Do trickle-down economic theories work?

[freeRadical]

The post-WWI boom raised all boats, until the Captains of Industry/Robber Barons bankrupted everyone, including themselves with the Great Depression.

Do you have any evidence that the “Captains of Industry/Robber Barons” cause the Great Depression? Who were they? How did they do it?

The consensus among economists now is that the Federal Reserve caused the Great Depression when they contracted the money supply by one-third in response to a moderate recession. Even Ben Bernanke, the former president of the FED, has admitted that. If they hadn’t done that, there would have been no Great Depression, just a moderate recession.

 

[freeRadical]

So are you saying that when a company that transports things and buys gas and pays the gas tax do not pass that on to their customers? The only way you are affected by the gas tax is if you directly buy gas?

Maybe they pass it on, maybe they don’t. The evidence on that is slim and there is a lot of studies in economics on who actually pays the tax. But even if they did pass it on to the consumer, it would still be a consumption tax.

 

[sallybutler]

Services are taxed under a consumption tax.

Again it seems you are arguing semantics. If you think that it would be fairer to tax employers for hiring the services of an employer, just like any other service, then that’s fine with me.

I am not arguing semantics. A service is action provided by a person. Often they provide their own tools.

I don’t understand why you have to pay a tax when you buy a pair of scissors, but you don’t have to pay a tax when you buy a haircut.

 

[freeRadical]

I am not arguing semantics. A service is action provided by a person. Often they provide their own tools.

I don’t understand why you have to pay a tax when you buy a pair of scissors, but you don’t have to pay a tax when you buy a haircut.

If you don’t have to pay a sales tax when you buy a haircut it is because it is exempted from sales tax. Some states do no exempt services from sales tax. i don’t believe I ever said I was opposed to taxing services under a consumption tax.

 

[on_the_hill]

Do you have any evidence that the “Captains of Industry/Robber Barons” cause the Great Depression? Who were they? How did they do it?

Um…those rich old white men did it.

Maybe there are valid examples to demonstrate what I’m wondering about. Who knows.

 

[freeRadical]

Um…those rich old white men did it.

Maybe there are valid examples to demonstrate what I’m wondering about. Who knows.

So you have no evidence, you can’t even name individuals. Like I said, the FED caused the Great Depression, not rich old white men.

 

[LeafByNiggle]

T
You bring up something to consider though. Should someone who has no kids in public schools still have to pay for public schools? Should someone who never utilized public parks still have to pay for them? Should someone who doesn’t use air transportation still have to pay for the air traffic control system?

Yes, it is a good question. Care to offer an answer? If you do then I will too.

 

[freeRadical]

Yes, it is a good question. Care to offer an answer? If you do then I will too.

They are very complicated questions but before I offer my thoughts I would like to point out that studies have shown that people prefer paying for public services through user fees and sales taxes rather then through property taxes. Not only do they prefer it, but they are actually willing to pay more for these services through user fees and sales taxes then they would be willing to pay for them through property taxes.

 

[Zoltan_Cobalt]

Um…those rich old white men did it.

Maybe there are valid examples to demonstrate what I’m wondering about. Who knows.

There is a wealth of valid examples that demonstrate why you are wrong. It is called actual HISTORY, unencumbered by revisionists.

 

[LeafByNiggle]

They are very complicated questions but before I offer my thoughts I would like to point out that studies have shown that people prefer paying for public services through user fees and sales taxes rather then through property taxes. Not only do they prefer it, but they are actually willing to pay more for these services through user fees and sales taxes then they would be willing to pay for them through property taxes.

If it makes it any easier, focus only on the public school question. It is more relevant that public park funding anyway, since only a tiny amount is spent on public parks compared to public schools.

 

[freeRadical]

If it makes it any easier, focus only on the public school question. It is more relevant that public park funding anyway, since only a tiny amount is spent on public parks compared to public schools.

The fundamental question is: Do public schools benefit society as a whole or do the benefits of an education only accrue to the people receiving the education, that is, is education a positive extranality? If it is, then a case can be made for the subsidization of public schools, if not, then a case cannot be made.

For the record, I am not against government subsidization of primary school but I am against the government administration of primary schools. I am also against government subsidization of secondary education, that is, college.

Milton Friedman goes into length on this topic in his book Capitalism and Freedom. I suggest looking into it.

I was just throwing those questions out there to make people think, that is what I like to do.

For things like public parks and the like, I believe user fees would be a better way to finance them instead of property taxes.

 

[on_the_hill]

There is a wealth of valid examples that demonstrate why you are wrong. It is called actual HISTORY, unencumbered by revisionists.

I see. I used History with only one capital letter. I should have been using HISTORY. My bad.

 

[on_the_hill]

that is, is education a positive extranality? If it is, then a case can be made for the subsidization of public schools, if not, then a case cannot be made.

Absolutely a positive externality. And whether or not people use them, property taxes are the appropriate way to fund them. School district quality drives property values. Taxes that go to support public schools are investments in the values of the real estate in the community. They are investments in the quality of life in the community.

For things like public parks and the like, I believe user fees would be a better way to finance them instead of property taxes.

I disagree with user fees, because we want as many people as possible to be active, spend time outdoors, get fresh air and sunshine, etc. We want to eliminate barriers.

 

[on_the_hill]

And now that I think of it, property taxes to support public education are user fees. They allow the property owner to use the quality of life in the community.

Insofar as govt administration–I support that end of it.

