How does deregulation mean more economic freedom for everyone?

[Greg Bernhardt]

That's the basic conservative economic position: more economic freedom -> higher growth -> more tax revenue -> lower deficits.

Does economic freedom = deregulation?

 

[Mentalist]

That has been the conservative plan for how long now? That is nothing new, they've been touting that plan since I was a new born, which was about 20 years ago.

Economic freedom in what sense, Greg??

 

[russ_watters]

Does economic freedom = deregulation?

Generally, yes. Clearly, that must be done with care to avoid abuse.

 

[Mentalist]

Economic freedom for whom?

 

[russ_watters]

Economic freedom for whom?

Everyone.

That's what across-the-board tax cuts do, for example. A trillion dollars in tax cuts and a trillion dollars in stimulus have the same initial effect on the country's balance sheet, but the tax cuts give you the choice of how to spend the money whereas the direct stimulus is the government choosing where to spend the money (on failing alternate energy companies...?).

 

[Mentalist]

How does deregulation mean more economic freedom for everyone? Wages have been going down for 20+ years now, so I don't see much of the benefits. That is, unless, I am looking at it the wrong way. But cite some sources please.

 

[Evo]

Romney's tax cut

The nonpartisan Tax Policy Center, a joint project of the Urban Institute and Brookings Institution, has said the Romney proposal would cost $360 billion in the first year before it is offset by closing loopholes, which others have extrapolated to estimate that it would amount to $5 trillion over the decade.

The report said the loopholes – popular deductions including those for mortgage interest, charitable giving and others – are not plentiful enough at the top of the income scale to cover the estimated $360-billion annual cost of reducing tax rates by 20%.

The gap would need to be filled by closing loopholes for those at lower ends of the income scale, those earning less than $200,000. Estimates say those earning between $100,000 and $200,000 would be significantly hit.

Also, the report said the trade-off between lower rates and loopholes would benefit higher-income households, which would see their overall tax burden go down while middle- and lower-income households would see their taxes rise.

http://www.latimes.com/news/politics/la-pn-fact-check-debate-romney-tax-20121003,0,3813713.story

 

[rootX]

How does deregulation mean more economic freedom for everyone? Wages have been going down for 20+ years now, so I don't see much of the benefits. That is, unless, I am looking at it the wrong way. But cite some sources please.

Look at economies of HK or Singapore. I doubt the US will ever have same kind of economy as those countries because you see different party every 4 years, removing all polices from the previous administration. You need a period of far more than 4 years to have something to work, government having different economic perspectives every 4 years is damaging IMO.

 

[russ_watters]

How does deregulation mean more economic freedom for everyone? Wages have been going down for 20+ years now, so I don't see much of the benefits. That is, unless, I am looking at it the wrong way. But cite some sources please.

I'm not sure what you are asking. What do lower wages (factual inaccuracy of the assertion aside) have to do with economic freedom/lack thereof? What are you asking me to source?

 

[CAC1001]

EDIT: Was responding in the debate thread, but then it ended up here.

 

[Mentalist]

Look at economies of HK or Singapore. I doubt the US will ever have same kind of economy as those countries because you see different party every 4 years, removing all polices from the previous administration. You need a period of far more than 4 years to have something to work, government having different economic perspectives every 4 years is damaging IMO.

I see now.

@russ: I just don't know what economic freedom entails exactly. My initial thinking of it was on the fact that it had something to do with wage earning and companies being able to increase their bottom line, i.e. profit, therefore helping their employees earn more money. I am still unclear on your point though. I am also asking for a source to what you're saying so I can read a bit more into it and do my own research from there.

 

[russ_watters]

I just don't know what economic freedom entails exactly. My initial thinking of it was on the fact that it had something to do with wage earning and companies being able to increase their bottom line, i.e. profit, therefore helping their employees earn more money. I am still unclear on your point though. I am also asking for a source to what you're saying so I can read a bit more into it and do my own research from there.

