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Why tax the productive sector to sustain the unproductive sector? watch

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    (Original post by WharfedaleTiger)
    I don't understand how, or why, your applying this to the public sector. The public isn't innately distructive as with war or violance (The broken window)-it is a suppliment to the private sector rather than a replacement or something which destroys the private sector. if managed correctly then it provides boosts to economic growth by providing an educated workforce, sponsoring innovation, providing inferstructure as well as other services which either protect wealth creation (The Police, defense, law), protect contracts and trust (law) or by providing nesscary services more efficently than the private sector (Health, Social Services) etc.
    I apply the same scenario since the destructive nature of it lies in the removal of funds from private businesses and the forced transfer of these to the public sector.
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    (Original post by Kibalchich)
    No, he doesn't understand either. He doesn't seem to understand half the stuff he posts. I think he's drunk a lot of the time.
    Says the guy who doesn't respond to anything I write, turns to personal insults when you realise you don't know what your talking about, and has understood very little of every debate he's been in. You're trolling.
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    (Original post by Rhadamanthus)
    I apply the same scenario since the destructive nature of it lies in the removal of funds from private businesses and the forced transfer of these to the public sector.
    Ignoring that the public sector creates value, whereas smashing windows only causes destruction?
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    (Original post by creak)
    Ignoring that the public sector creates value, whereas smashing windows only causes destruction?
    Are you being serious? Do you even know what the broken window parable is? Its message is that you cannot create value through removing value from another area of the economy. Just because the man has to spend £100 on a new window does not mean that this is 'valuable' since it gives the glazier more money - it just means that the first man is out of £100 and has to change his plans. The public sector might create value but the money used to create it comes at the expense of people in the private sector who would have spent that money elsewhere. Honestly, please read Bastiat's original argument.
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    (Original post by creak)
    Ignoring that the public sector creates value, whereas smashing windows only causes destruction?
    The public sector are notoriously bad at putting a sensible estimation on the amount of wealth they create so they end up over taxing and then wasting the money on products and services that nobody either needed or wanted.
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    (Original post by Rhadamanthus)
    Are you being serious? Do you even know what the broken window parable is? Its message is that you cannot create value through removing value from another area of the economy. Just because the man has to spend £100 on a new window does not mean that this is 'valuable' since it gives the glazier more money - it just means that the first man is out of £100 and has to change his plans. The public sector might create value but the money used to create it comes at the expense of people in the private sector who would have spent that money elsewhere. Honestly, please read Bastiat's original argument.
    "It is very true that often, perhaps very often, the official performs for James B. an equivalent service. In this case there is no loss on either side; there is merely in exchange. Therefore, my arguments do not at all apply to useful functionaries."

    ?

    Help me out here.
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    (Original post by creak)
    "It is very true that often, perhaps very often, the official performs for James B. an equivalent service. In this case there is no loss on either side; there is merely in exchange. Therefore, my arguments do not at all apply to useful functionaries."

    ?

