Capitalism

[pacfan]

Questions:

1) I haven't seen a correlation between unemployement and higher taxes, perhaps you can send me a link that shows that to be a fact.

2) I still don't see how "the free market riding it out" is fixing the problem.
As a liberal nothing is in stone for me, I must be convinced however to believe, and as of now I don't see how the free market "waiting it out" is helping to fix the problem.

Ok, killasheep, this is for you.

Answers:

1) Taxation is one of the tools govt. use to cool down overheating economy (aside from collecting money, of course). As such, it does tend to negatively affect employment though that's not it's primary intention. So the answer is yes and no at the same time.

2) Yes, the free market does usually tend to clear itself up over the long run but if let alone, it does so in a very messy way. It's just like flooding out a mound of garbage down into a city - the garbage will scatter all over but eventually with much rain flushing it, it'll all flow down into the sea.

1) I would like to see statistics that show higher taxes negatively impact employment.

2) Can you clarify that a bit for me? I'm a simpleton and didn't really understand. I still don't see how the "free market riding it out" fixes the problems created by "republicans, democrats, borrowers and lenders"

1) I don't do much research on the net so I can't give you the statistics (maybe kirkland will help you out there), but I can explain to you why it is so - actually it's a known economic fact - it goes like this:

When government increases taxes, there would be lesser money to spend in the hands of the consumers (ie; disposable income), and consequently they spend less. As overall consumption is reduced, the sales of companies catering to them also suffers correspondingly, thereby leading to cut in production. When production is cut, generally there will be more layoffs then if would have been otherwise, and consequently, unemployment increases correspondingly, though not necessarily in a straightforward manner.

But keep in mind that this is just a simple economic model (that is, every other things being equal) and there are many other factors that affect employment. But in most case, increased taxation is usually inversely proportional to employment.


2) This is much more complicated issue that takes volumes to explain to ordinary folks. All I can say for now is that economic system is inherently made that everything ultimately leads to the most efficient, in a sort of survival of the fittest type of way, where the least efficient ones naturally die out in favor of the more or most efficient ones. This is the process that Lyle meant when he said that economy will clear itself up. Obvious example is any business activity: if you can't give your customer a cheaper and better quality goods than your competitors, you will simply lose out, right? This process goes on and on at every corner of the economy that businesses operating at any given moment are the winners or suvivors in this economic dog-eat-dog jungle. But that doesn't assure them that they will be the winners tomorrow because competition is an on-going, never ending economic process mercilessly cutting out the less efficient from the system. This ugly and merciless process is what we're seeing now. It has turned ugly because of the regulators' oversight, and this is what tend to happen when the economy is left alone by itself. This is the reason for the heated debates going on now as to whether more regulation is needed (which contradicts the free economy principle) or not. Obviously, because of what happened, the inclination of the authorities is for more regulation - fortunately - because as I've said before, economic cleansing process tends to be long and messy if left alone...