I'm not sure I can provide you a source beyond a simple definition. Economic freedom equaling a lack of regulation is basically a tautology. It is tough to write a one-sentence description of economic freedom without mentioning the lack of regulation. For example:

Laissez-faire (i/ˌlɛseɪˈfɛər-/, French: [lɛsefɛʁ] ( listen)) is an economic environment in which transactions between private parties are free from tariffs, government subsidies, and enforced monopolies, with only enough government regulations sufficient to protect property rights against theft and aggression.

http://en.wikipedia.org/wiki/Laissez-faires

And I feel compelled to hit this again - this wrongness is stated too often to be allowed to go unchallenged:

Wages have been going down for 20+ years now...

This is triply wrong:
1. Only 1 of the six primary population brackets currently has an average income below what it was 20 years ago: the bottom quintile, by 1%. The bottom quintile is largely a function of unemployment rate though, not just wages, and unemployed people could have been in any quintile before becoming unemployed.
2. While every income bracket is below its most recent peak, none of those peaks occurred 20 years ago (all were much less). Since incomes are cyclical with the economy, they never go up or down for more than about 5 years at a time, but over a long time trend up, so whether one wants to imply a continuous drop or cherry pick from the top to the bottom of a cycle or adjacent cycles, it is wrong either way.
3. This is part prediction: while only two (the top two) of the six brackets saw increases from 2010 to 2011, the others were almost flat in that period, suggesting all brackets will see increases from 2011-2012 (it is October, after all). In other words, wages in all income brackets are currently going up, not down.

Source: http://www.census.gov/hhes/www/income/data/historical/household/2011/H03AR_2011.xls

If you prefer hourly wages instead of household income (you did use the word "wage"), the data has less depth in that it is only the overall average, but it tells the same story, though with a less pronounced effect of the economic cycle (due to not counting unemployment): http://www.data360.org/dsg.aspx?Data_Set_Group_Id=773

 

[Mentalist]

I get it in that sense but I was thinking Greg was speaking about economic freedom in the sense of economic prosperity which was along the lines I was thinking when the question was posed. But of course, I agree that deregulation means more freedom, but more freedom is never necessarily good in my opinion.

 

[russ_watters]

I get it in that sense but I was thinking Greg was speaking about economic freedom in the sense of economic prosperity which was along the lines I was thinking when the question was posed. But of course, I agree that deregulation means more freedom, but more freedom is never necessarily good in my opinion.

If freedom means freedom and prosperity means prosperity, why would someone say freedom when they mean prosperity?

 

[Charmar]

Percent increases over from 1967 till 2011 for the adjusted to todays dollar data.

Source: http://www.census.gov/hhes/www/income/data/historical/household/2011/H03AR_2011.xls
(the 2nd set of data)

Lowest 119%
2nd 112%
3rd 120%
4th 137%
5th 170%
top 5 188%

Was this how trickle down was supposed to work?

 

[russ_watters]

Percent increases over from 1967 till 2011 for the adjusted to todays dollar data.

Source: http://www.census.gov/hhes/www/income/data/historical/household/2011/H03AR_2011.xls
(the 2nd set of data)

Lowest 119%
2nd 112%
3rd 120%
4th 137%
5th 170%
top 5 188%

Was this how trickle down was supposed to work?

Yes.

 

[Charmar]

Yes.

So the richest people got tax cuts for them to have a bigger increase in money than the lower class?

 

[russ_watters]

So the richest people got tax cuts for them to have a bigger increase in money than the lower class?

That's confusingly written: you're aware that Bush's tax cuts were for everyone, right?

 

[Jim Kata]

Percent increases over from 1967 till 2011 for the adjusted to todays dollar data.

Source: http://www.census.gov/hhes/www/income/data/historical/household/2011/H03AR_2011.xls
(the 2nd set of data)

Lowest 119%
2nd 112%
3rd 120%
4th 137%
5th 170%
top 5 188%

Was this how trickle down was supposed to work?

Your link makes sense but I don't understand your percentages.

