1/8
This WSJ editorial makes an interesting but misleading point :
It quotes "a former U.S. President" as saying: “The tax on capital gains directly affects investment decisions, the mobility and flow...
wsj.com/articles/the-d…
This WSJ editorial makes an interesting but misleading point :
It quotes "a former U.S. President" as saying: “The tax on capital gains directly affects investment decisions, the mobility and flow...
wsj.com/articles/the-d…
2/8
of risk capital from static to more dynamic situations, the ease or difficulty experienced by new ventures in obtaining capital, and thereby the strength and potential for growth of the economy.”
of risk capital from static to more dynamic situations, the ease or difficulty experienced by new ventures in obtaining capital, and thereby the strength and potential for growth of the economy.”
3/8
And then it presents the surprise reveal: "That wasn’t Ronald Reagan. It was John F. Kennedy, whose chief economic adviser was liberal Keynesian Walter Heller. A Democrat who said that today would be excommunicated, but it’s nonetheless true."
And then it presents the surprise reveal: "That wasn’t Ronald Reagan. It was John F. Kennedy, whose chief economic adviser was liberal Keynesian Walter Heller. A Democrat who said that today would be excommunicated, but it’s nonetheless true."
4/8
Not really. These things cannot be true or false for all time as a matter of religious conviction. They are only true or false according to underlying conditions, and conditions were very different in the 1950s and 1960s than they are today.
Not really. These things cannot be true or false for all time as a matter of religious conviction. They are only true or false according to underlying conditions, and conditions were very different in the 1950s and 1960s than they are today.
5/8
At that time, investment in the US and globally was constrained by scarce savings — as it had been since at least WW1 and exacerbated by WW2 — and the US was a major capital exporter to a world that urgently needed more US capital.
At that time, investment in the US and globally was constrained by scarce savings — as it had been since at least WW1 and exacerbated by WW2 — and the US was a major capital exporter to a world that urgently needed more US capital.
6/8
In that case it wouldn't be at all surprising if JFK and his "liberal Keynesian" advisors believed that policies that increased savings would also increase investment. It easily could.
But this doesn't mean that if it were true by the end of the early 1960s it must always...
In that case it wouldn't be at all surprising if JFK and his "liberal Keynesian" advisors believed that policies that increased savings would also increase investment. It easily could.
But this doesn't mean that if it were true by the end of the early 1960s it must always...
7/8
be true. It would only be true in similar periods in which businesses, in response to strong demand, are eager to expand investment but are unable to do so because of scarce savings and the high cost of capital.
But this hasn't been true of the past few decades, and ...
be true. It would only be true in similar periods in which businesses, in response to strong demand, are eager to expand investment but are unable to do so because of scarce savings and the high cost of capital.
But this hasn't been true of the past few decades, and ...
8/8
to the extent that what constrains US business investment today is weak demand rather than scarce and expensive capital, it suggests that the best policy is not one that converts income into more savings but rather one that convert income into more real demand.
to the extent that what constrains US business investment today is weak demand rather than scarce and expensive capital, it suggests that the best policy is not one that converts income into more savings but rather one that convert income into more real demand.
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