no problem, bandgeek, glad to help. the difference would be between what we call a marginal cost and what we will call a sunk cost. maybe the best way to think about it is with an example:
think about taking the kids to disney world. suppose you pay a set price to get in and then a small fee for each ride. you have to pay the entrance fee even if you dont ride anything, but once you are in, the entrance fee is sunk and it doesnt cost much to ride, so you will tend to ride (or let the kiddies ride) a lot of rides. on the other hand, suppose there were no entrance fee, but a high price to ride. well, now you would probably think twice each time you let the kids take another ride because it is costing you a bunch. true, it may ultimately still cost less with the second system, but you are facing the high fee every time you ride (the cost is higher “at the margin”), and each time you have the chance to avoid paying it.
the tax idea is the same. mind you, this is just economic theory…
Good question, let me ask this then, why do some people who spend X time getting educated and work hard yet can make several times more than others with similar investments in their careers? Did someone tell you that life is fair?
There have been good comments on both sides of the argument but I have seen little on what people are willing to sacrifice in order to keep more of their money.
Do people want a tax cut in exchange for less law enforcement, less national defense, less health & welfare services, a larger defecit, etc?
You may argue the details but all of this is consumed, not invested. No investment is taking place. No improvement in physical capital (i.e. roads, ports, farms, industry etc) no improvement in human capital (i.e. education, training etc).
The only way that anybody will be better of is if they invest so that in the future they can produce more and consume part of it.
Only a bad farmer would consume his seed stock. This is what is happening on a massive scale.
Yes some money goes into these areas, but compared to the big destinations? Not really.
Government reform is where the savings will come. Government is basically run like a business, they get money and use it to pay people to provide services. The US government is one of the worst run businesses in the world. We need an independant team or quality managers, risk managers, and business managers to come in and go through each department of government, each process that government engages in and make the processes more efficient, less wasteful, and more clearly defined.
My father is doing this for a living right now and he is working with hospitals. His first hospital has saved in the millions in just a few years because they are running super efficient now. Screw ups have dropped exponentially, and patients are getting better care than they ever were. The employees are happier because when things are running really smooth there are way less problems to deal with and they have extra money so peoples pay is increasing.
The only problem is how do we force government to undergo this much needed reform? I am sick of politicians saying they are all for government reform. Even if they are what the hell do they know about it. They need to hire a team of professionals or possibly several teams to really make a change for the positive.
There is a huge amount of waste in our gov’t and we could all see the benefits of this, there is no down side to this unless you are the one milking the system and getting fat on our dollars.
[quote]malonetd wrote:
After re-reading your post, Goldberg, I have a question. What did you mean by saying this?
Goldberg wrote:
You think going to school is hard? Try being a middle class student whos parents cant afford to send you.[/quote]
I think he was referring to the fact that many people who are in the lower class can qualify for need based aid (such as the very gracious Pell Grant), while those just making middle class status don’t qualify for such need based aid and instead must take out loans.
Nitrox- I think that I’ve lived long enough to see that life is grossly unfair.
I was just making a point about the concept of fairness. I based the notion of fairness one way. Others, of course, will differ. There isn’t one universal way to fairly tax everyone that all, or even many, will consider fair.
I am also of the belief that the ‘government’ can’t make people fair, it can only treat them unfairly, especially when it comes to incomes policies. Fair enough!
As to your question about taxes and services, you raise an interesting point. It turns out that cuts in government sevices are made to do the most visible damage. Why, you ask? Because the citizens who feel the damage make the biggest fuss, leading the the highest chance of restored funding. Say you are a bureaucrat in charge of Dept X. Faced with cutbacks, you have two options. Cut back office hours and get rid of some low-hanging fruit in the department, or cut back on travel to annual meetings and conventions, where you get to schooze with like minds at the bar and on the golf course. Not exactly a hard choice.
The theory and some studies point to Option A. Common Sense does too.