Not entirely true.

A recession is now often defined simply as a period when GDP falls (negative real economic growth) for at least two quarters. Some economists prefer a definition of a 1.5% rise in unemployment within 12 months, neither of which occurred during 2007.

You can all see from the chart below that "2001" recession actually began in 2000 (I know how hard that makes it to blame Bush, but folk will believe what they want anyway). Negative growth did not occur until 4th quarter 2008.

What's voodoo about it?

Secondly, it's not about choosing not to be rich, it's about balancing work and leisure. The more you work the richer you get, but the less leisure you get. It is also logical that both suffer from diminishing returns in terms of their benefit to you - assuming you need 8 hours sleep a day, if you work 15 hours a day with 1 hour of leisure, you're probably going to want a bigger pay increase to work that final hour than if you were working 1 hour a day with 15 hours leisure. We can therefore express the value of leisure in monetary terms, so you might for example have someone who works 8 hours a day at $60 an hour, and would work more if their hourly rate increased, and less if it decreased. Taxes will decrease their effective hourly rate, meaning an increase in taxes would likely see a decrease in the number of hours they'd want to work. This has two obvious effects. Firstly, that person is working less so the taxes won't raise as much as might have been thought with a crude 'tax rate*average income' calculation. Secondly because people are working less as a result, the economy will shrink compared to how it would otherwise have been, meaning less money for people generally as well*.

As for the trickle down effect itself, again it is intuitive. Say a rich guy moves into a small town, and starts spending lots of money at all the shops. Suddenly those shops are gaining a much higher income, meaning they can spend more money (both hiring extra staff, and/or buying goods+services from other shops), and so everyone benefits. It's why tourism is a major focus for some countries, because it gives a noticeable boost to their economy benefitting the locals. Similarly a tax cut means that people have more money to spend (as well as the aforementioned increase in hours worked boosting this further), which helps boost the economy which is to everyones benefit. The same argument incidently can be made for government spending (the main downside to government spending being that the government is deciding where to spend it, and hence is likely to be more inefficient than an individual).

Now I'm assuming that by trickle-down you're referring to policies such as tax cuts focused on the rich or businesses being thought to benefit not just those people but also those under them. A key reason for tax cuts on rich and businesses instead of individuals is that they are much more able (and likely) to relocate than someone who is poor. Lets say you're in a 30% flat tax rate area, and could move to a 20% flat tax rate area. If you've only got an income of $20k it'd save you $2k so it's not worthwhile. If instead you've an income of $20m you're talking about a massive saving. Factor in progressive tax rates and the differences are likely to become even more pronounced. You may not always be able to relocate, but there are going to be some individuals and companies who can (while you'd also have fewer people wanting to move into the higher tax area). That means fewer 'rich guys spending into the economy', meaning it's worse for the economy.

What part of this is voodoo, or were you referring to something else?

The one point you make on which my opinion may surprise you is the concept of business taxes.

In reality taxes on businesses don’t really exist. Well they exist all right but they’re not paid by businesses themselves. In every case they end up being a hidden tax on the customers (i.e. individuals) that buy the product of that business. Within a reasonable range of values market forces require that someone make a reasonable profit on their effort. If the profit is too little no one will be interested in producing the product/service and if the profit is too high then others will enter the industry and offer the same product/service for less thereby keeping the profit reasonable. Of course there are barriers to entry and many other effects that come into play but like I said this is how it works within “reasonable limits”.

I *assume* that everyone here will agree with me on these basic capitalist premises  and this similarly applies to every other *cost of doing business* like raw materials, labor costs and even employee health insurance benefits all of which are borne by the customer.

Now of course it is possible for the sum of all these costs to raise the price of a  particular businesses’ product/service higher than people are willing to pay and if this happens then that particular industry will be unprofitable and no one will produce that product/service. But as long as that limit is not reached then business taxes are not paid by businesses but are really an additional hidden tax on individuals.

For that reason I’m basically against business taxes except where they are used to counteract “externalities”, the classic one being pollution, that represent a cost to society in general that otherwise are not reflected as a cost of production.

Another interesting point of this is the thing about the cost of employee health insurance benefits. By the above reasoning there is no charity going on here on the part of the business since these costs are borne by the businesses’ customers (assuming such costs aren’t high enough to put the company out of business of course). But not only that these costs are almost the same as if the employee paid them directly.

The reason is that no business hires an employee that costs more than they contribute to the company’s bottom line. Show me an employee that doesn’t and I’ll show you an employee that will be out of a job in *very* short order. Either that or they have some very good blackmail material but I digress.

Just like the market forces that ensure a company’s “reasonable” profit the same market forces ensure a “reasonable” wage that rises as the value of an employee’s labor rises. Again there are reasonable limits over which this model applies and there are also asymmetries of the employer-employee relationship that I believe make this a bit less true than the profit assumption but for the sake of argument I’ll ignore them for now.

