(09-02-2018, 12:09 AM)jj82284 Wrote:

(09-01-2018, 08:46 PM)mikesez Wrote: I'm pretty sure Milt's goal with what he called a "negative income tax" was to create a minimum income.  In any case we sort of implemented the "negative income tax" with the Earned Income Tax Credit and I don't know how Friedman felt about that.  

While I hope there could be ways to reduce the amount of time it takes to get a new medicine approved, I think its not usually ten years anymore, I wouldn't ever go to the extreme of saying that the FDA was a bad idea in the first place. Wow.

I think we agree on the idea that there is such a thing as the government stimualting the economy.  This is what the recent tax cuts did.  It's what most tax cuts do in the short term.  Spending is also a form of stimulus, though, and government stimulus, whether new tax cuts or new spending, is most needed when times are bad.  When all the self interested individuals are tightening their belts and slowing the circular flow of money, the government should, temporarily, push in the opposite direction.  And the government should tighten up when times are good so that it has ways to easily loosen when things inevitably get bad again.

a.)It's worth the time to actually check out the difference between the negative income tax and the UBI.  No one, on the right or the left believes that we should fundamentally leave people on the side of the street to die in the name of a pure laisse faire society, Hayek wrote about it in road to Serfdom for crying out loud.  The greater question then becomes how do we on the one hand help those truly in need in such a way that does not create a permanent disincentive to work.  Friedman actually solves that problem in a very simple way, unfortunately too simple and too effective for our betters in Washington to allow it to come to pass.  

And this isn't just some passing difference.  I am deadly serious when I say that we are looking at millions upon millions of people trapped in generational poverty and aborted as a result of the unannounced consequences of government distortions in the market caused by the way we structure the myriad of welfare payments and family assistance.  

b.)Think like an engineer.  Good intentions and good feelings don't count.  Does an institution or entity make things more efficient or less efficient.  We give this institution all this immense power and we have higher drug costs, more prescription overdoses than illicit overdoses and the truly sickest amongst us have to march through the halls of congress just to try an experimental drug that may save their life, at a risk they are willing to take to avoid a sentence of certain death.  

c.) Quite the contrary.  first, lets clearly reiterate that we just went through the greatest deficit based expansion of government spending in the history of history.  The result?  The slowest recovery since the last time we tried to use government spending to get us out of a recession (The great depression.)  

In the second place, there is a vast difference between government spending and tax cuts in terms of economic stimulus.  In the case of Government spending, its understood that the government itself doesn't actually have any money.  Every dollar spent, is understood to eventually have to come out of the economy in the form of either taxes or inflation.  This actually creates a DISINCENTIVE for capital investment (the real driver of economic growth.)  On the contrary, Tax cuts allow more money to be left in the private market in any given taxable transaction which has the short term affect of increased spending, but also the long term and more substantial impact of welcoming private capital for investment at a higher rate of return.  It's not just the 2000 the apple employee gets to keep on their personal tax returns, or even the bonus they might get because of the lower corporate tax rate.  It's also the 350 billion dollars that apple decides to invest in the country, reinforcing decisions already made by the market, not trying to correct them.  

Moreover, what is a correction?  As capital is allocated to create growth, then there is inevitable misallocation in a human system.  Rebalancing is NECESSARY for the health of the market.  What you and Keynes propose is that a select few would be in charge of massive discharges of wealth they didn't create or have any ties to in order to override the corrections in the market.  The simple problem with that thesis is that it is more likely that the select few, dripping in morale hazard, will make even bigger misallocations of resources which inevitably lead to inefficiency, malaise and even more massive corrections (2008).  Ironically Keynes first proposed the idea of government intervention and public works in response to a recession that he ACKNOWLEDGES was caused by state mismanagement of monetary policy!

I should introduce you to some of my Facebook friends, because quite a few of them would assert that the government should never do anything remotely like charity and that only religious organizations should.
I agree that a poorly designed welfare plan can create a disincentive to work. I personally know people who have quit their jobs, or avoided marriage even though they were living with someone that they otherwise would want to marry, so that their kids could get on Chip. I think we agree that the EITC is a partial step in the direction of helping people out while incentivising them to work. I'd like to see them figure out a way to make Section 8 and Chip and Snap work that way too. But I don't see either party putting forth a good-faith effort in that direction. Trump's blustering about requiring work before you can be on Medicaid seems to be pushing the opposite direction. The disqualification threshold for Medicaid is absurdly low in the states that didn't take Obama's expansion. Almost any amount of work will disqualify you but still leave you with too little income to afford insurance from other sources.

B) Engineers are just people who were trained to solve complex problems one little bit at a time using calculus. if one of the assumptions we make about the problem at the beginning is wrong, the whole solution is useless. This is not a matter of engineering but history. The Food and Drug Act passed under the first President Roosevelt. private actors were making drugs back then had every opportunity to get together and form some sort of licensing cartel and police themselves. They failed to do so. I don't see how any of their incentive structures have changed now. I agree that we need to really lower the threshold for getting a new and experimental drugs out to people with terminal illness, but that's really a special case and not cause for eliminating the FDA for the rest of us who are not terminally ill.

C) "the government doesn't have any money" is untrue - they can print as much as they like! You wrote that if they spend money, that wasn't from taxes, it will cause inflation.  This is the newly printed money.  But does it really cause inflation? Not necessarily.  It depends where on the supply-demand curve we are.  Typically in a recession, people are out of work and factories are slack, so the supply curve is actually nearly flat.  Introducing more money at such a time can reduce slack without creating inflation.  You're right that an elite group of people get to be in charge of distributing the new largesse.  In the case of quantitative easing those elites are Congress.  Congress is corrupt sometimes.  In some specific cases, they are bankruptcy judges. Judges are almost never accused of corruption in this country.  In most other cases they are the regional boards of the Federal Reserve.  They also are almost never accused of corruption.

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