Nobel Prize gets it right

[cwjerome]

Edward Prescott, an ASU professor, shared the 2004 prize for economics. Here's some of his quotes from a recent interview:

"When you cut tax rates, employment always goes up."

"The idea that you can increase taxes and stimulate the economy is pretty damn stupid."

"...[most] all economists are for free trade."

He said Kerry's tax policies would discourage people and businesses, and he dismissed claims that outsourcing of jobs is damaging the economy. He also thought private savings accounts for SS was an excellent idea.

Interestingly, he thought the stock market is about 20% undervalued, in contrast to a 15% overvalued threshold when stocks peaked in March 2000. He said that assessment was based on the value of productive corporate assets adjusted for tax rates.

Bush's campaign released a letter signed by Prescott and 5 other economic Nobel laureates critical of Kerry's economic plans.

It economics the last bastion of reason for the Nobel org?

 

[Garuda]

:thumbsup:

 

[ntdz]

i agree with him. Obviously some people on this board don't and will show other econ professors backing Kerry. But did any of them win the nobel prize this year?

 

[Vadatajs]

Maybe one of you Brownshirts should post a link before you climax :roll:

 

[miketheidiot]

Originally posted by: cwjerome
Edward Prescott, an ASU professor, shared the 2004 prize for economics. Here's some of his quotes from a recent interview:

"When you cut tax rates, employment always goes up."

"The idea that you can increase taxes and stimulate the economy is pretty damn stupid."

"...[most] all economists are for free trade."

He said Kerry's tax policies would discourage people and businesses, and he dismissed claims that outsourcing of jobs is damaging the economy. He also thought private savings accounts for SS was an excellent idea.

Interestingly, he thought the stock market is about 20% undervalued, in contrast to a 15% overvalued threshold when stocks peaked in March 2000. He said that assessment was based on the value of productive corporate assets adjusted for tax rates.

Bush's campaign released a letter signed by Prescott and 5 other economic Nobel laureates critical of Kerry's economic plans.

It economics the last bastion of reason for the Nobel org?

I think that quite a bit of what he said was taken out of context.

first, cutting taxes does not cause new employment. The last 4 years have proven this true. An increase in demand leads to higher prices which caused suppy to increase as companies go for profits. To supply more you must produce more and to produce more you must employ more.

second, an increase in taxes can led to more employment. Does anyone remember talking about the great depression in US history? Taxes went up on the upper and middle class substantually and an enourmous number of jobs were created.

I also think that he has no idea about the purpose of SS (its insurance, not a retirement account) Second privatizing SS will greatly aggravate existing problems. First, as it is now, funds coming in are used to pay for current beneifts. The SS fund cannot afford to pay full benefits and allow for massive investments for long.

This guy obdviously has no idea what he's talking about.

"economics is a social science with the people removed" <---sums everythig else up i guess

 

[ntdz]

Originally posted by: miketheidiot

Originally posted by: cwjerome
Edward Prescott, an ASU professor, shared the 2004 prize for economics. Here's some of his quotes from a recent interview:

"When you cut tax rates, employment always goes up."

"The idea that you can increase taxes and stimulate the economy is pretty damn stupid."

"...[most] all economists are for free trade."

He said Kerry's tax policies would discourage people and businesses, and he dismissed claims that outsourcing of jobs is damaging the economy. He also thought private savings accounts for SS was an excellent idea.

Interestingly, he thought the stock market is about 20% undervalued, in contrast to a 15% overvalued threshold when stocks peaked in March 2000. He said that assessment was based on the value of productive corporate assets adjusted for tax rates.

Bush's campaign released a letter signed by Prescott and 5 other economic Nobel laureates critical of Kerry's economic plans.

It economics the last bastion of reason for the Nobel org?

I think that quite a bit of what he said was taken out of context.

first, cutting taxes does not cause new employment. The last 4 years have proven this true. An increase in demand leads to higher prices which caused suppy to increase as companies go for profits. To supply more you must produce more and to produce more you must employ more.

second, an increase in taxes can led to more employment. Does anyone remember talking about the great depression in US history? Taxes went up on the upper and middle class substantually and an enourmous number of jobs were created.

