gut;1752911 wrote:They have? According to which Keynesian economist?
Lower taxes don't slow growth, that's asinine (although I suppose in some fairy-tale land where the govt is wise and efficient it's theoretically possible). Taxes aren't the only factor impacting economic growth.
Marriner Eccles, the Chairman of the Federal Reserve during the 1930's, was just the type of guy you can respect Gut - a millionaire Republican businessman - had this to say in 1938 (only two years after the publication of
The General Theory so he cannot properly be called a Keynesian):
As a general principle, deficit-spending by the government should only be undertaken in depressed times as a means of offsetting in part or compensating for the lack of private activity. Conversely, when private debt is rapidly expanding, there should be a contraction of public debt as a counterbalancing and stabilizing influence. However, there may be times when national income is at a high and rapidly advancing rate when it would be desirable from every standpoint to increase taxation— for example, by broadening the tax base— in order to maintain a flow of funds to impoverished elements of the population, to the aged and unemployables, whose purchasing power is necessary to sustain production and thus help to preserve existing capital and make possible further profitable expansion of facilities. This, in turn, would provide an outlet for accumulations for savings in the field of private investment. Otherwise, as happened in the late twenties, there may be excessive accumulations of investment capital which, unable to find outlet in productive domestic enterprise, are diverted to unproductive channels and to speculative bidding up of stocks and other equities or put into uncollectable foreign loans.
I agree that as a general rule of the past we had a scarcity rather than a superabundance of investment capital relative to productive outlets, and that, therefore, recovery from depressions before the last war was almost invariably led by new investment. I seriously question whether this rule, and the economic philosophy based upon it, is valid under present and prospective conditions. The point I wish to make is that it would be to the interest of capital under such conditions to advocate such taxation on a broad income tax base as would, in effect, sustain buying power and thus make for a sustained and expanding production which, in turn, serves not only to protect existing capital investment but also to provide a productive and profitable outlet for accumulated private savings.
When the supply of savings is insufficient to meet the expanding needs of the country for new capital on a profitable basis, income taxes should be reduced. A condition such as this may develop in the future, for I realize that technical progress opens up indefinite possibilities for production, and education, by causing needs to become more refined and diversified, can increase the requirements of our people indefinitely. But in times when savings are too large relative to productive outlet, government should increase taxes and should apply the proceeds to depressed areas, to public health and educational purposes, to public improvements, conservation and protection of natural resources— to preservation of the resources, human and material, of prosperity and not to competition with private initiative. Higher taxation could well be applied, in these circumstances, to the income groups of, say, between $2,500 and $50,000 (
$42,862.59 - $857,251.80 in 2015 so basically calling for tax cuts for the working poor under our current code)
, and to corporations, always, of course, on an ability-to-pay basis. It seems to me that some of the other capitalistic democracies, such as Great Britain and Sweden, have managed this general policy fairly well in net effect upon their economies, and I am inclined to think that it is their greatest economic safeguard in the preservation of democracy. (<--- He's saying prevent fascism and communism)
https://fraser.stlouisfed.org/docs/historical/eccles/077_01_0001.pdf
Providing the Poor with more money for consumption with greater marginal utility (i.e food stamps) may not result in a bigger pie than allowing the most well off to consume luxurious watches with low marginal utility and speculate with their excess funds to create asset bubbles which eventually crash but the pie is a smaller fruit pie instead of a bigger cowpie.
