyone bothers to debate the issue. The fact that we are debating this nullifies your counter argument entirely. Want to try again?


It's amazing that people can accept the claim that the stimulus plan "saved or created" millions of jobs, but then turn around and completely discount conservative claims about the economic effects of their polices. Doubly so when during the period that these 3.6 million jobs (or whatever the number is) were saved or created, unemployment went up from about 6.5% to just under 10%. That's some voodoo economic math for you right there!

If conservatives argue against the stimulus because it'll cost us jobs, but we pass the stimulus anyway and unemployment goes up, and then they argue that we should extend the tax cuts because it'll create jobs, and (as you claim) unemployment goes down, when do we allow for the possibility that the conservatives might just be right? There are objective measurements we use when assessing our economic health. When one side consistently predicts correctly what will happen and the other side consistently predicts incorrectly, doesn't that allow us to say that one side is right and the other wrong?


Lest we forget, Obama warned that unemployment would read 8% unless we passed the stimulus bill. But we passed it and it went up to 10%. Doesn't that sorta indicate that he and his economic team really had no clue at all as to what was going on? How can you possibly think that they had a handle on things, or could accurately assess the impact of what they were doing?

Edited, Dec 20th 2010 1:18pm by gbaji