Even a “wrong premise” can be argued intellectually. Especially when again, the “wrong premise” might be less than an objective observation.

I very much appreciate your labor. Yes, those Austrians can be dense, but thrilling.

Krugman is at the top of my list. Brilliant mind, wrong premise.

Am winding my way through the Hayek lecture, as I suspected it is causing great pain to my hair.

So far, and I’m sure there are “buts” to come, his argument would not seem inconsistent with mine on the relative value of economic theory.

BTW, are you throwing Krugman into your list of blathering Keynesian non-intellectuals? If so, one might posit that your vision is tainted by the old adage of beauty and the beholder.

I’ll be back.

Perhaps you are right about Reich. Perhaps I’ve haven’t delved deep enough into his archive of scholarly articles to see the depth of his thinking. That would be an interesting exercise. But, based on his general comments, which are very similar to other liberal, Keynesian commentators, I would challenge his intellectual assumptions. Forgive me if my assumptions are wrong.

Here is the problem as I see it. When you say only “history” can lead us to the truth, I would strongly disagree and say that only theory can lead us to the truth.

This gets sticky and I try to not get into theory here because it bores people. But the essence of Austrian theory is, well, theory. Their argument is epistemological (the science of how do we know what we know). Austrians would say, well, “history” is made up of a million facts because there were a million actors on the economic stage all making individual decisions. How do you know you picked the right facts to make your analysis? Well, most social scientists would say, they have a “theory” of why “x” happened and not “y.” Then they fo off and do empirical research. If it starts with theory, then you better have your theory correct, or your examination of the facts (history) is just going to be a guess.

We Austrians would say that theoretical examination is superior to empirical analysis. They have developed a type of logical analysis, starting with Aristotelian logic, and continuing through to today with new ideas about epistemology and logic.

The Austrians have been able to show, theoretically based on logical analysis, that Keynes’ theory (i)is incorrect, (ii) is internally inconsistent, and, (iii) if you do look at history, has failed miserably whenever applied.

This is not really the forum to discuss all of this stuff because it’s really deep and complicated. But if you ever wish to study Austrian theory (I’ve read Keynes’ General Theory) you should read Mises’ Human Action. Then you could appreciate the difference in the two theories. I think economics is quite different than how you perceived it in college. (Maybe you used Samuelson’s book as did I.)

I don’t mean to sound pedantic or arrogant here, but it’s hard to explain. I urge you to start with the idea of why current economics and its econometric analysis is incorrect and why it has led to disastrous results. The best explanation if von Hayek’s Nobel acceptance speech. It would explain a lot about how we think. http://nobelprize.org/nobel_prizes/economics/laureates/1974/hayek-lecture.html

Gotta go.

Dr. Reich is, in TV appearances, his blog and maybe others of his writings, a political commentator, generally pushing a political ideological agenda. As such, even though one may disdain his shortcuts, one does understand the necessity or reason for them.

TV talk shows are no venue for intellectual debate. They do not, nor cannot, afford the time to delve deeply into theoretical or practical applications of all the variables of any given subject, especially not economics. Blogs are only minimally better. Time is not the constraint on blogs, but there are limits concerning how interested and involved an audience will stay if a blog entry runs on page after page after page of esoteric ramblings.

I’ve have often wondered what Dr. Reich’s purpose is in his blog. To invoke thinking and thus commenting? To get things off his chest in meaningful, albeit shorthand, dialogue? My best guess is that the responses are for use in his classes as fodder for discussion and learning. Maybe, in the end result, to do nothing more than expose his students to the inanity of the average joe. To use his blog as a medium for truly intellectual discussion would necessitate longer entries from him and longer, and frequently boring, comments from a more educated audience. Arguably the more honorable goal but it returns you to intent and purpose.

I haven’t had time to review all your entries but a cursory review does not suggest that you have overcome many of the same pitfalls that Dr. Reich, or any other blog owner, falls victim to. The question always comes down to, do I write a book or merely an essay?

