Stock Market (was: Re: Government Radio Propaganda)

Kevin Dempsey Peterson (kevin@cafe.berkeley.edu)
Wed, 5 Nov 1997 02:03:05 -0800 

On 5 Nov 1997, Seth David Schoen wrote:

> But then there is government investment, which, while frequently more
> wasteful than private investment, still exists.

But how can you evaluate that waste?  This is what I think is most
dishonest about "libertarian economics" (that is, the economic
statements made by avowed libertarians).  This whole "well, if we get
rid of taxes, you'll have twice the money overnight, because the
government takes half your money, but the cost of everything will drop
by 50% also, since the government takes half of the producers incone
as well, and the costs would further drop because taxes take half of
the suppliers profit too, so you'd be eight times as right instantly."

Where is the real drain from taxes?  I think it's from government
wasting resources and labor on completely useless things, like
building ICBMs rather than factories, but there might be other big
drains as well.

> George Lee said:
> >the extra money people would have to spend could be invested in the stock
> >market, which is experiencing an incredible bull market. At the current rate
> >of increase, someone could easily double his (or her, of course) money in as
> >little as 5 or 6 years.
> 
> (Could _all_ taxpayers double their money in 5 or 6 years?  Wouldn't that
> require the whole economy to be doubling in production every 5 or 6 years,
> to avoid inflation?)

I don't think so.  Only a small percentage of all the capital in the
country would be invested in the stock market, so the apparent growth
("wealth" now vs. "wealth" later) is all that would have to match the
growth of the economy.  If you have ten thousand in stocks and 90
thousand in real estate, the stock market can double with only a 10%
increase in the overall economy.

> I think there are too many side effects and complications to reliably
> predict many actual overall effects to taxpayers of getting rid of taxes.
> As the critics of libertarianism like to say (irrelevantly), there's no
> free lunch in these matters; many advantages to individuals are subjectively
> balanced by new disadvantages.

...silently ignoring the fact that the disadvantages just mean that
people will have to build houses and factories instead of B-2 bombers
and welfare recipients would have to start producing.  Webster's gives
1975 for the first occurance of the phrase "free lunch" to mean
something that is "given entirely free of charge or obligation".
Heinlein's The Moon is a Harsh Mistress, which included the phrase
"There ain't no such thing as a free lunch" to mean "you can't have
social services without paying for them," was published in 1966.
Funny that critics would use a phrase from the a book about a
capitalist utopia (well...) to try to criticise capitalism.

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