The key numbers as I see it are

1980 income in 2011 dollars

11,201; 27877; 46,000; 67,770; 120,834; 180571

2011 income

11,231; 29,204; 49,842; 80,080; 178,020; 311,444

Wage stagnation for the bottom half of the economy, and larger and larger wage increases for the upper half.

 

[Mentalist]

If freedom means freedom and prosperity means prosperity, why would someone say freedom when they mean prosperity?

In the context of my post to which I laid out above, I've covered this and I don't feel like going over it again.

But to your link, sure, you could make the argument but that link does not cover the devaluation of the American dollar either (or, factor it in but I was wrong on employee wages decreasing). However, employees work more hours yet aren't paid to the degree of production, a 3%-10% increase isn't much either when compared with other factors.

That's confusingly written: you're aware that Bush's tax cuts were for everyone, right?

The tax cuts seems to diminish growth in my honest opinion. Everyone gets a tax deduction isn't a feasible plan from what I've observed.

Why would you decrease taxes yet keep spending at the same rate? Doesn't make sense to me. You'd have to decrease spending to keep up with the taxes, but the decrease in spending doesn't exactly bode well for public sector jobs either to which we would see cutbacks, i.e. teachers, police, firemen, etc... The current tax system in my opinion, doesn't work and needs to be raise, not cut even further.

Let the Bush tax cuts expire, this little growth isn't enough.

 

[JonDrew]

I just don't know what economic freedom entails exactly. My initial thinking of it was on the fact that it had something to do with wage earning and companies being able to increase their bottom line, i.e. profit, therefore helping their employees earn more money. I am still unclear on your point though. I am also asking for a source to what you're saying so I can read a bit more into it and do my own research from there.

The best reading on economic freedom that I have read in the past year was Alan Greenspan's "Age of Turbulence", Its sort of entertaining too, in case you aren't sure Greenspan was the federal reserve chairman of the United States for... a very long time. He was so good at handling the United States economy and predicting what it was going to do that he became known as the Maestro.

He is a very intelligent influence on this topic.

The one thing I really took away from this book was the value of freedom of speech. It tells you things like "No country with a relatively free press has ever had a substantial famine", but anyway I am ruining the book read it yourself.

 

[ImaLooser]

Wages have been going down for 20+ years now, so I don't see much of the benefits.

Some people just hate freedom.

 

[Charmar]

Your link makes sense but I don't understand your percentages.

The key numbers as I see it are

1980 income in 2011 dollars

11,201; 27877; 46,000; 67,770; 120,834; 180571

2011 income

11,231; 29,204; 49,842; 80,080; 178,020; 311,444

Wage stagnation for the bottom half of the economy, and larger and larger wage increases for the upper half.

I agree with you Jim on your point.

As for what I did with the data, I just divided the 2011 numbers by the 1967 numbers to get a percent increase, I feel this is a more fair way to represent wage increases over the years.

That's confusingly written: you're aware that Bush's tax cuts were for everyone, right?

To be honest, I didn't know, I stand corrected. I've spent a little while trying to find a chart or some data comparing the tax rates over the past 30 years or so and can't seem to come up with a whole lot. I would be happy to look at the data if some were presented.

It doesn't change that there is a large difference in wage increases between the bottom and the top.

 

[russ_watters]

Your link makes sense but I don't understand your percentages.

The key numbers as I see it are

1980 income in 2011 dollars

Not sure why you are picking 1980?

 

[russ_watters]

But to your link, sure, you could make the argument but that link does not cover the devaluation of the American dollar either (or, factor it in but I was wrong on employee wages decreasing).

No, the numbers are inflation adjusted.

However, employees work more hours yet aren't paid to the degree of production, a 3%-10% increase isn't much either when compared with other factors.

Please source the claim that they work more hours.

Why would you decrease taxes yet keep spending at the same rate? Doesn't make sense to me. You'd have to decrease spending to keep up with the taxes...

On that we agree.

