From: allens@yang.earlham.edu (Allen Smith)
Newsgroups: alt.individualism,sci.econ
Subject: Re: Increases in Social Security Taxes Caused the
Date: 6 Apr 92 04:36:21 GMT
Organization: Earlham College, Richmond, Indiana

In article <1992Apr2.135513.10890@zip.eecs.umich.edu>, jwh@citi.umich.edu (Jim Howe) writes:
> In article <92092.210117DGS4@psuvm.psu.edu>, <DGS4@psuvm.psu.edu> writes:
> |> In article <rdippold.702159004@cancun>, rdippold@cancun.qualcomm.com (Ron
> |> Dippold) says:
> |> >
> |> >DGS4@psuvm.psu.edu writes:
> |> >>Social Security is not taking money from productive entities and giving
> |> >>it to the government.  The vast majority of the money is given to other
> |> >>Americans who then spend it, thus encouraging economic growth.
> |> >
> |> >That is total bs.  The government is using Social Security taxes as
> |> >just another form of revenue.  As it was designed, it would work
> |> >somewhat at you have stated.  But government programs never work as
> |> >stated.  As it is, it finances another huge government IOU.
> |> >
> |> >In addition, how the f*ck is taking money from someone and giving it
> |> >to someone else going to encourage economic growth?  All you're doing
> |> >is changing who has the money (and you're wasting part of it in the
> |> >government for collection distribution, and paperwork), you're not
> |> >creating money out of nowhere.
> |> 
> |> Mind the profanity next time.  In any case, next time you're in a
> |> library (that's the big building with the books) pick up an economics
> |> textbook and examine the differences in propensity to consume of rich
> |> and poor people (and/or old and young people).  That's known as the
> |> multiplier effect and yes it does "create money out of nowhere"
> |> (Mystifying, ain't it ?)
> |> 
> 
> You are, of course, referring to a Keynesian economics textbook.  
> Money is most definitely *not* created out of nowhere.  Somehow
> Keynes had this idea that saving was bad for the national economy
> and that consumer spending was better.  He was, of course, wrong.
> Saving provides money for investment in plant and human resources,
> which allows businesses to create products for people to consume.
> Without the capital provided by savings, businesses would find it
> difficult to expand production to meet the additional consumer
> demand.  I suggest that the next time you visit the big building
> with the books, that you check out the numerous books that refute
> Keynes theory.
> 
> 
	You're distorting Keynes' viewpoint somewhat. He didn't think it 
was bad all the time- just when there was enough saving already and nobody 
was spending money, thus encouraging businesses to expand with the saved 
cash. There's a proper balance (between inflation and unemployment). Of 
course, stagflation has caused some problems with that theory, as has the 
US being in recessions despite a large amount of consumer spending. I 
suspect much of the reason is that companies, etc. tend to look too much 
to the short-term; to the next quarterly report. If, for instance, 
corporate bonuses for short-term profits were taxed more and those for 
long-term profits were taxed less, matters might be better.
	-Allen