Rich people and taxes

[jBirch]

Originally Posted by Inquartata

No. The relevant question is: Can government spend money and do things more efficiently than can private individuals and organizations? The body of evidence is overwhelming: No.

Actually, isn't Medicare in the US just such an example? The private interests of the HMO's conflicting with the private interests of the doctors conflicting with the private interests of the patient kinda conspires to make that a wholly deficient allocation of resources.

James.

[Dr. Pfleschbach]

Originally Posted by gojujay

Seems to me to be a plan for autocratic socialism except for possibly #5

Your definition of autocratic socialism is ridiculously broad.

Originally Posted by gojujay

The incentives that minmum wage laws create are what has led to the current illegal immigration imbroglio. Your assertation made in the beginning paragraphs seems to be at odds with your suggestion of a "Living Wage Law". Minimum wage laws are tools that are very popular with politicians looking for more votes but they do not make economic sense. Business will always look for ways to cut expenses and labor is the biggest expense.

I don't understand your premise that minimum wage laws cause illegal immigration. This is akin to claiming that laws against theft are responsible for crime waves (if we just got rid of those pesky laws there would be no more crime). Aren't the real causes the employers' quest for higher profit and the illegal immigrants' desire to escape the horrible economic conditions found in third world countries?

Originally Posted by gojujay

So we pay protection money to the poor to keep them from burning the town down?

So what are you implying, that anti-poverty programs function as bag men for rackateers? You don't need to go to such extremes to make your point. What you describe as protection money I would call a helping hand offered out of good will and enlightened self-interest.

[Inquartata]

Originally Posted by jBirch

Actually, isn't Medicare in the US just such an example? The private interests of the HMO's conflicting with the private interests of the doctors conflicting with the private interests of the patient kinda conspires to make that a wholly deficient allocation of resources.

James.

"Fun with statistics" is rather what I'd call it. The two systems are not directly comparable.

Medicare, being a government program of great size, does benefit from economies of scale, and from the coercive ability that a government entity can exert on suppliers and contractors. However, it is still run by a government bureaucracy, with all of the dysfunctions and inefficiencies that entails.

At the behest of Jeff's defense of Medicare on the other socialized medicine thread, I Googled "medicare+overhead" and got this:

http://www.thehealthcareblog.com/the..._medicare.html

I haven't gone and looked up the writer's credentials, and in fact I only read about halfway down the page, but some of the points look like fair cops.

[jeff]

Good find, Inq. I don't know the guy's credentials either, but it's an interesting read.

I'll add a few comments

- private HMO reimbursal rates (what they pay the provider) are also dictated by fiat: if a doc, lab, clinic or hospital wants to get patient flow from, say, Aetna, they have to accept what rates Aetna gives, and cannot balance bill. There is no negotiation

- Kaiser is mentioned as "different", but it may be unclear to the reader that it is both a provider and an insurer (eg: staff model HMO, where docs and others are employees), which alters the financial model substantially.

- Medicare offers two styles of admin work: one is almost the same as with an HMO: doctor's office codes the work done, submits request, eventually gets paid (if all goes well) - but it goes to the patient who sometimes forgets that it's the doctors money, and takes it to roulette at Vegas,, or the provider takes "Medicare assignment", where for a 20% (if I recall the % correctly) gets the check directly.

The conversation with the HR VP is priceless...

[jBirch]

Originally Posted by Inquartata

"Fun with statistics" is rather what I'd call it. The two systems are not directly comparable.

Medicare, being a government program of great size, does benefit from economies of scale, and from the coercive ability that a government entity can exert on suppliers and contractors. However, it is still run by a government bureaucracy, with all of the dysfunctions and inefficiencies that entails.

At the behest of Jeff's defense of Medicare on the other socialized medicine thread, I Googled "medicare+overhead" and got this:

http://www.thehealthcareblog.com/the..._medicare.html

I haven't gone and looked up the writer's credentials, and in fact I only read about halfway down the page, but some of the points look like fair cops.

Ok, but doesn't this still refute the "anything government can do, private industry can do better" line of reasoning?

James.

[jBirch]

A different tack for this thread...

The Canadian government is considering two different proposals for tax relief and economic stimulation:

1) Cut the national sales tax from 7% to 6%.
2) Decrease the lowest tax bracket by 1% from 16% to 15%

So, philosophically, which is better economically and personally? Cutting the consumption tax or cutting income tax?

James.

[Dr. Pfleschbach]

Originally Posted by jBirch

A different tack for this thread...

The Canadian government is considering two different proposals for tax relief and economic stimulation:

1) Cut the national sales tax from 7% to 6%.
2) Decrease the lowest tax bracket by 1% from 16% to 15%

So, philosophically, which is better economically and personally? Cutting the consumption tax or cutting income tax?

James.