So an employer must treat the cost of an employee’s health insurance benefit just as if it were true wages and if the employer did not have this expense then the market forces would tend to raise the employee’s wages the corresponding amount. In fact it’s even worse than this because there is an amount of overhead and management of the employee’s health insurance benefit that represents a cost to the employer that the employer must pass on to both the customer *and* the employee. Also this is magnified because this is usually *not* part of the core expertise of that particular business and so it’s not something they really want to do and that makes it even more inefficient.

So anyway all of this is why I don’t think the employer should be forced to be a middleman in the health insurance issue. Sure years ago when the cost of insurance was low it was a throw-in, a benefit for which the employer received a tax benefit and didn’t really cost him much. But now that is most certainly *not* the case and besides making the employer be in a businesses they’d prefer not to be in this puts US companies at a competitive disadvantage against foreign companies in countries with single-payer health insurance. Such countries in effect are providing a government subsidy to their companies that our companies don’t have.

To me this is the strongest argument for single payer health insurance that should appeal to *all* Americans, liberals and conservatives alike. Of course I realize that conservatives will find a way to shoot even this argument down but at the minimum I believe that we need to get the employer out of the health insurance business.

Hopefully there’s a point or two within all of this that even the most rabid right wingnut will be forced to grant. If not then I truly *am* wasting my breath here.

exactly, if it was the case, then we will all be still living in caves. Wealth can be created and destroyed, quite easily I might add (more easy to destroy than to create)

1. Congress was democrat controller since 2006. And they make the law, not the president.

2. GW Bush vehemently opposed the sub par debackle and deregulation and proposed strict regulations to stop it. Democrats vehemently opposed his plan by claiming that it is working, is giving homes to the poor, and that homes are never a bad investment and there is absolutely no way this could go wrong.

So "it is GW Bush's fault" is a bullshit claim, considering he tried and failed to get congress to stem the tide. But they would not listen (even when it was a republican congress, a few republicans sided with the democrats on that one).

Trickle up economics means (according to both liberals and conservatives): take from the "rich" (middle class), give to the "poor" (those who choose not to work, not work hard, or not get a degree). also known as communism (as marks said "from each according to his means, to each according to his needs"). The difference is that conservatives find this appalling while liberals find it just. (because they believe the only way to be rich is to steal from others)

The way liberals explain "trickle down economics" is the republican (it isn't) notion that you take from "everyone" (again, the middle class) to "invest" in companies which then benefit everyone (liberals claim that republicans claim that this benefits everyone. While liberals retort to that strawman that in reality the evil CEOs just pocket the money). What this really does is just give to those who are friends of the current ruling party. Been done by both parties; but mostly by the democrats, especially THIS obama administration.

Both of those are terrible ideas. What you should do is let people KEEP their own money and spend it how they will, that produces a healthy economy.

Which brings us to how conservatives explain "trickle down economics" is that if you single out the rich and tax them to death, you ruin the economy. While if you tax them less they produce more and everyone gets richer.

The republican explanation and the liberal explanation does not match. When you have to lie about what your opponent actually says and then tear down the lie you yourself made up, it is known as a "strawman argument". (typically used by creationists, which, btw, are not representative of "republicans" or "conservatives" no matter what liberals say).

Frankly I do not care, at all, what you choose to call your economic model. Or any attacks on imaginary models... it is the real models that matter. Democrats are pushing plain old marxist economics; wealth redistribution, crushing taxes,  nationaliztion (or destruction) of industry, all in the name of "fairness". Well ok, they are pushing some more extreme and stupid than just a plain old marxist view. Marx never claimed that you should destroy industry because that will magically make poorer people (in other countries) richer.

Conservatives (I hesitate to say republicans because there is a fair number of them who threw in with the democrats; and most are just trying to appeal to the "middle" by not being sufficiently vocal) are for a system of low taxes where people keep their money and spend it as they will.

I agree that is were I cut this comrnrnt directly from from:

"...recession is now often defined simply as a period when GDP falls (negative real economic growth) for at least two quarters. Some economists prefer a definition of a 1.5% rise in unemployment within 12 months,,."

Here's the whole paragraph, under Identifing, from your source:

"In a 1975 New York Times article, economic statistician Julius Shiskin suggested several rules of thumb for identifying a recession, one of which was "two down quarters of GDP".^[3] In time, the other rules of thumb were forgotten,^[4] and a recession is now often defined simply as a period when GDP falls (negative real economic growth) for at least two quarters.^[5][6] Some economists prefer a definition of a 1.5% rise in unemployment within 12 months.^[7]

^{Now I don'r care much for Wikipedia, but I have heard this definition used before.}

