The Effect of Financial Education on Economic Views

OMG finally a kindred spirit!

I'm economically right because its been proven that monetarism is extremely effective at promoting growth plus an economic left is what caused the his national debt to be so high

Politically this creates a dilemma as I can't vote for bigots but I also can't vote for a Keynesian fuckwit who will whinge about the rich. A classic example is the top level tax band cut from 50% to 45%ish. Labour whined saying "the toffs are helping the rich stay richer" whereas if they actually knew any economics they'd know that due to the Marshall Lerner condition, a lower top tax band leads to more tax revenue.

However no political party appears to be embracing monetarist economics and liberal views so I have no one to vote for

Rant over

 

Hm. Ok then.

I think this essay does a nice job of summing up many of my views on this:

6 Things Rich People Need to Stop Saying | Cracked.com

Beyond that, the whole issue of 'taxing wealth' or much else seems to ignore some basic issues and logic.

Would you argue that 'the wealthy' should not be taxed at all? Even though they benefit greatly from the results of taxes in the form of infrastructure, defense, police and fire protection, etc?

Also, there is the issue of responsibility. Specifically, in current society 'the wealthy' seem to get away with all kinds of stuff by dint of being wealthy, up to and including the US and other governments spending vast amounts of money to save 'the wealthy' from the results of their own excesses. Of course what gets ignored in the discussion is the the banks and 'the wealthy' basically have a gun to the head of everyone else in the form of all the pensions and 401(k)s and much else that means that if they go down they take the economy (or at least everyone else's retirement) with them.

So if you want to go to a system where if the wealthy destroy the stock market they and only they go down in flames (instead of the personalized profit and socialized risk that we are currently doing) then I'd be seriously interested.

The whole argument about the wealthy being so vastly taxed also seems a tad silly since taxes keep being cut again and again and the US tax code has tons of loopholes such that many of the wealthy (or big corporations) pay very little in taxes compared to everyone else.

Interestingly enough btw it seems that many of the more 'conservative' and 'business friendly' states in the US (aka Red states) actually receive more in federal money than they pay in taxes. Where does that money come from? From the more liberal 'Blue' states mainly, many of which have high populations and major chunks of the economy. Perhaps for a start at balancing the budget we should require that every state only get as much in Federal revenue as it pays in taxes?

Things like the Laffer curve get cited a lot but virtually never with actual examples or consistent examples. Pointing to two instances in the last 100yrs while ignoring every other thing that might have been going on at the time and then calling that proof positive that lowering taxes automatically increases revenues is just bad science. If you can come up with 10 'clean' examples (meaning clear, unambiguous examples that don't cherry pick the data or play wishy-washy semi-logic games to try to make themselves plausible) of this sort of thing happening then I'd be willing to consider that you might be on to something. But in my experience the real world is usually much more complex than that.

Then there's a fun phenomenon that we see here in Virginia (a very conservative and 'business and wealth friendly' state). When something big needs to be done, like road construction, the state legislature ties itself in knots because they've all signed pledges to never raise taxes under any circumstances but the roads still need to be built or upgraded. So what you hear virtually every time is that 'the Federal government should pay more of the cost'. So apparently taxing people is fine as long as the money is coming to us. This is often summed up as 'Don't tax you. Don't tax me. Tax that man behind the tree'. In other words, when asked most people will tell you that the benefits they get from tax money are terribly important, but the stuff they don't benefit from is a waste of money and should be cut. Lots of hypocrisy all around basically.

I'm a big fan of capitalism and based on the available evidence I think it can be very credibly argued that capitalism has done more to elevate the human condition than any other economic system in history.

But.

Just because some of something is good does not mean that more (or a limitless amount) is automatically better. A certain degree of regulation is required, and not the silly season and toothless 'regulations' that so many modern capitalists (or more often corporations) either whine about or try to get put in place to try to fool people into thinking they have to follow rules like everyone else. Pass laws that *start* by throwing the CEO and Board of Directors into hard core prison next to murderers and rapists when they screw up and I'll be very interested to hear it.

Finally, there is the issue of corporations. Corporations can (in principle) do some wonderful things. They are also in many ways rather like a semi-civilized example of the mob phenomenon, specifically designed to remove all responsibility from some number of people so the corporation can do stuff without consequences to itself. This is not a good thing.

