[ExI] Free Trade

[spike at rainier66.com]

From: John Clark <johnkclark at gmail.com> 



On Fri, Oct 10, 2025 at 6:35 PM <spike at rainier66.com <mailto:spike at rainier66.com> > wrote:

 

> Before I go on, is there anything above you wish to dispute?

 

Yeah, a couple.  

  

>…Laffer theory? All Laffer said is that to maximize the amount of money the federal government receives the tax rate should not be too high or too low, and to illustrate that point he drew a curve on a blackboard that is called by some the "Laffer curve" but that I call a keen grasp of the obvious…

 

 

Ja.  So obvious, most politicians still do not understand it or refuse to accept it.  They are the students in this class when Ferris Bueller was absent that day.

 

The movie was made in 1986.  It was a gag, about how Bueller was the only student who followed the professor.  The rest of them were catatonic with boredom.  But that guy who played the role is an actual literal economist, and ad-libbed that scene.  Take the minute 15 seconds, listen to what he says:

 

https://www.youtube.com/watch?v=uhiCFdWeQfA

 

 

 

>… The Reagan tax cuts affected the very rich far more than the very poor, overall he cut income tax rates by about 25% over three years, mainly by reducing the top tax rate by a lot, from 70% to 28%. It was called trickle down economics…

 

Sure was.  It incentivized the people with money to invest it rather than sit on it.  That worked.  It poured capital back into the economy.  Result: the 1980s were prosperous, the government took in more revenue than before.

 

>… The debt as a percentage of GDP also increased significantly during the Reagan years, it increased from 26.2% in 1980 to 40.9% in 1988… John K Clark

 

 

Right again.  Government spent way beyond its revenue, even though the revenue went up.  Spending went up more.

 

> I don’t see why interest on the current debt is placed under discretionary spending, but that is how economists treat it.

 

>…Spike, do you really think the US should just renege on paying the national debt and turn US savings bonds into junk bonds overnight?!

 

No, not at all, just the opposite.  I am suggesting that the funds being paid into Social Security to pay back the borrowing from that fund in the 1990s be treated as mandatory spending rather than discretionary.  

 

Currently we (well, not WE, but rather some people) think of mandatory spending as Social Security and Medicare only, which are entitlements, so those must be paid.  But the money the fed is now borrowing to pay back the mandatory funds is called discretionary spending.  In my view that should be considered mandatory spending, because the fed must pay back its debt, which it incurred using an accounting trick from 1994, which allowed it to consider what was mandatory spending as discretionary to start with.  Naysayers at the time (such as me) realized this would create the illusion that the government wasn’t really overspending its revenue, which it very clearly was, and did.  Now… we pay.

 

Well OK then, undo that accounting trick from 30 years ago.  Make it clear that we now have only two classes of discretionary spending rather than three.  The two remaining classes of discretionary spending are military and not-military (everything that federal government does.)  Treat the interest payments (AND THE ADDITIONAL FUNDS WHICH MUST BE BORROWED! (that part is damn important)) along with the future interest payments on the funds which must be borrowed as mandatory spending.  

 

Now that we have it all down to terms voters can understand, just two categories, military and not-military, they will see that what Elon Musk and his DOGErs were saying was absolutely right.  But… they were despised and ignored.

 

Elon was right.  The consequences of ignoring DOGE will be most painful.

 

spike

 

-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://lists.extropy.org/pipermail/extropy-chat/attachments/20251011/50bb4ca3/attachment.htm>