There are no rabid right wing nuts here. I am not even sure what that means... as its not exactly insanity to preserve a working system which made for the most successful, rich, and powerful nation on earth. It wouldn't surprise me if you just lumped anyone who supports democracy, freedom and capitalism (aka conservatives) with the nut cases like creationists and christian zealots in the term "right wing nuts" (*sarcasm* It is a well known fact that only christian zealots can be right wing nuts... and any conservative is naturally a christian zealot. Jewish zealots are known as "nazis", and any other religious zealots are known as "freedom fighters")

As for your points, some of them were actually valid, especially the opposition to taxes on business. Even an avid wealth redistribution fanatic should understand that you can tax business owners when they take a profit rather then the businesses themselves... as long as the money stays in the business it is just growing the economy; and most people have stock, such as in 401K plans... which can then be excluded. Although I disagree on this form of extra taxation based on income.

just so you know, conservatives also oppose to health insurance being tied to employers. But that was a creation of the democrats. First they force us into employer provided insurance (where changing a job / losing it means losing insurance; and a limit on your choice due to it being your employer who choses the insurance), then they admit it is broken (but don't admit that they are the ones who broke it) and suggest something even worse.

Liberals just want change, without considering the consequences. Conservatives want change only if it is a change to the better.

Makes you wonder if he leaves because he can't handle the truth or because he believes in his cause so much he does not want to be wrong.

That's pretty much it.

Off-topic side story:

In Germany airport security do random bag controls. But I had heard that they avoid searching the bags of Muslims to escape charges of "racial" profiling. When I went into the gate area of Hamburg airport a few months ago I was randomly picked for a search.

They had me remove every item from my bag and tell them what it is. So I went through it... towel, socks, DVDs, prayer book...

Prayer book.

Suddenly they were done and didn't want to know what else was in the bag. (This was after they had already x-rayed it, anyway.)

I think maybe that was the point when they realised that they had accidentaly stopped a Muslim.

The prayer book was this: http://www.amazon.com/gp/product/9653010689

A fairly normal thing for a Jew to carry around.

With their method of bag searches they won't detect many freedom fighters. But "Nazis" can also easily escape.

So if I get one of these books and take it with me traveling I may get by without hassle? Nice to know.

That's what the Rabbi said they were for.

G-d works in mysterious ways...

That depends on what time span you're looking at. Short term you're right, it's likely to be far better at stimulating the economy to give higher unemployment benefits than tax cuts on the rich because the poor are more likely to spend it. However longer term the picture changes for several reasons. Firstly that money saved by the rich isn't just sitting in a bank vault somewhere, it will be invested, for example allowing a company to expand/start up. Secondly, as already mentioned, the higher taxes in benefits scenario compared to the tax cuts is likely to drive some people+businesses away over time.

If the economy is in a recession the first option (benefits) will probably be best, since the economy will be operating below capacity due to a shortage of demand, and it will help boost this. However if the economy is already at or near capacity such a boost in demand won't do much other than drive up prices, while the second option would help increase this capacity and thus improve the economy.

Afraid I disagree with you on your premise. Yes, market forces require someone make a reasonable profit on their effort, but what is this required return based on? It'll be the return that could be made with the 'next best' investment adjusted for risk. Now assuming taxes are broadly consistent (in reality there will be some differences), taxes will be affecting the return on this next best investment as well, so if you increase taxes across the boad it shouldn't have such an effect (although it would decrease the return on investments within the country compared with other countries causing some businesses to invest elsewhere, i.e. into different countries).

Furthermore, taxes are based on profits, and hence aren't a direct cost that will be passed on fully to consumers unlike the other costs you mentioned such as raw materials. Say it costs a company $1 to make a product, and they can sell 5k at $2, or 2k at $3. With 0 taxes they'd make 25% more post-tax profit at $2 than at $3. With 50% taxes they'd still make 25% more post-tax profit at $2 than at $3 - their decision on whether to produce more/less or charge their customers more/less hasn't been affected (while if you instead had the raw material costs increase from $1 to $2 the prices+quantity sold at would change). If the taxes weren't a profit based one however but instead were a unit tax, then you'd see some of the cost transferred to consumers (although you'd still be unlikely to see all of it transfered due to the effects of consumers responsiveness to price changes).

That said you could still look at taxes on businesses as not really existing, in that the tax on a business is just a tax on the investors of that business (e.g. shareholders), who are people.

I'd say your views on health insurance are almost identical with mine by the way!

Not by these forum's standards - it wouldn't be possible!

You gave it less than 2 hours to see if someone would agree with any of what you wrote?

Ironically, even with this whole explanation, a much more simple short reply would have been enough. His own word basically say that any tax imposed on the business would be put in the price of the item being sold so the buyer basically ends up paying for it. Now, his point is to tax more to help the poor but it's the poor that buy these products that the businesses hide the tax in. Basically, he's admitting that he is OK with taxing the poor and middle class (the likely buyers) since he is fully aware the business is not the one paying the tax since they will hide the tax in the price. Would it not then make more sense to tax the business less so the product price can be lowered to benefit the buyers?