The Least, First

Monte Asbury's blog

Why cutting rich folks’ taxes doesn’t stimulate the economy

with 2 comments

And what does.

Another fascinating post comes from the ever-excellent True Conservative.

Consider: In 2007, only 9% of privately-held U.S. businesses … cited a “shortage of long-term finance” as a constraint on expansion. “Shortage of skilled workers” is No. 1.

So how do you increase the number of skilled workers? Here’s the story:

clipped from trueconservative.typepad.com
Here’s the central tenet of supply-side/trickle-down/voodoo Reaganomics:
If rich people get (and keep) more money, they will invest it and promote economic growth, so everyone will prosper.
That would (perhaps) be true if a shortage of investment were an important constraint on businesses […]
But availability of investment money is the least important constraint […]
[I]t ranks dead last on the list of business constraints. […]
A shortage of skilled workers in now the #1 constraint […]

Constraint 2
[This is the] economic view so ably explicated by James Livingston, which I summarize and link to here […]
The fact is that wealthy people can’t find truly productive investments offering sufficient returns, so they turn instead to investments that don’t have anything to do with production or productivity. (Think: MBSes, CDOs, CDSes, etc.)[…]
Since the greatest constraint on growth is currently a shortage of skilled workers, the best path to prosperity seems to be taxing those unproductive dollars and investing them in the thing that … is prosperity-producing: education.
Making sure that wealthy people have plenty of money is not the way to produce prosperity. That’s a self-serving myth […]
blog it

Provocative, eh?


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Written by Monte

November 21, 2008 at 10:50 pm

2 Responses

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  1. How true! And a couple of posts after this one, True Conservative (who is quite an original thinker) demonstrated that the return on government investment in education – even in strictly cash-back to the nation terms – is so high that it even exceeds the cost of borrowing money to make it.

    Monte

    November 28, 2008 at 11:53 am

  2. In all of my various employments, I have been stunned by the lack of regard for intellectual capital. This one fundamental flaw in management is enough to unravel the whole fabric of American business.

    Moliticon

    November 26, 2008 at 12:42 pm


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