Draginol

Join Date 03/2001

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Democrats don't understand the effect of income taxes

The unintended consequences of tax and spend policies

Democrats, in general, are extremely ignorant about economics. It's difficult to even find a Democrat with any serious experience in running a business or having actually produced anything at all. Elected Democrats tend to be lawyers. At best, lawyers help honest business men and individuals settle a dispute. At worst, lawyers are parasites on society.

It is usually without irony that Democrats decry how much doctors make and how health care costs need to be controlled while ignoring that it is because of greedy lawyers and their lawsuits that have a major impact on the cost of health care.

I rarely hear Democrats complain about how much lawyers make. Democratic Presidential candidate, John Edwards had a net worth of over $60 million. Consider that. John Edwards doesn't produce anything. He makes no products or goods.

And it is because Democrats are so rarely involved in producing anything that they have such a lack of understanding in economics.

For example, Democrats always seem to fixate on earned income when it comes time to "tax the rich". Yet they seem oblivious to the implications of their policies. When you tax the earned income of the rich, you are really hurting the most vulnerable Americans. The "rich" who are earning their income simply pass on that tax to their least productive workers in the form of lost jobs and lower wages.

According to the New York Times (that right wing rag..) the richest Americans are:

Mostly self employed
Mostly run businesses

So what happens when you increase their taxes? You increase their expenses. And what happens if you increase expenses? You either have to make more money or cut other expenses. Most companies have "fat" they can trim -- employees whose employment are tenuous. There's basically a layer of the American workforce that I'd say is only borderline employable. During the good times, they have jobs because their marginal productivity is still worth it. But when times are tough, they're the first to get cut.

Raising taxes on the rich simply adds to the bottom line cost and it is those at the bottom that suffer first. Yet Democrats never seem to get this even though it's been demonstrated time and time again. It is one of the reasons why lowering taxes increases government revenue. It isn't due to "trickle down" economics but rather because the cost of doing business for the bulk of employers goes down allowing them to hire more people and invest more which in turn generates income at a greater rate than inflation. It's not rocket science -- unless you're a Democrat I guess.

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Democrats don't understand the effect of income taxes

without reading the post at this point. i have to say it isn't that the democrats don't understand, it is they don't care. of course i am talking about the idiots in washington. not the voters.

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this is true for doctor prices.

this is not true for drug prices.

at least i believe that the reason drug prices are so high is because of universal medicine in ever other country on the planet.

i have written this before. every other country has a price cap on meds. the companies that make and research meds have to make enough money to do so. so the only country on the planet that doesn't have price caps has to pay for all of that research. ie the united states is paying for the meds for the whole planet.

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Always have, always will (fail to understand the effect of income taxes).

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I don't like the concept of income taxes.

Last year, I got a rent increase after the house I live in was sold.

Had the government taxed the land value of the house rather than productive income, the government would have made nearly the same amount of money from my living there, but I would have kept the wealth I produced.

Instead, the tax money would have come out of the pocket of the land lord, except that it would have been the money for the value of the location of the house, which is a value the land lord did not create (rather society did by deciding to move there and be productive).

The land lord would have received the money for the value he produced (the house).

I would have received the money for the value I produced (my wages).

The government would have received the money for the value society produced (the land value).

I wouldn't be negatively affected and would try to make more money because I wouldn't lose 40% of what I create.

The land lord would try to make the house itself more valuable, so that people would want to pay more for living in it.

And the government can work on the infrastructure in my area and improve land values (and hence collect more money in the future).

I'd rather have government tax what I use (land, petrol, electricity etc.) than what I create. The first would make me use these things less, which is good for others (more land available) and the environment (less pollution), the second would make me produce less, which is not good for anyone; although some liberals apparently believe it creates jobs. (I think productivity creates jobs.)

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at least i believe that the reason drug prices are so high is because of universal medicine in ever other country on the planet.

Universal health care creates a monopsony (many producers, only one buyer). Monopsonies tend to make prices lower because the buyer can choose and the seller cannot.

It's the opposite of a monopoly (one producer, many buyers). A monopoly tend to make prices higher.

If there is only one producer of medicine and lots of buyers, prices should be high.

If there are many producers of medicine and only one buyer (government or some form of public health service), prices are low.

The reason doctors leave the continent for Britain/Ireland/USA is that the continent pays less. If medicines are more expensive in countries with universal health care, the reason should be something else. Perhaps regulation or safety requirements impact prices?

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sorry you would have still payed the taxes on the house in your rent.

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Universal health care creates a monopsony (many producers, only one buyer). Monopsonies tend to make prices lower because the buyer can choose and the seller cannot.

why don't you quote the whole thing.

i have written this before. every other country has a price cap on meds. the companies that make and research meds have to make enough money to do so. so the only country on the planet that doesn't have price caps has to pay for all of that research. ie the united states is paying for the meds for the whole planet.