Finally, finally, a lot of 'capitalists' or their apologists seem to take the approach that if something makes money it is automatically a good thing. To which I will ask: If someone could prove to you that legalizing child pornography would create thousands of jobs and boost the economy to a huge degree would you support legalizing child pornography?

"Costs" are not solely financial and jobs alone are not a sufficient argument to do all things.

My 2c worth,

Todd

 

I think there probably is a correlation between studying business and finance and holding right-leaning views on economic matters; however, I don't think it has anything to do with "literacy," per se. Rather, I think it's a combination of how the subjects are taught and the prior knowledge of the people who go into them. Meaning, for example, that if a leftist who is already well-versed in economics goes to a liberal school, odds are they will still be a leftist economically when they leave. On the other hand, someone who previously was less knowledgeable about economic matters goes to a conservative school, they will be more likely to turn out conservative.

I think it's also worth distinguishing between studying economics and studying finance or business. I doubt either finance or business is all that concerned with what economic systems are theoretically the most efficient. I imagine they instead focus on issues within a capitalist framework (which is reasonable, given that we live in a mostly capitalist society and need people to figure out how to make things work the most efficiently within certain constraints). This should naturally sway those who study it toward a more capitalist mindset. Economists, in contrast, will experience less of a push toward the right due to the necessity of considering the pros and cons of various economic theories.

I, for one, have spent more time studying economics than business. I have absorbed enough to know that most of the economic policy debates shown in the media have little basis in actual economic theory, and that generally it is skewed to the right of what economists as a whole believe.

 

Couldn't agree more with the comment above. In England it seems like the chancellor of the exchequer and the shadow chancellor have very little economic knowledge however even a quality economist can fall down. Gordon Brown was a trained economist and heralded as the frugal chancellor but we all know how that story ended.

The nature of the social contract that holds society together is that everyone pays a little to benefit all and certainly in the UK no one has a problem with that. The main political issue in the UK is that people are paying their tax and it is being used very inefficiently. People have no issue with tax on the whole it's just that people resent paying it when government runs the public sector so poorly such as the NHS where there are more bureaucrats than beds. I would argue that if all public services were aimed toward being as efficient as possible without compromising standards that tax could be far lower OR the UK would be closer to removing the budget deficit. Obviously there are inherent problems in making the NHS more like a business but at he moment it's laughably inefficient.

 

I think that you get in trouble when you apply morality to economics. Yes it's moral to tax the rich more. But at the end of the day if you do thet will go to other countries and tax revenue may decrease and unemployment may increase. It's the greater good not to tax the rich more.

 

I am finishing up my bachelor's in economics and I would categorize my views as centrist/Libertarian/sprinkled with a bit of Keynesian. The problem with economics is that it's a social science, albeit a "hard" social science. It's difficult to predict the behaviors of consumers because they may or may not act rationally, they may hold dear different values, there may be information asymmetry, etc. In essence, economists can't say definitively, "if you raise taxes by x percent, tax receipts will change by x percent." That being said, I do believe that the government has a role in investing heavily in capital intensive projects that benefit society and that businesses aren't willing to invest in, like NASA, the arts, some medical research, etc. I also believe government can step in and try to prevent financial crises (a Keynesian move) but fear for the moral hazard it may create. In essence, economics is the choosing of the lesser evil, and hoping that our modeling is correct.

 

I believe in market economies but I think they should be kept under control.

Because people are tied down to a country for cultural and family reasons first and foremost, rather than their tax rate. Life doesn't work like a textbook and cases where people move country to reduce the taxes they pay are few and far between, even if many more express interest in doing so.
The latter question I can agree with, but it must be acknowledged that no country has inequality so low for it to be any danger of that happening. It is not a justification to raise inequality further.

You mean the Laffer curve right? Whose revenue maximising tax rate is pretty much indeterminable? And It's a curve, not a negatively sloping line, as some would love to believe.

You have the Conservatives, Labour and the Lib Dems all fitting under that category.

 

Morally, the rich should be taxed at least the same as lower classes, if not more. Realistically, they can't be taxed more, because then they'll just leave, as you said.

I can only call myself a moderate. The best ideas from the left, right, and all sorts of in-betweens should be combined in order to build the most fair and prosperous economy. That means the so-called "one-percenters" need to do their part to help the greater country by keeping worker wages proportionate to profits, and not using their deep pockets to selfishly alter government. On the other hand, we should cut them some slack, because we do need their resources, and heavy regulations will only come back to bite us in the butt.