 

[LeafByNiggle]

The fundamental question is: Do public schools benefit society as a whole or do the benefits of an education only accrue to the people receiving the education, that is, is education a positive extranality? If it is, then a case can be made for the subsidization of public schools, if not, then a case cannot be made.

Since you are for government funding of primary schools, I assume you believe a case can be made for education benefiting the society as a whole. Since I promised to offer my view, I will say that I also believe education is a benefit to society as a whole. Therefore it would be inappropriate for public schools to be funded by tuition.

In particular, the benefit to society as a whole is this: The society we live in depends on people who are educated. Even if you were rich and could afford tutors for your own children, you would not want to live in a world where a large part of the society you live in is illiterate. An educated workforce is a more productive workforce. That translates into better and cheaper products that you can buy. That is just one of the many societal benefits of education.

Another reason for public funding is that children are not “owned” by their parents. The parents have a certain responsibility to care for their children, but ultimately those children will leave their parents and become independent citizens. It is they who will benefit from their education more than their parents. So by tax-benefit linkage, it would be more fair to charge the kids, not the parents. But at the time of their primary education, children are unable to pay their own way. We could offer “student loans” for primary schooling, but that would be unfair because at the time such a “contract” was entered, the kids are not yet of the age to enter into such binding contracts. Therefore the funding model that makes the most sense is to fund education from taxes, not user fees.

For things like public parks and the like, I believe user fees would be a better way to finance them instead of property taxes.

In principle, I agree with this, because the benefit of public parks is spread much less evenly than the benefit of education. But a case can still be made for public funding in addition to user fees. Public parks are a source of national pride, which is useful as a symbol, even if many people do not visit them.

 

[freeRadical]

And now that I think of it, property taxes to support public education are user fees. They allow the property owner to use the quality of life in the community.

Insofar as govt administration–I support that end of it.

Property taxes are not user fees.

 

[freeRadical]

I disagree with user fees, because we want as many people as possible to be active, spend time outdoors, get fresh air and sunshine, etc. We want to eliminate barriers.

You don’t need a public park to spend time outdoors, get fresh air and sunshine, etc And it would seem that people disagree with you. Studies have shown that people prefer user fees and sales taxes to property taxes.

 

[freeRadical]

Since you are for government funding of primary schools, I assume you believe a case can be made for education benefiting the society as a whole. Since I promised to offer my view, I will say that I also believe education is a benefit to society as a whole. Therefore it would be inappropriate for public schools to be funded by tuition.

We must distinguish between primary school education and secondary school education. Yes, I believe primary school education benefits society as a whole and thus, there is a case for it to be subsidized by government. However, I see no case for the government to also administer the schools too. However I do not support government subsidization of secondary education.

In particular, the benefit to society as a whole is this: The society we live in depends on people who are educated. Even if you were rich and could afford tutors for your own children, you would not want to live in a world where a large part of the society you live in is illiterate. An educated workforce is a more productive workforce. That translates into better and cheaper products that you can buy. That is just one of the many societal benefits of education.

Do you really believe that primary school also prepares students to enter the workforce and also makes them more productive? Maybe it does, a little. The quality of public education in this country is terrible and that is because government also administers the schools.

Another reason for public funding is that children are not “owned” by their parents. The parents have a certain responsibility to care for their children, but ultimately those children will leave their parents and become independent citizens. It is they who will benefit from their education more than their parents. So by tax-benefit linkage, it would be more fair to charge the kids, not the parents. But at the time of their primary education, children are unable to pay their own way. We could offer “student loans” for primary schooling, but that would be unfair because at the time such a “contract” was entered, the kids are not yet of the age to enter into such binding contracts. Therefore the funding model that makes the most sense is to fund education from taxes, not user fees.

I have no problem funding public schools through taxes but I would rather see a land value tax then a property tax. However, I do have a problem that people who send their kids to private school also have to pay taxes for public school.

In principle, I agree with this, because the benefit of public parks is spread much less evenly than the benefit of education. But a case can still be made for public funding in addition to user fees. Public parks are a source of national pride, which is useful as a symbol, even if many people do not visit them.

By public parks, do you mean national parks or local parks. I can see the case for national parks to be funded by taxes but I don’t see why local parks cannot be funded by user fees.

 

[LeafByNiggle]

Do you really believe that primary school also prepares students to enter the workforce and also makes them more productive? Maybe it does, a little. The quality of public education in this country is terrible and that is because government also administers the schools.

Primary school is not sufficient, but it is necessary.

However, I do have a problem that people who send their kids to private school also have to pay taxes for public school.

Such a position denies the societal good of education and reverts back to the faulty view that education is a benefit primarily to the parents of the kids being educated.

If you exempt parents who send their kids to private schools, then on what basis can you refuse to exempt those without children, who also do not impose a burden on the public school system? It is a slippery slope that ends in no public funding for primary schools.

 

[freeRadical]

Such a position denies the societal good of education and reverts back to the faulty view that education is a benefit primarily to the parents of the kids being educated.

If you exempt parents who send their kids to private schools, then on what basis can you refuse to exempt those without children, who also do not impose a burden on the public school system? It is a slippery slope that ends in no public funding for primary schools.

I would venture that the benefit of education primarily accrues to those being educated. But this brings up another question: If primary school benefits society as a whole then why does the government only subsidize schools that it itself administers? Why does it not also subsidize private and parochial schools? Also, why does it not let people choose what school they want to go to? In my opinion, government is too involved in education and it has resulted in poor schools with low quality of education. Government obligation to education should end with subsidization, I see no reason why they should also administer the school and choose what school that people have to go to. That is why I am a fan of school vouchers and programs like it.