Lois & Clark Forums Forums General Discussion Fun with Polls Poll: Which US presidential candidate do you like best?

The flaw in the reasoning is that you make the assumption that nobody ever changes and that 5% is 5%. Give an employer an extra $450,000 and what does he do with it? Does he pocket it? Does he reinvest it? Does he spend it? No matter what he does with it, it's creating economic activity. And if he's an employer, even better because people spend money to make money when it comes to investment. And that money spent after getting that $450,000 could be used to hire 10-20 more people. Rich people do not like idle money. They put it to use. That's why they're rich in the first place. The best definition of a rich person I've ever heard is from the Cosby Show. Bill Cosby said that "you're not rich when you work for your money. You're rich when your money works for you." Exactly right. Give a rich person an opportunity to make money and he'll seize it.

One thing I could never understand is the propensity of the left to always assume static responses. It's clear that people will change their behavior under different circumstances. Yet nobody on the left ever takes that into account. That's the whole thing behind supply-side economics. Behavior is changed depending on the circumstance. Give an employer a higher ROI and out come those investment dollars and more jobs. It's not like $450,000 goes into a black hole and is never seen again. It's put back into the economy to make more money. And when it's investment, you get the power of the multiplier effect that does more than just hand $5 to a poor person. It gives ten, twenty people new jobs that they've never had before. Then they'll become part of the tax base and will contribute even more.

What can be more compassionate than enabling an economy to produce more and better jobs? Direct government handouts aren't going to do it. That's a recipe for keeping poor people poor. You have to give employers the incentive to hire more people. You do that by making it more profitable for them to invest.

I've always had this theory that psychologists make the best economists. Not the money managers or the accountants, but the psychologists. Economics is called the study of money but in reality it's the study of human behavior. The whole supply-side theory is based on what people will do when government gets out of their way, economically. Under a static model, you cut tax rates by 5%, you rake in 5% less in tax revenue. Under a dynamic model where human behavior changes, that 5% can ADD revenue, growing by leaps and bounds as people get hired, pay more taxes, make more money and hire even more. This is what the multiplier effect really is. It's a behavior change that ends up benefitting the economy more as a whole than as a sum of its parts.

The absolute worst kind of tax cut is a demand-side tax cut, what politicians refer to as a "targeted tax cut." Employers get nothing. No jobs are created. People lower on the economic ladder get their $5. Tax revenue probably will go down because no significant economic activity is stimulated. What then? Explain how that makes anybody more than marginally better off. Give an employer a tax break and you can point to the ten people who were previously unemployed who are now contributing.

I don't know anything about those tax cuts by the Swedish right wing politicians, but since your right wing is further left than our left wing, I wouldn't be at all surprised if those tax cuts that lost your treasury so much money were of those inefficient "targeted tax cuts" variety that generate little to no economic activity.

Even stock analysts are psychologists masquerading as financial experts. There are two types of financial analysts. There are fundamentalists and there are technicians. Fundamentalists look at the numbers a corporation generates and decides whether that company is worth investing in. Technicians couldn't care less what company they're looking at. What they look at are the little squiggles on charts that show stock movement in the past. By studying the little squiggles, they can accurately predict to a certain degree how a stock will do in the future. That field of study is known as technical analysis. Fundamentals can tell you a good company to invest in but a technician can tell you when to buy and sell stocks from that good company. A really good technician can make money on any stock, as long as it's publicly sold and has good liquidity (lots of shares sold daily).

Those little squiggles are basically patterns of behavior. People behave differently under different circumstances and those circumstances can be interpreted by the movement of a stock over time. You can make out patterns like pennants, moving averages, Bollinger Bands, teacups, inverted W's, etc. Some predict that events over decades can accurately predict a stock's movement. Those are the Elliot Wave technicians.

One of the most successful investors of all time lives in San Diego. His name is Larry Williams and I've had occasion to chat with him a bit. He invests purely in commodities futures. He studies those little squiggles all day long and places his orders based on those squiggles. He makes millions a year doing just that. All he does is buy and sell futures contracts and never actually takes delivery of any actual commodity. All that's done just by studying people's behavior. I should also say he writes books on investing, too.

I wonder why the left, in the face of so much evidence that people do change behavior based upon the circumstance, simply can't seem to get themselves to believe in it and act accordingly? Instead it's always his 5% is bigger than his 5%.