 

[russ_watters]

To be honest, I didn't know, I stand corrected. I've spent a little while trying to find a chart or some data comparing the tax rates over the past 30 years or so and can't seem to come up with a whole lot. I would be happy to look at the data if some were presented.

Not entirely your fault: democratic politicians have for years been hammering home the false idea that the Bush tax cuts were for the rich only. You just fell for it.

Wiki has articles: http://en.wikipedia.org/wiki/Bush_tax_cuts

There are actually two laws for them, linked separately in the top of the article. The first had these rate reductions:

a new 10% bracket was created for single filers with taxable income up to $6,000, joint filers up to $12,000, and heads of households up to $10,000.
the 15% bracket's lower threshold was indexed to the new 10% bracket
the 28% bracket would be lowered to 25% by 2006.
the 31% bracket would be lowered to 28% by 2006
the 36% bracket would be lowered to 33% by 2006
the 39.6% bracket would be lowered to 35% by 2006

The second moved up the timetable for the reductions and added a reduction in capital gains tax as well as increased several deductions that apply to people up and down the scale.

 

[russ_watters]

Some people just hate freedom.

There are so many wrong claims and cherry-picked facts in here, it is tough to know who you are really addressing or what your real point is or if it is based on the incorrect fact you quoted. Let me expand on my earlier affirmative response to the question on "trickle down" economics:

In order to say 19% growth for the bottom 20% in 45 years is bad, it has to be compared to an alternative. What's the alternative?

My perception is that there are multiple formulations for the other option, but they mostly focus on squeezing the top and bottom back together while being fuzzy on what happens to the middle and the aggregate. The most popular formulation currently in the US is the 1% vs the 99%. But when pressed (such as in the "is capitalism sustainable" thread), people on the left tend to begrudgingly acknowledge they believe:

1. More freedom => faster growth.
2. They are mostly concerned with maintaining a pretty high minimum acceptable standard of living, more so than raising the standard of living for all.

An example for #1 is that the "Gilded Age" is thrown around as an anti-conservative slur in P&WA, due to its high inequality. But the Gilded Age also saw high economic freedom and the highest growth the country has ever seen.

The result of this logic leads toward a picture much different from lowering the 1% to raise the 99%. It is more like hammering the top 1% to raise the bottom 20% while causing the remaining 79% to flounder (fractions are of course estimates).

So the question of values that I would ask/that drives me is:

Does the government exist to raise the quality of life for 20% of its population or as large of a fraction of its population as it can?

I will probably never be in the 1% and have some liberal friends who just can't grasp why I would support the Republican party given that prediction that I'll never be in the top 1%, but that's the simple answer: I'm a part of the 79% who I believe would flounder under increased government interventionalism.

 

[russ_watters]

Mention has been made of increases in production as if that means wages across the board should be rising. Why should that necessarily be the case?

Most of the jobs in the bottom 20% are jobs like WalMart greeting, burger flipping and janatorial work. Have these jobs changed any in the past 20 or 45 years to be worth an extra 20% in pay? Why should people be getting more pay for the same job?

Factory workers are not in the bottom 20%, but their jobs are also relatively unskilled. Why should they be paid more for the production of the factory? They aren't the ones who make the factory more productive. The engineers who designed the newer, more efficient machines, the skilled technicians who built them and the venture capitalists who put up the money are the ones responsible for the increases in productivity and should therefore get the most benefit from the production increase.

I think it is a bad idea to reward people for nothing because it causes people to think that they don't have to do anything to get rewarded. It can lead to a cycle of mediocrity.

 

[marty1]

There is a fundamental flaw in thinking that making poorer people richer and richer people poorer improves conditions for the lower end while not hurting the upper end. The truth is that the value of currency is relative and the people at the upper end have more influence over establishing it. If poor people have more money, the end result is to increase how much it costs for them to live. It's all relative.