I would think cutting the sales tax would work best for both the economy as a whole and personally because it is a flat tax that will effect spending for all incomes in more areas of the economy. The people with little money spend almost all of it on necessities. They do very little discretionary spending. Those with disposable income can make a choice to spend extra money for either more goods or more expensive goods because they now have an extra 1% at their disposal. The stimulation would help producers of both necessities and luxury items.

The income tax plan will primarily aid those with the lowest incomes and the spending would be confined mostly to basic necessities such as food, shelter and transportation. Thats less spending distributed less broadly with jobs created in fewer sectors of the economy.

[Inquartata]

Originally Posted by jBirch

Ok, but doesn't this still refute the "anything government can do, private industry can do better" line of reasoning?

James.

No, but who's making that claim? Not I. ( You may recall the whole "public goods" imbroglio. Government can handle the provision of public goods better than private industry...because private industry won't provide them in proper amounts if at all. )

Any nonpublic good or service can probably be provided more efficiently by private industry than by government, though.

It all goes back to the profit motive. Private industry is driven to minimize costs, because it means more profit for them. Government has no such incentive, because it isn't compensated from profits, but rather from tax revenue, which is set by fiat. In other words, it is immaterial to a public agency whether it saves money or wastes it because neither case affects its budget. Or to be more precise, it is often best if an agency overspendsm because that may get its budget increased. Underspending, ie cutting costs, will only get the savings taken for other government uses and probably will make lawmakers believe it was overfunded in the first place...and its budget frozen or cut.

[Dr. Pfleschbach]

Originally Posted by Inquartata

It all goes back to the profit motive. Private industry is driven to minimize costs, because it means more profit for them. Government has no such incentive, because it isn't compensated from profits, but rather from tax revenue, which is set by fiat. In other words, it is immaterial to a public agency whether it saves money or wastes it because neither case affects its budget. Or to be more precise, it is often best if an agency overspendsm because that may get its budget increased. Underspending, ie cutting costs, will only get the savings taken for other government uses and probably will make lawmakers believe it was overfunded in the first place...and its budget frozen or cut.

While private industry will seek to produce goods at minimum cost, the other side of the equation requires them to sell the goods at maximum profit. Market forces are not necessarily positive, but rather neutral in terms of advantage to the consumer because they can push prices in either direction. Savings to the consumer are only realized if there is sufficient competition and abundant supply. While it may be immaterial to a government agency whether it saves or wastes money, it is axiomatic that private industry will seek to control and manipulate market forces in it's favor whenever possible in order to raise prices to the maximum, thereby increasing profit.

I'm neither demonizing private enterprise nor praising government agencies. As you have pointed out, both function well in some instances and poorly in others. My point is that neither should be left entirely to it's own devices. Even within their ideal provinces, either is capable of royally screwing things up if not closely monitored.

[Epee_Pox]

Originally Posted by Dr. Pfleschbach

Even within their ideal provinces, either is capable of royally screwing things up if not closely monitored.

By...?

[jBirch]

Originally Posted by Inquartata

No, but who's making that claim? Not I. ( You may recall the whole "public goods" imbroglio. Government can handle the provision of public goods better than private industry...because private industry won't provide them in proper amounts if at all. )

I was taking as given the concept of health care as a nonpublic good (contrary to other positions I've held).

Any nonpublic good or service can probably be provided more efficiently by private industry than by government, though.

It all goes back to the profit motive.

Right. And when profit motives conflict, deficiency results. This is the essense of the monopsony/monopoly problem.

Private industry is driven to minimize costs, because it means more profit for them. Government has no such incentive, because it isn't compensated from profits, but rather from tax revenue, which is set by fiat. In other words, it is immaterial to a public agency whether it saves money or wastes it because neither case affects its budget. Or to be more precise, it is often best if an agency overspendsm because that may get its budget increased. Underspending, ie cutting costs, will only get the savings taken for other government uses and probably will make lawmakers believe it was overfunded in the first place...and its budget frozen or cut.

See, this only works if you assume infinite resources, zero cost and zero public bad. In a democracy, public service motives are electoral in nature and actions have a populist motive. Each department acts as a budget maximising entity. If medicare (for example) is too expensive, there is incentive for the government to cut its budget. If it is very popular, there is incentive for government to increase its budget. Medicare as a department then, works to maximise its budget by increasing its popularity. It increases popularity by decreasing public bad and increasing public good.

This allows for a public service (such as Health Care) to be provided in a more economically efficient manner then a similar private service because the populist motive for the service is more efficient (in this case) then the deficient profit motive in the marketplace for offering the high demand communal good at the lowest financial cost. In otherwords, if the goal is lowest cost health care for everyone, government offered service is the most efficient way to go. And it is an example of a non-public good being offered by the government more efficiently then the private sector.

James.

