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Bunter
User Rank
Platinum
Re: Chicken or egg
Bunter   5/21/2014 4:01:29 PM
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Hi Pat,

"Unemployment was 2%, GDP growth was 4%,"

This chart shows an unemployment low around 3% climbing to around 6% by 1960.

http://www.washingtonpost.com/wp-srv/special/business/us-unemployment-rate-history/

Your data seems a bit off there buddy.

Haven't found growth rate data to compare yet.  The charts for the 50's show such wild up and down swings it is hard to estimate the average.

Anyway, I can't see any reason to accept your GDP data at face value any more than your flawed unemployment estimate.

I don't see any point in continuing this.  I think I have established my origiinal points quite well and at best you have failed to show me in error.

 

Take care.

Dennis

 

patb2009
User Rank
Gold
Re: Chicken or egg
patb2009   5/21/2014 10:47:25 AM
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toyota is buying from Tesla because it's as you point out the best value and IMHO

toyota is building the RAV4 as a science project and a compliance project.

CARB is making them sell some EVs, so, they got some parts from Tesla.

Also Toyota owns a couple percent of Tesla, so, it's been a bit of a different deal.

 

I guess like anything,  if the contracts are good and the deal good sure, but,

a neutral supplier is better, it's why GM spun off Delco into Delphi so that

Delphi could sell to the industry.

ttemple
User Rank
Platinum
Re: Chicken or egg
ttemple   5/21/2014 7:34:51 AM
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@patb2009, If their products are clearly superior and competitively priced, they don't necessarily have to be viewed as a neutral supplier.  Toyota currently purchases electric drivetrain components from Tesla, and I believe that one other car company does as well.  In my opinion, they are doing so because Tesla is building world class drivetrain components, apparently at a cost that makes sense to "competitors".

patb2009
User Rank
Gold
Re: Chicken or egg
patb2009   5/21/2014 1:10:12 AM
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Tesla is clearly trying to go vertical in Cars, and Solar Energy, the hazard is they need to be viewed as a neutral supplier otherwise nobody will buy from them.

 

It may be wiser for Tesla to start the Gigafactory spool it off with an independent 

board of directors, independent managers and they sign best available pricing deals.

Cabe Atwell
User Rank
Blogger
Re: Chicken or egg
Cabe Atwell   5/20/2014 11:48:42 PM
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Building their huge plant should help them alleviate their problem with sales as well as help boost their R&D capabilities.

patb2009
User Rank
Gold
Re: Chicken or egg
patb2009   5/20/2014 4:07:00 PM
NO RATINGS
dennis

I will note for the record that the highest growth era of the US was

during the 50's when Top marginal income taxes were over 90%,

Unemployment was 2%, GDP growth was 4%, and 

the public sector had enough income that public school tuition was almost free.

Heck through th eearly 70's most state schools were insanely cheap.

 

It was only after Reagan came in that taxes were cut on top earners and

particularly Capital,  and suddenly tuition shot up and the US became more

like a third world country.

Bunter
User Rank
Platinum
Re: Chicken or egg
Bunter   5/20/2014 2:55:48 PM
NO RATINGS
Hi again Pat,

I did not specify how much the disincentive is-simply that it exists.  And clearly historical records indicate that tax changes are enough of an influence to invert the rate/revenue relationship.

I'm not saying no one will start/expand a buisness simply that the numbers will be reduced.

Your Buffet example indicates the real question-risk vs. reward.  Let's say it isn't making 90%, many buisnesses are operating well below 10% profit.  With variations in their markets, changes in the economy etc. getting hit with more tax (whether on the buis or their income) could swing a lot of them to say "enough".

Simply noting that taxs do not stop all users of a product does not tell us of the affect on some. 

Some of your arguements seem to fall into a family of fallicy of equating charateristics of the individual item with the charateristics of the whole group.

There also seems to be a certain "all or nothing" approach to your positions. I'm not talking about the complete elimination of taxes, just questioning the rates, and indeed pointing out that higher rates do not always produce higher revenues (a classic "lose, lose" situation).