 

[Jim Kata]

Charmar the problem with just a straight percentage like you did is that it isn't adjusted for inflation. The more interesting numbers in your link are the real wages that is the wages in 2011 dollars that's where the stagnation is made abundantly apparent. To Russ's point, the reason I picked 1980 or there about is because that is about the time when the stagnation begun.

The answer to wage stagnation is quite mundane it's because our economy went from a labor shortage to a labor surplus. In a labor surplus wages become stagnant. With increases in productivity through automation and stagnant wages profits increased and the businessmen thought the increases in profit was due to their ingenuous entrepreneur abilities and rewarded themselves accordingly. With out massive intervention this trend will continue because the amount of available jobs is far below the amount of employable people.

 

[BWV]

Definitely led to more freedom for beer drinkers:

http://reason.com/archives/2009/02/24/draft-dodgers/print

Draft Dodgers
Greg Beato|Feb. 24, 2009 7:00 am

For connoisseurs of Budweiser, the 1970s were a pale golden age. In every supermarket across the land, the King of Beers maintained its status as the grocery world’s most superfluous monarch, reigning over just a handful of domestic taste-alikes and one or two upstart imports. The American public had decided it liked its beer cheap, bland, and less filling, and the industry—which, after decades of consolidation, consisted of a mere 44 breweries in 1979—was happy to oblige. Consumers with a thirst for something tastier, or at least different, had few options. Things were so bad, in fact, that Coors, distributed in just 11 Western states, was considered such a rare delicacy in other parts of the country that bootlegged cases went for three times their retail price in New Jersey and Tennessee. Was it any wonder that the nation was feeling weak and watered down?

Then Jimmy Carter took pity on our wretched souls. In 1978 he signed Senate Amendment 3534, a portion of which gave each household permission to produce up to 200 gallons of tax-exempt beer each year.[/quote]Continued

 

[mheslep]

The Tax Foundation reviewed Romney's tax plan in response to the TPC review, taking issue with the TPC assumption that taxes rates have no impact on economic growth.

...the results of a single study by the Tax Policy Center (TPC),[2] which finds Romney’s tax plan would require raising taxes on low- and middle-income earners to pay for tax cuts for high-income earners. However, to get there, TPC assumes that tax rates do not matter for economic growth, i.e., Romney’s plan to cut income tax rates by 20 percent across the board will have no effect on labor supply or saving and investment decisions. Only among Washington score keepers does such an assumption make sense, but it certainly has no credibility among academic economists ...

http://taxfoundation.org/article/simulating-economic-effects-romneys-tax-plan

...The Romney plan would raise actual and potential GDP by about 7.4 percent over a five to ten year adjustment period. The private business sector would grow about 7.8 percent.

...The Romney tax plan would recover nearly 60 percent of the static projected revenue cost due to economic growth, higher wages and employment, and higher tax collections on the higher incomes. To keep the reform revenue neutral, the government would only need base-broadeners [i.e. deduction elimination] equal to about 40 percent of the static cost

U. Chicago economist John Cochrane reviews the Tax Foundation study here.

 

[Charmar]

Charmar the problem with just a straight percentage like you did is that it isn't adjusted for inflation. The more interesting numbers in your link are the real wages that is the wages in 2011 dollars that's where the stagnation is made abundantly apparent. To Russ's point, the reason I picked 1980 or there about is because that is about the time when the stagnation begun.

The answer to wage stagnation is quite mundane it's because our economy went from a labor shortage to a labor surplus. In a labor surplus wages become stagnant. With increases in productivity through automation and stagnant wages profits increased and the businessmen thought the increases in profit was due to their ingenuous entrepreneur abilities and rewarded themselves accordingly. With out massive intervention this trend will continue because the amount of available jobs is far below the amount of employable people.

I thought those numbers were adjusted for inflation due to the numbers being in 2011 dollars?

 

[russ_watters]

I thought those numbers were adjusted for inflation due to the numbers being in 2011 dollars?

Yes, they are.

 

[Charmar]

Yes, they are.

Well then my percents should be correct, thank you.