From: Hal Finney (hal@finney.org)
Date: Sun Jul 06 2003 - 19:34:14 MDT
These economic issues are complex and I am not too knowledgeable about
them, but I'll make a couple of quick points.
Taxation is fundamentally a matter of redistribution. It's not like
taxed money is not spent. Government spends pretty much all the money
that it takes in taxes. Give it back to people and they will spend some,
and save some.
Generally, an economy is faced with the same basic question that a
person faces: how much to spend now, and how much to save for the
future. For an individual, money saved (or invested) grows; hence he
will get more in the long run if he saves more, but this means delaying
his reward.
For an economy, it's not quite the same, because most everything
that is produced gets used. But where the analogous choice arises is
in allocating resources towards investing in capital-producing items,
versus producing short-term consumable items. By investing in long term
growth items, society defers its current gratification and will produce
more in the long run.
We know, therefore, how to increase growth in the long run: defer present
gratification. At the individual level, save more of your income.
At an economic level, build more industrial robots and fewer CD players.
The question is not really how to increase growth, in this crude model;
the question is whether to do so. That is a matter of social values,
of how much we want the lives of our children to be better versus wanting
our own lives to be better.
Hal
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