It is also very unclear that higher levels taxation and spending give us "more" or "better" civilization.  More is sometimes less.  More water may not give you a "better" bath, just an opportunity to mop afterwards.  (See my earlier point on the "War on Poverty", it's one of the earliest posts).

BTW, thanks for remaining civil and not decending into personal attacks as some did earlier.  It is appreciated.

Regards,

Dennis

patb2009
User Rank
Gold
Re: Chicken or egg
patb2009   5/20/2014 2:01:49 PM
NO RATINGS
dennis

 

taxes are the price we pay to live in a civilized society.

 

yes taxes can deter behaviour but, on the other hand taxes are no deterrent if there is a profit behind there.  Let me quote a very smart investor.

 

"Would i turn down an opportunity to make 90% in a year because i might be

forced to pay 10 or even 30% in taxes once the deal is closed out? I wouldn't even

consider the taxes, i'd only consider the deal"-- Warren Buffet.

 

Taxes are a deterrent isn't really that likely anyways.  People smoke cigarettes and drink

despite the taxes. Alcoholics pay any price for a drink.  

 

I also never understand people who give complex sphisticated arguments in favor of low capital taxes  when they pay higher labor taxes as a result.

 

Bunter
User Rank
Platinum
Re: Chicken or egg
Bunter   5/20/2014 11:35:27 AM
Hi Pat,

"I'm not impressed Reagan "Grew" revenue, if he burned up the Balance sheet

in the process."

Actually I agree.  If you will note I was making a point that raising tax rates does not necessarily increase revenue-in fact historically they have an inverse relationship. 

Hence the examples of Coolidge, Kennedy and Reagan cutting rates and gaining revenue plus economic acceleration.

I realize it is counter-intuitive.  One thing I was taught that helped me understand was to realize that a tax is a price for a behavior.  It is rather sad that everybody understands that a higher tax on tabacco, alchohol or gas is a disincentive to use those items.  Yet they miss that taxes that raise the price of acheivement, enterprenuership or buisness also reduce the incentives to do the things that create jobs.  France recently raised their tax on high incomes and found that the rich started leaving the country.  Shocker.

Please note that I do not support deficit spending  from either party, whether it is the party of too big govt with too much spending, or the party of really huge govt with even bigger overspending (those are the current choices).  Some of the comments I see by folks that actually think that the leadership of their party is the party that cares are rather precious.

In that area it ia also worth noting the affects of govt spending on the economy.

Admittedly these are corralation-I cannot prove causation-though I suspect others can.

1920ish-Stockmarket crash (yes there was another).  Harding trims govt spending massively.  Fast recovery-roaring 20's!

1929- Stock crash, in next year unemployment peaks at 9% has fallen to 6% prior to govt stepping in.  Govt steps in and the Great Depression results.  Both Hoover and FDR make the same mistake, indeed one of FDR's cabinet noted thatt there was nothing in the New Deal thatt didn't have a precedent in the Hoover admin.  FDR's treas. Sec. (IIRC) stated thst they had "spent more than anybody before, we know it does not work).

Most recessions since have had very little spending by govt and relatively quick recoveries.  The current recovery is possibly the slowest ever and it was preceded with...huge govt spending.

As I said earlier on another subject-there are somethings only govt can screw-up.

Enjoyed your thoughts.

Cheerio,

Dennis

patb2009
User Rank
Gold
Re: Chicken or egg
patb2009   5/17/2014 10:00:34 PM
NO RATINGS
Bunter

 

Reagan tripled the debt and took a deficit for 90 billion per year to close to 300 billion.

 

Bush Jr did the same only in spades.  He inherited a surplus and turned it into

aenormous deficit.

 

Internet companies of the 90's showed enormous revenue growth but were losing

cash every quarter

I'm not impressed Reagan "Grew" revenue, if he burned up the Balance sheet

in the process.

 

 

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