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in other words if you live in another country. the people in the united states is paying for part of your meds. we are also paying for all of the research for new meds.

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sorry you would have still payed the taxes on the house in your rent.

I am paying that same amount of money now. So what's your point?

I am not saying that I am against paying taxes. And I won't have a problem with paying the taxes for the land value I use. My opposition is to income tax, not to the other taxes I advocates should be used instead.

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That's how the market works.

If some customers are willing to pay more and others are not, the first group will pay more. Changing that would be socialism.

So thanks to the US for paying more for medicines and thanks to the early iPhone buyers for paying more for iPhones.

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So thanks to the US for paying more for medicines

if the democrats get their way. you can kiss your meds goodbye. because then the producers will give the bulk of the meds that they produce t the highest bidder.

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If the Democrats get "their way" (presumably nationalised health care), medicines will be even cheaper as the market consolidates more on the buyer side. If American customers stop competing among themselves, the total monopsony power will increase and prives will go down.

Of course the downside is that if prices go down, many medicines will disappear from the market (when prices fall below cost).

The balance is important in a market.

The point is that national healthcare does not make health care more expensive. It makes it cheaper as the number of customers is being reduced to one. The downside is that the quality of care might go down with the prices. It's not so simple.

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if the democrats get their way. you can kiss your meds goodbye.

(Citizen)Leauki---Of course the downside is that if prices go down, many medicines will disappear from the market (when prices fall below cost).

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Danielost,

You are still not getting the whole picture. What you quoted was an extreme. Prices are unlikely to fall below cost, because there is demand that doesn't go away (sick people do not want to die).

There are countries, like Germany, that have a national health care system and all medicines are available, simply because Germany remains a market that pays more than cost for medicines.

(Germany also produces a large percentage of medicines available on the world market. It's not just the US. Same for France and Switzerland. In fact, if you look at http://en.wikipedia.org/wiki/List_of_pharmaceutical_companies you will find that Europe and the US spend about the same for R&D and have about the same sales.)

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Universal health care creates a monopsony (many producers, only one buyer). Monopsonies tend to make prices lower because the buyer can choose and the seller cannot.

First, Leauki, the problem is that quality is reduced. As competition is reduced, so is incentive.

Fact is, in America, we already have socialized medicine. We call it our Medicare/Medicaid system. And today I will be watching a close friend bury his one month old son quite possibly BECAUSE of that system. If my suspicions are confirmed, get ready to see a whole host of articles dedicated to that purpose.

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First, Leauki, the problem is that quality is reduced. As competition is reduced, so is incentive.

Competition isn't reduced by a monopsony. In fact sellers have to compete more if there are fewer buyers.

If all iPhone customers were to form a big group (with or without being forced to do so by the government), they could dictate the price of the iPhone.

I don't see a connection between competition and incentive as you see it. It's rather the other way around. More competition leads to less incentive.

Hence, the chain of events is:

National healthcare -> monopsony -> more competition -> lower prices -> less incentive

It is NOT:

National healthcare -> X -> less competition -> Y -> less incentive

It is true that the end result is less incentive, but it is important to understand what really happens at X and Y.

What the monopsony also does is decrease competition between sick people. Left-wingers think that is a good thing, right-wingers think that it is a bad thing. I tend to think that less competition between customers is a good thing when it comes to healthcare. But I also think that a monopsony ultimately creates less incentive because it creates more competition and lower prices; and our goal for medicines is not "pay as little as you can" but "get the best possible".

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Competition isn't reduced by a monopsony. In fact sellers have to compete more if there are fewer buyers.

This is true. However to compete, those seller cut corners to reduce the price, and hence the quality of services.

For the most part, JU is blessed with rational liberals. They at least are not the frothing hate filled ones we see all too often in print, web sites and on the news. Yet even they have this disconnect bewteen where money comes from, and how it is created. I dont see that changing. You can tell because they do not argue with facts, or even respond to facts. instead they throw "feelings" around like that was the basis of all money.

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That's true, except that the monopsony will be controlled by the government. And the government will pay whatever the medical companies want. Or, if prices go down, we will have less quality healthcare than we do now. Because hospitals don't ALL compete. Sometimes, there's only one hospital you can go to. And that's the hospital that's going to suck.

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That's true, except that the monopsony will be controlled by the government. And the government will pay whatever the medical companies want.

The stories of a $600 hammer are rampant. But the reality is that most government purchases are to the lowest bidder (by law). So with many sellers, the lowest one gets the contract, and they are usually the worst one, quality wise.

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Competition isn't reduced by a monopsony. In fact sellers have to compete more if there are fewer buyers.

the dentists in england have optied out of that universal medicine. and prices have gone through the roof.

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It's worse for your company, too, Draginol. Once you cut expenses, and everyone else cuts expenses, there are more people making less money. These are the people that, had they that extra money they were going to be making, would have bought a computer game. Now, they don't, and you make less sales, and more people get laid off. It becomes a vicious cycle of layoffs. As more people get laid off from the non-necessity companies, the necessities companies get less sales too, and then THEY have to lay off people, and it just keeps going until nobody's working and nobody's buying.

