Reaganomics i.e conservative/libertarian economics succeeds at last.

Because an unregulated free market system was so successful in the late 1800s and early 1900s? And on that note, we complain about the current economic crisis but imagine that every other decade because that's pretty much what happened consistently.

Boom and bust cycles today aren't even close to what they were before world war II and the New Deal.

 

This post is a gem. Thank you for saying what I want to say, but better.

 

Economic systems aren't moral, be it socialism or capitalism. They are methods of distribution of resources and are only as moral or immoral as those engaged in them.

 

People fundamentally misunderstand what the aims of Reaganomics were. Simply casting it as a success or failure based on the economic fortunes of average Americans misses the point of Reaganomics completely. It had very little to do with us, and everything to do with distributing power to big business - and, by that measure, it was an overwhelming success. It didn't only initiate a massive power shift to corporate entities, it also inculcated a sense among average people that this state of affairs was only right and proper - and that is the great success of Reaganomics and we're still living with the consequences of that today.

 

Both capitalism and communism presented the illusion that the movement (or stasis) of property and currency was controlled by abstract forces (whether the 'free market' or the 'common good'), obscuring the fact that the movement and accumulation of property is always determined by the most powerful individuals in any given society.

Getting people to accept an abstract ideology as the motive force of their own economic well-being (or lack thereof) introduces a measure of stability into a society - you can't vote capitalism out of office, you can't burn down communism's house - you can't fight an abstraction, you can't take an abstraction to court. So, if the abstraction isn't working for you - what can you do about it? Not much.

But, if you recognize that the abstractions are simply shadows of the desires of the powerful in yours society, and you know who the powerful are - you can vote them out of office, you can burn down their house, and so forth.

Both capitalism and communism functioned, and still do, as screens between the populace and the powerful. The screens obscure the actions and intentions of the powerful to such an extent that people are willing to accept the idea that "market forces" or "the will of the people" are the things that make their lives either good or bad.

Most of what we mistake for "market forces" or "the good of the people" are really just side-effects of two powerful individuals or organizations in conflict with one another. We're not their concern, because we're under control.

 

I disagree with this and it won't work.

Take 1 Mickey D for example. Does the manager make the same as the assistant manager, the shift lead, cash register, the fryer, the cleanup person make the same money?

Should LeBron make the same money as Ryan Bowen, the head coach, the GM, the ball boy, the guy that yells BEER all night long?

If you give everyone a $1,000,000. In 2-3 years, you will see roughly the same people on welfare line and the same people the most of that money.

Former stars (movie, sports, singers) with lucrative contracts and lottery winners proves it.

 

Just to clarify, I was making a very simple example. There should absolutely be differentiation in wages because that's what incentivizes people to advance, get higher degrees, etc. However, the question is how much?

CEO's have always been paid substantially more than janitors at companies.
However, over the last few decades, the difference in pay between those positions has grown dramatically. Does a CEO today provide that much additional relative value than a CEO did 30 years ago? The question is whether that increased difference is a good or bad thing.

 

Back in the day, Magic Johnson got the biggest contract ever for a basketball player. $1,000,000 / year.

Does the players today deserve $20 Mil/year?

Is Oprah worth $300 Mil/year?

 

Macro/philosophical questions aside....

I'm not sure now is the best time for a tax increase. Money is still very tight.

I'm not opposed to tax increases later....but raising marginal rates in this climate doesn't seem like a good idea to me.

 

What was the minimum salary when Magic was getting his $1MM? What is it today?

Remember - I'm not talking about absolute numbers. I'm referring to relative distribution. We definitely want absolute numbers to go up for everyone.

 

To continue with the NBA example - when Kevin Garnett signed his insane contract in the 1990's, that's when the NBA realized their system was broken. Too much money was being given to the stars at the expense of everyone else. So they instituted the max salary contracts - and the union went along because the "regular players" in the union (~janitors) were suffering at the expense of the top players (~the CEOs). It helped get some semblence of health back into the NBA.

 

The federal budget deficit ballooned under Reagan, and the only way to clean it up is to some degree undo the marginal tax decreases. Going from 70% to 28% was a ridiculous drop.

We learned that you can run a surplus with Clintonian tax rates - and still have massive economic growth. I think that's the sweet spot we need to get back too. Reagan was right about marginal tax rates but he went too far and he also disincentivized new investment which is today hurting our economy.

We can undo that right now, not until the economy and job growth starts to heat up, but it needs to be done at some point.

 

You're trying to make a correlation between tax rates and economic growth/surplusses, when in reality it's probably a weak connection.

 

I'd disagree there - cuts in marginal tax rates have typically led to budget deficits.

And on the state and local levels there's even stronger correlation between tax rates and budget deficits.

You don't just have to look at the U.S. economy either. Plus, it's pretty obvious - increase revenue = less deficit, cut revenue = greater deficit.

 

I'm referring more specifically to the Clinton era. There were other huge factors that spurred economic growth and created surpluses during those years, with increased taxes being a very small part of it.

 

Sure - economic growth helps...but think of it this way, growth during the Bush presidency recovered quickly in 2002-2004 and yet he ran a deficit - why? Because he cut taxes.

When you run a deficit in the good times, you're asking for big trouble in the bad times - because now you can't cut taxes nor really increase spending. Bush casterated fiscal policy for years to come.

 

It was $1.40/hr in TX in 1980 and $7.25/hr now

 

Not realistic at all, it's an example of how men can and should be, not how they are. It's a romantic work. The characters are acting in a way consistent with a particular philosophy, just as capitalism is a system (the only system) that is consistent with it.

Negative externalities (dumping as an example) exist in any system. To the extent that they can be quantified, the state has a role to play in enforcing compensation. That isn't inconsistent with capitalism.

Credit default swaps and overleveraging might be unwise, but unless there is fraud or contract violation, capitalism has nothing to say about people engaging in activities you think are unwise. It's simply wrong to force your view of prudent behavior on anyone else.

The arguments made here about which system results in better outcomes is missing the point (not to mention it's boring). The question is which system is right, morally.

A system that uses force to influence/restrict private individual activity is never justified, no matter the outcome. Force is only justified in the defense of individual rights.

 

Yay! Rand's brand of capitalism makes for a more interesting, morally compelling story book.