Economics (again)

[tony]

I was bored the other day so I started reading up on "The Wealth of Nations" by Adam Smith, the architect of Political Economics and the philosopher who brought forth the idea of the "Free Market" or Laissez-Faire. An ideal that tends to be a conservative reference.. but a couple of things stood out to me about his philosophy;

Adam Smith believed in a progressive tax:

"The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state. The expense of government to the individuals of a great nation is like the expense of management to the joint tenants of a great estate, who are all obliged to contribute in proportion to their respective interests in the estate. In the observation or neglect of this maxim consists what is called the equality or inequality of taxation."

Furthermore

"The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. A tax upon house-rents, therefore, would in general fall heaviest upon the rich; and in this sort of inequality there would not, perhaps, be anything very unreasonable. It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion."

I find it funny that those who say the market should be free are against a progressive tax when the man who created the theory of free markets himself was for one. On welfare;

But in every improved and civilized society this is the state into which the labouring poor, that is, the great body of the people, must necessarily fall, unless government takes some pains to prevent it."

And on war.. this is more interesting to me than it is partisan.

The ordinary expense of the greater part of modern governments in time of peace being equal or nearly equal to their ordinary revenue, when war comes they are both unwilling and unable to increase their revenue in proportion to the increase of their expense. They are unwilling for fear of offending the people, who, by so great and so sudden an increase of taxes, would soon be disgusted with the war; and they are unable form not well knowing what taxes would be sufficient to produce the revenue wanted....

How can someone effectively argue against progressive tax in a capitalistic society when the architect of capitalism was FOR it?

[joecoolfreak]

Couldn't have said it better myself

[Vteckidd]

So you agree with Mccain Now?

It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion."

The "RICH" or top 50% of earners pay more than 96% of ALL INCOME TAXES.

So 50% pay 96%, and the other 50% pay 4% of total Taxes.

So we should tax the rich more? You should look up the word PROPORTIONAL.

I saw something funny the other day about Obama saying hes going to let the Bush Tax Cuts expire, there for MOST middle class people (who the cuts were designed for) their average tax liability will go UP 4%, now, when Obama implements his TAX CUTS, itll lower taxes 5% for middle class.

SO its not this 5% drop from where they are NOW, its 1% which is meaningless.

Interesting none the less

[tony]

So you agree with Mccain Now?


The "RICH" or top 50% of earners pay more than 96% of ALL INCOME TAXES.

So 50% pay 96%, and the other 50% pay 4% of total Taxes.

So we should tax the rich more? You should look up the word PROPORTIONAL.

I saw something funny the other day about Obama saying hes going to let the Bush Tax Cuts expire, there for MOST middle class people (who the cuts were designed for) their average tax liability will go UP 4%, now, when Obama implements his TAX CUTS, itll lower taxes 5% for middle class.

SO its not this 5% drop from where they are NOW, its 1% which is meaningless.

Interesting none the less

The person I am quoting didn't speak of a proportionate tax, he spoke of a progressive tax. For those that argue a progressive tax prevents an individual from striving to achieve more, Adam Smith created that theory but again.. he supports a PROGRESSIVE tax.

And Mike.. that top 50% includes incomes in the $40k range.. two individuals making $20k a year fits into that category.. hardly "Rich" so this whole notion of taxing the "RICH" is evil, a lot of those individuals are nowhere close to wealthy.

[blaknoize]

As we see, when its a good valid page, no one speaks... another great econ post.

[Verik]

Enjoyed the read, I think when it comes to big gov't programs (i.e. welfare) Adam Smith supported the ideal of a working system without fraud or waste. I don't think he'd be equally for one where people riding up in escalades with wheels to publix are dropping the food stamps to pick up groceries on their way to collect their welfare check. lol

[man]

Enjoyed the read, I think when it comes to big gov't programs (i.e. welfare) Adam Smith supported the ideal of a working system without fraud or waste. I don't think he'd be equally for one where people riding up in escalades with wheels to publix are dropping the food stamps to pick up groceries on their way to collect their welfare check. lol

Exactly, I have read Wealth of Nations and it makes very interesting points. At the same time, however, it fails in the same way as communism. It relies on social idealism and fails to include the true human element.

Also tony, why is it strange to you that no one agrees with him 100%? This is a theory, not a proven system, produced not by some economics god but a man.

[tony]

Exactly, I have read Wealth of Nations and it makes very interesting points. At the same time, however, it fails in the same way as communism. It relies on social idealism and fails to include the true human element.

True human element? Smith's theory was based on the notion that individuals will do what is in their own best interest and this will drive a free market economy, how much more human does it have to get?

[Verik]

True human element? Smith's theory was based on the notion that individuals will do what is in their own best interest and this will drive a free market economy, how much more human does it have to get?

You are still missing the fact that he did not talk about these concepts or theories with fraudulent activity running rampant. He said people will act in their best interest with regards to the law as well. This is still the overshadowing element that you are not recognizing in terms of the flaws of the reality of his application of economics.

[ironchef]

Another element to think about...

The wealth of nations was written more than 230 years ago. At a time when there was no globalization, no computers/internet, no industrialization, no effective global transportation, no credit cards, etc etc etc. It might have been a nice theory back then, but with today's much evolved world financially and technologically it doesn't hold nearly as much weight.

[SampaGuy]

Another element to think about...

The wealth of nations was written more than 230 years ago. At a time when there was no globalization, no computers/internet, no industrialization, no effective global transportation, no credit cards, etc etc etc. It might have been a nice theory back then, but with today's much evolved world financially and technologically it doesn't hold nearly as much weight.

x2