    Help me out here.
    Sure, what he meant was that if the destruction is carried out (the collection of the taxes) but James B receives something directly in return, this cannot be deemed a negative-sum game but rather is an exchange. I'll admit that the archaic 19th century French setting of the whole thing can be a bit complicated. The first chapter of Henry Hazlitt's Economics in One Lesson is a modern take on the broken window parable.
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    (Original post by Rhadamanthus)
    I apply the same scenario since the destructive nature of it lies in the removal of funds from private businesses and the forced transfer of these to the public sector.
    Without whom the private sector would not be able to function and would have to shell out to either educate employees themselves or pay employees higher wages to maintain themselves. Its not a broken window if it serves a useful, enabling purpose. The private sector does not exist in a vacume.
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    (Original post by WharfedaleTiger)
    Without whom the private sector would not be able to function and would have to shell out to either educate employees themselves or pay employees higher wages to maintain themselves. Its not a broken window if it serves a useful, enabling purpose. The private sector does not exist in a vacume.
    I hear this argument being advanced a lot (normally by lefty studious types) and I don't necessarily disagree with it but feel that advocates are taking one eyed view of the situation. Yes it's fair to say the public sector creates wealth, but it's a lot more difficult to put a figure on the exact amount of wealth they create so they may be overestimating their economic usefullness to the public. A normal business will take in resources at one end alter them in some way before selling the good/service on to somebody else at a profit, the public sector doesn't work like this. They take resources in and then provide citizens with goods and services that are "free" at the point of use without measuring their full market value. This is great if you work in the public sector as there's no profit motive to discipline your team, but it's not so great for the poor taxpayer that ends up subsidising it all.
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    (Original post by chefdave)
    I hear this argument being advanced a lot (normally by lefty studious types) and I don't necessarily disagree with it but feel that advocates are taking one eyed view of the situation. Yes it's fair to say the public sector creates wealth, but it's a lot more difficult to put a figure on the exact amount of wealth they create so they may be overestimating their economic usefullness to the public. A normal business will take in resources at one end alter them in some way before selling the good/service on to somebody else at a profit, the public sector doesn't work like this. They take resources in and then provide citizens with goods and services that are "free" at the point of use without measuring their full market value. This is great if you work in the public sector as there's no profit motive to discipline your team, but it's not so great for the poor taxpayer that ends up subsidising it all.
    You don't need a profit motive to motivate your team. Police, doctors, nurses and teachers do just fine without a profit motive.
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    (Original post by Rhadamanthus)
    Are you being serious? Do you even know what the broken window parable is? Its message is that you cannot create value through removing value from another area of the economy. Just because the man has to spend £100 on a new window does not mean that this is 'valuable' since it gives the glazier more money - it just means that the first man is out of £100 and has to change his plans. The public sector might create value but the money used to create it comes at the expense of people in the private sector who would have spent that money elsewhere. Honestly, please read Bastiat's original argument.
    Bastiat's argument relies on the assumption that taxes are taken merely to pay officials who provide no benefit to James B. Whilst this may have been true in 1850s France, it certainly isn't the case today - James B benefits from a lot of public services.
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    (Original post by Captain Crash)
    You don't need a profit motive to motivate your team. Police, doctors, nurses and teachers do just fine without a profit motive.
    Pffft, the average pay of a doctor is over £100k and the starting salary of a teacher or policemen is well often over £20k plus generous (by private sector standards) pension benefits.

    They're motivated by money and profit as much as anybody else, which is why they're striking today over changes to their pensions.
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    (Original post by chefdave)
    Pffft, the average pay of a doctor is over £100k and the starting salary of a teacher or policemen is well often over £20k plus generous (by private sector standards) pension benefits.

    They're motivated by money and profit as much as anybody else, which is why they're striking today over changes to their pensions.
    You're contradicting yourself. Does the public sector have a profit motive or not? You said no previously, but here you're suggesting they do....

    For what it's worth, doctors and teachers can earn much more in the private sector. If they're that motivated by money, why would they work in the public sector?
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    (Original post by Captain Crash)
    You're contradicting yourself. Does the public sector have a profit motive or not? You said no previously, but here you're suggesting they do....

    For what it's worth, doctors and teachers can earn much more in the private sector. If they're that motivated by money, why would they work in the public sector?
    No I'm not contradicting myself, you were sugesting that doctors teachers and the police weren't motivated by money and I'm saying they am. Technically it's not 'profit' though because they're being subsidised by the taxpayer, it's just common greed.
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    The public sector isn't unproductive, we couldn't exist as a society without it -- the private sector relies on its being there as much as we all do (just think about the economic benefits of a healthier workforce, for example, they must be vast, and that's just one example out of many). That we have such a strong infrastructure is one reason why the UK is a good place for investment. It's very myopic to call it unproductive. (But, of course, I also reject the assumption that unproductive things ipso facto shouldn't be done.)