I also think that he has no idea about the purpose of SS (its insurance, not a retirement account) Second privatizing SS will greatly aggravate existing problems. First, as it is now, funds coming in are used to pay for current beneifts. The SS fund cannot afford to pay full benefits and allow for massive investments for long.

This guy obdviously has no idea what he's talking about.

"economics is a social science with the people removed" <---sums everythig else up i guess

its not true. You can't take the last 4 years and say it doesnt work. If the tax cuts were never passed, there could be even less jobs now, you just don't know.

 

[b0mbrman]

cwjerome, do you have the links to the context of those quotes?

Originally posted by: Vadatajs
-------------------------
Reagan's Funeral (exclusive pic)

Wow...

 

[wirelessenabled]

The idea that you can run $400 billion + deficits and keep the whole house of cards afloat? Now that is crazy.
Funny Clinton increased taxes and stimulated the economy through the 90's. Why? Because he ran a surplus!

Businesses run on BORROWED money. Low interest rates help more than low tax rates.

Look at GE GE balance sheet . GE has about $512 billion in debt. Each 1% change in interest rates affects it about $5 billion per year.

GE has earnings of about $20 billion before tax. GE income stmt. Pays tax of $4.3 billion or 21%. Cut GE's tax rate by 50% and it saves $2 billion per year.

Which do you think stimulates more jobs? A 1% cut in interest rates or a 50% tax reduction?

This guy may have gotten a Nobel but he doesn't seem to know sh!t about the economy outside the narrow scope of his research..

 

[cwjerome]

Cutting taxes causes new employment two major ways: The people have more money to spend creating demand and therefore securing jobs, and, businesses have more capital to reinvest in their company. Of course he's right. The last four years has proven nothing, except there's excellent evidence that the recession would have been deeper and longer if it weren't for tax cuts.

Yeah I remember the Great Depression, and a major cause was very high tariffs (protectionist policies most Libs love). Roosevelt's plans did little to help the economy. He was optimistic and a good leader, but his policies mostly backfired causing the Depression to last longer than necessary. The only real increase in employment was government... and that ain't helping the economy.

No private/SS plan calls for massive investments. You're probably old and greedy, but I would like to have a SS when I get to retirement age also.

 

[cwjerome]

Yeah, Prescott, Alan Greenspan, and most major economists are just hitting the panic buttons..... no, actually that's just the leftist quacks.

 

[wirelessenabled]

Originally posted by: ntdz


its not true. You can't take the last 4 years and say it doesnt work. If the tax cuts were never passed, there could be even less jobs now, you just don't know.

Of course one needs to take in to account the roughly 800,000 job increase for the government. These jobs didn't come from the tax cuts they came from GWB's overspending. Think what a hole Bush would be in now if he was a real conservative and not willing to run $400+ billion deficits.

Without the huge government job increase over 1.5 million jobs have disappeared on Bush's watch.

As you are continually reminded when studying economics.

There ain't no such thing as a free lunch.

Fortunately from Bush's perspective the bill for his overspending will fall to future years and future generations thus he and his buddies will not have to pay the bill.

 

[wirelessenabled]

Originally posted by: cwjerome
......

The only real increase in employment was government... and that ain't helping the economy.

......

So you don't think that Bush's increase of approximately 800,000 governments jobs is useful? Should we terminate them because they ain't helping the economy? You can't have it both ways.

 

[Rogue]

I wish people would quit crediting Clinton with so much of the economic gains during his administration. He simply rode the wave of a tech sector explosion that made everything look rosy until it all came crashing down at the end of his term. You've also got to remember that he inherited a post-war economic trend too, and let's be honest here, post-war America almost always sees a financial boom. Clinton was lucky to have served in such a prosperous time, he didn't necessarily create one.

 

[wirelessenabled]

Maybe we should get down to the real facts and figures.