Now theoretical debate is enjoyable, although the advantage goes to the one better read and more knowledgable of the theories being debated. Arguing theory only is somewhat of a masturbatory exercise. Economic theories exist, lo, proliferate, across a broad spectrum. Start with some basic premises, generally accepted by most economic theories, and then you enter a decision tree with multiple branches, usually beginning with Adam Smith, moving to the Austrians, the monetarists and, maybe near the bottom Keynes. No doubt there are many other branches of which I am totally ignorant. The point being that theory alone tells us nothing. Only practice and application can teach us anything and that requires real world examples which can only come from history, perhaps with a little aid from analogy.

Take for instance your assertion, of which you seem uncertain: Maybe I’m wrong, but generally high taxes tend to depress economic activity. In theory, absolutely correct, but you cannot, using all of history prove the premise. If we could isolate only taxes and their impact on economic growth we might be able to argue the “theory” and find historical examples, but again, dynamism. Reviewing only cursorily, Clinton’s term in office would prove the contention false. Even rigidly parsing Reagan’s term might disprove the “theory” given his multiple tax increases along with his tax decreases. He is still on record for signing the largest tax increase in US history, 1982.

The biggest problem I have with economic theories, and the thing that turned me off quickly when taking economics classes in college, is that there are no hard postulates, no axioms. Most every economic theoretical “fact” is based on a number of assumptions many of which must be held constant to prove the “fact”. The worst one might be “rational man” theory. All, using that word hesitantly, economic argument, proposing given this then that, is predicated on a “rational” behavior of the players involved. What is “rational”? Is it fixed or variable? Our current dilemma would suggest very variable.

Enough for now, welcome to Econ 1, as opposed to 101.

Here’s what gets me: Mr. Reich does exactly what you accuse others of–half-truths, innuendo, false conclusions. He passes himself off as an intellectual but there’s nothing very insightful in his writings. I also can claim quite a few years to my hide, but so what. We need to discuss theory before we can discuss history. I try to discuss theory at a practical level, often using history to prove a theoretical point. (I know I’m generalizing here.) I should be more careful what I say around you. I was using progressive-regressive in the economic sense. Maybe I’m wrong, but generally high taxes tend to depress economic activity. More later. I would agree that your philosophy is far from mine, but that’s why we have to have serious discussions and find a common ground to get at the truth. Thanks for the comment.

Don’t be to honored, I’m an equal opportunity liberal blather spewer. My viewpoints have been called many things, seldom is intelligent one of them.

Among my pet peeves are those who use numbers selectively in support of their ideas, or “strongly” held beliefs. I subscribe to the doctrine of “the whole truth”. Half-truths tend to imply, at least, half-lies. If your premise cannot withstand scrutiny when all facts are exposed can you even have a valid premise?

Another hot button is incongruity. A gentler, kinder word for, hypocrisy. To wit:

I also don’t think your comment about Reagan as being an era of buffoonery is valid or fair. It’s just name calling.

Then:

And, I heard Reich this morning on NPR and he’s so ingnorant that I may do another piece on him.

Granted the former may represent a serious moral judgment, while the latter was simply joking but then could the reference of the former perhaps have been said with tongue in cheek? Given that I am an expert on the reference of the former, let me state that it was a serious observation, coming from one who had quite a few years under his belt before Reagan entered the national stage.

We can argue about history until we’re blue in the face.

True, but it is fun and interesting. Arguing about the future, while also fun and interesting, will find some of us, literally, blue in the face before we know who was actually right. History is certainly no blueprint for the future. The dynamism of this thing we call life seldom ever allows for a completely comparable set of events. However, it is the only template available to appraise actions and potential effects. Thus, history is worth revisiting, even though some have views much more myopic than others.