    (Original post by Rhadamanthus)
    Are you being serious? Do you even know what the broken window parable is? Its message is that you cannot create value through removing value from another area of the economy. Just because the man has to spend £100 on a new window does not mean that this is 'valuable' since it gives the glazier more money - it just means that the first man is out of £100 and has to change his plans. The public sector might create value but the money used to create it comes at the expense of people in the private sector who would have spent that money elsewhere. Honestly, please read Bastiat's original argument.
    Except that it's not a fallacy. As when one has a broken window, nearly 100% of people would spend the £100 to replace the window, because the vast majority of people think that a broken window urgently needs to be repaired (to protect against crime, the wind etc.). However, less than 100% of people (perhaps much less) would generally spend all of the £100, or however much, otherwise; the refutation of the parable doesn't take into account personal saving, which seems like quite a stunning lapse, even to a non-economist such as myself. In other words, the £100 may well come from contingency funds that would simply have continued to languish in the bank, had the window not been broken.
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    It's more than a little ironic that it was Victorian and Edwardian liberals who, albeit grudgingly, implemented the creation of a public sector precisely because they recognised how the private sector was failing to educate the children of workers so as to render them suitably skilled as the next generation of obedient employees, failed to provide adequate health care for similar reason, failed to provide adequate physical and social infrastructure for similar reasons.

    Despite all its ideological rhetoric and perceived status as champion of unsullied capitalism, the US relies on a huge public infrastructure to prop-up service capitalism.

    Just one of the many internal contradictions of capitalism.
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    (Original post by chefdave)
    No I'm not contradicting myself, you were sugesting that doctors teachers and the police weren't motivated by money and I'm saying they am. Technically it's not 'profit' though because they're being subsidised by the taxpayer, it's just common greed.
    No, I said they weren't motivated by the profit motive that you said motivates the private sector but not the public sector. I mentioned these jobs because they are public sector jobs that you'd be hard-pushed to say aren't performed by motivated people.
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    (Original post by Oswy)
    Despite all its ideological rhetoric and perceived status as champion of unsullied capitalism, the US relies on a huge public infrastructure to prop-up service capitalism.

    Just one of the many internal contradictions of capitalism.
    To be honest, I doubt many informed people really believe America remains a bastion of free market capitalism, despite what the politicians may say. Since the abolition of the gold standard its operated under a completely phony fiat money system. It's become the biggest welfare-warfare state in world history, and is collapsing under the strain from the inside-out.

    I doubt many Americans would say that the public infrastructure there is propping up capitalism. Hindering it, rather. Public education, the Federal Reserve, the Post Office, government airline regulations, the horrible hybrid of state/market healthcare...all crippled, and crippling, institutions.
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    (Original post by Captain Crash)
    No, I said they weren't motivated by the profit motive that you said motivates the private sector but not the public sector. I mentioned these jobs because they are public sector jobs that you'd be hard-pushed to say aren't performed by motivated people.

    The profit motive doesn't motivate the private sector it discipline's it, so for example if a very wasteful restaurant takes in a load of fresh produce but then leaves it lying around to rot eventually it'll go bust and their capital will be sold off to someone that wants to make use of them.

    This doesn't occur in the public sector because they're able to force money out of the taxpayer whether they're efficient or not. There's virtually no risk of them going bust (at least there hasn't been for a very long time) so they're incentivised to keep spending and hand the taxpayer the bill. I'm sure a lot of public sector employees are motivated from a personal perspective but there's no market discipline available to reign in spending when they allocate resources to projects that aren't valued by the public.
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    (Original post by Oswy)
    It's more than a little ironic that it was Victorian and Edwardian liberals who, albeit grudgingly, implemented the creation of a public sector precisely because they recognised how the private sector was failing to educate the children of workers so as to render them suitably skilled as the next generation of obedient employees, failed to provide adequate health care for similar reason, failed to provide adequate physical and social infrastructure for similar reasons.

    Despite all its ideological rhetoric and perceived status as champion of unsullied capitalism, the US relies on a huge public infrastructure to prop-up service capitalism.

    Just one of the many internal contradictions of capitalism.

    And despite the UK taxing taxing 50% of GDP (i.e near Communism levels of taxation) and borrowing another 10-20% British workers are more under the thumb than ever. Strange that, because a socialist informed me that this was a guanteed path to prosperity for all.
 
 
 
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