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the dentists in england have optied out of that universal medicine. and prices have gone through the roof.

Yet you seem to believe that non-socialised medicine would make things cheaper.

That's true, except that the monopsony will be controlled by the government. And the government will pay whatever the medical companies want.

Medical companies competing for exactly one customer will not want a lot of money. If one of them does, the one customer buys from the others.

Dr Guy's point that the cheapest service might be the worst one is important, but the assumption that government will simply pay whatever the most expensive supplier demands is wrong. I have lived with a socialised health care system (in Germany) for most of my life, and it is simply not true that Germans pay more for healthcare than Americans per person for the same service. What is true is that German dentists are paid less than Irish dentists and that good dentists leave Germany, while Ireland experiences an influx.

If the argument FOR socialised medicine is not understood, how can one argue against it?

SOCIALISED MEDICINE:

Monopsony: one customer, many suppliers
Lower prices (due to monopsony power of the buyer)
Suppliers compete with each other, patients do not
Service might be worse due to lower prices
Service might be good due to more competition among suppliers

Catchphrases: costs less, all patients are equal

NON-SOCIALISED MEDICINE

Many customers, many suppliers
Higher prices
Suppliers and patients compete with each other
Service might be better due to higher prices
Service might be a bit worse due to less competition between suppliers

Catchphrase: better service

Liberals care about equality and price. Better service for most (even almost everyone) is, in their eyes, not as good as good service for everyone. Conservatives care about better service. Less than best possible service for most is, in their eyes, not as good as the availability of the best service.

Whether the second creates a better world for everyone in the long run is a difficult question.

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It's worse for your company, too, Draginol.

I don't think it's a matter of money at all. The economy can produce just as much under a total tax system (everything owned by the state) as it can under a no tax system (everything owend by individuals). It's all about incentive.

The more I have to work for other people (the state) when I work, the less I will want to work. Why should I work harder when I reap only 60% of the benefits? Why should I pay more to the state than somebody who just chooses to work less?

I guess that's the reason why the Soviet Union had great scientists. Science was the only field in which an individual could keep all he created even though the state also took it. A famous scientist remains a famous scientist, even if the state uses his research. But a rich man does not remain rich if the state uses his wealth. Hence productive individuals in Russia tended to become scientists.

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(Citizen)Leauki

you still don't get it do you.

the united states is paying for all of the medical research going on in the world. if we go social all of that research ends now not tomorrow not next week it ends now.

an example that i have used in the past. bill clintons last experment in socialized medicine. was to tell the companies that supplies the united states with flu shots that he was only going to pay them so much. well the next year the last year that he payed for we ran out. the government had to go and buy the shots from the year before.

they assume a certain strain of flu is going to be the one that hits the usa every year. it is a different one every year of course it is a crap shoot that you will get that strain and not another but. the problem is that billy boy said we were only paying so much and the companies responded by only makeing so much.

now if there is only so many pills to go around. these companies are going to sell them to the highest bidder not the lowest bidder. since the united states has the best economy in the world who do you think will be getting the lions share of those pills.

oh and many of your many suppliers will go out of business because they won't be able to pay their bills. which means even fewer pills for sell. and what happens when supplies get smaller.

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you still don't get it do you.

Well, you are wrong.

the united states is paying for all of the medical research going on in the world. if we go social all of that research ends now not tomorrow not next week it ends now.

I take it you neither know much about the world nor did you follow the link I provided. I have a thing for people who argue around the facts and ignore evidence.

CURRENTLY, companies in the EU and Switzerland are spending as much on research as American companies and they are selling as much. What would happen if US medicine were socialised? Probably what happened when European medicine were socialised. But wait, European medicine IS socialised, but Europe nevertheless researches and sells as much as the US.

Just imagine how much Europe would research if it had the system you declare, without evidence, would cause more research!

I admire your patriotism and you should be proud of your country, perhaps, but making claims like "The United States is paying for all of the medical research going on in the world" is just stupid and ignorant.

Here's the top five. First number is revenue, second is money spent on research and development:

1 Johnson & Johnson USA 53,324 7,125
2 Pfizer USA 48,371 7,599
3 GlaxoSmithKline United Kingdom 42,813 6,373
4 Novartis Switzerland 37,020 5,349
5 Sanofi-Aventis France 35,645 5,565

The list goes on like that, with nearly a half the US, nearly the other half Europe, with the two being followed by Japan and then Israel and Australia.

That is who is paying for "all the medical research" in the world. It's Europe, the US, Japan, Israel, and Australia. You are free to add up the numbers, but it looks like you would find that it is the EU that pays for most of the research. Following your logic that means that the US healthcare system is living off the European socialised system.

Enjoy!

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