Case in point; If you want something truly regressive, as history has shown, go for a confiscatory top rate as you suggest. Being a lawyer, or formerly one, I would think you would use words more carefully. “Regressivity” or “progressivity”, in tax discussion parlance, refers to the effect of the taxes on a basis of income levels. A top rate of 90% on astronomical income levels cannot, by definition be termed “regressive”, until perhaps we all get there. Horrendous, absurd, even insane, might be appropriate, depending on your point of view, more specifically your political ideology, but it ain’t “regressive”. You can claim history supports your view, doubt you can prove it.

Economic history would tell us that during the period when 90% top rates were in place, we enjoyed the greatest economic growth in the history of the world. This is not to suggest cause and effect but it does suggest that the high marginal rates were not much of a hinderance to economic prosperity, especially for all.

BTW, I like and admire Dr. Reich. I’m not a disciple nor a blind follower. I take him to task from time to time but overall he and I share a belief in THE only valid political ideology.

I am honored that you would read my blog. I appreciate your comments because they probe to the meat, so to speak. I agree with your general comment about numbers, but for another layman, like me, it’s difficult to come up with anything original, so I’ve got to live with what I get from the IRS. You are correct in that the WSJ quote was referring to a 100% balanced budget, not the one-half that I and Obama were discussing. But it was in the same vein.

While we may agree that a VAT is a bad idea, I don’t think the Obama Administration necessarily believes that. They believe so much other BS that a VAT isn’t such a big leap. Especially if they rebate the po’ folks. My point is that the deficit numbers will be much higher than they project and, if he’s true to his word, the money will have to come from somewhere. If you want something truly regressive, as history has shown, go for a confiscatory top rate as you suggest.

I also don’t think your comment about Reagan as being an era of buffoonery is valid or fair. It’s just name calling. We can argue about history until we’re blue in the face.

But, thanks for your comments. I hope you continue to participate because it is helpful to me and my readers to see another intelligent viewpoint.

And, I heard Reich this morning on NPR and he’s so ingnorant that I may do another piece on him. (Thought I would yank your chain a bit.)

Was struck by the Wall Street Journal quote. Not sure if the two were correlated but the Obama presumption was that increased tax revenues would cover half the deficit. The WSJ quote nets to a 100% tax on the top 2% in 2006 would equate to less than half the total budget of 2006. No doubt true. No doubt numbers that show up within the same ballpark. But being an old green eyeshade accountant I prefer precision and paralleling what the $1.3 trillion would have done to the 2006 deficit would have been more meaningful. Arguably not apples to oranges but surely, Delicious Reds to Greens.

We are all familiar with, “Figures never lie but liars sometimes figure”. Somewhat a misnomer. “Finaglers sometimes figure” would be more apt. Many would substitute “Accountants” for “Finaglers” but that’s another story.

Another obscurity appears in a comment above: It is staggering that the top 2.9% in earnings pay 62.5% of all income taxes. How on earth could anyone seriously assert that “the rich” aren’t doing their fair share? We see variations of this theme appear all over the blogsphere. The flaw, even maybe fallacy in logical terms, is that the statement means nothing if we don’t include what the 2.9%’s share of total income is. Smoke and mirrors is not dissimilar from haze and reflections in windshields.

As to a national sales tax? Ain’t gonna happen on the Dems watch. You’re correct, far too regressive. Beyond that you’d be treading on a province left to the states. The Fair Tax is the biggest sham to come along in eons. The APT tax, with all its flaws would be better.

Perhaps the best solution would be a financial transactions tax. Been there, done that and it could be small enough, ratewise, so as not to infuriate the masses.

Best get out the crying towels guys. The era of Reagan buffoonery is over.

In my best impersonation: Good day!

Haven’t read the proposed budget. Retirement not only means “Never having to say you’re sorry” but also that you don’t have to look back. Would guess that Obama’s projections are predicated on the meager return to a top rate of 39.6%, coupled with the return to 20% on capital gains. Off the top of my head I would tend to agree you can’t get there from here. Now a top rate of 50% or 70% or 90%, beyond appropriate income levels could get us there, maybe in spades. It may be that Obama needs to think bigger.