Thursday, June 14, 2007

Need for Discipline

Greg Mankiw asks the Real Question of how much progressivity is optimal for Tax rates. Dedicated Students should read every link in the Post, and every link in the linked Pages. I personally would like to read the Paper of Ivan Werning. I personally have real difficulty with the concept of Pareto efficiency and Tax rates. There are two Parts to the setting of Tax rates: the spread of Rates, and the overall Tax impact. Pareto efficiency will only impact the spread of Tax Rates, not the overall impact. A 15% Tax spread appeals to most Economists, but there is vast difference between 5-20%, 20-35%, and 45-60% overall Tax impact. Greg calls the Tax impact a political issue, but I think there is a heavy economic issue in each. (By the way, I favor 10-30% Tax spread over Four intervals, but with Business paying all Social Security contributions; this simplifying necessary Tax increases to meet Social Security and Medicare financial Costs).

Tyler Cowen has a blog Post and a NYTimes article on the laxity of Youth discipline in America producing young entrepreneurs as well as Troublemakers. I have some trouble with this Concept, and not because many Youth are not more successful–which they are. I imagine these youthful Business achievers lack a qualified Life experience; the basic element consisting of absolving themselves of responsibility for proper maintenance of a labor force. They do not understand the Costs of providing a Household, the Crisis of inability to control Income Flow, or proper exploitation of expansion capacity outside of their specific skill. The obvious Retort will be that they will learn on the Job, but how many Economic lives will be adversely impacted in the Learning Period?

Menzie Chinn has this Post, which has a link to another Post on how to control Energy use. Both are elemental to understanding our Trade Deficit position, and its fallibility. American reaction to the settled nature of the Yuan cannot affect Our Trade deficit markedly; the only Recourse here is to take Steps to regenerate American manufacturing capacity. The Bush position on Energy punishes Food Consumers with higher Prices, while doing nothing to constrain Fuel usage. The current Push by both President and Congress is to benefit Corporate and Agribusiness through Tax Credits, rather than make any other substantial gain. Take the Time to study both Posts; no policy initiative currently advocated attacks the structural problems involved. lgl

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