Bush is borrowing money and running a deficit close to 4% of GDP. The economy is growing at close to 4%. Where is the surprise here?

Bush takes the $400 billion he borrows and spends it on 800,000+ new government jobs and other handouts and bailouts for various "deserving" folks like the oil &amp; gas industry, Halliburton and so on.

Why would anybosy be surprised that the economy is growing at 4%?

 

[CycloWizard]

I think this demonstrates that the economy is a function with zillions of variables. This demonstrates the similarity between economists and engineers. Both realize their mistakes once the reality doesn't match up with their model, and they have to reexamine their ideas to determine where the mistakes come from. Since economics is largely empirical, this takes time while engineers can make models based on physics. Since economics involves (and is even based on) human factors and responses, it may never result in accurate modeling. The only way to know for sure is to allow the tax cuts to continue and see what happens. Not suggesting this is the proper course of action, but I don't think even a Nobel prize-winning economist can declare them successful with 100% certainty.

 

[cwjerome]

Bush's domestic, governmental growth upsets me, as do deficits which Bush is PARTLY to blame.

However, 4% is pretty damn good growth... 2.5% is considered average, and even that's better that most Western European countries.

 

[0marTheZealot]

Classical economics is fundementally flawed.

 

[Dissipate]

This year's nobel prize winners in economics haven't contributed anything great to economics. It is mostly just mainstream mathematically modeled mumbo jumbo.

Text

 

[Todd33]

Most economist will tell you that that permanent tax cuts along with no decrease in spending is bad, really bad. Of course tax cuts stimulate the economy in the short run, you are essentially buying jobs with taxpayer money. Dumping a trillion dollars into the economy will do something, but it's not real growth.

BTW there are plenty, if not more, famous economist that support Kerry or are against Bush's plans,

 

[Ballsack]

Here is another point of view shared by some other guys.

PHILADELPHIA - John Kerry won the endorsement of 10 Nobel Prize-winning economists Wednesday as he attacked President Bush for policies that he said have led to the creation of only low-paying jobs.

...

The endorsement, in the form of an open letter American voters, was signed by George Akerlof and Daniel McFadden of the University of California at Berkeley, Kenneth Arrow and William Sharpe of Stanford University, Daniel Kahneman of Princeton University, Lawrence Klein of the University of Pennsylvania, Douglass North of Washington University, Paul Samuelson and Robert Solow of MIT and Joseph Stiglitz of Columbia University.

Who to believe???

BALLSACK

 

[CycloWizard]

Originally posted by: Dissipate
This year's nobel prize winners in economics haven't contributed anything great to economics. It is mostly just mainstream mathematically modeled mumbo jumbo.

Text

So why aren't you or I winning Nobel prizes? I'm guessing there's a little more to it than a bit of math.

 

[Dissipate]

Originally posted by: Todd33
Most economist will tell you that that permanent tax cuts along with no decrease in spending is bad, really bad. Of course tax cuts stimulate the economy in the short run, you are essentially buying jobs with taxpayer money. Dumping a trillion dollars into the economy will do something, but it's not real growth.

BTW there are plenty, if not more, famous economist that support Kerry or are against Bush's plans,

A real economist would declare both candidates as morons.

 

[CycloWizard]

Originally posted by: Dissipate

Originally posted by: Todd33
Most economist will tell you that that permanent tax cuts along with no decrease in spending is bad, really bad. Of course tax cuts stimulate the economy in the short run, you are essentially buying jobs with taxpayer money. Dumping a trillion dollars into the economy will do something, but it's not real growth.

BTW there are plenty, if not more, famous economist that support Kerry or are against Bush's plans,

A real economist would declare both candidates as morons.

Yes, because that's oh-so-productive. I'm guessing that's exactly what you did.

 

[Ferocious]

Bush raised taxes in 1991.

Clinton raised taxes in 1993.

What followed was the biggest economic expansion in history.

 

[ciba]

Originally posted by: Ferocious
What followed was the biggest economic expansion in history.