[Dr. Pfleschbach]

Originally Posted by Epee_Pox

By...?

Private industry by manipulating market forces into imbalance that causes prices to rise artificially (Enron in the energy market or De Beers in the diamond market). Government by failing to exercise prudent and efficient practices.

[Epee_Pox]

Originally Posted by Dr. Pfleschbach

Private industry by manipulating market forces into imbalance that causes prices to rise artificially (Enron in the energy market or De Beers in the diamond market). Government by failing to exercise prudent and efficient practices.

I was not asking how they would screw up. I was asking who would be doing the close monitoring that would prevent the screwups.

[jeff]

Inq: "Any nonpublic good or service can probably be provided more efficiently by private industry than by government, though."

Wasn't it argued at length that health care was a nonpublic good, and therefore private industry _should_ be more efficient?

[umbrella]

The Republican Party has long argued the case of Privatization. While the theory sounds good, it doesn't work, because of Corporate Raiding; buying up one company after another to form Corporations for the sole purpose of running it to the ground for a loss and tax right-off. Therefore, the Country rely on Government to provide things that they simply can't do, because they are busy going to work, running a household, and filing taxes. The problem is that Government, not knowing how to handle money, spends it on Military supplies, hiring soldiers; and then they form a Sparta state. The government/science end feels that most Americans are basically stupid people, and won't notice if a missle aimed at the Moon in 2009, will 'do anything'. My guess is that it will...My best guess based on several readings of simple simple textbooks about the "Moon and the Earth", tells me that there will be a tide, a tide, a tide, and a tide, there be a tide wind
and a hard rain is going to fall.....

Bub Bylan's Old Song......
Tell me my little one...what do you see
[duh]
tell me my darling one...what do you hear
[wha]
Is there a bear in the bathroom.....or a frog in the lake,
a basket of nonsence....or a deer on the lawn,
and its a hard,it's a hard,it's a hard,its a hard
its a hard rain......Gonna fall.

[Dr. Pfleschbach]

Originally Posted by Epee_Pox

I was not asking how they would screw up. I was asking who would be doing the close monitoring that would prevent the screwups.

That's a good question. Regulatory bodies and concerned citizens already monitor private industry, but who is in a position to monitor government agencies? There shouldn't have to be a congressional hearing every time you want an accounting of what's going on.

[gojujay]

Originally Posted by Dr. Pfleschbach

Your definition of autocratic socialism is ridiculously broad.

Agreed.

Originally Posted by Dr. Pfleschbach

I don't understand your premise that minimum wage laws cause illegal immigration.

They don't "cause" illegal immigration (hereinafter referred to as II), the incentives created by these laws make employing IIs more desirable, as they are cheaper labor.

Originally Posted by Dr. Pfleschbach

This is akin to claiming that laws against theft are responsible for crime waves (if we just got rid of those pesky laws there would be no more crime).

Your analogy is faulty. One is a crime against a person, real or fictitious, the other is a misguided attempt at perceived egalitarian social engineering (as a side note, most of the people promoting this, definitely want to be perceived as egalitarian... )

Originally Posted by Dr. Pfleschbach

Aren't the real causes the employers' quest for higher profit and the illegal immigrants' desire to escape the horrible economic conditions found in third world countries?

What is the problem with seeking higher profits? How dare somebody make so much money? Don't they know people are starving, the environment is tanking, etc., etc. As to IIs wanting to better their conditions, good for them. They are "voting with their feet."

Originally Posted by Dr. Pfleschbach

So what are you implying, that anti-poverty programs function as bag men for rackateers? You don't need to go to such extremes to make your point. What you describe as protection money I would call a helping hand offered out of good will and enlightened self-interest.

Such sentiments, like diplomacy, work better at the point of a gun. If you want to give your money away, that's your business. If you want to give MY money away, we have a problem. Or rather, you have a problem.

[gojujay]

Originally Posted by Inquartata

It all goes back to the profit motive. Private industry is driven to minimize costs, because it means more profit for them. Government has no such incentive, because it isn't compensated from profits, but rather from tax revenue, which is set by fiat. In other words, it is immaterial to a public agency whether it saves money or wastes it because neither case affects its budget. Or to be more precise, it is often best if an agency overspendsm because that may get its budget increased. Underspending, ie cutting costs, will only get the savings taken for other government uses and probably will make lawmakers believe it was overfunded in the first place...and its budget frozen or cut.

Interesting sidenote: This very thing happened in my department (I work for the State of Cahlifonia and happened to see Senate hearings on this very subject. The Senator seemed upset that a government contractor would exhaust his budget to ensure his continued funding levels... "Spending down" is a cancer that can even affect private contractors.

And I used "imbroglio" first.

[gojujay]

Originally Posted by jBirch

...snip...increases popularity by decreasing public bad and increasing public good.

I would add "perceived" to both clauses.